Markup Hero Revenue & Valuation (2024)

hey folks my guest it is jeff solomon it's a real treat because he's a six time founder with three exits velocify in 2017 428 million is obviously probably the best known one he's also been teaching and coaching entrepreneurship for 10 plus years and invested over 150 startups experienced in sas content marketing and many other uh many other areas like venture funding b2b software ux ui as well all right jeffy ready to get to the top let's do it all right so um 2017 was out of exit did you jump right into markup hero after velocify or no no no i did um well i played around for a little bit you know had a nice exit so i took a little break was doing some angel investing still working with amplify the the accelerator that i that i founded uh you know previously in 2012 doing some deals there and then mostly was consulting for a number of years you know just going into other companies that needed help with product and growth and marketing and stuff like that and then uh maybe two or three years ago started toying around with this markup hero product so tell us about it what's markup hero so it's a it's a highly commoditized space right it's screenshots annotations file annotation image annotations a ton of products out there that do it um something i use every day a lot of people use every day uh and it was just a i didn't really have a solution that i liked that did everything and you know one of the things that we we started doing was was trying to figure out could we get other sas applications to add this capability right so so a good example is is um evernote which i don't use anymore but i used to they bought this product called skitch and it was a screenshot and annotation product and they integrated it and so it was really nice when you made a note in evernote you could drop an image in just like you can in notion or any of the other similar apps but you could right click on it open it annotate it save it right back into the page it was super useful and none of the other products have that asano doesn't have that you know uh notion doesn't have that like there's so many any of the product management monday.com all these guys so our thought was like hey we built this platform that is you know direct to consumer direct to business person sales and we have that and it's growing and it's nice but can we make a library that other sas companies could integrate easily and add that capability and that's sort of what we're out trying to try to grow right now interesting okay so that's the main focus now what are you charging for this when people sign up what do they pay well on the core product when you just go to our site it's like four bucks a month it's a cheap very low cost product um high volume thing um and then on the api we're kind of still in beta you know we've got like a handful of customers using it we're charging on a per markup basis so if they have a thousand customers and five of them use it and the rest don't they only pay for a total number of markups it's kind of how we're pricing it um you know so it could be you know a couple hundred bucks for them a month to handle their whole client base depending on how heavily it's used but we're still trying to figure out what's the best best pricing model we're just trying to get some really good companies that have users that find it valuable but but starting off seat based four bucks a pop uh when did you launch the business what year uh it was during covid uh whatever 2018 yeah yeah okay got it so and i guess why jump into like a very competitive space where you know the winners really are the ones that have the best distribution channels right they're on the top of all the big blog posts they dominate the seo blah blah blah because they're basically feature parody on everything else like why do this i mean by the way we're trying to quantify obviously the exit right velocity i think you guys have raised about 20 million bucks or something and yep you sold for 180 and there were what three or four co-founders yeah three co-founders it was a slim cap table like really nice exit for everybody um you know to answer your question uh i think it was a combination of one i just didn't feel like there was one product that had everything there was multiple products that i used back and forth to accommodate different needs so that was one issue i feel like there was there was room for improvement and two um you know i wasn't at the time necessarily looking to have another billion dollar exit or huge exit like that you know i really wanted to build stuff that i liked that i used personally and i had a team of guys that i met at a consulting company that were just looking for something fun to work on and we kind of toyed around with some ideas and we were like hey we can we can put something together that's really nice and maybe make a great lifestyle business out of it and i tell that to founders all the time it's like hey raising 20 million bucks and like going for the moon and taking 14 years to get to 130 million exit is cool but that's a lot you know it's like there's nothing wrong with a business that's throwing off three million dollars in ebitda with three guys you know that's a nice business so i was like i think we can build that oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how 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 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to 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 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 founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are 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 well 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 data set of sas valuations and what you can get now inside of founderpath