#22 - Generating $1M ARR in 3 months
Co-founder of an AI short-form video tool.
David is an active LinkedIn user and I got in touch with him after I read one of his posts about submagic’s progress.
In today’s interview, we talked about;
David’s background,
How did they start submagic,
How did he grow so fast and why content business,
The power of affiliate programs,
The power of bootstrapping.
ps: We had this interview 2 months ago and I noticed that submagic passed 1 million user 4 days ago. Congrats for the team!
Notes from our side:
One of the things I like about Beehiiv is their recommendations feature and last week I gained more than 35 subs with the help of saasbootstrappers newsletter. Welcome to each and special thanks to Mac Martin if he is reading this post.
I'm wondering about how did you begin your journey at the sub magic? I've seen that you are an entrepreneur at heart. We would like to get some information about your background and also how did you start sub magic?
David:
So first of all, let’s start with my background. So I'm 26 and from France originally.
I have a not common background because I started working when I was 16 years old and I didn't study. So I started my entrepreneurial journey very young. And so the chance with that is I had the opportunity to make a lot of mistakes.
I tried different things and my first company that I launched was in a gambling industry, in sports betting in the UK.
So I was living in London at that time from my 18 to 23. I had a company in gambling and then after this company, I went to textile.
And after textile I went into software because I understand that textile is not a good business in terms of margin.
I wanted to do something scalable. I would like to work from anywhere in the world without managing physical products.
So that's why I chose software business and I started a software company in France two years ago which was a small bootstrapped software that I created with one business partner.
It went okay, but it wasn't something great.
It was in a very specific niche. I learned a lot from this experience.
In my second experience, I know how to find a good business partner and scalable idea.
So that's why I started submagic because on my side, I was a content creator myself and I want to dive into software.
To create any kind of software my goal was to create a software that solved one of my pains. And into an industry that I really understand well.
I was creating videos since 12 years old. So I know this industry of videos better than 99 percent of people in general.
So I knew that if I went into this field of video marketing, I will be better than everybody else. And I can talk with people about that for hours, because this is my field. So that's how I started submagic.
Can you give us more details about submagic’s journey?
David:
So we met with my co-founder in January 2023. And when we met; we said together, what is your vision? What do you want to achieve in your life? And my plan was very clear. I wanted to do something I like and be able to launch some products very quickly. And to do that I needed to have a good business partner.
So I meant, I was able to sell it very quickly So we say okay, let's figure it.
We don't know if we're going to find a good product that will find the product market quickly. So the goal is to say, let's take 10 months and during 10 months, we're going to ship and launch 10 different products every month.
And in 10 months, I think we might have one successful product. And we started with sub magic. So we shipped submagic in like one month. We have the MVP and three weeks after we had the first sale on May, 2023.
You didn't get a chance to test other nine products, right? Submagic was your first product.
David:
Exactly. We started with submagic and we had the product market fit in 10 days.
And we said we're going to do something great.
And right now you have been bootstrapping this business?
David:
Yeah, we are bootstrapped since day one. We are profitable since day one. We didn't need to raise funds because to be honest. To build a good software, you don't even need to raise as much funds as people think.
I believe that you can do some big things without raising funds. This is the case of submagic at the moment.
Levent:
And for the ones who have no idea about submagic, can you please give us some details regarding what you offer?
David:
For sure. So we are focusing on the short form content industry.
So for those who don't know what is short form content, it's like TikToks, reels on Instagram.
And so I believe it's a magic that short form will become the new marketing of 2024 like it's already the new way of doing marketing today.
But it will replace like quite everything in the next couple of years.
It will replace emails and similars because we believe that the last 20 years when you wanted to sell a product what you will have to do is having some salespeople and do some outreaching on emails to say; “Hey, this is my product.”
Are you interested in these things? Now the marketing is changing in another way. People are creating content and they attract people because they do great content in educational content about what they are doing.
Because now the chance we have with those platforms is, you don’t need 1 million followers to reach 1 million people. You can reach 1 million people with zero followers.
What exactly, for example, Leo, what do you like in your life? What do you consume? What is your hobbies? And they will show you the content that you want. So for example, I'm a professional banker. I'm doing some emerging acquisition. And if I consume this kind of content, I will have always something like that in my feed.
So every business can be sustainable with short form content. And that's the core of that. So we believe in that.
So short form content is something huge and usually it will still continue growing so fast.
And we believe that creating content is not easy. You know, there is a lot of competition.
Today the value is not only creating content, it is like catching the attention from people.
So you have two ways to do it:
First, you can learn yourself and learn to become a very good video editor. Go on after effects and do some really good editing on after effects. It will take you hours to learn that and it will be painful.
