How Chatmatic CEO Travis Stephenson grew Chatmatic 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...