Ecom Pilot Revenue & Valuation (2021)

hey folks my guest is jacob lenski he's building a very cool tool econpilot.net it's a product research tool for dropshippers he's 20 years old he's got a degree he's he's a 20 year old degree apprentice meaning he works full-time as a software engineer and part-time completing university which is paid for and spare time he's working on this business a sas product research tool for drop shippers they're pre-launched right now but they've been lucky enough to find some partners who are working on a completely complimentary tool now uh raising a series a also working for affiliate tree which is more of a bootstrap effort um at a social enterprise looking to do some good jacob area tickets to the top yeah all right how does econ pilot get its first customer how do we get you to revenue yeah so um you know even though we're pre-launched right we've had some revenue already we've had four paying customers um oh nice we've had a yeah we've had more of a silent launch this was kind of my first effort in uh in tech business right before this i was working on e-commerce business for the past three years so you probably heard of amazon selling and drop shipping and things like that um i was doing that as a side income alongside my software engineering job and that's kind of where i came across the idea for e-compilot um yeah the currently he looks beautiful i mean the site looks beautiful so how did you find these first four customers so um yeah so the way it started is i started uh building this uh june last year um we launched around december time for a silent launch where i wanted sort of testers i wanted some early feedback right the last thing you want to do is build in silence um this is where i reached out to certain people when i read it and other social media platforms i feel like my main source of feedback was from mainly reddit and quora that's where i got the first first four paying customers um apart from that we've had a hundred free users uh and currently you know alongside our partners we're doing some market research we're basically reaching out uh trying to you know find out if there's any sort of specific niche or market gap we're missing see if there's any other problems people want to solve the tool see you know whether we can patch up a leaky bucket right of uh before what kind what kind of core threads and reddit threads were engaging in defined customers what'd you search for um so one interesting so especially within the drop shipping niche and e-commerce things like shopify platforms right any shopify kind of thread there's also specific drop shipping communities which you can reach out to um but yeah mostly think of e-commerce or website building platforms right where would drop shippers and e-commerce sellers hang out and what those first four customers pay it was 27 dollars a month are they still paying no we've had three children one still paying there's one why the ones paying insurance so we've spoke to them um this was early on when we sort of presented the product uh as you know we wanted to get the feedback we wanted to get some paying customers see how hard would it be um and the main three turned because one it was still you know it was an early product right there's still plenty of things to fix there's still plenty of things to improve the one paying customer has stayed on um he's still happy giving feedback and he's been using the tool uh weekly which is great another thing is those three paying customers have now converted to lifetime customers for free right we've appreciated their feedback and their early sort of early adopter mindset and we found them you know useful if they're not gonna if they're happy to of course provide feedback for a lifetime supply uh you know that's very that's much more useful than a customer that's gone right okay well you're completing your degree now we don't want you have to go get a real job after this so how much revenue do you need to start generating so you'll do this full time after after school yeah um i think you know originally we were aiming for let's say you know 3 000 a month right in terms of profits so i'm thinking you know let's say revenue you know our costs are pretty low right it's a sas product um of course you know we're not sure what the custom acquisition cost will be yet right that's still more to find out once we launch um but i think the aim would be around six to seven thousand right revenue a month um that was sort of my goal speaking of my partners you know they're thinking much larger than they're saying you know in our first launch when we do it properly through product owned through the correct mediums we could go definitely to uh let's say a hundred thousand the first month right uh and instead of paying uh you know instead of providing a monthly subscription we provide a lifetime subscription right model uh especially for early adopter products that's that works great feedback and when you say we do you have a co-founder and if so how much equity do you still own um no this is the partners that we're speaking with so uh so how much equity do you own an econ pilot uh 60 60 and the partners on the rest yeah yes um walk me through how that negotiation worked like what are they bringing to the table are you and are you doing all the development uh yes so i reached out to them in december mainly because they were working on a complementary product to glorify um this was in the same area i'll glorify what uh i feel like just glorify.com or glorifyapp.com you should be able to reach it um they basically provide a tool for e-commerce sellers to create graphics right and marketing images things like that and uh you know since this is a complimentary product i thought it'd be great their targets in the same audience i wanted to learn some