Markup Hero Revenue (2024)

[00:00] Hey, folks. My guest today is Jeff Solomon. It's a real treat because he's a six time founder with three exits. Velocify in 2017 for a 128,000,000 is obviously probably the best known one. He's also been teaching and coaching entrepreneurship for ten plus years and invested over a 150 startups. Experienced in SaaS, content marketing, and many other many other areas like venture funding, b to b software, UX UI as well. Alright, Jeff. You ready to take us [00:22] to top? [00:23] >> Let's do it. [00:24] Alright. So 2017 was an exit. Did you jump right into markuphero after Velocify or no? [00:30] >> No. No. I did. Well, I played around for a little bit, you know, had a nice exit. So I took a little bit break. Was doing some angel investing, still working with Amplify, the accelerator that I that I founded, 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. [00:51] >> And then maybe two or three years ago, started toying around with this markuphero product. [00:56] So tell us about it. What's what's markuphero? [00:58] >> 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. Something I use every day. A lot of people use every day. 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 started doing was trying to figure out, could we get other SaaS applications to add this capability, [01:19] >> right? So a good example is 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 [01:39] >> back into the page. It was super useful. And none of the other products have that. Asana doesn't have that, you know, 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 SaaS [02:00] >> companies could integrate easily and add that capability? And that's sort of what we're out trying to trying to grow right now. [02:06] Mhmm. Interesting. Okay. So that's the main focus. Now, what are you charging for this? When people sign up, what do they pay? [02:12] >> Well, on the core product, when you just go to our site, it's like $4 a month. It's a cheap, very low cost product, high volume thing. 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 [02:32] >> of markups. It's kind of how we're pricing it. You know, so it could be, you know, a couple $100 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. [02:47] But starting off seed based $4 a pop, when did you launch the business? What year? [02:53] >> It was during COVID. Whatever. 2020, I guess. [02:57] Yeah. 2020. 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 parity on everything else. Like, why do this? I mean, by the way, we're trying to quantify obviously the exact right philosophy. I think you guys [03:19] had raised about $20,000,000 or something. Yep. And Yep. You sold for $130,000,000 and there were what, three or four co founders? [03:25] >> Yeah. Three co founders. It was at a slim cap table, like really nice exit for everybody. You know, to answer your question, 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 felt like there was a, there was room for improvement. And two, you know, I wasn't at [03:49] >> the time necessarily looking to have another billion dollar exit or a 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 [04:07] >> maybe make a great lifestyle business out of it. And I tell that to founders all the time. It's like, hey, raising $20,000,000 and like going for the moon and taking fourteen years to get to a $130,000,000 exit is cool. But that's a lot, you know, it's like there's nothing wrong with the business that's throwing off $3,000,000 in EBITDA with three guys. You know, that's that's a nice business. So I was like, I think we could build [04:27] >> that. [04:28] 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 you can access this in a second. But you log in, you connect [04:52] 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 because depending on who's doing the buying of your SaaS company, you're gonna [05:16] 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 sold the whole thing outright. Now what's cool about this is this is [05:38] 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 a bunch that have been acquired the valuation and the multiple. Maybe you're [06:04] 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. All right, we're gonna go back to the YouTube video here in a second, but [06:25] 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 platform. I hope to see you there. Alright. Let's jump back into [06:52] the interview. Yeah. Well, I mean I mean, Jeff, can I try and quantify this? Right? So if you had raised 20,000,000 total and assume a 1x liquidation preference, it took you fourteen years to do this, but assume a 1x liquidation preference, 128,000,000 exit, assuming it was all cash upfront, there's about a 100,000,000 left to hit the full sort of waterfall cap table right after the 1x pref, assuming it's participating. You're splitting it amongst obviously the three [07:12] 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, pretax was something like 15 to $20,000,000 effectively. Right? But it took you fourteen years to do it. [07:25] >> Hell, yeah. I mean, it's a long ride, you know. Yeah. It was a long ride. And so the liquidity isn't as good as people think. You know what mean? [07:33] I mean, basically, a million bucks a year. Right? As you could sort of maybe more than a million. A million 5 a year. [07:37] >> 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. No. No. I gotta get the big bucks. I gotta 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 [07:52] >> clean cap table situation. But I've seen a lot of people sell for $150,000,000 and walk away with like $300. [07:58] 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 of 2,000,000 that was spinning off a million in free cash flow every year. Yep. Right? And did it for fourteen years. It's the exact same thing, net net, [08:17] but probably way less stress. No board meetings. Right? [08:20] >> 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 mortgage at that company and we cycled through a 100% of our clients. They all went belly up. And I was like, I'll do it. I'm gonna shut this company down. [08:40] >> I was in Hawaii talking to our investor and he was like, okay, fine, fine. We'll give you a bit more money. And we had to do, you know, a little 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. [08:55] Yep. Yep. Yep. And did that that bridge round, they know they had you by the gut. So even if it was a flat valuation, I imagine the terms weren't very friendly. [09:02] >> Yeah. I mean, they were basically it was basically the exact same deal we had before. They just added more to it. So we just took some dilution. It wasn't like they didn't grind us beyond that, which was cool. Yeah. 