How Amber Book grew to $4.3M revenue and 2.8K customers in 2022.

hey folks my guest today is michael erman he's an architect and author of the book architectural acoustics illustrated and winner of 13 awards for teaching research and design the design for his own house edition made from bubble wrap earned an international arc archetizer a plus design award uh last year he's now building amber hyphen book.com it's test prep for architects michael you ready to take us to the top i am ready nathan and we were just geeking out before the call you're at virginia tech i would have had you and i guess third or fourth year uh i would have been your professor that would have been crazy if you're stuck in an architecture if i stuck around i know man you know honest truth i was in chile martin's studio that first year and you guys you know how burst it's all open so you sit next to 50 years and over here 50 years going man i'm only making like 60 grand here i'm like tech's like one of the top architecture schools in the country uh like what's going on and it was because of the weight the financial markets were sure i like money too much i have to drop out it worked out for you i think yeah i'm having fun all right tell me more about this i did not know did i did i ever see your bubble wrap house by the way was it was it no you didn't it was not actually it's three doors down from the house that you looked at um uh yeah so um i put a actually i'm in the room now um so you can see the bubble wrap yeah yeah yeah oh wow um but i put an addition an addition made a bubble wrap because bubble wrap um usually if you have thermal insulation it's opaque and if you have daylight it's transparent but not very thermally insulative and uh so i i wanted to see if i could make something that was both um that light in that daylight in but also uh also um get me warm this time of year that's amazing so tell me like how did you get the idea for amber brook and when did you launch it yeah so the um there there are six exams if you had stayed in architecture uh you'd be in the middle right now taking six exams um to be an architect so you can't call yourself an architect you can't get your license until you've passed six exams and the average pass rate for each exam is 58 so uh it's a it's a pretty painful experience for some people um on average it takes two and a half years between when you for just for those who finish it takes two and a half years between when they pass their first when they take their first test when they pass their last one and that doesn't include the six months a year of studying that happens beforehand so um so uh uh so first i was teaching uh courses all around the country uh continuing to prep people for the exams and people kept asking me uh would you do a video for this but you you know would you do an online course and frankly i'm not a big online course person i'm kind of more of an in-person person and so i always said no but um the demand got high enough and i i uh one of my students was an animator and uh i said hey could we do some animations and you know and make a really good course and you know i'll figure out a recording studio to go to and we'll do it high quality and see what happens so we started making animated uh uh animated um content for prep for the class our prep for the test rather and then we spun that out and it became uh it became the course itself so we have about 50 hours of animation plus you know maybe a thousand flashcards and maybe a thousand practice questions well it's beautiful you know i'm used to a world of internet marketers coming on the show and they show me their courses and they look like i look at yours i go oh my gosh this is beautiful i mean this is what i mean if disney put out a core an info product this is what it would look like yeah it's not pixar it's simple animation but what we've what we've been what we've been able to do is i mean imagine pixar for 50 hours but yeah the cost but we've been able to make some low cost and most importantly uh instructive like no one ever had a bad class with a good teacher and so we've we've tried to make it uh instructive and helpful and and and we become the um we become kind of i don't know what the i don't know people feel about us i guess the way people feel about trader joe's or the way they used to feel about apple or something like that we've become the big player in the space um and uh um and we've been able to help a lot of people pass the exams and do it more efficiently and it's kind of fun and you know it's not it's not like fun like what you'd want to be doing if you had your choice but it's much more fun than the other modes of studying oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview so what do people pay do they pay monthly is it one time how do they pay it's monthly so it's a subscription uh actually there's two different versions right so the um it's a subscription and it runs about uh um well our average is about 250 dollars a month and it's not really a pure place sas because there's an expectation that you'll pass and you'll finish and you'll pass so if we do our job paying right right unlike most of the people you interview we're actually thrilled when people leave us we think that's a really cool thing um but but uh but we also started offering firm licenses as well uh and the firm licenses are uh more more up your alley their b2b sas or evergreen um the average there for a firm uh is about maybe we don't track those numbers but i'm gonna say it's about twenty four hundred dollars a year uh um for the for everyone in the firm it's like all you can eat that's interesting and there you probably it's probably way more sticky right uh we would hope so it's fairly new but we our churn is less than one percent uh monthly and so it seems to be sticky and it's been around for a couple years