PLG & Growth·Richard White, Fathom

SaaS Retention: Why 99% of Signups Failed (And How He Fixed It)

Introduction

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Richard White had 100,000 signups in his first month and only 100 people actually using the product. His SaaS retention rate was effectively 0.1%.

After running UserVoice for over a decade, Richard launched Fathom, an AI note-taking app, just as the pandemic hit. Zoom featured them in their marketplace and signups exploded. But 99% of those users had zero meetings on their calendars. Instead of panicking, Richard used those low-quality signups as the perfect testing ground to fix his broken onboarding and solve his SaaS retention crisis.

Richard White is the founder and CEO of Fathom, the #1 rated AI note-taking app that automatically captures and summarizes meetings.

In 2019, after running UserVoice for over a decade, Richard decided it was time for a change. Like many people, he struggled to take notes while talking in meetings.

When the pandemic hit, he saw his opportunity. He recruited four of his best engineers from UserVoice and raised funding on day one. But growth was painfully slow. After nearly a year, they only had 50 stable users.

The problem was trust. People wouldn't bring an unknown bot into real meetings. They wanted to test it first, but testing on their own didn't work because the bot would mute itself. So his team built a clever fix - a bot that played pre-recorded video, giving users a "fake" meeting to help them build confidence.

Then Zoom launched its app marketplace and included Fathom. They exploded to 100,000 signups in the first month. But only 100 people were actually using it daily.

Turns out 99% of signups had zero meetings on their calendars. Zoom had sent them tons of free users who weren't using the platform for business. Richard's SaaS retention numbers looked catastrophic.

Instead of giving up, Richard saw opportunity. The thousands of low-quality signups were actually the perfect testing ground to fix their broken onboarding and solve their SaaS retention problem.

Just as growth took off in 2022, the funding market crashed. VCs started demanding revenue over user growth. Richard gave his team 60 days to monetize. They started selling a team plan before it was built - just two features ready and a slide deck showing what was coming.

It worked - they hit $100K ARR in the first month and reached $1M ARR in a year. Today, Fathom generates eight figures in ARR with 80 employees and serves around 175,000 companies.

This episode is part of our PLG & Growth series.

Key Insight

Fathom exploded to 100,000 signups after launching in Zoom's marketplace, but only 100 users were active daily - a 0.1% SaaS retention rate. Richard White fixed it by treating the 99,900 inactive signups as a zero-risk testing ground, iterating aggressively on onboarding until activation worked.

Key Ideas

Attack metrics in serial, not parallel: focus on SaaS retention first, then acquisition, then monetization
Use low-quality signups as a testing ground to iterate on onboarding without risking real customer relationships
Build a "fake meeting" feature to let users test the AI bot safely before committing to a real meeting
Set aggressive deadlines to force monetization: a 60-day ultimatum led to $100K ARR in month one
Sell the vision before the product is built: Fathom sold a team plan with only two features ready using a roadmap slide deck

Key Lessons

🎯 Attack SaaS retention before acquisition or monetization: Richard focused on retention as the "riskiest metric" first - proving people would use Fathom daily before worrying about growth or revenue, because a product nobody retains is just expensive churn.
🔄 Turn bad signups into a SaaS retention lab: When 99% of Fathom's 100K signups were inactive, Richard used them as a zero-risk testing ground to iterate aggressively on onboarding without damaging real customer relationships.
🛠️ Build trust before asking for commitment: Fathom's "fake meeting" feature let users test the AI bot with pre-recorded video, solving the trust barrier that killed early activation - and delivered a 10x improvement in that metric.
⏱️ Set aggressive deadlines to force monetization: When the 2022 funding market crashed, Richard's 60-day ultimatum forced his team to launch a paid plan before it was fully built - hitting $100K ARR in month one.
📈 Sell the roadmap, not just the product: Fathom sold a team plan with only two features ready and a slide deck showing what was coming. Customers bought the vision because the free product had already earned their trust.
🏢 Leverage your network for a founding team: Richard recruited four engineers he'd worked with for a decade at UserVoice, getting a trusted, proven team from day one instead of hiring strangers.
🧠 Treat your second startup like speed-running a video game: Richard compared Fathom to "playing Minecraft after 10,000 hours" - open-ended questions become multiple choice when you've done it before, letting you move faster with more conviction.

Watch the Episode

Chapters

00:00Introduction

01:30What Fathom does and the AI note-taking market

03:45Richard's decade running UserVoice

06:20Why he decided to start over with Fathom

09:15Recruiting engineers from UserVoice

11:40The first year: Only 50 stable users

14:30The trust problem with AI meeting bots

17:00Building the "fake meeting" feature

19:45Zoom marketplace launch: 100K signups

22:30The retention crisis: Only 100 daily users

25:15Using bad signups as a testing ground

28:00Iterating on onboarding to fix activation

31:20The 2022 funding crash

34:00The 60-day monetization ultimatum

37:15Selling a team plan before it was built

40:30$100K ARR in month one

43:00Scaling to $1M ARR in a year

45:30Today: Eight figures ARR, 175K companies

48:00Lightning round

Episode Q&A

How did Richard White fix Fathom's SaaS retention problem when only 100 of 100,000 signups were active?

Richard used the 99,900 inactive signups as a testing ground to rapidly iterate on onboarding. Since they weren't real customers, he could experiment aggressively without fear of damaging relationships.

Why did Fathom's SaaS retention rate fail so badly after the Zoom marketplace launch?

99% of the signups from Zoom's marketplace had zero meetings on their calendars - they were free Zoom users, not business professionals who needed meeting notes.

How did Fathom solve the trust problem that was killing their early SaaS retention?

They built a "fake meeting" feature where a bot played pre-recorded video, letting users test the product without risking a real meeting with an unknown AI bot.

What was Richard White's approach to tackling SaaS retention before acquisition or monetization?

Richard attacks core metrics in serial, not parallel. He focused on SaaS retention first because it was the "riskiest metric" - proving people would use the product daily before worrying about growth or revenue.

What was Richard White's 60-day ultimatum that forced Fathom to monetize?

When the 2022 funding market crashed and VCs demanded revenue, Richard gave his team 60 days to launch a paid product. They started selling a team plan before it was fully built.

How did Fathom hit $100K ARR in the first month of monetization?

They sold a team plan with only two features ready, using a slide deck to show what was coming. Customers bought based on the vision and existing free product value.

How did Richard White's decade at UserVoice shape his approach to SaaS retention at Fathom?

Running UserVoice through PLG, enterprise sales, and multiple pivots taught Richard that retention beats acquisition. He applied that lesson by making SaaS retention his first priority at Fathom.

Why did Richard White recruit four engineers from UserVoice to start Fathom?

After working with them for over a decade, he knew their capabilities and could trust them to move fast. This let him "start on second base" with a proven engineering team from day one.

How did Fathom grow from 50 stable users to 175,000 companies?

By solving their SaaS retention crisis through better onboarding, launching on Zoom's marketplace for distribution, building viral loops through automatic note sharing, and monetizing with a team plan that hit $1M ARR in one year.

Book Recommendations

The Score Takes Care of Itself

by Bill Walsh

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