How AutoForward SMS CEO Norbert Hüthmayr grew to $144K revenue and 992 customers in 2023.

hey folks my guest today is norbert houth meyer he is a software developer and online entrepreneur looking to buy and scale off-beat internet businesses norbert you ready to take us to the top yes i am all right why why buy and sell instead of build from scratch um i find it i find it interesting um to pick something that already has traction and uh because it's the hardest part quite frankly to find the product market fit is probably the most difficult part and if you can shortcut it yeah why not so tell me about the last company you bought and how you found it um so i started in uh 20 early 2021 and i was just you know i wanted to to buy something and and and see if i can scale it and i did a search through all the internet marketplaces mostlyflipper.com back then and just you know looked at as many listings that i could get my hands on and talk to the to the owners and then i found autoforward sms and yeah just bought that one okay and so which network did you find that that website on flippa that was flippa yes okay and what was the listing price it was pretty cheap i think the original listing price was about 12 grand for i think 600 usd mrr back then so by all right 4 600 monthly uh six six six hundred six hundred years yeah it was in in australian dollars so i don't i don't remind exactly but yeah okay so it was asking 12 grand and it was doing 600 600 per month or 7200 per year so about a 2x multiple um and what'd you end up buying it for i bought it for seven and a half grand i think because the owner had the deal lined up but the guy who bought it bef like bought it before me never sent the money never did the transfer and so the the owner reached out to me like hey i have fell through you can have it i was like yeah i like it but uh i'm only paying this amount it was like yeah here uh take it and so i got it for a really good multiplayer um very cheap by today's standards you mean look a lot of people think you go list on these marketplaces and some of the owners of the marketplaces are guilty of saying oh you build a 100 a month app you can sell it for 10 million dollars on our marketplace and it's frankly just not true i mean the most the deals are the ones like what you did right there for like 1x or sometimes 1.5 x is usually what happens but i guess why did the founder want to sell why was he a motivated seller so in this case it was an old australian lady she had a bunch of businesses in the sms space and she said she wants to work less and she was just selling off part of her assets and this app and this android app was one of the assets and um yeah i mean i had no reason to not believe her she was very forthcoming very open which is always a good sign when you're dealing with uh owners so that's why she sold it and i was quite lucky to get my hands on to be to be honest so you buy the company any surprises once you took it over in the code base or the finances or customers or anything um not a surprise but a little difficulty that i did not foresee so her company was registered with stripe in australia and i am based in the u.s so i had to transfer the account which stripe doesn't do for you so i needed to code like the transfer of the accounts the credit card information and they kind of help you but it was still i was still worried that i might break something and that the subscriptions wouldn't renew everything turned out really well but i was i was sweating i was just test migrating like five times 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 percent of 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 founderpath 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 wanna check this tool out if you wanna 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 and what is my what is the monthly recurring revenue today on the app uh it's just a little bit more than 10 10k usd per month or per year per month oh wow so you've really grown it a lot over the past 12 months yeah so how'd you do it so um part of the reason why i found it interesting in the first place was that i i saw something um like i would call it maybe an error pricing mistake the previous owner had a very neat feature that was totally for free so in her mind it was like yeah um if you forward text messages to um like an api let's say it doesn't cost me anything so it shouldn't cost the user anything and so um the power users i want to say that use the app the most basically got it for free like they paid 99 cents and when i took over the app i restructured the pricing and i said well this is a feature that helps you so i should be earning and i made it a paid feature essentially and that was the best thing that i could do um because so it was it was free and now what did you charge for it how much so it's it's in tears so if you want to forward like 500 messages a month it's like i think a dollar 30 if you have between 500 and 5 000 it's like five dollars a month and it the top tier is like a hundred thousand forwards per month and that's uh 22 dollars how many forwards across your entire user base are you doing per month i have no way to track that because i advertise it as some like as a taking care of their privacy so i have no way to see what they are forwarding or how much they how do you know what to build them well i'm i'm tracking it but the app tracks it so the app it's it's a counter inside the app and i have no stat i know how much a certain user is forwarding but i don't know how much all of them in total what is your