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Founder Interview

How MagicBell Reached $1M Revenue and 100 Customers with a $4.5M Seed Round (Interview with CEO Hana Mohan)

Interview Date
July 6, 2022
Interviewee
Hana MohanCEO and Co-Founder
Watch
Watch the full interview

Company Metrics at Interview Time

Revenue (2022)

$1M

Customers (2022)

100

Avg Contract Value (2022)

$10,000

Seed Funding Raised (2021)

$4.5M

Team Size (2022)

11

Historical Snapshot

These numbers were reported by Hana Mohan during her interview with Nathan Latka recorded in July 2022 and are a historical snapshot, not current figures. See MagicBell’s current numbers.

Key Takeaways

  • 01MagicBell had approximately 100 paying customers as of July 2022
  • 02Average contract value was $10,000 per year, usage-based on monthly active users
  • 03The company raised a $4.5M seed round in 2021, including participation from Y Combinator
  • 04MagicBell launched on Product Hunt in November 2020 and gained its first paying customers there
  • 05The team comprised 11 people, including 4 engineers plus the co-founder
  • 06Content marketing and LinkedIn posting were the primary go-to-market channels
  • 07Paid plans start at $99 per month and go up to $1,200 per month, with custom enterprise contracts above that
  • 08A customer paying $10,000 per year would have roughly 30,000 monthly active users
  • 09MagicBell was founded in October 2020, spun out of the bootstrapped company SupportBee
  • 10Hana Mohan was the first openly transgender woman to participate in Y Combinator

Company Metrics at Time of Interview

MetricValueSource
Revenue (2022)$1MFounder interview, July 2022
Customers (2022)100Founder interview, July 2022
Avg Contract Value (2022)$10,000Founder interview, July 2022
Paid Plan Entry Price (2022)$99 per monthFounder interview, July 2022
Paid Plan Top Listed Price (2022)$1,200 per monthFounder interview, July 2022
MAUs at $10K/yr Plan (2022)30,000Founder interview, July 2022
Seed Funding Raised (2021)$4.5MFounder interview, July 2022
Team Size (2022)11Founder interview, July 2022
Engineers (2022)4Founder interview, July 2022
Year Founded2020Founder interview, July 2022
YC BatchWinter 2021Founder interview, July 2022

Growth Breakdown

Revenue

Hana Mohan reported MagicBell was at approximately $1M in annual revenue as of July 2022. The average contract value was $10,000 per year, driven by a mix of self-serve plans and upmarket enterprise deals that include features such as SOC 2 compliant infrastructure, data warehouse integrations, and support SLAs.

Customers

MagicBell had approximately 100 paying customers at the time of the interview. The company launched its first paying customers through a Product Hunt launch in November 2020 and grew primarily through content marketing and LinkedIn.

Team

The team stood at 11 people, including 4 engineers and a co-founder who also has an engineering background. Other roles included a marketer, an operations person, a customer support specialist, and a product designer.

Funding

MagicBell raised a $4.5M seed round in 2021, which included Y Combinator as an investor from the Winter 2021 batch. Hana noted that as a women founder, the fundraising environment in 2021, while strong overall, was not equally accessible to her. The company was working toward breaking even at the time of the interview.

Growth Strategy

Product Hunt Launch

MagicBell launched on Product Hunt in November 2020 shortly after spinning out of SupportBee, which brought in the company's first paying customers and established early traction.

Content Marketing and LinkedIn

Hana credited content marketing and consistent posting on LinkedIn as the primary drivers of customer growth from the initial handful of customers to 100. She noted these channels remain effective even as the company explores outbound sales.

Product-Led Growth with a Free Plan

MagicBell offers a generous free plan to let developers experience the product before converting to paid tiers, following a product-led growth model that lowers the barrier to adoption.

Upmarket Enterprise Deals

Beyond self-serve plans, MagicBell sells custom enterprise contracts that include infrastructure features like SOC 2 compliance, data warehouse integrations, and dedicated support SLAs, which pull the average contract value well above the listed plan prices.

Y Combinator Network

Acceptance into Y Combinator's Winter 2021 batch provided both capital and network access, helping MagicBell accelerate its go-to-market efforts and gain credibility with enterprise buyers.

Best Quotes

“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.”
“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.”
“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.”
“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.”
“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.”
“I think it's gonna be somewhere in between a Braze and a Twilio”
“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.”
“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.”

What Happened Next

This interview captured MagicBell at an early stage in July 2022, when the company had approximately 100 paying customers and around $1M in annual revenue following its $4.5M seed round. The figures here are a point-in-time snapshot reported by Hana Mohan and do not reflect the company's current state. Visit the MagicBell company profile on GetLatka for the most up-to-date metrics and funding information.

View MagicBell’s current profile and metrics

Full Transcript

Chapters

Introduction and SupportBee Background

Nathan Latka

00:00Hey, 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?

Hana Mohan

00:22>> I am. Yes. Thank you.

Nathan Latka

00:24Close out the SupportBee story because I remember you coming on being so impressed with how big you grew that bootstrap. Did you sell it?

Hana Mohan

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.

What MagicBell Does

Nathan Latka

00:38Okay. Tell me about magicbell. What's it doing? What are people paying paying you for?

Hana Mohan

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.