more from them and one thing that was great is uh you know they eventually reached out and they said we like your product how about we just you know get a call discuss it and then what we started off as being maybe just an integration where we both worked together as company manager product they eventually jumped on board and said you know what we're happy to be partners we're happy to uh to follow through of course there you know uh i believe glorify is run so i feel like it's quite a large team now i think 20 to 30 employees but um it's run by mainly so two guys uh which you know 30 and 40 years old respectively so way more experience in business than me one thing i know though is as a software engineer i'm able to build a tech stack i'm able to you know actually create the product so jacob how do you go out and get you know you know 100 new customers right like that's obviously what's going to give you the flexibility to do this full time so so what's your best idea there how do you go do that yeah so i guess distribution is something i'm continually learning right this is something that's much more based on experimentation right seeing what works i believe that you know one of the strongest sources for uh bringing people in especially within the e-commerce market and especially in drop shipping and amazon selling will be through affiliate marketing right there's plenty of youtubers plenty of content out there covering how to you know get into this ecosystem it's more working with those sort of uh have you read no not yet no what are you waiting for like i said right now we're focusing on the market research right we want to be able to you have a you have a beautiful thing up you can start selling it you already have people that are paying for it you don't need to do more research you'll research until you die yeah yeah well yeah i can i can promise you it's not uh it's not a point of stalling um but it's uh yeah again we completely understand that no product will ever be perfect right uh it's more about you know slowly letting in sort of like a cold yeah just basically pouring in some cold customers seeing that feedback why are you doing to build this did you sell a bunch on like on your team did you sell a bunch of like ecom products on amazon or something so yes um in 2018 i started as an amazon seller right i was selling lanyards that's still running that website um yesterday uh so if you go on amazon it's a listing for lanyards 25 um how much and then what year did you do i started 2018 and by 2020 how much did you sell yeah yeah we had around a revenue of 15 000 pounds right so just from an amazon product 2020. yes 20 yeah okay um so what are some people one thing for you now like what do you think's gonna happen they're gonna use your tool and basically find new products to ship where they can make money on and if that's the answer how are you gonna identify trends when you're competing against these other big tools that have more computing power to find trends faster yeah so you know this is where you know being a seller and being in the market understanding yourself customer base comes in useful right i've been a user myself with certain tools right i've used jungle scout for amazon selling i've used the z analytics for ebays when it comes to drop shipping there's no real market winner and there's no tool that really so you know properly works right there's a lot of tools i've noticed that i'll do manual hand-picked products where every week they'll show you a new product you can sell what we're looking for is automated product tracking right we track products from a supplier first mindset right why would you try let's for example let's let's take jungle scout right jungle scout tracks different uh niches within amazon right the thing is you're missing is those products already being sold right that means that mac is already fairly saturated if you want to find a good product to sell in ecommerce you need to find it supplier first right one that's not yet being sold on amazon one that's yet not being dropshipped which is where we come in right we track products and aliexpress on cj drop shipping on these different platforms abstract that all for you and provide you basically you know assorted uh you know sorted products in terms of demand or in terms of how many stars they have or in terms of how many sales they're getting each week why isn't somebody else doing i feel like there's got to be a bunch of people doing that so yeah that's one thing i was expecting um when i originally joined i used the manual uh so hand-picked products there's a uh which which was useful but one thing i noticed is you know the automated tracking so much better um i feel like that there was a competitor i believe niche scraper which also aimed to basically track products aliexpress the main thing you're missing with aliexpress though is you know these are chinese products these are quite low quality it's important to include other selections so such as cj drop shipping drop shipping uk and other sort of suppliers within us something like that so that's your yeah so we'll see if that ends up i mean i just think that there are there are software teams much larger than you that can go scrape the same data what i'm hunting for and these questions is trying to find what your unique advantage is that you can really capitalize on so maybe it is one of those things maybe just out executing maybe people beat a team of 10 engineers i hope you do it i think they'll be great what do you want to hit by the end of the year what do you want to hit by the end of the year in terms of a number of customers um yeah we're definitely aiming for around a thousand customers and the main reason for that is i win during by december buy anything eight thousand eight thousand how much per month not