Strava Strangled Segments

Just over a week ago Strava shook the fitness world (again) by announcing the removal of the popular Segment Leaderboards for their free tier users. Strava has definitely struggled in the PR department as of late and the handling of this move was no exception.

Without any advance warning Strava also cut off the leaderboards for 3rd-party apps. Removing this data field was, to be sure, a necessary move given the objective. If 3rd-party apps could still view the leaderboards then it would simply drive free-tier users to other apps in order, somewhat ironically, access Strava data without going behind the paywall.

As mentioned above, in this case the problem was not the “why” but rather the “how.” Overnight free-tier users got a substantial downgrade to their Strava experience. Meanwhile, those 3rd-party apps suddenly appeared to be broken if they were pulling in a data field that Strava removed without so much as an FYI.

The Internet then proceeded to do what the Internet does best: dividing into two sides and writing rage posts. One side has people up in arms over the removal of this popular feature. You know the type: the kind of people who think just about everything should be free and who will go to the mat to try and justify this view point. The other camp recognizes the need to make some money at some point, lest the company go belly up.

Following the WeWork debacle and underperformance of other tech IPOs, sustainable businesses are en vogue once again. Strava is privately held and does not report financial performance, but from the information it has released it does appear as though it was profitable stating, ““We are not yet a profitable company and need to become one in order to serve athletes better”. This is a company that is now ten years old.

There are a number of reasons this could be happening now. Strava’s cash runway could be running out. Covid-19 is wreaking havoc on private capital markets and one or more investors might be forcing their hand. Whatever the reason, Strava’s founders, who returned to once more helm the company at the end of 2019, decided to draw a line in the sand: Either you pay the Strava subscription to use the app or you continue on the free tier and…don’t get much. This was accompanied by the removal of the confused, tiered subscription mess marketed as “Summit,” a wise move considering that few could ever figure out what benefits were in what tier.

What Strava’s management has done is take a long, close look at their business and decided that Strava’s Unique Selling Point (USP) is its Segments feature. This is probably accurate. Strava scaled in large part because this User Generated Content (UGC) proved to be a new and fun way for athletes to experience their sport. Remove segments and what are you left with? They’ve (finally) made some improvements to their route builder, but there are dozens of route builders out there and it still falls short in many respects to the best in class including services like RWGPS and komoot. Strava has also enhanced the training data features, but it’s still not as full-featured as something like TrainingPeaks. Now you’re down to an activity feed with the occasional photo and a Kudos (like) button. Sounds an awful lot like Facebook to me, and who’s going to pay for that?

It will be interesting to see how this plays out over the next 12-18 months. For folks who live and die by segment KOMs this is probably enough to push them over the fence and get them to click the subscribe button. It will also churn out many users who don’t click that button because there’s simply not much for them to do there any more.

Make no mistake about it: this is a high-risk strategy. Why? Because it risks destroying the network the network effects that enabled the company to scale to begin with.

Case in point – I have a friend who’s really in to the segments where he likes to compete with me and others in our club. He’s a free-tier user so he was really disappointed to lose visibility into not only what I and other club members are up to, but also his own segment history. To him, segments are a killer feature and he confided that he was thinking about ponying up for the subscription. He asked if I would do the same and I’m not a big segments guy. To me they’re kind of fun but not something I’m willing to pay for and I’m actually going to be ending my subscription when it’s time to renew. “Oh,” he exclaimed, “if you’re not going to subscribe then there’s no point for me to do it.”

And there you have it. Strava did not just lose one subscriber. They lost two.