what is your largest user forward per month like hundreds of thousands uh no it's like the limit would be 100 000 and i've never had anyone complain that he needs more typically people text me when they reach like a tier limit and say hey i need more but i've never had anyone saying that he needs more than a hundred thousand so needs to be below that and how many customers are paying something monthly right now um 992 so i'm really expecting to bridge the 1000 paying customer threshold i don't know maybe early next month something like that so on average with 10 000 an mrr each one's paying about 10 dollars per month yeah even though it's highly scattered like yeah i have a large amount of people that have on the highest tier and yeah this is a great story i mean so is that really what it was it was just that one pricing change is there anything else you changed to go from 600 a month in revenue to 10 grand a month in revenue under 12 months um so that was definitely the biggest thing the app has had steady organic growth that's what the previous owner told me and so i was able to you know continue with that i i redid the website we started to blog a little bit to you know more some more like faq and like um help articles for for the users to know you know what to do what they can do what they can do how to configure the app and stuff and yeah organic growth is still strong i don't do any paid marketing or anything and purely you know people find it on on google and they how do they find it on google what do they search for um most of the people search for some something like text message forwarding sms forwarding stuff like that and uh the website's there for like five six years already so it has you know good history um the app itself is quite old old in quotes again five six years before i bought it and i'm having it for a year now so uh has a lot of history and i think that's very important when you do seo so anyone listening to right now looking to buy their first app for under 10k they want to find something that's been around for three or four years they want to find something that's dominating at least one distribution channel in your case it was a specific keyword like text message forwarding in the android app store and number three it'd be ideal if they found an app that was making very little revenue because there was a very popular free feature where you believe you could put up a very small paywall and start generating users those are the three things that you recommend people look for yeah it's it's hard to narrow it down i would say look for something that interests you and and try to find a seller that is you know open and honest and forthcoming many many people that have put out their listings they they don't really care too much they just want to make a quick buck and you you you ask and they won't bother responding or you know they just want to close the deal and it's like yeah don't waste my time and so whenever i find someone like this like yeah if you don't spend the time to talk to me and i can do my due diligence then it's a red flag and yeah yeah okay this makes sense are you buying more companies as part of a holding company or you're only focused on this one no i'm sorry i bought this one i also bought a website uh to teach myself a little bit about content i didn't like it very much and uh it's shut down already but i'm i'm actively looking for something new right now um spent a lot of time quite frankly so far uh valuations are really high so i wanna you know it doesn't it doesn't help me to buy something that's overvalued so i really take time and and if i don't find anything i just wait or start to build something from scratch in the meantime there's always something you'll learn can you invest more in auto forward sms you have 992 customers you can develop other products to sell them things like that hire another engineer or two would you ever scale it um i right now i don't um i really want to find something new because i want to diversify my income a little and so i'm maintaining it i'm bug fixing it i'm updating it so i'm a software engineer i do all that by myself basically um but i don't have plans to you know scale it with dedicating myself 100 to that business right now rather want to find something new and you know take it from i don't know a grand or two grand and and scale it just to have uh adverse income streams i guess what are other important things people should consider when they're looking at applications to buy specifically what to do after they buy it to drive revenue oh it's a tough question so i typically go in and i look at how they make money right now a lot of low i want to say low mrr businesses they have pricing that doesn't really help them make money um often i see for example it's a page builder for example you pay for one website and and then if you want to have three websites you pay three times as much but there are customers that will always only have one website so you need to to make sure that you capitalize on the amount of traffic they run not only the amount of websites they have and so um yeah just be clever with the pricing see what your customers need and where you provide value and then make sure to charge for the value you provide not for what it costs you know that's that's great that's great advice now what about churn in the business are you able to measure churn uh i am uh i can have a look at my dashboard right now i don't i've it's going down so we had a little bug where that made it really high so churn is at eight percent right now per