SaaS Retention, Product Adoption, and the AI Challenge: Karel Papik, Product Fruits

Transcript lightly edited for spelling and punctuation. The conversation is unabridged.

Mark Evans: This is Mark Evans, and you're listening to Marketing Spark. You launch new features, you invest in product, you ship improvements your team is proud of, and then not much happens. Users don't adopt them, engagement stays flat, and you're left wondering where the disconnect is. Karel Papik has built a company around solving that problem. He's the co-founder and CEO of Product Fruits, a product-based platform that helps SaaS companies turn new users into active, engaged ones without writing code. In this conversation, we'll talk about why adoption breaks down, what companies miss after the product is built, and how to close the gap between what you ship and what users actually use. Karel, welcome to Marketing Spark.

Karel Papik: Hello. Thank you for inviting me.

Mark Evans: So let's set the stage for people who aren't familiar with Product Fruits. What problem were you and your co-founders staring at when you decided that this company was worth building?

Karel Papik: Product Fruits supercharges your product with a team of AI agents, which support users in every stage, for example, from the first onboarding, and then helping with any workflow, adoption, and so on. Every user will get the help in the right moment. We have some discovery agent and onboarding agent. We do a lot of engagement in the application, feedback loop, and so on. We are kind of an interface between any user and any application.

Mark Evans: The topic that we're exploring today is that there seems to be a disconnect between how quickly companies can launch applications and solutions, and how easily it is for users to adopt them. This is being exacerbated by the fact that AI has made product development easier than ever. You're in the business of adoption. What are you seeing on the ground when you talk to your clients? When you look at the SaaS landscape, is one of the biggest challenges that companies are shipping faster than users can absorb? Is there a tsunami of features coming at users and they just don't have the time or patience or ability to adopt them?

Karel Papik: I think the problem is not in the pace, but in the quality of the new features and new platforms and new applications are being shipped. It also kind of affecting us. Let's assume we are in a city or in a town with a lot of restaurants, right? Now, zillions of good restaurants, but then these restaurants are starting to serve food, which has not nutritious and questionable hygiene. And then people are stopping to eat in the restaurants, even in the old restaurants. That's something what I see on the market now. People are fed up by applications which are not actually bringing any value or features which are not bringing any measurable, actionable value. It's just AI. Everybody's pushing AI, try this AI, try that AI. But the question is if the value is really there, the stickiness and the retention of AI tools and platforms is actually significantly lower than traditional B2B SaaS. I think it's 40% yearly, typical median annual retention. And in B2B SaaS, it's 90%. We are talking about numbers which are more like for B2C SaaS. So it's not really good. I don't know. Lovable, for example. I love Lovable. Do you know this platform, for sure? And I read recently that they have 85% retention in the day three. And I believe that, but I would be curious to know what is their retention after nine months. And I think maybe the numbers won't be that great.

Mark Evans: Are you suggesting that choice is a bad thing because people look at AI as candy? It's good in the short term. It gives you that sugar high. It allows you to embrace something new and sexy, but they don't have much staying power because there's another AI product coming over the horizon that's even sexier and sweeter. If you want to carry on the candy analogy?

Karel Papik: I think the problem is that most AI tools are not delivering. The value is simply not there. So let me show a different example. Two years ago, I was getting two, three cold emails daily, offering me some IT services or audit of our website and stuff like this, and I was ignoring them. Now I'm not getting two or three daily, I think seven, even when my spam filter is working. So I'm getting bored and they are personalized by AI, which means basically, whoa, I read your last post from LinkedIn about Docket. It was so inspiring. Can we offer you some IT services? I see it's not personalized; it's bullshit. It's actually annoying me quite a lot. And I'm not responding to this. But now it's a goldmine with AI, but the value is still not there.

Mark Evans: If you read through the LinkedIn news feed, a common theme these days is that sales cycles are getting longer. And a lot of companies are frustrated because prospects will enter the pipeline. They'll have conversations, they'll do a demo, and then they stop for no apparent reason. One of the theories is that there's so much confusion in the marketplace. There's so many options. There's uncertainty about the value of the features that the easiest thing for a company to do is do nothing, is to stick to the status quo. The software that they're using may not be perfect. It may be far from ideal, but there's risk in terms of switching to something new and companies don't like risks. So instead of trying something new and then it later turns out you made a mistake, they do nothing. That may be the biggest problem in SaaS these days.

