Img Revenue & Valuation (2024)

hello everyone my guest today is daniel houston he is building a company called imagely uh which is where he strives to build platforms to make design more accessible for everyone after graduating with a phd in electrical engineering in 2015 he had a few interim cto positions in the local startup community in 2017 he co-founded immediately with his partner his case his co-founder all right daniel ready to take us to the top sorry are you ready to take us to the top i'm ready are you having me you bet so tell us about the company this is specifically for designers is it a b2b sas tool all right specifically for non-designers actually it's our sdk so it's more like it's us yes it's um software development kit so it's targeted for developers actually um so basically customers which build photo editing or even like things where you need photo editing editing like for example you're building photo books or something or you have a social media network where you want image upload crop it filter it that's where we come in as a plug-in solution which you just take take into your product and everything works okay and what's the model is it one time is it monthly annually how do you price here it's uh subscription based so we have both options with monthly or annually here okay and what's it cost per month it totally depends we're it's pretty modular it totally depends how many features you take etc because you can imagine you can just take something like crop or filter but it can be more advanced like overlays especially which can create graphics automatically etc it starts like a really low with let's say 29 or euros depends per month but can go up to to way higher if you take the full suit and integrate it in your product what's the what's the customer who's paying you the most what are they paying you per month so you can approximately say it depends a bit about the support et cetera they get but it can be around 20-25k yes per month per no no uh per year then per year okay guys so two thousand dollars per month and if you and if you look at what the average does a non-designer is paying you per month or per year what would you say the average is yeah the problem is that the average is not the real average because because sure it's not that there's a customer which has the medium plan let's say this way so the average i guess it's it's totally depends it could be like 500 okay in average but you cannot just calculate the average but it's hard to say i mean you can calculate the average what you're saying is it's not representative of the business right the average is just total revenue divided by customers so that's your average but what you're saying is very different yeah you have very you have very different profiles of people um okay so so again tell us more of the back story here so you launched the you actually had your first paying customer in 2017 or you started writing the code all right somewhere around 2016 we had started writing the code um basically and we actually wrote it not for sale in the beginning actually we were part of our biggest software agency digital agency and we were having different let's say customers which we figured out needed something like photo editing in their applications but to be honest they were not willing to pay the end of amount of money it would take to build it really right and so and we started building it ourselves more like a site project and then said okay you can just have it in your pro in your product but it was not that let's say the sum you would pay if you develop it one time so this is how we really started and then we really put it on github back then um seeing if somebody might might use it and eventually we thought maybe it's just an open source tool and people will be happy about it but then things changed quickly but what changed or changed or one of so for sure somebody called us and said okay it's a really nice tool but how about a commercial license so how about support etc and that was the first where we where we realized okay somebody likes it very much and really wants to pay for it and needs the support for it and so we started um yeah we started really licensing this sdk for in the beginning it was like really one time payment yeah say so it was like our first first or start with it and this is what changed in the beginning yes okay so you put it up on github did you was the agency your agency or were you an employee at the agency i myself was an employee but my co-founder was also founder of the agency so um this is how it started yes how did you guys spin the technology the code out of the agency well this was far later to be honest um like two years ago at first we left it inside the agency and kind of split the pot and said okay this is this is this theme and this is this team and later we are just like you normally do you found a new company and you have to pay some taxes et cetera and then uh you have that one okay but you and the agency co-founder split equity and immediately yeah i see and how many total people are on the team today oh today we are 30 people 30 people okay wow so you've grown to 30 people have you bootstrapped or did you raise we didn't raise at all the only money we took was let's say the initial investment of the agency which meant like at the very very beginning for sure one employee was like building it on the site let's say on let's say 10 hours per week etc but even after that we uh just took the money we got from new licenses and hired new people and invested it over the years inside into the product and that's where we are today so how much money would you say the agency put in initially ma'am so it's really a rough number no because hard hard to differentiate