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 [09:19] >> company problem. [09:20] This was Volition, I'm assuming? [09:21] >> Yeah. Velocify. Yeah. Yeah. Oh, no. No. No. This was Volition was the second money in. This was Rustic. Yeah. [09:29] Okay. Well, shout out to Rustic for not ringing the Founder over the coals when they needed a little extra cash. [09:33] >> Yeah. They were cool. In the end, they're good good dudes. But [09:36] That's awesome. Yeah. Okay. So you're now you're now building this. Now, how many people are full time on the team today, markup? Just three of us. There's just three. Okay. We love that. Love that. Alright. And how many paying customers? [09:46] >> We have maybe 10,000. [09:48] We have 10 holy crap. Okay. That's so 10,000 at $4 a month. I mean, $40,000 a month in MRR? Mhmm. Wow. Okay. And where were you exactly a year ago? [09:57] >> Probably 3,000, 4000. [10:00] Okay. Yeah. So I mean, nice growth again. And you have a 100 can control. Right? No no money raised? [10:04] >> Yeah. There's no money at all. We just all do stripes. [10:07] Yeah. I love that. And so are you still co founder here? [10:10] >> No. The three of us are essentially co founders. [10:12] I see. Did you split equity that way too? [10:14] >> Sort of. I had a little more experience, so it's a little weighted my side. But, you know, these guys these guys are 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 some of developers over the years. This guy is phenomenal. He could 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 [10:31] >> UI product guy and then myself. And I just do all the all the the content marketing, just, you know, SEO, all that stuff, all the BD and and we just build. And it's just a fun project. [10:42] Tons of it. Yeah. So tell me about that. Right? I mean, there's a lot of people trying to get to $44,000 in MRR, but they're to have, six people on their content team. They've gone through eight SEO agencies. Like, you're a 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? [10:56] >> I guess the the two big things are consistency, you know, like, I I produce content every single week and then distribution of that content, you know, whether it's through backlinking 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 [11:22] >> asking you to basically help them. And so that's my feed. I basically when someone hits me up like, hey, wanna 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 gonna write in my content calendar. I'm like, write this. And then in return, you need to get me two backlinks on, you know, other [11:41] >> guest posts you're writing on other sites before I post this. And Mhmm. That that's been a consistent flow once we get to a certain point. [11:47] And they build their link into the article they're writing for you so they get a backlink. [11:49] >> Yeah. Exactly. So I gave them one link in that article. Mhmm. [11:52] Yeah. Yeah. Really interesting. Yeah. And you you've sort of built a product around this because in your footer, it says write for us, and you have a whole plan. I'm like, here's how you do it. Here's how you do sites, minimum 1,500 words, etcetera. 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? [12:09] >> Well, I'd say probably sixty forty. They write at these third parties. Now I reject a lot, and I've gotten really good at filtering out who I think is gonna be a good writer. So I get at least six to seven inquiries a day, inbound inquiries. And a lot of them are are overseas, you know, content creators and I just ignore. But sometimes I'll get, you know, an agency on behalf of another SaaS company. That's gold. Like, [12:31] >> if monday.com has their agency reach out to me, like, I'm gonna do that deal. You know, that could be that's a great partner for me. So and I get and a lot of those SaaS companies are doing that. So usually I get, like, three or four a week that are pretty solid that I know will give me good content and are also getting distribution on other sites. So I'll get some good backlinks from it, but it [12:49] >> takes some filtering. And then in terms of writing myself, I'll probably write one complete article myself a month, maybe two. And then I've basically built out this model where I have these third parties 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 a $150 for a draft and it's good, but not great, but good enough, you know, [13:11] >> 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 do that. [13:17] I actually do the exact same. I recently hired a content agency for 3 k a month, but before I did exactly that. I hired folks on Upwork and Fiverr that did good enough for a $100 an article, a 150, and then you just take time for about an hour and polish it and get it out. But you're following a nice playbook here. You sort of have buckets of content. Right? So one of your buckets are effectively [13:35] product reviews. So there's one on here that's, you know, Nuclino October last year, the underdog knowledge based tool you should try. Right? So now is this Nuclino 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 markuphero and Nuclino screenshots, like that sort of stuff? [13:53] >> No. Most of that is stuff is is I've just done my keyword research to find out 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 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 [14:13] >> Notion templates and it's a good article and then they see our product. 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 [14:37] >> get those people coming in and they're like, oh, cool article. Good. Oh, this is markuphero. 