How Chatmatic CEO Travis Stephenson grew to $34.9K revenue and 150 customers in 2023.

hello everybody my guest today is Travis Stephenson and he's a software entrepreneur and marketing coach that specializes in all things Facebook and Instagram he's been at it at it for eight years on his own and now it's finally branching into a real SAS clat forum for the long term called chat Matic Travis we ready to take us to the top yeah absolutely excited to be here all right man so tell us about chat Matic what does it do and how does it make money so simply put it takes advantage of facebook Messenger facebook Messenger 2016 March announced that they were allowing chat BOTS and messenger BOTS and you know it sounds incredibly complicated on the surface and so what we did was we made a SAS that allows you to take advantage of all of the capabilities without having to be a programmer developer understand code so we just make it really really simple and then to take it to the next level we're also building in automations so if you come to us and say hey I've got a youtube channel how does messenger help my youtube channel we've got automations that are built into YouTube so when you upload a new video your messenger subscribers are gonna get a link to that video automatically so we've got these automations for things like receipts for Infusionsoft and we're working on other you know shopping cart providers and whatnot but essentially we're trying to make it to where you can take your funnels that you normally would do on your own and bring them into messenger but make that easy and conversational and give me a general sense of kind of the customer type you're working with are they paying you 10 bucks a month 20 bucks what's the average customer paid all ranges so right now we've just got done with an early what I'd call alpha stage release where we released a basically it's a minimum version of the product and it doesn't have all the feature set and so when we actually released basically what we're gonna do is is to kind of stir up the market a little bit at least we're gonna have flat yearly accounts with unlimited subscribers so okay so you are you're pre-revenue today then yeah well yeah we've actually already done right now we've done about 1.5 million in sales in our alpha stage and so none buy what is that like how many customers paying what amount of money it's anywhere between 697 and well actually we have a 90 a month account that people could take advantage of going all the way up to 997 dollars but we're ranging right around 1,800 to 2,000 ish customers nothing big but again we didn't really want to roll it out to big in pre-launch so so you said to about 2,000 customers and total revenue is one point one yeah one point for one point four now how did you drive those sales there's a lot of entrepreneurs that would love to have those kinds of pre-sales before they're fully launched most of its Facebook I mean a good majority of it came from Facebook obviously I've got some I've got relationships with other marketers who have you know lists that are also in the same space so the right here with that joint venture but the majority of it yes coming in from Facebook mostly Facebook Ads via webinars travels like whoo I mean when you see if how do you find a partner and maybe can you name one or two and how do you convince him to market for you yeah I mean it really just comes down to making sure that your product is in line with theirs I've had a lot of relationships going back to seven eight nine years ago when I was in different in all kinds of different spaces so I used to run a CPA Network and that obviously led me to the affiliate marketing space so I had relationship with affiliate marketers that then took me into obviously going to most of my relationships come from going to live events everything from Affiliate Summit traffic and conversion like real affiliate marketing events so what goes are you paying I mean we're talking 50 percent 10 percent yeah so usually in this stage because it's a flat fee I'm going 50 percent down to about 30 percent on upfront sales to any affiliates or anybody who brings me in but honestly if you're an entrepreneur and you're looking to go that route my biggest suggestion is everybody always hates the idea of giving away revenue right out though right out the gate what I did was I used those joint venture partners to build up an audience basically to feed my pixel for Facebook feed my pixel for YouTube and then you take that audience you create look-alikes and now you have amazing startup audiences for Facebook Ads for YouTube ads and it makes it way easier than just time to jump in and you know go at it cold so now this the 1.4 million you brought in is this recurring annually or these was one time for life no I'd say probably right now our recurring is around 45 to percent what we did was 45 neutralized huh what's that forty five to fifty percent of what forty five to fifty percent of our revenue is recurring either yearly or monthly the rest of it's gonna be a flat fee for a set amount of features that they got at that time okay but it's a flat bet so I'm saying is it flat fee for a life or for a year for a year okay so that's I'm trying to get at are they expecting to them are you expecting them to then pay that whatever that is again at the