but maybe a hundred thousand it could be hundred times because it's like i said it's hard to tell because the people were not working full time in the beginning et cetera yeah and how many customers do you have using the technology today today around 400 worldwide okay 400 worldwide that's great and obviously churn is critical with any sort of sdk or sas company but what's your turn today yeah we are pretty lucky i guess we have an average we just looked it up it was like 102 this year over the year average wow why is it i mean that is extremely low why is it so low that's for the whole year not monthly that's two percent perfectly yeah the average over the year yes yeah so okay you can say it's also per month then but still um well no hold on is it two percent per month or is it two percent for the whole year it's an average two percent so it's per month one okay got it so 20 so 24 churn annually okay then i okay then i made a mistake no then two percent per year because it's really it's really not not even one person per month sometimes so just to be clear yeah so let me just make sure we're doing this right okay so if a year ago you were doing a hundred thousand dollars a month in revenue right and and you have two percent annual churn that means today you're doing 98 thousand dollars a month in revenue from that same customer base ignoring new customers exactly so but not each customer has the same amount of what they paid but of course yeah well you're right uh and now we are forgetting the new customers right um yes but turn based you're right that's great okay so two percent uh churn and then break down the team a bit for me there's 30 folks total how many are engineers the half of it i would say half of it and or four or five of it of designers and then it goes to our marketing sales our product people yeah we have actually everything in our company so we don't outsource anything well basically the whole food setup that you need for companies you rest daniel is a price point high enough where you can have sales people with quota selling it all right actually good question we don't have quota currently it's not our concept um but we i think we could um but it's not how people work in our company these days so it might happen in the future um yeah now 400 customers at that 500 a month sort of average that would put you guys at what around 200 000 a month right now in revenue yeah a bit less but yes you can say so yeah okay and where were you about 12 months ago just so we can understand growth so i think 12 months ago we were like 125 something like that and i can tell you that we in average it's like two to three percent currently that we are steadily growing uh per month over the last year where's the growth coming i mean this is a great story right you've bootstrapped your way up to about a two million dollar runway company you know we know how you got your first customer it was the github sdk how did you eat your first hundred customers yeah actually in the beginning was really finding us on github for some reason and but then we quickly switched to our let's say we created a landing page then all the seo game for sure so we are present there and you can find us if you search anything about photo editing and sdk or something like that uh and later for also paid search page things etc and blog posts if you write in the technical realm et cetera there but i think most of it comes from typical sale sao seo how much do you spend monthly right now on paid advertising they're really not much i think many people will pay a much more i think it's like maybe a thousand months okay okay not a ton at all and then if we look at if you look at uh some of the the keywords that you guys are ranking for what are some other like if i search in google what would you come up number one for for sure photo editor and then anything that comes with sdk sas maybe some programming languages as it's a developer product so photo editor and then something like c plus with pretty specific due to developers uh also image editor these days we also have video editing so there's video editor sdk and such things that rank most interesting video editor sdk okay interesting and is this so so seo is a main play paid spend is very small how many new customers are you adding per month right now let's say i think it's like five to ten it totally depends yeah and those can be as again as small as a hundred bucks a month or as big as a thousand or two thousand a month yes exactly and to be fair we these days we tend more to the bigger customers um so um but i suppose so we target those but we target more and more like the big enterprises because our software is built for enterprises and yeah they leverage most of the features right and you're bootstrapped which means worth worst case your break even but you could be making a lot of profits and you know doing dividends with the team which one is it are you reinvesting everything you break even or not to be sure to be honest we are currently reinvesting everything we have because we are let's say bigger plans currently um so we have this product it's you're right it's generating revenue we can pay our team we also would have money to spend on there for for other things so we currently do more stuff with it yes we reinvesting it what's the bigger plan the bigger plan for sure is extending the sdk business i already told you that we have video editing integrated now i started integrating it and these days we extend more to complete layouting technologies that can do more than just photo editing but also compose complete uh things like multi pages and all that stuff that's what we're currently doing and what we actually ship to let's say this way very cool and if you were