How Legit Check By Ch Hit $200K in Revenue Authenticating Luxury Items (Interview with Daniel Ch)

Introduction and Overview

Nathan Latka

00:00Hello, everyone. My guest today is Daniel Ch. He created Legit Check By Ch with his brother David who's 17 and they've gathered over 6,000,000 all time users. Their company helps people authenticate luxury items like clothing, sneakers, bags and watches. They're currently making $200,000 per year using the simple send order note function of an ecommerce system. Daniel, you ready to take us to the top?

Daniel Ch

00:20>> Yes, I am. Let's go. You've got two things. You've this tool and

Price Unlock: A/B Testing Pricing Tool

Nathan Latka

00:23then you've got another tool called Price Unlock. Touch quickly on Price Unlock. What's it what's it do?

Daniel Ch

00:28>> Price Unlock is being built right now because of a need we have, so we need to A/B test prices. To give a practical example, I don't know whether $9.99 $9.90 $9 sharp, or $10 a month is what would work best for us. And then we also need to localize some prices. So Price Unlock is meant to help you find and set the perfect pricing for your SaaS tool.

Nathan Latka

00:52That's pre revenue, pre launch?

Daniel Ch

00:55>> Yes. So at the

00:56>> moment, it's not even a fetus. It's just being conceived, so to speak.

Business Origins and App History

Nathan Latka

01:00Alright. Let's go back to legitcheck.app. The headline on your website says Authentic Fake. Let's find out. What's the business model?

Daniel Ch

01:07>> It's very simple. So we are first and foremost a media company more than a tech company. So this actually didn't even start as a business. In 2017, I wanted to learn how to make an app, and I found out that I don't really like it, that I actually hate making apps, but I did go through and finish it. So it was literally just a glorified bookmark folder because I've also written a few guides on how to

01:31>> tell fake Yeezy's, fake Pharrell Williams shoes. That's what was cool back then. And then I just let it there. And long story short, in the meantime, has just grown. I got very lucky to a point where I think it pulled in 100,000 users before we made an Android app and then 300,000 users before we made it into a business. So to answer your question, the business model is simple. This is our bread and butter. We have

01:56>> some other things as well. But people send us pictures and we come back with a verdict. We tell them whether the item is fake or authentic. And then if they got scammed, if suddenly we need to bring the set of news that the item is fake, we can help them get their money back if they paid via PayPal or via credit card.

Nathan Latka

02:13Okay. And what year do you launch the business? First line of code.

Daniel Ch

02:18>> No code. Zero lines of code. No. I'm joking. That's actually like, there is code in the background, as everybody knows. The app was was released in twenty seventeen November, but then it became a business in April 2019. So that's when we started earning money out of it.

Nathan Latka

02:34And how much did you make in 2019?

Daniel Ch

02:39>> If I had to guess, because I don't really know, I would say 20 to 30 grand. I'm not really sure.

Nathan Latka

02:45And how did you and your brother split that?

Daniel Ch

02:49>> Brotherly, so to speak. In our family, we are communists. As much as there's a negative connotation, I shouldn't say that.

02:57>> Just like everything is within the family.

Team Size and Structure

Nathan Latka

03:01So you guys just sort of profits, you put it back into the family. Is it now still today, just the two of you guys working on it?

Daniel Ch

03:07>> It's mainly the two of us. So ownership, it's yes. The two of us. But then we also get the help from some other people. We employ some developers, some people to help us authenticate.

03:19>> But Sorry, were you asking ownership?

Nathan Latka

03:21What's the total team size today, full time?

Daniel Ch

03:26>> Between eight and ten, I would say. Something like that.

Nathan Latka

03:29Okay. And why is that fuzzy? Don't you know, Owen, wouldn't it be obvious who's full time and who's part time? Why does it fluctuate?

Daniel Ch

03:35>> The question is whether I need to make myself look bigger or not. So that's why I wanted to give an honest answer. We have some people on some longer term full time freelance partnerships, but it's not like employment employment. So that's why I'm just a bit finicky when it comes to this number.

Nathan Latka

03:52Got it. So between eight and ten, how many are engineers?

Daniel Ch

03:56>> Five.

Verification Pricing and Business Model

Nathan Latka

03:57Okay. So heavy heavy in tech. And what's the model? How do you guys make money?

Daniel Ch

04:01>> People pay us. We come back with a verdict. And I was just making this post the other day about how that verdict is being sent through. Anybody seeing this, if you've ever used an e commerce platform, you know you have a function for sending an order note like, hey, your order is a bit late. Sorry for that. So that's how we send our verdict. Now, the reason why I'm doing this and why I made a post

04:21>> in this interview as well, thanks, by the way, for having me, is we're leaving that behind. So that was just a scrappy way to get off the ground. We didn't ever imagine we're going to make 6 figures out of it. Low six figures, I have to mention. So we're coming out with something new pretty soon. Same same business model, but something more elegant than just the scrappy send order notes. And that's what it is.

Nathan Latka

04:45Is it a recurring model or people just pay you one time when they want to get something verified?

Daniel Ch

04:49>> It's a transactional, so one off. People pay one time, but 25%, 40% of the people come back

Nathan Latka

04:58part of this What

04:59pay, do Daniel, one time for one verification?

Daniel Ch

05:02>> Anywhere between $20 and $100 Depends on the item, but most of our items are priced at $20 But if you've got a Hermes Birkin, that's going to be $100

Nathan Latka

05:11And how many verifications did you process last month?

Daniel Ch

05:15>> Six, seven hundred, somewhere like... Something like that.

Nathan Latka

05:18Okay. And is that the main growth driver? Like, that's all you're focused on is getting people more verifications per month?

Free Guide Library and Growth Strategy

Daniel Ch

05:23>> Honestly, our focus is to bring more and more readers because we have 6,000,000 all time viewers of our guides, and that's really our main, main product. I know it's not as fancy

Nathan Latka

05:35Where can we view that, Daniel? What's the link?

Daniel Ch

05:38>> legitcheck.app, and if you go in the nav bar, get authenticated, there's going to be a button that says Explore the library. So that's where we've written about a million words on how to spot fake items. So what I forgot to mention earlier is that people can pay us $20 or $100 but we kind of shoot ourselves in the foot, I guess, quote unquote, by giving people the free guide. So if anybody wants to learn...

Nathan Latka

06:00Where is... Sorry. Where is that free? I'm on Get Authenticated. I don't see a link to a free guide anywhere.

Daniel Ch

06:05>> Sorry. So say again, in the nav bar, there should be Yeah. A button that says... Yeah. And then... Oh, no. My bad. My memory is bad. Library. The first button. Explore the library. I With a blue badge, free guides here.

Nathan Latka

06:19Got it. So these these have gotten over 6,000,000 views is what you're saying?

Daniel Ch

06:22>> Yeah, pretty much.

Nathan Latka

06:24Okay. And this is how you bring new people paying $20 to get verified. They trust you through your content.

Daniel Ch

06:29>> Yeah. So it's It kind

Nathan Latka

06:30feels like a lot of

06:31work to write all this. Do you write all this personally?

Daniel Ch

06:33>> No. No. We get help from people. We got into a point where we have a system put in place, where we have some internal guidelines on how to make a guide, how to test it, how to make sure, you know, things don't slip through the cracks. And that's basically our expertise. That's why we beat our own drum that we have earned expertise, not self claimed because there are other people doing this, but they just set up

06:55>> shop one day and they say, I know how to authenticate. But that doesn't have any claim, any backing to their claim.

Revenue: Last Month and Trailing Twelve Months

Nathan Latka

07:01Yeah. So 700 verifications last month at $20 a pop means you did about $14,000 in revenue last month. Is that about right?

Daniel Ch

07:08>> The ARPU is a bit higher because we also... We charge $60 for our certificate. So if you've gotten scammed with fakes and you wanted to get your money back, we charge $60 and we make that into a nicely looking letter that is trusted by banks, by PayPal, by Amex for that matter.

Nathan Latka

07:25So more like 20,000 or $30,000 last month in revenue?

Daniel Ch

07:28>> Oh, I wish it was that high. No. Last month we have all this public, by the way. Last month, I think we were very close to $15,000 But then the previous months, were doing a bit better as we were riding the wave of, unfortunately, the coronavirus pandemic.

Nathan Latka

07:42So what was total revenue last year, 2020?

Daniel Ch

07:46>> 2020, I don't know. I can look it up if want. But what I've checked for that post was that May to May, so May 2020 to May 2021, it was $200,000 And it should actually be a bit more because we made some charges outside of WooCommerce.

Nathan Latka

07:59I see.

Daniel Ch

08:00>> So let's say $220,000 something like that.

Nathan Latka

08:02Yep. Yep. That's trailing twelve months.

08:05How are you splitting your time? Obviously, I get more excited about Price Unlock. Right? You're building a tool so that you can use on your own, you know, application. My gut tells me that that's the thing that's going to take off over the next five years.

Daniel Ch

08:17>> Yeah. Who knows? I mean, I hope to link back to this specific episode and say, look, Nathan predicted it.

Nathan Latka

08:23What's the URL? Where can people check this thing out?

Daniel Ch

08:26>> Buychgroup.com/priceunlock. I have priceunlock.com, but I can only start using it in three days from now.

Nathan Latka

08:36Say the link one more time, buychgroup?

Daniel Ch

08:38>> Yeah..Com/priceunlock.

Nathan Latka

08:42Okay. Got it.

Daniel Ch

08:43>> Pretty soon, priceunlock.com, when I will get that domain, when it gets unlocked.

