How Storybook App Passed $500K in Revenue with 10,000 Paid Subscribers in 2021 (Interview with Co-Founder Francisco Cornejo)

Introduction and Business Model

Nathan Latka

00:00Hey, folks. My guest today is Francisco Cornejo. He's the husband and father of two boys. His family is his greatest treasure and his greatest project. He's building now a company called storybookapp.com to help parents make their kids fall asleep. Francisco, are you ready to take us to the top?

Francisco Cornejo

00:15>> Let's do it.

Nathan Latka

00:16Okay. So what's the model here? Are you selling directly to moms and dads, or is there a b to b play?

Francisco Cornejo

00:21>> Yeah. Storybook is a b to c, a consumer subscription based app. It's free to download, seven days trial, and then you have a subscription to have all the content of the app.

Nathan Latka

00:33Okay. Interesting. And when did you guys get when did you launch sort of the first line of code for the application?

Launch Timeline and Early Growth

Francisco Cornejo

00:38>> So the the MVP, we released it in mid twenty eighteen.

Nathan Latka

00:432018.

Francisco Cornejo

00:44>> But the but the fast growth, we saw it since January 2020.

Nathan Latka

00:51January 2020.

Francisco Cornejo

00:52>> She was one of the main users.

Nathan Latka

00:54Little ones. I love that. And so how much do parents pay on average per month to use it?

Francisco Cornejo

01:00>> We have yearly plans. So the yearly plan the yearly price in The US is 89.99.

Nathan Latka

01:06Okay. So $90. And when did you get your first customer? What year?

Francisco Cornejo

01:10>> We well, the day we launched. We started with a pay per download business model back then. Probably the wrong decision, but was great to test our hypothesis. There are people willing to pay for this even without looking at the app. And the reviews were great. So on day one, we sold 300 apps. That was really exciting and told us we are on the right track.

Nathan Latka

01:32And so how much revenue did you do that first year?

Revenue History: 2018 to 2020

Francisco Cornejo

01:35>> The first year, we did around 90 k. The second year, we did around a 100 k. Wasn't much difference. The next year, we did 400 k.

Nathan Latka

01:46So Oh, wow.

Francisco Cornejo

01:47>> There's there's when we started to grow really fast.

Nathan Latka

01:50And so that would have been 2020. Right?

Francisco Cornejo

01:53>> Yep.

Nathan Latka

01:54So in 2020, you did 400 k. How much will you do this year?

2021 Revenue Progress and Target

Francisco Cornejo

01:58>> The plan is to get there with 700 k.

Nathan Latka

02:01And And what what do have today?

Francisco Cornejo

02:02>> Pushing to grow. We're right now are really, really busy working on the product. So we're looking in the long term of the business.

Nathan Latka

02:10How much total, though, this year have you already done?

Francisco Cornejo

02:13>> We're already past 500 close to 600,000.

Nathan Latka

02:16Okay. So you need about 120,000 of sales in the next sixty days to break your goal.

Francisco Cornejo

02:20>> Yeah. We'll we'll get there.

Customer Acquisition and Ad Spend

Nathan Latka

02:22That's awesome. Okay. And how are you finding these customers? What's your growth strategy?

Francisco Cornejo

02:27>> So we've been relying on paid acquisition since we started Facebook and Instagram mostly. Now, we are seeing a big potential in partnerships and, of course, organic, which takes a long time to build. Now, we are seeing the the benefits of it.

Nathan Latka

02:44Francisco, how much did you spend on Facebook and Instagram ads last month?

Francisco Cornejo

02:50>> Last month wasn't a typical month, but we are spending around 40 k, 50 k.

Pricing by Country and CAC

Nathan Latka

02:56Per month. And so how much do you know you can like, what does it cost you to get a new $90 download?

Francisco Cornejo

03:02>> Depending on the country. So right now, for example, the pricing in Brazil, we are testing monthly plans, which is something we have nowhere in the in the world. In Latin America, the price is $50. In The UK, the price is £50. In The US, it's $89. So the average CAC cost per acquired subscriber, it's around 40 to $60 depending on the country.

Nathan Latka

03:29Okay. So $50. Like, in The US, you might spend $50 to get a $90 download. So you're profitable, you know well, you're profitable instantly because they pay it all upfront. Right?

Francisco Cornejo

03:38>> Yeah. Well, we aim to to do that. We aim to to have a higher ARPU than our CAC. So, the renewals come as an addition.

Nathan Latka

03:48But it's all annual. So, even if your ARPU, average revenue per user I per month is mean, you're getting it all right back immediately. Now, have you raised capital here? Have you bootstrapped?