end of 12 months yeah well so it's kind of up to them the people who ended up getting into those programs they're gonna have an option to upgrade but they wouldn't upgrade at that same cost they would upgrade at lower cost obviously as being one of the first ones in and so technique there was was straight-up like when you're I knew that the software itself was gonna cost multiple six figures or high six figures to build into completion and at least with the team and the way that I wanted to do it versus my competition and you know being a Silicon Valley guy the the private funding space is something so foreign to me so what I did instead was let me go out generate a bunch of revenue in pre-sales use that revenue to fund the development of the project and then go out into the mainstream yeah what I'm trying to pin down here is what base you've built for yourself so I love the model you keep a hundred percent control no funding pre-sales is the way to go the best investors obviously the customer so you bring in one point four top-line you're paying at about thirty percent to an affiliate so that takes it down to about a million or maybe nine hundred grand if I then take that nine hundred grand and or sorry the one point four divide your two thousand customers into it that's basically two thousand payments of seven hundred bucks a pop and if you assume those are basically annually if I did but divided by twelve then that's about fifty eight bucks for those two thousand people each month you could argue you've built a base of about a hundred grand and monthly recurring revenue do you look at the revenue like that or no are these people expecting you're not expecting them to keep paying year-over-year I would say that in any sort of projection that we've run I'm probably more along the lines of a twenty five to forty five thousand a month when it comes to them for them to actually recur like for them to actually continue on into upgrade because a lot of people I mean they they just they're gonna see that hey maybe this one wasn't for me and they might use it again in the year after but the nice thing is what I've really done and this was sort of my goal if my goal wasn't actually to build any recurring in this first year which is we're just about to finish this year it was just to get the product out there get the point where I can actually develop it where I want it to be because now basic I didn't want to embarrass myself right by releasing a product that wasn't what I wanted it to be so now we're getting close to actually at the end of December releasing it to the to the you know stature that I was hoping for and now I have you know way more audience that I can actually go out and reach more ads that I can run in a better you know a better demographic for a long term occurring and yeah try to sort of corner the market on a yearly recurring fee versus a monthly and just make it unlimited feature sets instead of the latter where you kind of you know pricing goes up as you get more quote-unquote subscribers or you do more so do you know yet I mean you've obviously it sounds like you've launched this just a year ago right 2016 yeah okay do you have a good sense here in terms of what your churn is annually yeah no I don't I mean like I know that so what I also did in order to in an effort to decrease the churn and a lot of people don't love doing this is I created a a buyers only Facebook group kept it active the entire time make sure that we actually like discuss things gay people new ideas and so our group is still incredibly incredibly active that being said I again you know when it comes to my my turn my drop-off anybody who's not going to be there in the new year if they have to reap return it's a guessing game but thankfully I wasn't banking on that piece just yet with the new feats are set thankfully we're gonna be able to change the term rate just because everything's gonna be built in and the way that we're doing it and you guys will see hopefully as it comes out but you'll see it's a lot more sticky it's gonna be integrated with your buyers platforms and your notification sections and the one thing about messenger is it's not like an email platform right like I can't go from Aweber to get response if you wanted to do that you could export your list in you know your list and move it from one to the other the problem Messinger is it's based on where you get the authorization so you can't move a messenger list from one place to the next so the idea being you know creating a stickiness of sorts that makes it to where it's a good enough price that if you can't find value in it at that year at that you know at that number then you're I'm sorry I don't mean to cut you off but you can look I mean you're a software guy I mean a lot of the interviews we have here with companies that have built you know I've probably had 20 and CEOs on that I've done and reached a hundred million in revenue annually and and they always that the number one thing they look at they almost ignore price point they ignore revenue they just look at what's the one thing they have to get a new customer to do in the first seven days where they know they're gonna be sticky yours is pretty obvious they have to set up a chat bot they maybe they have to get their first five subscribers I mean you can look at your