and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations 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 platform i hope to see you there all right let's jump back into the interview yeah well i mean i mean jeff can i try and quantify this right so if you had raised 20 million total and assume a 1x liquidation preference it took you 14 years to do this but assuming one exquisition preference 120 million dollar exit assuming it was all cash up front there's about 100 million left to hit the full sort of waterfall cap table right after the one x prep assuming it's participating um you're splitting it amongst obviously the three co-founders if we assume you guys each own 33 at the beginning plus there was maybe 15 esop plus the investors owned another 20 you're walking away net like pre-tax was something like 15 to 20 million bucks effectively right but it took you 14 years to do it hell yeah i mean it's a long ride you know it was a long ride and so the liquidity isn't as good as people think you know yeah i mean basically a million bucks a year right as you could sort of maybe more than a million a million five a year yeah plus salary it's like yes that's true and versus can i make a nice business that's thrown off a ton of cash flow it's very low cost to run there's nothing wrong with that and a lot of founders are just like no no no i got to get the big bucks i got to do this big thing i'm like okay man but like a lot of people do a lot worse than me like that was a clean cap table situation i've seen i've seen a lot of people sell for 150 million bucks and walk away with like 300 grand yep yep no no it makes most people the math that i just ran through and it sounds like you're sort of confirming that was around the right range most people don't run that math right and they don't realize that it's effectively the same as if you bootstrapped a business to two million that was spitting off a million in free cash flow every year yeah right and did it for 14 years it's the exact same thing that but probably way less stress no board meetings right dude board meetings are a nightmare for sure yeah it was a lot of stress i mean i was on my baby moon with my wife at that time and we were out of cash it was 2008 we were gonna go under like we were we were entirely mortgaged at that company and we cycled through a hundred percent of our clients they all went belly up and i was like i'm gonna shut this company down i was in hawaii talking to our investor and he was like okay fine fine we'll give you a little bit more money and we had to do you know a little uh bump raise at a flat valve just to stay afloat unfortunately we were able to like really turn it around but man it was it was rough for a number of years back then yup yup yup and did that that bridge round they know they had you by the guts so even if it was a flat valuation i imagine the terms weren't very friendly yeah i mean they were basically it was basically the exact same uh deal we had before they just added more to it so okay we just took some dilution it wasn't like they didn't grind us beyond that which was cool um you know they were in a tough spot too because they didn't want to lose their investment you know they were like this company does have value and they knew that it was a market problem not necessarily a company problem this was a volition i'm assuming yeah philosophy yeah yeah yeah oh no no no no this was volition was the second money in um this was rustic rustic yeah okay well shout out to rustic for not ringing the founder over the coals when they need a little extra cash yeah they were gold in the end they were good good dudes but that's awesome yeah okay so you're now you're not building this now how many people are full-time on the team today marketing there's three of us there's just okay we love that love yeah all right and how many paying customers um we have maybe ten thousand we have ten holy crap okay that's so ten thousand at four bucks a month i mean forty grand a month in mrr wow okay and where were you exactly a year ago um probably three thousand four thousand okay yeah so i mean nice growth again and you have 100 can control right no no money raised yeah there's no money at all we just saw blue striped yeah i love that and so are you still a co-founder here uh no the three of us are essentially co-founders uh i see did you split equity that way too that's sort of i had a little more experience so it's a little bit way to my side but you know these guys these guys are awesome and and it's been a great we've just had a great team like i have a developer i've worked with so many developers over the years this guy is phenomenal he can do anything like can you do this he's like yeah i'll figure out how to do that and then great front end ux ui uh product guy and then myself and i just do all the all the the content marketing just you know seo all that stuff um all the bd and and we just build and it's just a fun project tons of fun yeah so tell me about that right i mean there's a lot of people trying to get to forty four thousand bucks in mrr but they're like six people on their content team they've gone through eight seo agencies like your one-man show doing sort of all that so like what's the one thing you're doing on the seo side that's working right now um i guess the the two big things are consistency you know like i i produce content every single week and then uh distribution of that content you know whether it's through backlinking uh outreach or guest posting or just you know reposting and doing content elsewhere but just really a lot of you know hustling on that front and you know once you i found that once you get your domain authority up to a certain point you start getting inbounds people asking you to basically help them and so that's my feed i basically when someone