Karel Papik: That's definitely correct. And a lot of companies and people, the companies, they believe that now we are on the edge of some big tectonic change and they are afraid that they might not be relevant for the future. They are scared that their product, company they are working in, and themselves, they may not be relevant for the future, but still they don't know how the future will look. So they are trying to use or try some solutions and platforms and tools, and then they are hesitating. Is this the cure for the future? Will this be relevant two years from now because you don't want to switch to something different. Right. So that's why I believe, at least what we are doing is that we are still offering the classic, analog digital adoption tools, like the step-by-step tours, which are getting you in the product or hints, video feedback, stuff like this. And we are offering set of new AI tools which works really well, but we are not forcing companies to try that. But I see that they are buying Product Fruits licenses quite a lot for one reason. They see that with us, they are on the trajectory to the future because we are the most advanced AI digital adoption platform, or I would say product experience platform now on the market. So, not necessarily, they don't need the answer. Like if the product as it is now is the answer for my future needs, but they are happy that this...

Mark Evans: as they are on this trajectory. We've talked about the tsunami of options. And I want to switch the conversation to onboarding. So you spend a lot of money in product development. You pound away in terms of cold outreach, social media, and conferences, and you finally get people to buy your product. The problem, however, is getting users to embrace the product, to adopt it, to explore a lot of the features. Do you see that as a major problem for many of these AI companies? Why is that happening? What's stopping users from buying a product and getting value from it?

Karel Papik: What is the biggest problem with AI applications now? The adoption. The adoption isn't as big as we hope it will be. So why is that? And we are doing the adoption. There are some fundamental roadblocks to adopting AI. I would say that the biggest problem is uncertainty. Right? Because it's not that deterministic. It is deterministic features, like calculator one plus one is always two, unlike AI, which is kind of fuzzy. Right. So that's a mindset shift you have to make and you have to be ready for iteration and stuff. So that's one thing big companies are afraid that they don't know for 100% which output the AI will give. Another problem is, for example, even the pricing. Right? The pricing, we are selling the product yearly licenses or sometimes monthly licenses. And what we tried in the past, I'd say six months ago or eight, we tried to charge by the resolution. When we help the user with something, we charge the company. It seems to be great concept, very fair. We are not charging anything if we are not helping, but it doesn't work because simply the people from companies, they told us, yeah, I get it. It's very fair, but I need some number, which I will take, and I will ask our procurement if they approve this, if they can approve this in my budget. So they need a number. Right? So now we are, like, offering yearly and monthly tariffs. And to AI providers, we have to pay for the resolution and stuff. So the risk is on our side. So that's another risk. Another one is the black box. You really want to know what the AI will do. You really don't want to have just some black box, which is doing something magical and you don't see it. So you'll need to have a lot of processes, how you will communicate with your AI. In Product Fruits, we are actually spending quite a lot of resources to help you keep your AI on the short leash. It's about governance policies and this.

Mark Evans: Just turning our sights to AI, Product Fruits. You've got something called Alvin AI that automates personalized onboarding. Walk me through that thinking. What problem were you solving that your existing product couldn't?

Karel Papik: We started a digital adoption platform, right? Main tool was the step-by-step tours. You started an application and the application told you, if you want to start, do this, click here, do that, fill this, and so on. Product tours, right? And now we are more in something what I'm calling product experience platform. Because when AI came, we had finally the option to do the stuff which we always dreamt about. It's a big change how to approach onboarding and adoption and everything, because in the old world, the world of product tours, every application tried to own the onboarding. It told users, start here, do this, do that. And I don't think people want this. We want our onboarding. It's our, it's up to me what I will do. I just need some assistance from here and there, but it's up to me. So don't push me to do this, do that. I'm not in school. I hate being in school. And AI helping us to have a conversation with the client, with...

Mark Evans: the user, not just pushing him some information. What you're saying is that different users have different use cases. They use a solution or a product in ways that meet their own needs. And so the one-size-fits-all approach to onboarding doesn't work because in some cases it might be too simplistic. In other cases, it might be irrelevant to what I'm looking to do. So if I understand it correctly, a new user can personalize their own journey. They can onboard onto a product in the way that they want to. And that the onboarding platform isn't intelligent enough to go, 'Oh, I know what you want to do. Here's how we can take you on that journey.'