current base and tell me of the two thousand how many have done that and you can basically assume if they haven't done that they're gonna churn so how are you looking at that data set right so again the software itself was a little bit more complicated I've kind of schooled myself on UX going through it kind of trial and error to be honest and so it was a little bit more complicated when we first launched it but the good news is I would say within seven days 60% of our members are active doing something now the first thing that we changed was that was one of my first questions in the new UX was when I log into the software what do I do thankfully there's a couple of things that even if you you know fall backwards through it you're gonna end up having some stuff going on getting some momentum so it's not necessarily creating a bot as much as it is using a bot because there's a lot of cool features that a lot of people don't know about with BOTS that you can do kind of automatically but what's the value tied to though I mean there is a moment where there's an aha moment is it the first subscriber I mean what is that moment yeah I mean so subscribers is definitely one way where they're like oh my god this is this is gonna be great broadcasting because you can broadcast through messenger that's another way but then the the other I think the best is whenever somebody comments on a post on Facebook you're allowed to send them a message and that's through a chat bot and so a lot of our users I'd say probably 80% of our users they're most commonly using that function where if somebody comments on a post on Facebook it'll automatically reply with something so they're attaching it to their ads they're attaching which also means I get opted in right I mean if they if they get a reply they're subscribed technically yeah so as soon as that what it's a one-way messaged originally but then as soon as that customer comments back it would be a subscriber an actual subscriber that you could then have more engagement with but right out the gate a lot of our customers like you know ecommerce for instance a great example Shopify customers are promoting different products with Shopify and saying hey if you comment below I'll give you a ten percent discount or I'll give you this and so they're using those incentives to you know lower their cost for ads and do all this so we're making it toward that function is the easiest one to use because it's the most common so as soon as you log in that's what you're gonna see it's also the easiest way to get the first subscriber it's just chat right so it makes it easy so what's so far the two thousand you have on the platform how many of them have gotten at least you know one response to the comment stream where they've gotten at least one subscriber on Oh actually we're we're around 80 last time I checked we're around eighty to eighty-five percent of all of our users have at least considered one subscriber they've gotten something that would be an action in response to something that they did basically somebody subscribe to their chat bot in some way which is you know obviously it's phenomenal but we do a lot of behind the scenes teaching and coaching sort of how to use it how to use it and utilize the different features because otherwise there would be that that fall down there would be there'd be a ton of people who just weren't you know able to figure out what they need to do a lot of that comes with training webinars I'm a little wait trying so I'm confused you just a minute ago said that only 60 percent are active and you said that they've done at least something but then you just said eighty percent have got at least one subscriber why it is so when I say active I mean that are still using it on a regular basis most people work they're gonna go in they might set something up and then they who knows that they log in again we use I'm sure you're familiar with intercom obviously well we use intercom to kind of track when logins were and when was the last time and so based on that I'd say right around sixty percent are still active but we've seen that about eighty to eighty-five percent of our accounts and I don't have the actual number because we did this like three weeks ago have at least one subscriber god but the good news is you know we're right now with two thousand ish summers somewhere on that rock that not that line we've we've had BOTS connected to I believe right now about 44,000 fan pages so obviously those 2,000 a lot of them are doing it for other people they're you know they have multiple for themselves and then we also had a for a while we had a free trial where you could get in and then leave so obviously some of those customers attached to fan pages and whatnot but just seeing all of that data even was super helpful for us to see what they were doing in the first 24 hours and the biggest thing that I learned was yeah you know I've made a ton of mistakes and I'm probably still gonna make a ton of mistakes in the new one but you know you learn and just keep keep moving so yeah now is your only customer acquisition cost on this the the 30% on the 700 our annual sale so I mean that you're paying to affiliates that was the original yeah I mean aside from obviously overhead but yeah cost to cost for sale I mean face most again most of my sales came