And the second way is to work with an agency. They will charge you a lot of money to manage your content if you have the money, that's good But we believe that your job is not to focus on how to attract people, it's to focus on creating content.
This is your value. We have created SubMagic as a solution that enables for everybody who wants to make their short form more viral, more engaging in three clicks with AI.
So how do you we make that?
David:
We make that through captions today, because if you add captions and dynamic captions, your content will be more engaging and more valuable.
And then we say, what else can we add to make more engaging content?
Oh, we can add B rolls. Okay. So we're going to add B rolls and more engaging B rolls on your content. And then we had transition and then we had sound effects and then we had music and then we had title. Everything that helps your content more go viral.
We put it automatically with ai in three clicks.
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You make the content in a more consumable way and more attractive with your solution Including captions, zoom, sound effects and b rolls.
Currently, I guess you have some employees. You are not two founders. You have some employees working for sub magic. Is it possible to share some details regarding the current situation, how many employees you have, the MRR and similars?
David:
So 12 months ago, we were two co-founders at the beginning and then we grew and we decided to hire only when it hurts. This was a mentality with my business partner.
We don't like having big team. Like everybody thinks like you, if you have a successful business, you need to have like 50-100 employees and they always make the comparison employees versus like.
For me, this is super stupid. And nowadays, you can see that's a lot of successful business with less people. And that's what we believe in that. So we only hire when it hurts. So today we are 10 people in the team.
And the split is we have two people in the customer success. We want to give the best customer experience possible to our users. And we are very proud to have like, since we launched more than 900 reviews in total, and the average rate is 4,9 / 5.
So we have a very good success rate in customer experience. And that leads to our main acquisition channels.
Everybody's sharing the world about how so much is good and how the expense is great at submagic. So two person at the customer experience, we are three person in the marketing, myself, head of growth and or affiliate manager. And then we have three person in the products. So my co-founder and two tech guys.
And then we have one person in SEO. And then one person in content creation.
So we grew from 0 to 1 million ARR in three months. So we reached 1 million ARR three months after we started the business. And now we are on the road to reach 5 million ARR very soon.
And we have more than 12, 000 active clients today. And in terms of retention, this is part of our business, but because we grow very fast, we have a pretty high churn. We started with a very high churn and then we are reducing the churn drastically every month because we are targeting who are our best clients now.
And your main source channel is word of mouth, right? Do you also have paid channels or organic channels?
David:
So word of mouth is our main channel. And then we're doing paid on the side. We have a big affiliate program where we have more than 5,500 affiliates today. And we give 30 percent commission back on lifetime value of every customers.
And that's the program works really well. We are very proud of this program because we have some people from all over the world, 18 years old guys making like four grands a month by just sharing some magic in the community. And we are very proud of that. This is amazing.
Any advice for other bootstrappers you would like to share, for the ones who are in the AI space like this video space, anything that you would like to share?
I see a lot of people asking me some advice and telling me; David should I do that or that when launch the product.
I think it's really important that people understand that you need to go fast to launch a product. And what I mean by fast is like, you don't need 10 months to launch a product.
When you start the business and then you need to go fast to validate the mvp, and you need to sell it quickly and see if there is attraction if people want to buy it.
And don't focus on details. Don't focus on stupid things Your product needs to be a minimum viable product.
You need to be shaming about your product.
If you're not shaming of your product it means you don't have an MVP and you are going too far. You are building a good product. And this is the number one mistake that I see everybody's doing. They want to build something great. And then they start selling after six months and then they realize there is no market.
They could have done that in two weeks. That's my first advice on that.
Levent:
So they need to push their limits and ship the product as soon as possible. See the reactions, engagement. And if everything is going well, they can focus on other features as you said, right?
David:
Yeah. And talk with customers, talk with the customers, talk with people.
For the first 500 customers of submagic, I have my personal WhatsApp number and they were calling me anytime they want to give me their feedbacks or anything they want.
So in this case, I was so close with them. So they give so much values for free and they were my best product guys, because they were building my product for me and they were pairing my subscription at the same time. So that's amazing. And people don't understand how valuable is that? Like the basic thing, the business are just like simple things.
Talk with people, talk with people, talk with people and sell and sell.
So when you sell, you make business so then you get the feedback from the people and don't get feedback from people who don't buy your product because people who don't buy your product are not your customers and take only feedback from people who buy your product and, and all the customers are good customers.
Well noted for me as well, David. Thanks for your time also. And anything that you would like to add instead of my questions, or do you have any recommendations in terms of books, advices, or videos?
I like a podcast called Lenny’s podcast, love this guy. He's doing so much great content, so much value. All the guests are amazing.
And if people have questions, I always here to help. I can share some insights, give my feedback on product. I love product. I love marketing. So, do not hesitate to reach me on LinkedIn.
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