just it was covered in the middle of it so just as things were picking up that uh um the world kind of got weird when people they closed the testing centers and people weren't taking the test for a while so so that was what 2019 you launched the firm offer uh probably yeah that sounds about right and what via five 10 20 firms on that or more i have 149 firms 150 weeks going today 150 firms that's a ton i mean so can i multiply 150 times 2400 that's 360 000 bucks a year uh i think it's more than that um so it's 150 firms times uh in that case it's 100 times 2400 so it's probably closer to 700 000 a year and that but that's only about 15 of our business uh our arr is 4.3 million right now because most of our most of our most of our subscription is you know we'll call it content a subscription is uh um is in the uh is in the um is in the individual enrollments but the firms is obviously the fastest growing part and probably the part that that that you would be most interested in well look well maybe i have 85 percent of it's on the other side maybe you wouldn't be well not necessarily because look i mean some of the fastest growing sas companies today you go back and look at their first couple years and many of them start off as like info products exactly what you're doing like if i was a betting man my bet is you're eventually gonna find a software engineer and you're gonna start building like real software like read your own version of cad i don't know but like you know a better version of these things and and you'll have a software company with a very high valuation yeah we'll call it uh content as uh software services content as a subscription so like we'll make a new term i like that i like that michael as a service mask there we go uh so this is cool okay got it so how do you do you find that people who pay you on average 250 bucks to take the exam if they pass the exam or do they become your salesperson for the firm they joined that's exactly what a year yeah that's exactly what's happened until i guess last month we really haven't had any marketing spend it's just been word of mouth but within a firm so someone will take the course and uh they'll let then they'll if they pass or even if they don't they'll let other people know that that um that they that they work with us that maybe they ought to take us yeah that's very cool give me the back story here what year did you sell your first amber book course uh i'm gonna say it's 2015. okay so we probably started making the content in 2014 and then we and then and then 2015 is when we when we started uh uh moving into actual selling access to the closing and last year you did 4.3 no last year we did 3.8 uh our ar right now is 4.3 got it so just to be just to make sure uh you're taking you're taking whatever your revenue is uh in the past 30 days multiplying by 12. take it run right yeah yeah to get run rate yeah yeah so 350 360 000 in the past 30 days times 12 is 4.3 million run rate yep exactly 363 000 is what we've done in the last 30 days is it super seasonal do you see a lot of signups in january and we do that's man you're good at this um yeah we do we do see a lot of sign ups in the beginning of january and um it's not super seasonal though because because it because it's you know on average three months and some people stay for six months and some people stay for one month or whatever it kind of smooths that out um it'll take a little dip of course in december uh but um but in general it it in terms of revenue in terms of new signups it definitely spikes there's like a new year's resolution season where people say this this is the year i want to get licensed do you remember so if you're doing 360 000 bucks in the past three days this same 30-day period one year ago what did you do uh 220 thousand oh wow so where's the growth coming from is it just more students or what actually that's kind of a weird thing because last year must have been a good january because i you know i've prepared these numbers we don't we don't do kpis and we don't kind of follow this stuff do carefully but in preparation for this podcast i did it and um so we've grown 113 between you know for year over year 2021 2022 or 2021 versus 2020. um most of the growth has come a lot of it's come in the firms and a lot of it's just come just kind of steady organic i don't know i don't even know what to call it i mean it's just it just it's it i don't know it's lucky gosh this is not lucky you know this because i like pattern recognition is popping out to me it's like glaring in my head right i mean when you go study the beginning of qualtrics which is recently multi-billion dollar exit obviously you know they they did the same thing they sold a product to byu students who then when they actually know the product they sold into the firms that they joined after college and it's how they grew it to hunt you know over 100 million bucks of ar wow so this is not lucky i mean maybe you stumbled on it but like you're falling very successful yeah i mean i don't think the court you know the the business case is kind of lucky but the course itself is not locked up you know i've been a college professor for 21 years um and uh um and i've you know kind of been working on that for a while i'm really into how people learn and and and um and i you know i recognize that the content's already out there in the libraries and on your phone so it's really kind of you know much more about curating the content and making it palatable for people mm-hmm no i love this and how many how many customers are paying today on a monthly plan oh wow um i think so last year we had uh 2800 individual signups and then 2100 for the year um were uh were individuals that were within firms so it's 4 900 a year last year of course it keeps growing so uh you know i'm not quite sure how that's going to work out right