from Facebook Ads running webinars so there is that cost of webinar platforms or you know auto webinar platforms and then Facebook ads but you know we were still we were still pretty positive I mean 50 percent cost is about what we would typically run at most whether it's a JV affiliate relationship or if it's ads got it so sometimes you'll run ads you'll have an ad payment but also then a JV cut but the worst you'll see is you know 350 bucks in kak yeah and so I'll never I would never run an ad and pay the affiliate Commission unless we're doing a retargeting campaign so that's a very minor amount of sales but the straight-up cold targeting we don't end up having an affiliate sale on that because we know that came from us yeah that makes good sense awesome so what percentage of these mm do you think once you get the real kind of the real SAS thing launched in a few months what percent do you think are gonna convert into kind of active paying folks man it knows to be at home I'm hoping that we can work hard enough like I'm hoping that we can actually dig deep enough into the end to get them you know more active and to see what it is I would say we're gonna start off with a really healthy base of over 500 I know that because he's hangin ninety seven bucks a month oh yeah I mean we already have I think right now 180 at that number and that's the 97 so when we asked to have a 497 a year account where you can do one fan page for a year 497 a year breaks into like what $38 a month or something so other chatbot platforms get into the several hundreds if you have thousands of subscribers ours is gonna be capped at 497 a year so it's gonna be you know pretty opportune but that's sort of the the initial goal there is to is to run that way and and again we strategically didn't take on as many clients as we as we could have just based on you don't want to end up setting incorrect expectations you don't want people to think that there's something that they're supposed to get that they shouldn't be so we said hey let's do what we need to do to fund the project and then from there we'll kind of shut things down and we're in that phase now yep yeah I've got a lease yeah you've got a healthy baby 150 customers you said you have right now right paying 19 bucks that's 14 grand I think per month and only your's only gonna scale from there you've got a good base to work with and good affiliate relationships yeah and so all right our goal the new year is is really leverage those affiliate relationships with a new platform but then also we're gonna be stable enough where we actually have two legs to stand on as opposed to one for our cold targeting and that's kind of my background is a lot of Facebook traffic YouTube traffic some you know some Google Adsense stuff or Google AdWords but so that'll be the the big push forward is getting into small markets and showing them how they can use it so reaching out to financial advisors with an ad that says hey here's how financial advisors are benefiting from chat Matic and doing that all the way down the scale and what your team size today and where are you based everyone in Tampa no actually almost everybody's virtual we have two in Tampa we have a total of eight okay and you're just funding their salaries and stuff from the one point four you brought in right I mean most of it obviously yeah I have I have we started the project with my own funding but then since then sales usually kind of keep the ball rolling yeah good stuff Travis let's wrap up here with the famous five quick answers number one what's the last book you read last book I read was think like a freak number two is there a CEO you're following or studying right now man just everybody Elon Musk you know what he's making moves right so you just got to follow him number three besides your own with your favorite online tool oh good question email marketing platforms which one I use I would say probably right now Sen Lane I like sin lane it's a small one it's good number four how many hours of sleep to go every night at least eight and what's your situation married single you have kids I think I heard one crying in the background married one kid who's just over a year old and I just recently moved to Tampa and super happy about all and Howard are you Travis 32 last question take us back 12 years what he was your 20 year old self now oh man I wish my 20 year old self knew how important being able to code was because I have no coding capabilities right now and if I had started at 20 I give myself that excuse all the time of oh I'm too old now to learn which I know I'm not but I'm just too much in the grind but I would have told my 20 year old self it's more important to learn how to code then to go out and do you know hang out with your friends there guys however from Travis learn to code easier launch the company in 2016 just recently chat Matic there now over 150 folks paying 97 bucks a month after a very healthy alpha launch that brought in about 1.4 million dollars in capital for him to use to get the SAS product launched off the ground bootstrapped which I love too early to look at churn all that yet spending about 210 to $350 max on customer acquisition cost looking to scale here with his remote team of eight into 2018 Travis thank you so much for taking us to the top I appreciate it thank you