Visiting family in North Carolina this past week, we hiked in Asheville and Boone. Today's edition explores how AllTrails—the hiking app with 80M+ users—grew to dominate outdoor leisure with PE backing from Spectrum and Permira. 

As always, if there’s a sector or company you’d like me to dig into, drop me a note at [email protected]

Founding & Early Growth

AllTrails was founded in 2011 by Russell Cook to address a personal pain point: lack of digital trail maps and user reviews. Riding on the proliferation of smartphones and GPS technology inside them, Russell raised $400k seed funding to launch the product. 

And it was an instant hit–1,000 users signed up on day 1. One year in, AllTrails reached 200k users. In that same year, the company partnered with National Geographic to directly integrate NatGeo’s mapping data and redirect NatGeo website visitors to AllTrails. By year 2, AllTrails reached 1 million users.

Then in 2016, AllTrails made a strategic move to acquire its main competitor EveryTrail from TripAdvisor. The combined app became an instant leader with over 5 million users. 

Revenue Model

AllTrails has operated on a freemium model ever since its launch. 

While financials are not public, the company disclosed in 2021 that it had 25 million total users, of which 1 million were paid (equating to ~$35M ARR + ad revenue). 

By 2018, AllTrails had 9 million total users, which implies (using the same % paid user as 2021) ~360k paid users (equating to ~$12.5M ARR + ad revenue). 

In 2018, Spectrum acquired the business with a $75M investment, which implies a ~6x revenue multiple–rich for a B2C mobile app. But with its explosive growth, AllTrails has been a success story for Spectrum that Permira validated with its $150M minority investment.

1. Massive Outdoor Recreation Market–Hiking As the Entry Point

Silly to state the obvious but outdoor reaction is practically a universal hobby. And it is one of the largest sectors of the economy, after the essential healthcare and financial services industries.

And within outdoor activities, hiking is the 3rd most popular activity by participant count.

So how did AllTrails/Spectrum go about dominating a huge market like this?

2. M&A Fueled Global Consolidation–Winner Takes All

AllTrails immediately stepped on the the M&A gas pedal following the Spectrum investment in October 2018:

These acquisitions, combined with the 2016 acquisition of EveryTrail, propelled AllTrails to be the dominant player. By the end of 2019, the company grew to over 10M registered users and ~50M unique app/website visitors.

Much like how big players in other user-generated-content markets (e.g., TripAdvisor in travel and Meta in social media), AllTrails and Spectrum understood that M&A is a powerful tool to cement dominance in self-reinforcing, network-based businesses. 

3. Hyperlocal SEO Dominance–Explosive Organic Growth

AllTrails and Spectrum quickly amassed 10 million users by 2019 via M&A. But they also executed on key organic growth initiatives to reach 25 million users by 2021. Here are some interesting stats (per GrowthLoopTearDown newsletter): 

So how do they do it? Hyperlocalized SEO.

When we search trails, we typically search for “hiking trails near [me] / [specific location]”. And unsurprisingly, these are the #1 search keywords that lead to AllTrail’s website/app.

And they sliced up the landing pages in a million ways via automation. You simply can’t miss AllTrails if you are looking to hike, walk, bike, or do anything on a trail.

In a low-price B2C app ($35/year), outbound sales doesn’t make sense and within inbound, organic search is critical to grow profitably. And AllTrails nailed it–they grew organically from 25M users in 2021 to 80M users by 2025.

These organic and inorganic initiatives were very quickly implemented over a 3 year period between 2018-2021, culminating in a $150M minority investment from Permira. This is one of the best examples of B2C app investment well-done by PE.

Since Permira’s investment in 2021, M&A has been muted, and instead AllTrails has focused on:

This expansion of use cases and user base grows AllTrails’ TAM even further before the company eventually shifts into “harvest mode” on monetization.

But, despite reaching 80M users, AllTrails remains relatively small—estimated <$100M revenue in 2025. So where could it go next?

Potential Playbook: PSG’s “Consumer App to B2B Software” Play 

In April 2020, PSG acquired Untapped, the most popular consumer app & community website for craft beer enthusiasts. It’d go onto acquire other B2C beer magazine and events companies (Hop Culture, Oznr, BeerAdvocate) in the same year, before pivoting to B2B software acquisitions in 2021 (brewery management/ERP software Fermentable and B2B2C distribution marketplace in Ollie).

AllTrails could go on to acquire B2B outdoor events and program management software tools. Afterall, Vista’s outdoor events software Active Network was sold to Global Payments in 2017 for a staggering $1.2B.

Or, 

Spectrum and Permira could sell out to a consumer brand–similar to Under Armour’s acquisition of MyFitnessPal, which became an orphan asset later divested at a loss to Francisco Partners.

What do you think—should AllTrails pivot to B2B or stay consumer-focused? Hit reply and let me know.

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