hits me up like hey i want to write a guest post for you i'm like okay here's the topics that i'm writing like pick one you know and like i they don't even get to suggest i already know what i'm going to write my content calendar i'm like write this and then in return you need to get me two back links on you know uh other guest posts you're writing on other sites before i post this and that that's been a consistent flow once we get to a certain point and they build their link into the article they're writing for you so they get it back yeah exactly so i gave him one link in that article yeah yeah really interesting yeah and you've sort of built a product around this because in your footer it says right for us and you have a whole plan i'm like here's how you do it here's how you use sites minimum 1500 words etc yep yep interesting okay so so what percent of your content these days would you say you're writing versus this machine is pumping for you well i'd say probably 60 40 they write at these third parties now i reject a lot and i've gotten really good at filtering out who i think is going to be a good writer so i get at least six to seven inquiries a day in inbound inquiries and a lot of them are overseas you know content creators and i just ignore but sometimes i'll get you know a uh an agency on behalf of another sas company that's gold like if monday.com really has their agency reach out to me like i'm gonna do that deal you know that would be that's a great partner for me so um and i get a lot of those sas companies are doing that um so usually i get like three or four a week that are pretty solid that i know will give me good content are also getting distribution on other sites so i'll get some good backlinks from it but it takes some filtering um and then in terms of writing myself i'll probably write one complete article myself uh a month maybe two and then i've basically built out this model where i have these third parties uh writers create the first draft and then i spend about an hour and a half editing i found that to be the most cost effective so i'll pay like 150 bucks for a draft and it's good but not great but good enough you know to get me started they have a lot of the data in there and then i just reformat it you know tailor it and and post it and so it takes a lot less time to do that that's how i actually do the exact i actually do the exact same i i recently hired content to agency for 3k a month but before i did exactly that i hired folks on upwork and fiverr that we did good enough for a hundred bucks an article 150 and then you just take time for about an hour and polish it and get it out yeah um but you're following a nice playbook here you still have buckets of content right so one of your buckets are effectively product reviews so there's one on here that's you know nucleo october last year the underdog knowledge based tool you should try right so now is this new cleaner reached out to you and you said fine you can write a review about yourself on our site but here's how it needs to be objective and you need to use markup hero and new clino screenshots like that sort of stuff no most of that is stuff is is i've just done my keyword research to find out uh other products and services that i think are the right customers for us that have the right users and so i'll just write product reviews like if you look i have a product review of notion uh templates that i posted on medium it's also on our site and it's i get a ton of traffic from that because people are searching for for notion templates and it's a good article and then they see our product um so that's just a strategy where i just find competitors or companies that are like-minded that's been our whole product manager approach like i have a ton of content on product management obviously our product has nothing to do with product management per se but product managers use our product those are the right people so if they're searching for product management salaries at google i get those people coming in and they're like oh cool article good oh this is microphone let me check that out that could be useful for my career that's one of our our strategies because there's only there's only so much traffic on like annotation image annotation or you know screenshot like it's small volume so i can't count on that as my like keywords i love how you've stuck to like first core principles for sas what i mean by that is there's nothing more powerful than like utility-based upselling usage-based upselling if you attach the right usage metric so your pricing is very simple right you are strict based off number of file uploads number of sorry edit markups and annotations for a number of days right and then see your history for a number of days and also max file size per per per file um you pay four bucks a month basically everything's unlimited right do you have a sense of which of these four or five things is the most powerful driver of four dollar a month conversions yeah it's it's mostly people getting to their cap of of um screenshots per per month right they hit their cap and they see like oh i need to do more uh they get a notification pops out gives them month three the whole oh my gosh ten ten percent i would hit that in a day ten screenshots yeah you hit that you hit that per month well you can still do them and they get logged but you just don't have access to the other the previous stuff so people kind of get anybody that uses it regularly will find it to be you know too limiting and so a lot of people just upgrade at that point and we give a lot of coupons so like you know the of the of the user base like we're not at the exact number that you said in terms of revenue because you know we did we did a we did a big campaign on appsumo which gives us some lifetime customers right