Fintech

Truebill turned canceling subscriptions into the ultimate recurring-revenue business

Now a part of the company that owns Rocket Mortgage, Truebill is helping the fintech giant fill out its offerings.

Truebill CEO Haroon Mokhtarzada

Haroon Mokhtarzada launched Truebill with his brothers to track recurring subscriptions.

Photo: Truebill

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Haroon Mokhtarzada launched Truebill after realizing he was paying $40 a month for home security for a house he no longer occupied.

He and his two brothers, who are Truebill’s co-founders, also discovered that they were unknowingly paying for subscriptions they didn’t really need. That’s why they created a whole business around canceling subscriptions.

“In my case, I was paying for a security system on a home that I had moved out of a year previously,” said Mokhtarzada, the company’s CEO. “I had blown over $500 on that subscription.”

Truebill tracks users’ subscriptions by analyzing their bank account and credit card data and helping them cancel those they no longer need, or aren’t even aware they have.

The startup launched in 2015 amid the rise of subscriptions as a business model.

“The subscription economy has massively exploded,” he said.

Rocket Companies acquired Truebill for $1.3 billion in December, starting a new chapter in the Maryland-based company’s history.

In an interview with Protocol, Mokhtarzada looked back on Truebill’s journey as a startup that blazed a trail by embracing a new and unusual business model, and shared what’s in store for the company as part of another fintech pioneer.

This interview was edited for clarity and brevity.

How did you come up with the idea for Truebill?

Most of my companies come out of a personal frustration that I have. In this case, I actually found it quite difficult to keep track of the subscriptions I had all over the place.

I spent a good deal of time looking for something that could just tell me what I've got. It didn't exist, and this bothered me. So my brothers and I got together and built a prototype. We all found stuff that we were paying for that we didn't want to be paying for. In my case, I was paying for a security system on a home that I had moved out of a year previously. I had blown over $500 on that subscription: forty bucks a month for security, but I was gone, I had left the house.

How did you decide to approach this need and turn it into a business?

What we realized is you need to get someone's transaction data, and from that transaction data we built algorithms that can detect recurring payments and subscriptions automatically.

That's what we built, and we ran it on friends and family. We basically were able to identify all of their recurring subscriptions. Then, beyond that, we started adding a knowledge layer. What actually are these subscriptions so we can detect them? What company is this? How does someone cancel it? And then we added our own service, which would cancel it for the user.

The first thing is getting visibility. That's great. Tracking it — that's great. But then being able to cancel is the next step. We added that to the initial product.

Canceling subscriptions can be tricky. How did you work that out?

We basically went and studied each one. We support over 1,000 subscriptions now. We looked at the different methods possible to cancel and we do it within those methods, whether it's a letter, whether it's an email, whether it's calling them. We will call on behalf of our customers and cancel for them.

You mentioned the decision to start the company was based on your personal experience. But how big a problem was it when you started?

I’ve got to be honest, I didn't do some huge market research analysis on this. What we believed was that it was a problem and it was going to be a much worse problem as more and more companies were shifting to subscriptions. This idea germinated in 2015. The subscription economy has massively exploded. There were so many things that were one-time payments and are now subscriptions: all of software, basically. Do you remember we used to buy software in a box?

Sure, shrink-wrapped boxes.

Right, shrink-wrapped. Microsoft does not do that anymore. [Editor’s note: Well, mostly.] You're paying a subscription. So software was the first thing to go. Then suddenly it’s things that you would have never expected as a subscription. You have a subscription for grocery delivery; you have a subscription for food delivery; you have a subscription for clothing to come to you; you have subscriptions for vitamins and things like that. There are now subscriptions for cars. You can get a Tesla as a subscription; Autopilot is a subscription. There's now music subscriptions. Then you’ve got cable TV unbundled. You went from one bill to, “I've got to have my Netflix, my HBO [Max], my Disney.” Then your music became a subscription. So no more CDs.

What are the most common reasons why people cancel their subscription?

The most common reason is: “I am no longer using it anymore.” It fundamentally comes down to that. Service failure is another one. But the main reason is, “I'm not using it anymore.” It comes down to the consumer getting enough value out of that subscription to keep it. The companies that have very high retention rates, like Amazon Prime or Netflix, people are getting a lot of value and use out of it. But there's many other subscriptions where you sign up for a free trial and you forget about it. You don't really like the product. You don't really use the product and then it just continues to bill you until you remember to go and cancel that.

What are some of the bad practices that you've seen in terms of using subscriptions as a revenue model?