Karel Papik: In Product Fruits, you can utilize, or you can use a question agent, which at the start of the experience has some discussion-based with the new client. And based on this discussion, it's like discovery call. It will ask you, what is your use case? What you are looking for? If you have experience with some similar platforms, in which department you are working, and so on. And so during this short discussion, there is an exchange of information. And based on this, another agent, like an onboarding agent, is tailoring the experience in the application based on the outcomes from these discovery calls. By the way, when we are using all this information from the discovery calls, from the support agent, and so on, then we are generating something that we are calling outcomes. So you are like an admin, not like a user, but like an admin of the application. You can ask where are my users struggling the most? What is their biggest issue? What they dislike? What they hate? And we are checking all this information, and we are able to give you really great information and you can iterate your product. You're in...

Mark Evans: a marketplace where you compete against companies like Pendo, WalkMe, Userpilot, and AppCues. These are well-funded, known platforms. The question, and this is something that every early stage entrepreneur wants to know, is how do you compete as a smaller, leaner player? And where do you win deals? How do you win deals? What gives you that competitive edge from a marketing, sales, or customer success perspective?

Karel Papik: Our company has 26 people now, and we are selling worldwide. Our biggest market is actually the US. Our edge is the AI. We are the most AI advanced platform, the best product experience platform in the world, and it's really delivering. People are spreading this information to us, so it helps us a lot because a lot of AI features are not delivering. Our AI is really delivering. It's tangible. It works. It's great. And if you are not ready for this, you can still use the old world. So that's our edge. Even new customers, which are subscribing for our application, even if they choose to use more, our, I would say, analog-like tools. They like that with us, they will always be on the AI trajectory and we will always tailor our platform for the, for the future. So that's our edge. I think they have a program to change the course. They are trying. I can see it, but it's slow. We can be much more agile.

Mark Evans: You're a smaller player. What do you do from a marketing and sales perspective? Specifically, how do you raise brand awareness? How are you driving sales? I think there's a lot of lessons to be learned when a smaller company can successfully take on bigger competitors. What's been the key to your success from a sales and marketing perspective?

Karel Papik: Our marketing department, which is Dan and Lucas, we are running some people, doing some content. We are not really attending any events because we just don't want to. I would like to go there, but I can't because I don't want to. So now we have these podcasts. Our guys are pushing me to do something. But this is like number three podcast in my life. So it's quite a new thing for me. In lead gen, there is no silver bullet. You can do content. You can do direct sales. You can do PPCs, maybe some events. There is nothing especially unique what you can do. So it's a standard stuff. But we are a typical company, which is, I would say, more technically oriented, product-oriented. So we are trying marketing as easy as it is, and we are focusing on the product because that's our only chance to be better in a product than the others, because we can't be better at the marketing because we don't...

Mark Evans: have funds for that. You can build a better mousetrap, but if no one knows your mousetrap exists, then that doesn't matter. The question I'm asking is if you are growing, what's driving growth? Is it referrals? Is it word-of-mouth? When you look at your numbers or you look at your business plan, what would you tell investors in terms of this is why we're growing?

Karel Papik: It's a really standard mix of PPCs, of content. Of course, we did some changes like when we started, we did a lot of PLG stuff in the application. And then we saw at the start, I think we started to sell four years ago and we had conversion in free trial. We have in every given moment about 300 companies in free trial approximately. And we have been converting like 22, 23% of these companies to the paying customers. It was quite a lot.

Mark Evans: That's fast. Yeah.

Karel Papik: Now we are below 15%, but the accounts are much bigger now. Right? And we had to make some change. We had to start to build the sales department that we built it for the second time, the sales department. And then for the third time, now it's really working, I think. So now it's also to some extent, I would say, sales led, but still we are not doing any outbound. Everything is a 100% inbound, but our sales guys must be able to explain the value of Product Fruits because what we typically see, and I think this is very common for a lot of other applications, that clients are asking us, I would say, are you selling potatoes? I would like to buy some potatoes. And we are saying, yeah, we do sell potatoes, but actually, maybe you are not just meat, potatoes. What's your plan? What do you need? And they are saying, oh, we would like to do some soup, to make some soup. Right? So okay. But for the soup, you need not just potatoes. You need mushrooms, some meat, some spice, and so on. And maybe at the end of the day, you don't need the potatoes at all. So, typically, when they are arriving at our application, they are amazed about all the possibilities that we have. So now our sales department is much more crucial part of our puzzle than it used to be. And also we are doing a lot of upsells because we have 1,300 companies, and now we are upselling them with the AI solutions.