to back into a cac to get a new 500 a month customer what would you say you spend to get these customers it's really not easy it's something we think about a lot um so as you can see we're not spending much on our let's say paid ads but i would definitely go there and put put more effort there that's what we're currently trying to do with more a b testing and how maybe also look for let's say teeth like other channels where you can put banners or ads not maybe um google itself but maybe on forums and all that stuff or newsletters and all that stuff yeah what about the other components of cat cac isn't just paid spend you have a marketing team of a sales team when you look at what your fully weighted cac is what would you put it at it's actually actually i don't know i have to look it up so but so um so i don't want to say something which is not true in the end you know no no no that's fine i mean if you again come this is always sort of a guess by companies but right if you if you are taking basically 10 to 20 you know 10 new customers per month 10 to 20 and you just basically take your total expenses in sales and marketing and paid so sales and marketing salaries all your paid spend and just divide by 20. you can kind of back into a rough fully weighted attack so so like you said yourself so we are paying our whole team so if they're like say four to five people are currently in marketing and sales yeah so average salaries in germany it's let's let's say it's make it simple it's maybe two in salaries might be less might be more so um yeah it's set by 20. yeah so 200 sorry 200k five people on the team you pay them 200k per month total 20k are per year because maybe someone is or maybe not so we have people who are full-time workers so and in germany series like from 50k to 100k approximately depends totally um and uh so um we have some juniors we have some seniors you know so i said in average maybe 200k maybe 250 but so total total annual salaries added up for that five-person team it's called 200k um people say it's a marketing yeah so you could take that back to a monthly basis and say it's what is that uh eighteen fifteen thousand dollars per month divided by ten new customers so call like fifteen hundred bucks to get a new five hundred dollar a month customer or something like that yeah you can could say it that way yeah yeah how do you so i mean how do you ultimately if you want to put more money on direct like paid channels you sort of have to figure out again like a better idea for what cac is so what is your process right now for launching new paid experiments um so there it totally depends so currently we do it sometimes feature based because we have different use cases and our so we figured out over the years that photo editing is really um you can can use it for photo books or you can use it for in theme parks for joyrides to take the pictures etc you know you can use it for the police to create pictures from us from other things so we totally always we are we always do the same we are have created a new feature which we might have developed with another customer so we know in which our use case this customer was in and then we can maybe see if we can target this more specifically yeah and um then we yeah we put out the ads and we have designers we create different versions of it see which may perform better but the volume you see uh i totally paid like a thousand currently and the volume for the search volume isn't that high that you can let's say be a totally data driven company that that the numbers are so solid in the same months or something yeah so we have to do a guessing and talking to customers and we talk to our customers a lot and then try to figure out what is it yeah so what is what they're looking for basically okay daniel let's wrap up here with the famous five number one favorite business book lately i read the blitz skating by reed hoffman which i really liked number two is there a ceo you're following or studying yeah these days i'm following sebastian troon which company is he with he was the founder of udacity but now he is having i don't know the name of the company but something with flying cars number three what's your favorite online tool for building imagely my favorite online tool um it's actually github because a lot of you have a lot of developers yeah number four how many hours of sleep to get every night these days i really get seven because i realize that you should i should have that and what's your situation married single kids are currently single okay no kids no kids all right and how old are you daniel i'm 37 37 last question what do you wish your 20 year old self knew um i think i should have i should have known that i should try to get into business i spent a lot of time in academia which i really liked but would i have known what i've known but i know no i would have started early is creating businesses and learning there on the go et cetera guys imagery and image editing sdk also now video editing sdk 400 customers paying 500 bucks ish per month but again that really does vary that's just an average doing caught a little less than 200 000 a month right now in revenue or about a 2.4 million dollar run rate that's up from 125 000 a month just a year ago so about two to three percent month over month growth they're doing this all bootstrapped which we love they're profitable and bootstrap team of 30 people 15 engineers five on sales and marketing one or two sales folks only two percent annual return which is pretty incredible as they look to continue to scale into the enterprise daniel thanks for taking us to the top thanks mason 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 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