One is when you take something that is often used for a very short-term thing and you turn that into a subscription. For example, paid credit-repair companies. You're buying a house. You need to get your credit score up. You subscribe to one of these services. Often, they help you actually get it up; they might help you argue some of these things on your credit file, and things like that.

But then, afterwards, you don't really need that anymore. Once you've purchased your house, they're not really doing much work for you. But that thing often continues to renew in the background.

There are many companies that make it very difficult to cancel: They might have online cancellation, but you've got to go through a really convoluted flow to really get there that's so confusing that you almost can't figure it out. And people will even employ dark patterns sometimes in these cancellation flows.

The first thing is getting visibility. That's great. Tracking it — that's great. But then being able to cancel is the next step. We added that to the initial product.

The other one is just not letting you cancel at all or making it really hard. For example, there may be gyms where you have to physically show up to the gym to cancel. We have people who are military. They're overseas, and they can't cancel the gym membership because they will not let you call and cancel. Even if you tell them, “Look, I don't want this anymore.” And they say, “I'm sorry. You have to come in and fill out a form.”

We think that these bad practices need to go away. There needs to be clear consumer protection that just says, “Hey, look, if you're billing someone's credit card and they no longer want you to bill their credit card, they don't want the service anymore, you make it just as easy for them to stop.”

I've heard about gym memberships. What do you do in those situations? Do you have someone actually go there to cancel for a Truebill user?

We can do certified letters and things like that. There are some that we just cannot do, unfortunately. We can't show up with a mask on looking like that person. We're not going to do that. With those ones, we give them the instructions and we tell the person, “This is how to do it. Unfortunately, we can't do it for you.” But the vast majority are not like that, and we can support it.

I guess that's one example of a dark pattern. What are other examples?

Sometimes, you actually make the flow confusing when they're trying to cancel. You can do this through design. You can do it by making the button that says, “No, I'll keep my subscription,” really big. And then there's a tiny gray text that says, “Continue with my cancellation.” Things like that.

There are things where it's just fundamentally not clear how to cancel. You just don't put any information anywhere that's clear to do it. A lot of these companies don't pick up the phone. You can't just call them. They don't publish an email address on their website. So it's quite difficult.

Have you gotten any kind of feedback from these companies? Are these dark patterns intentional?

I don't think someone says, “Go and create a dark pattern.” I think someone has an idea and says, “Hey, why don't we change this page to be a little bit more like this?” And they try it and they say, “Hey, look, our retention has been improved.” Then it's like, “OK, let's keep that thing.”

There's a balance, right? I think it's fair for a company to try to save a customer. If someone's trying to cancel, you can give them an offer. You can kind of ask them, “Hey, please try us out for one more month,” or things like that. I think that's fine as long as it's not laborious, and it's simple enough for someone to do.

What are the best practices that you've seen?

I think Netflix did it right. Netflix’s homepage used to say sign up for free, cancel any time, in massive text. They put front and center that this thing is gonna be very easy to cancel, and you can cancel it with just a click of a button.

As companies start learning over time, they're gonna realize the benefit of making it worry-free to join something. You might get a little bit more churn because you didn't make it hard for people to cancel, but I actually think more people will sign up for a service like that because they won't be afraid that it's gonna bill them and it's gonna be a hassle. There is a trade-off of, yeah, on the one hand, you might lose a few more people, but people don't want to join a site that they know is going to be difficult to cancel.

Many software and SaaS companies make it pretty darn easy. You don't want that anymore, you go to your account page and say, “cancel my subscription,” and you can do it.

This is an unusual business model. How did you attract users?

We launched on some public forums. We’re a Y Combinator-backed company and got some press. We did some PR work and just kind of got the word out there. There was a certain amount of organic traffic. We actually built landing pages for every service just telling people: “How do you cancel this thing?” A lot of people just search and say, “How do I get rid of this thing?” So we did SEO around that. We got folks signing up through SEO.

The business model was really interesting. We said, “Look, this service we're continuing to develop, it costs us money.” And we just asked our customers, “Hey, would you mind paying for this thing?” We let them choose how much they wanted to pay. And they could cancel anytime. That business model enabled us to then start paid user acquisition.

What were some of the biggest mistakes in those early years?

It took us a little while to figure out that people would pay for our service. We were trying to make money in all kinds of other clever ways, like showing them ads and stuff like that. We thought maybe we could get them to sign up for other subscriptions or other services through our service. But none of that worked.

What really worked was just aligning our incentive structure with the customer. Customers were like, “Hey, I like this thing. I find value. I'll pay you.” Because of that, we can just focus on making the product better.

We went from a product that gave you visibility over just your subscriptions, to, “Hey, wait a minute here. We've got all of your transaction data. We can give you visibility to the whole thing, your entire financial life.” So we added spending reports. We added automatic categorization of all of your spend, putting it into months, budgeting. We added your credit file so you can see your whole credit report. Net-worth tracking. You can track all of your assets, your debt, your investments, all of that stuff, all in one place. You get a full financial picture.

There are many companies that make it very difficult to cancel: They might have online cancellation, but you've got to go through a really convoluted flow to really get there.

What we realized is we were lifting a veil; we were exposing something. The problem wasn't that people couldn't cancel the subscription. The problem was they didn't even know what they had. So we are removing blind spots. We went and said, “OK, let's remove other blind spots in people's financial lives.” So we basically gave people a full picture of what they've got with a lot of good alerts around: “Hey, your cash is getting low. These bills are coming up.” We have a really good sense of what's going on because of these algorithms we built. We know exactly when your paycheck’s coming. When are your bills coming? What is your cash flow looking like? Are you going to make it to your next paycheck? All kinds of stuff like that we could do with the data that we already have.

Other companies like NerdWallet and Credit Karma are doing that. How did you navigate the competitive landscape?

We fundamentally are a product company. Credit Karma is a marketing company, as is NerdWallet. They're basically an SEO marketing company that built a product on top of it. And fundamentally, their business models require them to sell other products, right?

The biggest thing that differentiates us is, because our customers were paying for our service directly, we didn't have to muck up our interface with all these ads. We didn't have to throw all these recommendations in their face. We could just say, “Here's your finances. Here's what it looks like.” And we could basically just focus day in and day out on that because all we cared about was that our customers used our service and loved it so that they would keep it and tell others.

Basically, we let people go down to a $3 a month subscription. And you know, up as high as $10 a month.

It's like a tipping model.

It's a little bit like a tipping model. We sort of say, “Hey, here's what we recommend, but if you want it to be less, you can do it.”

How did the businesses whose subscriptions were being affected by your service react?

We've had a very, very small number of companies that have said, “Hey, we do not want you engaged in this at all.”

We usually don't fight it. What more often happens is a company says, “Hey, you're canceling subscriptions on behalf of your customers. We appreciate that. But it'll save a lot of time if you just do it this way. Send us an email to this box and we'll just process it that way.”

So sometimes we work out an arrangement that's more efficient for them. But I mean, what are they going to do, right? We don't ever recommend, “Hey, we think you should cancel this subscription.” We just tell them, “Here it is. Here's your subscription.” If a user sees something and they don't want it, they don't want it.

What has been the most memorable reaction, like maybe an angry call from a CEO or something like that?

That's funny. Let me think about that. I don't know about an angry call. It tends to be a cease-and-desist letter. And like I said, it's been few and far between.

Honestly, the real reactions that are memorable are the insanely positive reviews that we get where something is just life-changing for someone. You have people who have super high anxiety and they knew they had all these subscriptions, but they just can't get on the phone because of the anxiety they have. And they say, “You don't know how much this has helped my mental health.” You have someone who says, “I didn't realize how much cigarettes were taking out of my budget. And I've quit smoking as a result of that.” You have people who say, “I have two children and I haven't been able to make ends meet. But now that I can see all my finances, I've gotten my stuff in order and we're thriving as a family again.”

There's just so many amazing examples where it's not just someone who's saving $10 a month. We're actually changing their life and how they interact with their finances completely.

Can you talk about the decision to sell to Rocket? How did that conversation start and how did you decide it was the right move to make?

[Rocket CEO] Jay [Farner] actually reached out personally. Initially, I didn't really understand what we might do with a mortgage company. But when I hung up the phone, I turned to my brother [Yahya], who's our chief revenue officer and co-founder, and I said, “This is really interesting.”

There are a lot of people that are thinking about a home, but are not ready to purchase. A lot of those people end up at Rocket, and Rocket doesn't really have anything for them. If you're not ready to get your mortgage, what do you do there?

Trubill is actually a really great platform for high-intent users who've got some kind of large transaction coming up, where you want to get your finances in order. You want to start tracking your credit score. You want to do all of those things.

Truebill is perfect for that. It fits really neatly in that use case. And you think about their servicing customers who've already gotten a mortgage. They have two-and-a-half million servicing customers. Many are logging in every month to pay their bills. And they're there for years, on average seven years.

What if you could give them a more holistic kind of financial platform where they're not just trying to pay their mortgage, but they are then seeing all their finances in one place?

They're tracking their home value. They're tracking their net worth. These things make sense in each other's context, in my mind. We've got some really amazing plans to put a very holistic platform together that brings the best of both of these worlds.

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