now yeah yeah super interesting um tell me more about funding have you bootstrapped or raised 100 bootstrap never raised i love that so like the question i'm going to is michael like i'm sure you love teaching but like i'm sure virginia tech is not paying you 4 million a year why are you teaching yeah that's a good question i mean i see myself as that's kind of how i see myself as just you know the professor um and i really like engaging students and i'm able to do that with the course itself you know i do uh weekly meetings and um we have zoom calls for like maybe a couple hundred people to 300 people and then i do uh weekly one-on-one meetings with people who are studying for the test so i'm able to do some teaching but i kind of see myself as as i don't know i just i just how i see myself and the rules for the state of virginia are pretty strict um we're not allowed to work more than eight hours a week on on our own business so i'm pretty religious i am very religious about that and so i've kind of kept this this is it's a little different than again a lot of the people that you know you're always asking people are you all in you know when are you gonna go all in and and i'm not all in i'm not i'm part-time but it's worked out well it's crazy i mean we always talk people come on the show they go nathan i want to build passive income and like you you like and but then you dig and they're actually spending like 90 hours a week building the business for you i mean this is truly really more passive income because you've got only eight hours you said a week or a month eight hours a week yeah i mean you've got eight hours a week right so you know work week it's michael's eight-hour workout you know that's the next book that's incredible so so i can tell i believe from like what you showed me i remember now when i was in town you showed me some stuff you're working on you reinvest a lot of this into very cool sort of architecture related projects so some of it goes into architecture-related projects we've um we've made a course for uh high school students who are uh who are studying for the sat or the ac that's the same idea that basically we kind of start with the idea that everyone's a visual learner you know people people say i'm an architect because i'm a visual learner but i've never met anyone who like looked at a graph and said can you please put that back in the table format um and so so we just kind of start with that proposition and so we just finished that and actually i just finished i just i've been working on the amber book for 12 years i just finished it last month like you know i always had kind of more stuff on um on the board to get through and um and i don't get me wrong i could make uh i could make another four of these probably i could make it four times as long easily and i'd enjoy it but at some point the course gets too long you know at some point it's just not an efficient way to study yeah because we kind of see the core okay so our super secret plan is to make better buildings right but we don't tell people that because nobody wants to pay to make better buildings but um but what we do is we teach to the test and so so it's like if you were to take a a college course uh but instead of the final exam being about the course it's like the other way around the course is all about the final exam and so at some point we kind of have to stop so i'm at our pivot point now um uh where i'm trying to figure out what to do so you know this may be something where i bring in an external or promote an internal ceo it may be something where um where you know we sell this to someone with um expertise or interests or economies of scale who can uh who can engage with marketing and and um uh and hr and and just kind of the business operations of the of the thing um uh uh or it may be uh something where i just continue to continue to run it it's actually been quite fun you know there are plenty of companies i've interviewed that sell tools for uh architects that are pure sas plays and one thing you can't buy this is attention and what you've built is attention and a community around an info product that's a very high quality product you know i could see this selling you look at the comps in the space right so morning brew hustle uh you know these are communities but for business purposes this is a community for a sas company i think the folks in architects would buy you know it'd be very interesting um is this just how many people i guess consultants have you paid at least a dollar over the past 60 days to do something for amber book um well we have 4.3 ftes that includes um that includes 4.3 4.3 i just had again i didn't know any of these numbers it's been this has been there's been a trip just kind of finding out what what our business is doing we have uh four point three four point three uh ft's that includes me and uh and um and contractors and then we have we have three that are on the payroll three four on the payroll that's so funny okay very cool do you have a price in mind if someone offered you 15 million bucks all cash today do you sell uh did you say 15 or 50 one five uh no no not for one five i mean probably for sure no i mean it would be um it would probably be a negotiation malpractice to to to tip my hand on that but but um but yeah if you know if there was if there was the right company and we're we're just right now kind of talking to m a advisors and and starting to pull our pull our stuff together that's actually why i'm you know i'm not super comfortable talking about money on a podcast but that's why i'm doing it is because we're looking for a m a advisor or a ceo or someone to buy the company or like i said i can i can continue to run it our even the margins are 90 so um i can i can just kind of coast on this if i want to as well i really enjoy doing it i just think that