MagicBell Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Hana Mohan. She's the cofounder of magicbell, a notifications inbox geared towards app creators. Before that, she founded two other software companies, SupportBee and MoozyBoo, an online music community where she can upload and discuss songs. She's a programmer, maker, transgender woman who speaks openly about her transition and was the first openly transgender woman to participate in Y Combinator. Alright. Hana, are ready to take us to the top? [00:22] >> I am. Yes. Thank you. [00:24] Close out the SupportBee story because I remember you coming on being so impressed with how big you grew that bootstrap. Did you sell it? [00:30] >> No. We are still running it, and I have a team that runs it, and I'm, like, not involved in the day to day operations. But, yeah, no. We did it in the business as of now. [00:38] Okay. Tell me about magicbell. What's it doing? What are people paying paying you for? [00:42] >> So magicbell was an idea that came out of SupportBee, in fact, because SupportBee relied heavily on notifications, email notifications, and mobile notifications. And I just spent so much time building notifications in SupportBee that at some point, I figured actually seems like a more interesting problem for me personally because SupportBee is a great business, but I am an engineer myself and I had always wanted to build an API product. And so magicbell is the [01:09] >> notification inbox and then like a complete notification system for your product. So within an hour, you can have an inbox in your product. You can have email notifications, text notifications, and we'll manage you know, click smart delivery so people don't get it twice. Or if you mark it read in one place, it's read everywhere else. The the entire kind of, like, modern notification experience out of the box. [01:32] That's amazing. Okay. And what do you charge on average for this? [01:36] >> So we do have a pretty generous free plan, kind of, like, PLG, I guess. And our paid plan start at $99 a month. 99? Yeah. Going all the way up to 1,200. And then we also sell some custom contracts enterprise upmarket. [01:52] Wow. Okay. So that's a huge range. I mean, would you say the sweet spot is sort of a $100 a month, $200 a month, something like that? [02:00] >> So we are not very, like, open with the numbers here because we did raise some money and it's a different trajectory, but I'd say the average would be something around, like, 10,000 a year or something like that. [02:10] Yeah. And someone who's paying you 10,000 a year, what are they getting? Is it a number of notifications, number of seats, a feature based upsell? What's the story? [02:17] >> So we don't think of ourselves as like a delivery provider. So we price based more on the number of active users because we think that's how we deliver value to you by improving your retention and engagement within the product. And so it's based on the number of monthly active users, which is people who are notified or log in. So the listed prices are very much kind of every subsequent plan is more monthly active users, but I [02:45] >> think, you know, our average revenue is more so because we also sell upmarket enterprise deals. There are things like infrastructure that's SOC 2 compliant or a data warehouse integration or a support SLA, things like that as well. [02:57] So if I'm paying you $10 k a year, how many MAUs do I probably have? [03:01] >> If you pick us $10 k a year, then you're probably on our, know, I would say the pro plan and you would have about [03:11] >> 30,000 monthly active users. Let's say a reasonably sized b to b app, b to b SaaS app. Yeah. [03:18] Yep. And put all this on a roadmap for me. When did you officially, like, spin the company out of of SupportBee? When was, like, the launch date for magicbell? [03:26] >> Yeah. So I actually tried a couple of times really to, you know, separate from SupportBee, but I think, like, you know, I got used to a paycheck from SupportBee. It was hard. But finally, we did it in October 2020, [03:38] and we launched pretty quickly in November 2020 on Product Hunt, got a few paying customers [03:44] >> and we got into YC in the winter of twenty one. And then it's been kind of like that path from there on. [03:52] That's amazing. And the YC model is a 125 k for 7%, right? [03:55] >> Yeah, that's what we got. [03:56] Yeah. And I'm [03:57] >> very grateful for it. I mean, no complaints that we didn't get 500. It's totally okay. Yeah. [04:00] Yeah. Oh, no. I didn't even know that was an option. [04:02] >> I was [04:02] just curious what that was. Now it is actually. Yeah. Yeah. That's nice. Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how [04:27] you can access this in a second, but you log in, you connect your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days, and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is [04:50] because depending on who's doing the buying of your SaaS company, you're gonna get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you [05:12] sold the whole thing outright. Now what's cool about this is this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are [05:37] a bunch that have been acquired, the valuation and the multiple. Maybe you're going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're [06:02] gonna go back to the YouTube video here in a second, but if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the [06:27] platform. I hope to see you there. Alright. Let's jump back into the interview. Your first couple of customers in November 2020 via product hunt, is obviously fantastic. How many customers are you scaled up to now today? [06:38] >> I would say like it's about a 100 paying customers. Yeah. [06:43] Okay. Okay. And did you see this longer term? You know, is this gonna be Mailchimp? It's gonna be for millions of people or it's gonna be for a thousand people paying a $100 a year? [06:52] >> I think it's gonna be somewhere in between a Braze and a Twilio, like [06:57] That's a really good analogy. That's a really good analogy. So if you, I mean, by the way, maybe we should be toasting champagne right now because if my math's correct, you just broke a million dollar run rate. [07:09] >> I would rather not comment, but thanks. [07:11] As she says with a big smile, but for the audience, my math is at a 10,000 ACV on average, that's $830 a month times a 100 customers. You obviously get that magic $83,000 a month number. But, Hana, we understand you can't talk about that since you've raised a little bit. That's fine. Talk to me about funding, though. You've bootstrapped in the past. Why decide to fund this one? [07:30] >> It's just a different