Mark Evans: Building a SaaS company from Prague in a market dominated by US players. How does geography shape your strategy, your hiring, your go-to-market thinking? Is it something that you think about as a top-of-mind or is it irrelevant, typically because you've got a great product and it doesn't matter where you're based.

Karel Papik: We have a great product. It doesn't matter where you are. If you are doing the sales in the way we do, we are not attending any events and stuff physically, so we don't need to be in the US. I actually do know the US quite a lot. I believe we operated on this market 15 years. My background is in video games, and I was developing shitloads of games for the US market. And a lot of games are actually based on the US TV franchise, like Criminal Minds or Castle. And I was selling on the US market online. Now we are selling worldwide. We are selling to Australia, Singapore, South Africa, you name it, and Germany. So we are trying to be really focused on worldwide territory.

Mark Evans: Well, let's talk about fundraising. Because you've raised €1,600,000 in...

Karel Papik: seed. We've raised $4,500,000. Now you're in...

Mark Evans: the process of looking for a larger round?

Karel Papik: We are looking at all possibilities. So maybe this is one of the options. We are profitable now. So nothing is really pushing us. We have money in the account. So we are not struggling with runway or anything. So that's a pretty good situation to be in.

Mark Evans: When you have leverage, it's good to be when you're really dealing with investors. If you had one bold prediction about where user onboarding and digital adoption is headed over the next two to three years, something that most people in the category aren't saying yet, what would it be?

Karel Papik: At the end of the day, AI will take everything from us sooner or later, probably later, one day. We will not have jobs and we will not have purpose. And if we will not have purpose, we will have no meaning. And this is a pretty grim forecast and but we have to do it. We have to play this AI. I don't know if you ever played the game Portal from Steam, the game Portal. They say they're scientists, which is, by the way, AI, which is funny. They are saying what we do what we must because we can. This is it. It's too tempting not to try to create a god when you can. So we are trying to destroy ourselves, do we want it in everything, just because we can. But the bright side is that in the next twenty years, we will definitely benefit from this. Right? The bad times will come later. So if you are looking at the short term, I will be hesitating to do some prediction, but my feeling is that I don't believe much in these headless application where the agents will just roam around and do everything on their own. I think this is not correct. It's naive because people need control and governance and iteration. And then if you need this, you will need some interface. Right? So this headless application, I don't believe it's such a big thing as some people think. I'm also not sure about the AI only because smart people like their job. If you love your job or at least like it, at least don't hate it like myself, I like it. I want to be productive. I want to be useful. And I enjoy working with three different AIs in any given moment. If it's helping me to generate better output and be faster, be smarter, but I really don't see any, any meaning to be replaced by AI. So that's also how we are selling the AI. We see it more like in the current, the next years, more in cooperation with you and not just replacing them.

Mark Evans: When you look at some of the big onboarding trends and digital adoption, what's over the horizon? What do you, what are you focused on these days?

Karel Papik: Well, now we are far beyond the onboarding. It's just a fragment of what we do. I would say it's more about the experience and adoption and everything. And what I, what we want to build is we have like, you can imagine like an invisible guy, invisible body, which is always sitting next to you and helping with your work, not just helping with the application, where you should click, but he also owns the knowledge in the area. So he's helping you with everything. So that's the way how I see the future, having some invisible body and very patient, very friendly, like your GPT, very specialized in the area you are currently working in.

Mark Evans: Great conversation. Where can people learn more about you and ProductFruits?

Karel Papik: Head to our website, ProductFruits.com.

Mark Evans: Thanks, Karel. And thanks to everyone for listening to another episode of Marketing Spark. If you found this conversation valuable, subscribe on Apple Podcasts, Spotify, or your favorite podcast app, drop a quick rating and share it on social media. And if you're a B2B or SaaS CEO struggling with stalled growth and frustrated with marketing, we should talk. You can reach me by email, mark@parkepics.ca. Connect with me on LinkedIn or visit marketingspark.co. I'll talk to you next time.