Nathan Latka

01:32That's amazing. Okay. And what do you charge on average for this?

Pricing and Plans

Hana Mohan

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.

Nathan Latka

01:52Wow. 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?

Average Contract Value and Pricing Model

Hana Mohan

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.

Nathan Latka

02:10Yeah. 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?

Hana Mohan

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.

Nathan Latka

02:57So if I'm paying you $10 k a year, how many MAUs do I probably have?

Hana Mohan

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.

MAUs and Enterprise Features

Nathan Latka

03:18Yep. 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?

Hana Mohan

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,

Nathan Latka

03:38and we launched pretty quickly in November 2020 on Product Hunt, got a few paying customers

Hana Mohan

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.

Nathan Latka

03:52That's amazing. And the YC model is a 125 k for 7%, right?

Hana Mohan

03:55>> Yeah, that's what we got.

Nathan Latka

03:56Yeah. And I'm

Hana Mohan

03:57>> very grateful for it. I mean, no complaints that we didn't get 500. It's totally okay. Yeah.

Nathan Latka

04:00Yeah. Oh, no. I didn't even know that was an option.

Hana Mohan

04:02>> I was

Nathan Latka

04:02just 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

04:27you 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

04:50because 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

Company Timeline and Product Hunt Launch

Nathan Latka

05:12sold 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

05:37a 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

06:02gonna 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

06:27platform. 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?

Customer Count and Market Ambition

Hana Mohan

06:38>> I would say like it's about a 100 paying customers. Yeah.

Nathan Latka

06:43Okay. 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?

Hana Mohan

06:52>> I think it's gonna be somewhere in between a Braze and a Twilio, like

Nathan Latka

06:57That'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.

Hana Mohan

07:09>> I would rather not comment, but thanks.

Nathan Latka

07:11As 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?

Why Raise Funding Instead of Bootstrapping

Hana Mohan

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.

Nathan Latka

07:53Yep. So what did you decide to raise?

Seed Round Details and Equity Sold

Hana Mohan

07:56>> We raised we ended up raising about 4,500,000 last year in Okay,

Nathan Latka

08:014.5 seed and most people the seed rounds last year were selling 15 to 20% of the business. Were you sort of in that range?

Hana Mohan

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.

Nathan Latka

08:24Fair. 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.

Hana Mohan

08:32>> Average out, I would say. Yeah. Yeah. Much on the ballpark. Yeah.

Nathan Latka

08:35And 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?

Hana Mohan

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.

Nathan Latka

08:49And so we are hoping that we can first break even. We have a small team of How many?

Path to Series A and Team Size

Hana Mohan

08:55>> 11 people.

Nathan Latka

08:56Oh, wow. How many engineers besides you?

Hana Mohan

08:59>> We have four engineers,

09:00>> and we pay well.

Nathan Latka

09:01I come in Sorry.

09:02Including you?

Hana Mohan

09:03>> No. Including not even including my cofounder.

Nathan Latka

09:06Okay. So six engineers total.

Hana Mohan

09:08>> I don't code anymore.

Nathan Latka

09:09Don't code? You don't you don't miss coding?

Hana Mohan

09:13>> I do miss coding, but I don't think I

09:15>> can quite code professionally anymore.

Nathan Latka

09:16Yeah. I see. I see.

09:17Okay. Fair enough. So six engineers.

09:19So what are the other four or five people working on?

Hana Mohan

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

Nathan Latka

09:48we also actually have in the very early days, we

Hana Mohan

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.

Go-to-Market Strategy and Content

Nathan Latka

09:59Oh my god. The website's beautiful. It's paying off. Clearly, it's paying off.

Hana Mohan

10:02>> Yep. Yeah.

Nathan Latka

10:03Yeah. 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?

Hana Mohan

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.

Famous Five: Books, Tools, and Habits

Nathan Latka

10:36Well, 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.

Hana Mohan

10:45>> I can't recall, actually, but actually, Build by Tony Fadell. Yeah.

Nathan Latka

10:51Yeah. That's a good one. Number two, is there a CEO you're following or studying?

Hana Mohan

10:56>> I actually think Jeff Lawson is a great CEO and then, you know, LaunchDarkly's Edith. She's pretty amazing. Yeah.

Nathan Latka

11:02Yeah. 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?

Hana Mohan

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.

Nathan Latka

11:28Yeah. Yep. Number four, how many hours of sleep do you get every night?

Hana Mohan

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.

Nathan Latka

11:49That's a good one. Okay. And situation, married, single, kids?

Hana Mohan

11:53>> Still with my two cats.

Nathan Latka

11:55Two cats. Love that. Okay. And do you mind me asking how old you are?

Personal Reflections and Wrap-Up

Hana Mohan

11:59>> I'm 40.

Nathan Latka

12:0040. 30 or 40?

Hana Mohan

12:01>> 40. Four zero?

Nathan Latka

12:02Oh, wow. Okay. You look 30. So that's great. Last question. Something you wish you

12:11when you were 20.

Hana Mohan

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

Nathan Latka

12:31Hey, 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

12:52everything 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.

Hana Mohan

12:58>> Thank you so much.

Nathan Latka

13:00One 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

13:25p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two 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 notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's

13:46an acquisition, a big fundraise, big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people

14:08are saying. Sign up for that at nathanlatka.com/slack. 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

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