month which is uh quite high by sas standards i think but it has been growing like i want to say 15 per month um over the past year so honestly i've never been too concerned about it um but yeah trend is automatically you're the only person running it right just one person i run it uh i have a dear friend of mine that is taking care of the tech um what do you mean engineering yeah i okay i thought you said you do all the engineering work i do i do so the app when i bought it was built on one tech stack and then we released a new version of it that is built on a new tech stack uh it's file google firebase and flutter and i do the old app where most of the revenue is coming from that's a kotlin and a php backend and the new one is firebase um plus flutter so he takes care of the new app and i take care of the old app and yeah that's how he played it what do you pay him per month do you just pay him four or five grand uh he has a share um so this is a fun story so we we typically travel once a year like as uh you know friends and we sat together we traveled to ecuador last year we sat together and i was like hey don't you want to join me i give you 20 and he was a little bit hesitant and then i just kept on talking talking and one day he was like i'll help you and so i promised him 20 and so he takes 20 every month um of you know the the profit that we make and he just charges he sends me an invoice and that's great so what were profits last month uh i need to go back um so the mrr doesn't always align too well but uh give me give me a second to look i think take your time this would be march 2022 yeah the new stripe stripe layout still confuses me so last month we had a revenue of 9.3 grand and um with very little costs i don't i don't know exactly but it's way below 500 bucks a month um really good profit match and could further cut it down you know so what was profit 85 80 600 something like that yeah something like that and so he took 20 to that so about about 16 17 hundred dollars yeah okay interesting and you're able to keep the rest right yep where do you personally invest that money do you pay it out as dividends and invest in real estate or what uh i just keep it so i pay myself a small salary i don't really need much i pay myself a small salary the rest stays in the company and i just use it to you know fund other ideas sometimes i want to try this i want to try that for acquisition you also need a bit of a cash um caution um just in case you know i want to go to a bank and say hey i want to fund this let me pay i don't know down payment whatever and should i ever need it you know for myself i can always just pay it out but no stress there and you're bootstrapped today though right no outside funding no nothing that's awesome we love that very cool on that note let's wrap up with the famous five number one favorite business book oh my favorite business book um i read a lot but not a not anymore about business uh one book like that you read the last book that i read was from sahil lavinia i forgot the name but it was about bootstrapping um i could i could quickly find it okay number two is there a ceo you're following or studying um to be honest uh no no no particular person i mean i'm on twitter i follow a lot of folks but mostly indie hackers i find their stories very interesting they're very open and forthcoming and yeah number three what's your favorite online tool for building auto forward my favorite online not sure if it qualifies as a tool but uh i really love stripe um as as a techie um i'm just amazed by how well everything works and integrates documentation customer support just just love them number five a four how many hours of sleep to get every night oh i sleep i don't know six seven sometimes eight i don't i don't you know i don't try to to minimize that i did that when i was younger but i don't think it it did me any good so if i'm if i wake up i get out of bed if i sleep longer they i sleep longer doesn't matter number and what's your situation married single kids uh married no kids no kids and how old are you i'm 34. almost 35. 34. happy early birthday last question something something you wish knew back when you were 20. um yeah the persistence is key um you just gotta stick you know you have an idea you gotta dedicate the time uh get rich quick worked or works sometimes but it's better better not to to bet on it it's better you find something and you dedicate and you put in the hours of course there is no guarantee i tried i have a list here next to me of 20 things that i tried and failed and yeah you just got to keep keep digging i think and one day hopefully you hit gold that's all guys there you have it a great way to get into sas he bought a software company doing six hundred dollars per month for seven thousand five hundred dollars he then proceeded to grow the business now ten thousand dollars a month today he found it on flippa.com he loved that there was a big user base there was good seo traffic for the word text message forwarding on the google android app exchange and all he did when he launched and bought it was basically put up a paywall on a very popular feature that's driven most the growth which has been incredible if you want to find a great company to buy check it out at nathanlocka.com forward slash flippa a lot of great companies there you can follow in norbert's footsteps norbert thank you for taking us to the top thank you for having me have a good day 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 nathan lacka dot 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