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. [14:54] I love how you've stuck to, like, first core principles for SaaS. What I mean by that is you there's nothing more powerful than, like, utility based upselling, usage based upselling if you attach the right usage metrics. So your pricing is very simple, right? You restrict based off number of file uploads, number of Oh, sorry. Edit markups and annotations for a number of days, right? And then see your history for a number of days and also max [15:16] file size per per per file. You pay $4 a month. Basically, everything's unlimited. Yeah. Right? Do you have a sense of which of these four or five things is the most powerful driver of $4 a month conversions? [15:28] >> Yeah. It's it's mostly people getting to their cap of of screenshots per per month. Right? They hit their cap and they see like, oh, I need to do more. They get a notification, pops out, gives them month free, the whole thing. [15:41] Oh my gosh. 10. 10 per month. I would hit that in a day. 10 screenshots. [15:45] >> 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 others the previous stuff. So people kinda get anybody that uses it regularly will find it to be, you know, too limiting. So And 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 [16:01] >> 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 it's still very, very profitable for three guys. [16:13] Yeah. How much recur I mean, was it more like 20,000 in a month? [16:16] >> Yeah. Closer to that. Yeah. [16:17] 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 AppSumo to folks trying to build an enterprise like SalesMotion long term because it's discounting and lifetime value, but I can see where it makes complete sense for what you're building. [16:31] >> 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, a 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. [16:42] It's not a very diplomatic way. I would just say same people that sort of shop at JCPenney probably. [16:48] >> Nothing wrong about other type [16:49] of user for sure. Nothing wrong. Nothing wrong. [16:51] >> It gets you some momentum. It gets you some momentum. [16:53] 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 based upselling like blurring, insert imaging, add signatures, etcetera? [17:07] >> 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. 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 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 [17:27] >> way to do collaborative stuff. Like, there are products out there like Miro and that are, like, fully real time collaboration on the annotation side. We don't wanna go there. What we wanna do is create like what we're calling layers or sort of like 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. [17:49] >> 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 it to 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 [18:04] >> and that'll be a premium feature for sure. [18:06] So how much profit per month on 20 k top line? [18:09] >> Oh, it costs us, like, like, $3,000 a month other than what we pay ourselves Mhmm. To run the the hosting concert, you know, it's very, very nice. [18:16] What? So you're pulling, like, 5 k net profit each month, something like that? [18:20] >> More than that. Yeah. [18:21] More than that. Well, no. Including including what you pay yourself. [18:24] >> Oh. Oh. Yeah. No. We we just basically take whatever's left and use their Okay. Bit for marketing. So Okay. [18:29] Got it. It's like maybe, like, 15,000. You just split up however you wanna do dividends. Right? Yep. Mhmm. Is that what you do for to maximize, obviously, tax consequences here? You just it's dividend is how you treat those? [18:37] >> Well, you know how it goes. We like run expenses and stuff. [18:39] Are you in Puerto Rico right now? [18:41] >> No. My my engineer wants some movies 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 wanna pay California tax anymore. Moved to Tennessee. [18:50] That's funny. Alright. And you are, again, just to be clear, totally bootstrapped. Right? [18:54] >> Yeah. Yeah. We never raised no money. [18:55] Alright, man. Let's wrap up here with the famous five. Number one, favorite book. [19:00] >> I mean, to great if you're going business books, but if you're going all time books, Name of the Wind. [19:06] Number two, is there a CEO you're following or studying? [19:10] >> I mean, I I you know, the Notion Notion team, I'm always always keeping track what they're doing. I'm just really impressed with that product. I I use it day in, day out. So what's his name? You know, the CEO from there. Yeah. Yeah. No. Ivan. Ivan. Ivan. Yeah. I follow him him a good amount. He's been doing great work over there. [19:26] Number three, besides your own, what's your favorite online tool for building markup? [19:31] >> Besides my own? I mean, I use Canva. I use Canva a lot. [19:33] Number four, how how many hours of sleep each night? [19:37] >> Oh, I get at least eight. Okay. [19:39] >> Yeah. [19:40] And situation, married, single kids? [19:42] >> I'm divorced, and I have a a great partner now. [19:45] Yeah. That's awesome. Any kids? [19:47] >> I do have two kids. I got twins. They're 13. Oh. [19:50] Oh, wow. Okay. And how old are you? [19:52] >> I'm 47. [19:53] 47. Last question. Something you wish you knew when you were 20. [19:58] >> 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. [20:09] Guys, there you have it. Fourteen year well, entrepreneur built this first company over fourteen years, raised about $20,000,000 in revenue, sold for $130,000,000, netted out to about sort of 1,500,000 sort of revenue per year worked on the business. He goes, 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 markuphero.com. Doing about $20,000 in revenue right now, $15,000 a month going to the [20:29] bottom line. Team of three, high revenue per 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. [20:39] >> Absolutely, my friend. Good to meet you. [20:42] 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 [21:07] p. 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 [21:28] an 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 [21:50] are 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 [22:10] 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.