Nathan Latka

08:48What are you waiting for? Why can't you launch this, like, right now and have customers on it? This looks like it's ready to go.

Daniel Ch

08:54>> I started collecting email addresses. It's still being built because we started building it last month. I understand where you're coming from. I designed it in four or five days, and the demo can hopefully show more than four or five days of work.

09:10>> We'll show something that looks like more than four or five days of work. It's still being built and it's about to be released as a beta by the end of this month. So, I mean, I'm doing that thing where if you release it and you're still ashamed of how it looks like, that means you released it at the right time, something like that?

Nathan Latka

09:29Yep. Well, I'm up right now. Pricing testing is one of the big areas that a lot of SaaS founders leave money on the table. It should be way higher, should be way lower. So I'm curious to see how you're going to end up testing and really launching this. I'm on the waitlist.

Daniel Ch

09:42>> Yeah. Should we talk about this now or should we keep talking about Legit? I can tell you about either of them.

Nathan Latka

09:46No. We can go back. I mean, we're about out of time, but I want to make sure I touched on Price Unlock as well since it sounds like it's a SaaS you're building.

Daniel Ch

09:52>> Yeah. That's actually our headline, what you just said, Stop leaving money on the table, to which I sometimes add, Maybe stop taking too much money from the table because that's the thing. You don't know whether you're pricing too high or too low. Most people price too low. We know that. But what if you're actually pricing too high? And, you know, I just wanted people and myself actually to have some knobs to turn when it comes to

10:14>> pricing. You know, kind of like being able to experiment by turning the knobs. That's what I mean.

Nathan Latka

10:20Yeah. Now, if if Price Unlock takes off, would you sell Legit Check out if someone offered you $200,000 upfront on cash?

Bootstrapped, Profitable, and No VC Funding

Daniel Ch

10:27>> Just for a year of revenue? Yep. Well, probably not going to sell regardless of even if I'm getting a very juicy multiple because in my head, it could be way more. It just needs to be a slow burn because it's bootstrapped, completely bootstrapped, so no VC money. Is it profitable today? It is. Well, pretty much we could operate on 95% margins if we fire everybody and do the authentications ourselves. So there's a fancy word metric, which I

10:53>> don't know. The ones net income? I don't know. How much money you make before only after putting the fixed...

Nathan Latka

11:00Fail is discretionary and like founder discretionary Yeah,

Daniel Ch

11:04>> that one. That's the one.

Famous Five Rapid Fire Questions

Nathan Latka

11:06Yeah, okay, very cool. That's good. Profitable, good to go. Launching a new tool, we're gonna watch you carefully. Let's wrap up here with the famous five. Number one, favorite business book.

Daniel Ch

11:16>> It's not a business book per se, but it helped me become a better business person. The Power of Now, no doubt about it.

Nathan Latka

11:21That's a good one. Number two, is there a CEO you're following or studying?

Daniel Ch

11:26>> Scott Galloway.

Nathan Latka

11:27Number three, what's your favorite online tool for building a business?

Daniel Ch

11:31>> Getlatka.com.

Nathan Latka

11:33You really use it or you're just trying to make me feel good?

Daniel Ch

11:36>> A bit of both. I'm not going to lie, but I actually use it because some of your episodes are... Look, I was looking at Uploadcare the other day. We're going to use Uploadcare. And then I said, hold on a second. Let me see if these guys are not going to just go bust in two years with all my pictures. And then you had an episode. So, getlatka.com was up there.

Nathan Latka

11:56That was a good episode. All right. Number four, how many hours of sleep do you get every night?

Daniel Ch

12:02>> At least eight, nine is really the answer.

Nathan Latka

12:05And what's your situation? Married, single kids?

Daniel Ch

12:08>> No kids. I'm building my future with my partner who I respect and love a lot. She's she's great and she's actually been not only inspiring to me, but I look up to her. I can say that proudly.

Nathan Latka

12:21That's great. And Daniel, how old are you?

Daniel Ch

12:23>> 23.

12:23>> 23.

Nathan Latka

12:24Last question. What's something you wish you knew when you were 20?

Daniel Ch

12:27>> That was yesterday, man. Know. This isn't maybe when I was 13. No, I'm joking.

12:37>> Building wealth is a function of saying no. That's what I would tell myself.

Nathan Latka

12:42Guys, there you have it. Legit Check app launched a couple years ago with his brother. They did $30,000 in 2019, their first year in business. And in 2021, last twelve months, they've done about $200,000 in revenue. They help consumers submit pictures of purses and bags and watches, and then they verify it for between 20 and $100 a pop. They did over 700 verifications last month, but now he's frustrated with his pricing. Is it too high? Is

13:04it too low? He's building a SaaS tool called Price Unlock to figure that out. We'll see what happens next. Daniel, thanks for taking us to the top.

Daniel Ch

13:10>> Thank you for having me, Amanud.

Nathan Latka

13:13One 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

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