which isn't isn't like recurring but it's still yeah it's still very very profitable for three guys yeah how much recruit i mean there's more like 20 000 in a month yeah closer to that yeah yeah yeah yeah okay i mean that's that's i mean that's slightly different why do i mean actually i guess your product is good for appsumo i i'm i generally don't recommend absolutely trying to build an enterprise like sales motion long term because it's discounting and lifetime value but i can see where it makes complete sense for what you're building yeah for this product it did make sense like i wouldn't put velocify on there at all and the type of user on there is you know very unique type of user so it was a good play good way to like get rolling you know just to get the ball rolling in a very diplomatic way i would just say same people that sort of shop at jcpenney probably uh nothing's a particular type of user first nothing nothing it gives you some momentum it gets you some momentum you have to know your audience so okay cool and is that 10 screenshot per month limit a more powerful upsell driver than if i scroll further down the page and you have these product product-based upselling like blurring insert imaging add signatures etc the blurring is important yeah blurring comes in comes in heavy basically any of these things you try to do it prompts you right after um the signature is a newer feature that's been a thing the biggest thing we're working on right now which we don't have which is kind of you know keeping us i know we're losing customers for is we don't have a commenting control and we don't have we've come up with this really clever way to do collaborative stuff like there are products out there like mira and that are like fully real-time collaboration on the annotation side um we don't want to go there what we want to do is create like uh uh what we're calling layers or sort of like um you do your annotations and then you share it with someone else and then they can do it on top and you can like hide or show kind of like photoshop layers or figma layers so that way it's not real time but you don't really need real time just need to tell me your comments and then send it to this guy give me his comments and then send us that girl and then give me her comments and so it like keeps a layer of all these comments and and stuff so that piece is missing and we get a lot of feedback on that so i think that'll really help push and that'll be a premium feature for sure so how much profit per month on 20k top line oh it costs us like like three grand a month other than what we pay ourselves uh to run the hosting costs are you know it's very very nice what's your point like 5k net profit each month something like that more than that yeah well you know including including what you pay yourself oh oh yeah no i mean we just basically take whatever's left and use their stuff a little bit for marketing so okay got it like maybe like 15 000 you just split up however you want to do dividends right yeah is that what you do for it to maximize obviously tax consequences here you just it's dividend is how you treat those well you know how it goes we like run expenses and stuff are you in puerto rico right now no my my engineer wants to move he's going there next month to go visit he wants some boom down there he moved to tennessee from la though he's like i don't want to pay uh california tax anymore i'm moving to tennessee that's funny all right and you are again just to be clear totally bootstrapped right yeah yeah we didn't raise no money all right man let's wrap up here with the famous five number one favorite book uh i mean good to great if you're going business books but if you're going all-time books um name of the wind number two is their ceo you're following or studying i mean i i you know the notion notion team i'm always always keeping track of what they're doing i'm just really impressed with that product i use it day in day out so um what's his name uh you know the ceo from there yeah yeah ivan ivan ivan yeah i follow him him a good amount he's been doing great work over there number three besides you're on what's your favorite online tool for building markup besides my own i mean i use canva i use canva number four how many hours of sleep each night oh i get at least eight okay yeah and situation married single kids i'm divorced and i have a great partner now yeah that's awesome any kids i do have two kids i got twins they're 13. oh wow okay and how old are you i'm 47. 47. last question something you wish you when you were 20. um probably you know when you build something make sure you're actually solving a problem not just build something cool the first product i built was just really cool but it didn't nobody really needed it so nobody used it and we failed guys there you have it a 14 year well entrepreneur built his first company over 14 years raised about 20 million bucks in revenue sold 130 million bucks netted out to about 1.5 million sort of revenue per year worked on the business he goes you know what i should just bootstrap my next one just do profits and do it the old school way that's what he's doing with markup hero.com doing about twenty thousand bucks in revenue right now fifteen thousand dollars a month one of the bottom line team of three high revenue pro employee which we love just taking out dividends as they come in as he continues to scale with really seo content marketing being his main go to market motion jeff thanks for taking us to the top absolutely my friend good to meet you 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 1pm 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 notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fund raise a big sale a big profitability 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