eight thousand one thousand paying customers oh one thousand paying 27 a month no no uh lifetime fee so ninety seven dollars why do you save your lifetime fee if you do a lifetime fee you're ruining all your sas economics you can't make hiring decisions you can't do this full time when you graduate because you have to do new revenue every single month why sell lifetime so the important thing about selling lifetime is one you capture the customer which then can provide you feedback over the years right and you don't have to worry about them they pay they pay once why would they keep giving you feedback five years from now no because then you have to be worrying so much about chung does that make sense well no because they can't churn because they already paid you yeah exactly exactly you can't churn if i if it's a one-time fee you also don't have any recurring revenues right and customers that love your product have no problem paying every single month i just wonder like why would you give up all that and also by the way it's not true right because if you sell a lifetime plan what you're going to be around and you're going to support this no matter what in 50 years like no it's going to end at some point so there is no lifetime which is like it's sort of a false sale uh one thing that you notice within some of the i guess early startup ecosystem is the one thing that lifetime provides that i guess a monthly subscription doesn't is you know one when i speak about churn of course right when they play when they're paying let's say uh 100 pounds instead of 27 pounds right that's the four months they're paying upfront in a way um one that helps you build capital much faster from my understanding and the second thing is right now when we're focusing on feedback and the early adopters that are happy paying more they're happy being more engaged in feedback on the tool that's what we're focusing on right eventually it makes sense for all sas companies to go into a model where it's monthly payments but until you've you know really those that is what sas is software as a service it continues over time doing a lifetime thing one time it's great for like an initial cash bump which is fine i get that but like relying on azure model to me is just silly it doesn't allow you to build a meaningful big company or hire great talent around you to build a product yeah i completely understand that and i think you know this is sort of advice i've gotten from my partners right they've started off as a lifetime fee subscription model um and eventually they're looking to move to i guess a monthly subscription model the benefit of doing that what what is a subscription subscription implies like you're subscribing and you're paying multiple times so what you're going to come back a second lifetime and pay for another lifetime it's no it's a it's a one-time fee no no yeah yeah giving them the product for life like it's not a subscription yeah when i say live time subscription i mean light sensors i mean lifetime deal and then they're going to move to a subscription model right yeah the benefit of doing lifetime uh like i said i'll just reiterate is get you know because those customers are paying more they're much more likely to be engaged right it's like you said as well you get that early cash flow which is beneficial but uh yeah i think the focus is on getting those early adopters that are happy you know being part of the lifetime of tool right they're not only buying the tool that's current that you currently have they're also investing in the future of the tool does that make sense of course it makes sense i've heard there's like of course i've heard this like a thousand times i'm just saying like i've seen an end in like tragedy educo is a good example of this came on was bragging about how he made all this money on appsumo and he shuts down the company six months later so he just basically frauded all those people he sold a lifetime plan because it only lasted six months like it's just it doesn't make me feel good like i just don't think it's a good way to treat people and you don't know like you might feel really good right now but in eight months you want to do something different you're gonna be like oh quick i can't do something different because i saw these lifetime plans that being said i don't i'm not against this i think it's a good way to do like market research so i'm rooting for you we're over time though so let's wrap up the famous five number one jacob what's your favorite book uh seven habits of highly effective people and number two uh what is your is there a ceo you're following or studying uh hopkins ceo johnny yeah he's good number three what's your favorite online tool for building a business um i have world motion notion notion by the way johnny never sold lifetime plans just saying number four how many hours how many hours i sleep to eat every night um i look i have faith eight and once you're such a married single kids i'm gonna assume not married and no kids right yeah just that relationship 20 years old what's something you issue when you were 10 um the fact that even you know stable businesses are constantly testing things they're constantly figuring things out on the way there's never that eureka moment where you feel like you understand everything guys he sold fifteen thousand dollars with the lanyards online and his team's now launching e-com pilot gun that help other people find profitable things to sell on amazon using other sources like alipay we'll see if it works he had four beta customers one still active paying 27 bucks a month as well as a thousand customers by the end of this year jacob we're room for you thanks for taking us to the top thanks a lot 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 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