kind of problem. I think, like, one of the things I did learn from bootstrapping was bootstrapping clearly works, but for certain kinds of problems. And if you're solving, like, infrastructure problems or, you know, you wanna upfront invest into building a solution and then get it profitable over the years, it's it's just better to raise money. And for this kind of problem, it just made sense. [07:53] Yep. So what did you decide to raise? [07:56] >> We raised we ended up raising about 4,500,000 last year in Okay, [08:01] 4.5 seed and most people the seed rounds last year were selling 15 to 20% of the business. Were you sort of in that range? [08:08] >> To be very honest, I think a little bit more because we went through YC, and I think it's also worth noting that 2021 was a pretty amazing year for fundraising. But as a women founder, it wasn't, like, quite the same party. Like, I think I was at a party, but not quite the same party. Yeah. [08:24] Fair. Okay. Fair enough. Fair enough. Got got it. So maybe selling a little more than 20%, but so somewhere between sort of a 10 and 20,000,000 post money valuation though would be selling about Yeah. [08:32] >> Average out, I would say. Yeah. Yeah. Much on the ballpark. Yeah. [08:35] And what would that so how what do you think you need to get to in terms of revenue to go raise a competitive series a if you do wanna go keep raising? [08:44] >> Yeah. I think at this point, I mean, anyone's guess is, like, as good as mine. [08:48] >> I have no idea. [08:49] And so we are hoping that we can first break even. We have a small team of How many? [08:55] >> 11 people. [08:56] Oh, wow. How many engineers besides you? [08:59] >> We have four engineers, [09:00] >> and we pay well. [09:01] I come in Sorry. [09:02] Including you? [09:03] >> No. Including not even including my cofounder. [09:06] Okay. So six engineers total. [09:08] >> I don't code anymore. [09:09] Don't code? You don't you don't miss coding? [09:13] >> I do miss coding, but I don't think I [09:15] >> can quite code professionally anymore. [09:16] Yeah. I see. I see. [09:17] Okay. Fair enough. So six engineers. [09:19] So what are the other four or five people working on? [09:22] >> We have a marketer, we actually do have an operations person because it really helps. I mean, one thing I think I realized was like, was so used to half of my time was actually going into operations really in my bootstrap startup. And so I figured this time I should create more time for actually building the business. We have somebody to help us with customer support because we wanna provide a different level of kind of service upfront. [09:45] >> And we have a product designer, and [09:48] we also actually have in the very early days, we [09:50] >> had a more generalist but brand, like kind of brand leaning designer. And it's actually been one of the contrary in decisions that's worked out quite well for us. [09:59] Oh my god. The website's beautiful. It's paying off. Clearly, it's paying off. [10:02] >> Yep. Yeah. [10:03] Yeah. So tell me a little bit about how you went from three customers from Product Hunt to a 100 customers today. What's the go to market strategy here? [10:10] >> I mean, unfortunately or fortunately, it's really like mostly content and posting on LinkedIn, things like that. We've had some referrals, but it's a our product product launch and Hacker News launch helped, but it's actually largely been content. I mean, it's the funny thing is, like, those things really don't change that much. Yeah. Like, we are, like, figuring out outbound, but it's it's definitely not trivial. [10:36] Well, we're certainly rooting for you. This is a heck of a story, which is fun. In the meantime, Hana, let's wrap up with the famous five. Number one, last business book you read. [10:45] >> I can't recall, actually, but actually, Build by Tony Fadell. Yeah. [10:51] Yeah. That's a good one. Number two, is there a CEO you're following or studying? [10:56] >> I actually think Jeff Lawson is a great CEO and then, you know, LaunchDarkly's Edith. She's pretty amazing. Yeah. [11:02] Yeah. A great, great story there too. Number three, how many hours of sleep do you get every sorry. What's your favorite online tool for building magicbell besides your own? [11:13] >> My favorite online tool, one that I personally use but not with the team is Roam Research. Like, it's kind of really helped me get more structured. With the team, I would say my team is starting to adopt Hugo. I don't know if you've heard of it. Looks quite useful right now. [11:28] Yeah. Yep. Number four, how many hours of sleep do you get every night? [11:31] >> I actually aim to get eight. I've been very diligent. In fact, one of those things like since the first couple of years are always so hard, I'm trying to now restore my health and I bought this Whoop, it's a product I love. Yep. And it like, yeah, know I'm starting I'm very serious about it. I don't always get it, but that's what I aspire to. [11:49] That's a good one. Okay. And situation, married, single, kids? [11:53] >> Still with my two cats. [11:55] Two cats. Love that. Okay. And do you mind me asking how old you are? [11:59] >> I'm 40. [12:00] 40. 30 or 40? [12:01] >> 40. Four zero? [12:02] Oh, wow. Okay. You look 30. So that's great. Last question. Something you wish you [12:11] when you were 20. [12:13] >> Oh my gosh. It's [12:17] >> well, one, I wish I knew I was trans. Like, I mean, that's just, like, the honest answer. And I also recently got diagnosed with ADHD, so I wish I knew that. Actually, that's been kind of life changing. So really, I I wish I had a business y answer, but it's really like, you know, those are the foundational things I wish I [12:31] Hey, when you're bootstrapped and you run into business, personal is business. So that makes perfect sense to me. Guys, SupportBee bootstrapped, had a lot of success, incubated magicbell inside of it before spinning it out in 2020. Now in YC, raised a 4,500,000 seed, sold about, you know, north of 20% of the business to do that. But scaling nicely now, 100 customers. You know, these customers paying $10,000 per year for magicbells all in one notification system. They do [12:52] everything for you. She's solving her own pain point, scaling faster. We'll see what happens next. Hana, thanks for taking us to the top. [12:58] >> Thank you so much. [13:00] One 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 one [13:25] p. M. Central. 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In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, I do it so that we can all learn. We have to counter [14:28] those people. We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you. Hey.