it may be that someone else could do it better you were talking about expanding i mean it could be that you know i could imagine a scenario where um because we're trusted i can imagine a scenario where uh you know we could make a starter kit for people once they get licensed with you know with affiliations with an insurance company for for professional liability insurance in general you know general uh general business insurance uh or lawyers or um so i could see someone going down the vertical i could see someone moving into uh taking this and taking the content and either moving it into uh the space where uh building building product manufacturers you know if you want to teach people how to install your roof or teach people what's better about your roof or something like that i could see a smoothie you know us moving into that world and i can see us moving into a world where where we kind of take the formula that we've done and start applying it to the you know with kind of high quality instruction and and frankly a significant investment in the animations uh and then um and then taking it to anything where you have a where you have a a a licensure process or licensure exams a cpa exam hairdresser's exam stock brokers exam etc yeah process yeah 100 i mean 16 000 people have enrolled 300 plus firms and over 3 000 positive reviews it's a heck of a community that you've built it'll be interesting to see what happens next um anything you want to touch on michael that we skipped over no uh let me see let's see so i'm so thrilled that uh i'm reuniting with something related to blacksburg and architecture i just i had no idea going in now i'm like oh my gosh all the memories are flooding back it's a it's a it's a great town i mean the the it's a great town and being a professor is a really great life and people uh if people you know if you if you think it's going to be good if you think it sounds like a good thing it's really a good thing just to be able to kind of engage with students and and uh and and frankly you take a you know i'll let you in on a secret um the the faculty take a lot of pride in the student work it's almost like you know it's our own work you know so at least when it's good when it's bad we kind of you know i think mentally you assign it to the student but when it's really strong work we're really excited for you guys and and we take a little a little extra pride in it well i hope you guys realize like people ask me a ton they go nathan was studying architecture at virginia tech away so time and ago are you kidding me to build great software you have to be very empathetic and one of the things i learned studying architecture at virginia tech was empathy i mean you've got to think about so much about a human interacts with bits and atoms the empathy is such an advantage in software so i hope all of you guys take tons of credit for even people that come out of the program that don't build buildings i'll i'll take i'll take credit i'll take credit for all of it there you go i'm not sure i think that's a that's a that's a uh um that's an architecture trade as well we like to give ourselves awards and we like to take credit for things so i'll i'll fit that stereotype i love that michael all right let's wrap up here with the famous five number one favorite book um oh capital in the 21st century that's a good one number two is there a ceo you're following or studying my mentor here has been uh amy ankrum she's the ceo of a sas company here in blacksburg that does um they do lab compliance they actually just exited to another ideogen i think is the company but um but that's someone you ought to have in the show is a cscrc it's something it says no it's not exactly downtown it's it's a sas company they do uh lab compliance um uh compliance in the in the biological laboratory space that's very cool okay number three favorite online tool for building amber book do you do anything to manage the course or anything tools yeah i mean you know i think probably after effects that's the adobe software we use to make the animations and that would probably be the most important and we do all the normal sas stuff we have you know hubspot and zapier and you know quickbooks and and uh stripe and that kind of thing as well number four how many hours of sleep to eat every night six yeah he is not overworked only eight hours a week uh and what's your situation michael murray oh no i have a whole nother job teaching the other the other 30 too um and i'm uh yes i'm married uh yeah married uh um uh to actually uh someone i've known since since we were seventh grade and uh i have two kids yeah two kiddos and how old are you michael i'm 48. all right last question something you wish you knew when you were 20. um read uh i wish i i wish i'd started reading up it earlier guys really reading for pleasure but great great story here amber hypenbook.com basically started back in 2014 i would categorize as a community for architects looking to pass an exam to officially become an architect michael professor virginia tech has effectively built out this beautiful it's an info product but it's a beautiful info product over 16 000 students have taken it they did about 220 000 bucks a month in revenue just uh 12 months ago the same 30 day period this year 360 000 a month about a 4.3 million dollar run rate all bootstrapped 90 ebitda margins he only works in the business eight hours a week that's by law because he's also a professor at virginia tech teaching architecture i predict big things here great community focused on architecture content does a big firm a sas company acquire them uh who's also selling to architects we will see michael thanks for taking us to the top thank you so much nathan one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathanwacka.com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya