AutoForward SMS Revenue (2023)

[00:00] Hey, folks. My guest today is Norbert Hüthmayr. He is a software developer and online entrepreneur looking to buy and scale offbeat Internet businesses. Norbert, you ready to take us to the top? [00:09] >> Yes, I am. [00:10] Alright. Why why buy and sell instead of build from scratch? [00:14] >> I find it I find it interesting to pick something that already has traction and because it's the hardest part, quite frankly, to find the the product market fit is probably the most difficult part. And if you can shortcut it, yeah, why not? [00:30] So tell me about the last company you bought and how you found it. [00:34] >> So I started in early twenty twenty one and I was just, you know, I wanted to buy something and see if I can scale it. And I did search through all the internet marketplaces, mostly flippa.com back then, and just you know, looked at as many listings that I could get my hands on and talk to the owners. And then I found autoforwardsms and yeah, just bought that one. [01:05] Okay. And so which network did you find that that website on, Flippa? [01:08] >> That was Flippa. Yes. [01:09] Okay. And what was the listing price? [01:12] >> It was pretty cheap. I think the original listing price was about $12,000 for, I think, 600 USD MRR back then. So by [01:23] Alright. 600 monthly? [01:26] >> 600, 600 US. Yeah. It was in Australian dollars, so I don't I don't recall exactly. But yeah. [01:37] Okay. So she was asking $12,000 and it was doing $600 per month or $7,200 per year, so about a 2x multiple. And what do you end up buying it for? [01:47] >> I bought it for $7,500, I think, because the owner had the deal lined up, but the guy who bought it before me never sent the money, never did the transfer, and so owner reached out to me and said, hey, I have fell through, you can have it. I was like, yeah, I like it, but I'm only paying this amount. And she was like, yeah, here, take it. And so I got it for a really good multiple, [02:17] >> very cheap by today's standards. [02:19] You know, mean, 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 $10,000,000 on our marketplace. And it's frankly just not true. I mean, the most of deals are the ones like what you did. Right? They're for like one x or sometimes 1.5 x is usually what happens. But I guess, why [02:41] did the founder wanna sell? Why was he motivated seller? [02:45] >> 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, this Android app was one of the assets and yeah, I mean, I had no reason to not believe her. She was very forthcoming, very open, which is obviously a good sign when you're dealing with owners. So that's [03:13] >> why she sold it, and I was quite lucky to get my hands on to be honest. [03:18] So you buy the company, any surprises once you took it over in the code base or the finances or customers or anything? Not [03:26] >> a surprise, but a little difficulty that I did not foresee. So her company was registered with Stripe in Australia, and I'm based in The US, 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 [03:52] >> turned out really well, but I was sweating. I was test migrating like five times. [03:59] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect [04:22] your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:46] get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna 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 [05:08] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna 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 [05:34] going out right now and you're raising your seed round. We'll 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 dataset of SaaS 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 [05:56] 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/products/valuations. 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. Alright. Let's jump back into [06:22] the interview. And what is month what is the monthly recurring revenue today on the app? [06:27] >> It's just a little bit more than 10 k USD. [06:33] Per month or per year? [06:34] >> Per month. [06:35] Oh, wow. So you've really grown it a lot over the past twelve months. [06:38] >> Yeah. [06:39] And and Tell me about [06:41] how'd you do it? [06:43] >> So part of the reason why I found it interesting in the first place was that I saw something 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, if you forward text messages to like an API, let's say, it doesn't cost me anything, so it shouldn't cost the user anything, and so the power users, I wanna [07:15] >> say, that use the app the most basically got it for free, like they paid 99¢, 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 because So it was [07:38] it was free and now what did you charge for it? How much? [07:41] >> So it's it's in tiers. 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 $5 a month. And it's the top tier is like a 100,000 forwards per month, and that's $22. [08:00] How many forwards across your entire user base are you doing per month? [08:04] >> I have no way to track that because I advertise it as some like as taking care of their privacy, so I have no way to see what they are forwarding or how much they [08:15] Well, how do you know what to bill them then? [08:17] >> Well, I'm 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. [08:32] What is your what is your largest user forward per month? Like hundreds of thousands? [08:37] >> No. It's like the limit would be 100,000, and I've never had anyone complain that they need more. Typically, people text me when they reach like a tier limit and say, hey, need more. But I've never had anyone saying that they need more than a 100,000. [08:54] And how many customers are paying something monthly right now? [08:57] >> 992. So I'm really expecting to reach the 1,000 paying customer threshold. I don't know. Maybe early next month, something like that. [09:05] So on average, with 10,000 in MRR, each one's paying about $10 per month. [09:10] >> Mhmm. Yeah. Even though it's highly scattered. Like, I have a large amount of people that have are on the highest tier. And yeah. [09:20] 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 $10,000 a month in revenue in under twelve months? [09:33] >> 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. Redid the website, we started to blog a little bit to you know, more like FAQ and like [09:54] >> help articles for the users to know, you know, what to do, what they can do, what they can't do, how to configure the app and stuff. And yeah, growth is still strong, I don't do any paid marketing or anything. I'm purely, you know, people find it on Google and they install it. [10:12] How do they find it on Google? What do they search for? [10:14] >> Most of the people search for something like text message forwarding, SMS forwarding, stuff like that. And the website is there for like five, six years already, so it has you know good history. 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 has a lot of history, and I think that's very important when you do SEO. [10:43] So anyone listening to right now looking to buy their first app for under 10 ks, they want to find something that's been around for three or four years. They wanna 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 [11:03] 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. [11:10] >> Yeah, it's hard to narrow it down. I would say look for something that interests you and try to find a seller that is, you know, open and honest and forthcoming. Many people that have put out their listings, don't really care too much, they just want to make a quick buck and you ask and they won't bother responding or you know, they just want to close the deal and it's like, yeah, I'll waste my time. And so [11:39] >> whenever I find someone like this, 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 [11:49] >> yeah. Yeah. Okay. [11:50] This makes sense. Are you buying more companies as part of holding company or you're only focused on this one? [11:55] >> No. I bought this one. I also bought a website to teach myself a little bit about content. I didn't like it very much and it's shut down already, but I'm actively looking for something new right now. Spent a lot of time quite frankly so far. Valuations are really high, so I want to you know, it doesn't help me to buy something that's overvalued. So I really take time. And if I don't find anything, just wait or [12:22] >> start to build something from scratch in the meantime. There's always something you learn. [12:27] Can you invest more in autoforwardsms? You have nine ninety two customers, you can develop other products to sell them, things like that, hire another engineer or two, would you ever scale it? [12:38] >> Right now I don't. 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. 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 [13:06] >> or $2,000 and scale it just to have a diverse income streams, guess. [13:13] What are other important things people should consider when they're looking at applications to buy, specifically what to do after they buy to drive revenue? [13:21] >> 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. Often I see for example, [13:39] >> so page builder for example, you pay for one website 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 make sure that you capitalise on the amount of traffic they run, not only the amount of websites they have. And so yeah, just be clever with the pricing, see what your customers need and where you provide value and [14:07] >> then make sure to charge for the value you provide, not for what it costs you. That's [14:15] great advice. Now what about churn in the business? Are you able to measure churn? [14:19] >> I am. 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 that made it really high. So churn is at 8% right now per month, which is quite high by SaaS standards I think. But it has been growing like, I want to say 15% per month over the past year. So honestly, I've never been too concerned about it. [14:53] >> But yeah, Churn is automatically [14:55] You're the only person running it, right? Just one person? [14:57] >> I run it. I have a a dear friend of mine that is taking care of the tech. He's very [15:04] What do you mean? Engineering? [15:06] >> Yeah. [15:07] Okay. I thought you said you do all the engineering work. [15:09] >> I 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. It's Google Firebase and Flutter. And I do the old app where most of the revenue is coming from, that's a Kotlin and PHP backend, and the new one is Firebase plus Flutter. So he takes care of the new app and I take care [15:32] >> of the old app. And yeah, that's how we split it. [15:37] What do you pay him per month? Do you just pay him 4 or $5,000? [15:40] >> He has a share. So this is a fun story. So we typically travel once a year like as you know, friends. And we sat together, we traveled to Ecuador last year. We sat together and I was like, don't you wanna 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, can I help you? And so I promised him 20% and [16:03] >> so he takes 20% every month of you know the profit that we make. [16:09] Mhmm. [16:10] >> And he just charges. He sends me an invoice and [16:13] That's great. So what were profits last month? [16:17] >> I need to go back. [16:21] >> So the MRR doesn't always align too well, but give me give me a second to log in. [16:27] Take your time. This would be March March twenty twenty two profits. [16:32] >> Yeah. The new Stripe Stripe layout still confuses me. So last month, we had a revenue of $9,300 [16:41] >> with very little costs. I don't know exactly, but it's way below $500 a month. [16:50] >> Really good profit margin. Could further cut it down, you know. [16:54] So what was profit? $8,850, $8,600, something like that? [16:57] >> Yeah. Something like that. [16:59] And so he took 20% of that. So about about $1,600, $1,700 dollars. [17:04] >> Yeah. Yep. [17:05] Okay. Interesting. And you you're able to keep the rest. Right? [17:08] >> Yeah. [17:09] Where do you personally invest that money? Do you pay it out as dividends and invest in real estate or what? [17:14] >> 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 cushion just in case, you know, I ever want to go to a bank and say, hey, I want to [17:40] >> 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. [17:49] And you're bootstrapped today though, right? No outside funding? [17:52] >> No, nothing. [17:53] That's awesome. We love that. Very cool. On that note, let's wrap up with the famous five. Number one, favorite business book. [17:59] >> Oh, my favorite business book. I read a lot, but not anymore about business. Book that What's the [18:07] last book that I [18:08] >> The last book that I read was from Sahil Lavingia. I forgot the name, but it was about bootstrapping. [18:16] >> I could quickly find it. [18:18] >> Okay. [18:19] Number two, is there a CEO you're following or studying? [18:23] >> To be honest, 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. [18:35] Number three. What's your favorite online tool for building auto forward? [18:40] >> My favorite online tool? Well, not sure if it qualifies as a tool, but I really love Stripe. As a techie, I'm just amazed by how well everything works and integrates documentation, customer support. Just love them. [18:58] Number four, how many hours of sleep do get every night? [19:02] >> Oh, I sleep, I don't know, six, seven, sometimes eight. I don't, you know, I don't try to minimize that. I did that when I was younger, but I don't think it did me any good. So if I'm if I wake up, I get out of bed. If I sleep longer, day I sleep longer. Doesn't matter. [19:21] And what's your situation? Married, single, kids? [19:24] >> Married. No kids. [19:26] No kids. And how old are you? [19:28] >> I'm 34. Almost 35. [19:30] >> 34. Happy early birthday. [19:32] Last question, Norbert. Something something you wish knew back when you were 20. [19:39] >> Yeah. That persistence is key. You just gotta stick, you know, you have an idea, you gotta dedicate the time, get rich quick works or works sometimes, but it's better better not to bet on it. It's better you find something and you dedicate and you put in the hours. Of course, is no guarantee. I tried, I have a list here next to me of 20 things that I tried and failed. And [20:04] >> yeah, you just got to keep digging, I think. And one day, hopefully you hit gold. That's all. [20:09] Guys, there you have it. A great way to get into SaaS. He bought a software company doing $600 per month for $7,500 He then proceeded to grow the business to now $10,000 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 store. And all he did when he launched and bought it was basically put up [20:31] a paywall on a very popular feature. That's driven most of the growth, which has been incredible. If you wanna find a great company to buy, check it out at nathanlatka.com/flippa. A lot of great companies there. You can follow in Norbert's footsteps. Norbert, thank you for taking us to the top. [20:44] >> Thank you for having me. Have a good rest of the day. [20:48] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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 1PM [21:13] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM 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 SaaS world, whether it's an acquisition, a big [21:35] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS 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 [21:57] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty 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 [22:17] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright. I'll be in the comments. See you.