Fundraising: $1M SAFE with Jason Calacanis

Francisco Cornejo

03:57>> Yeah. We raised our pre seed round last year. We're lucky enough to crossroads with Jason Calacanis, amazing angel investor, probably one of the top five in The US, not the top three, at least. And he also was an early investor in calendly.com. And he fell in love with the business model because he knows about the subscription apps and how massive they can grow. But he also understood the need of helping parents to get their kids to

04:32>> sleep because of a personal experience. It was

Nathan Latka

04:34So, a great how much did you raise around last year?

Francisco Cornejo

04:37>> So, it was around 1,000,000.

Nathan Latka

04:391,000,000. Okay. Got it. And what sort of cap or valuation did you raise that at?

Francisco Cornejo

04:45>> We raised at 8,000,000.

Nathan Latka

04:47Okay. Did that feel fair to you? Like looking back, was that the right call?

Francisco Cornejo

04:51>> Yeah. Yeah. I think the potential was there. The numbers show that the the investors are happy and we're looking to raise more. So, yeah, I think it was You

Nathan Latka

05:02only raised 1,000,000 today then?

Francisco Cornejo

05:04>> Yeah.

Nathan Latka

05:05Okay. That's great. How much are you looking to raise now?

Plans for Series A

Francisco Cornejo

05:08>> We're still undecided on the on the figure.

Nathan Latka

05:10Yeah. What do you think it'll be? Do you have a range?

Francisco Cornejo

05:14>> We're aiming to to get to our series a next year. So we should be looking at, it could be anything from 5 to 7,000,000.

Nathan Latka

05:23Mhmm. And if you raise 5,000,000, well, what do you think you'd spend that money on? Is it mostly CAC?

Product Focus and MAU Growth

Francisco Cornejo

05:29>> Well, it's gonna be growth, massive growth. Right now, we have been really focused on the product. So if you compare storybook from what it was a year ago and what it is now, we tripled our metrics in retention, in monthly active users, in weekly What is MAU? Content by a lot. So, we look at or MAU, the only thing that we care is people who are actually completing the stories, not looking at the app, not starting

05:58>> a story, but the ones who are completing stories. And it's around 30 k.

Nathan Latka

06:0430,000 monthly active users today?

Francisco Cornejo

06:06>> Yep.

Nathan Latka

06:07And what was it a year ago?

Francisco Cornejo

06:09>> A year ago was December last year was around 8,000.

Nathan Latka

06:15Around eight. Okay. Yeah. So this is great growth. How many customers will download the app this year? Or how many, I guess, are on the monthly or the annual recurring plans now today?

Paid Subscribers and Free Users

Francisco Cornejo

06:27>> So right now, we have 10,000 paying subscribers, active paying subscribers.

Nathan Latka

06:3310,000 paid. So when you say active paying subscribers, does active mean they're part of that MAU number?

Francisco Cornejo

06:39>> Yep.

Nathan Latka

06:40So I guess if you have 10,000 customers, how can you have 30,000 monthly active users, like triple the amount of your paid customers? Are there a bunch of free users in there?

Francisco Cornejo

06:51>> Yep.

Nathan Latka

06:52Oh, I see. Got it.

Francisco Cornejo

06:53>> But, yeah, it's a freemium model, so you can use the app for free. But if you want to to get access to all the content, you need to pay for a subscription.

Total Downloads All Time

Nathan Latka

07:01I see. So 10,000 paid on the annual plans. How many total downloads does the app have all time?

Francisco Cornejo

07:06>> All time. We are a little past 1,500,000.

Nathan Latka

07:11Okay. 1,500,000. So you've converted 10,000 of those into paid?

Francisco Cornejo

07:15>> Yeah. Well, remember that the business model changed. But, yeah, ultimately, that's that's what it is.

Nathan Latka

07:21Yep. Yep. Interesting. Any other product lines? I mean, can you sell anything else, these 10,000 customers to increase ARPU?

Francisco Cornejo

07:27>> Yeah. Of course. Many things. But the focus right now is to make a storybook the best product it can be so we can launch for a more aggressive growth. And instead of focusing to get more money out of this 10,000, we want to get to a million subscribers, 2,000,000 subscribers. And along the way, we will be launching additional things, premium content, physical products. We have a few things down the line, but I don't want to spoil

07:54>> the surprises.

Nathan Latka

07:55That's fair. Who is we? Who's how many people on the team today?

Team Size

Francisco Cornejo

07:58>> We are 20.

Nathan Latka

07:5920 people. And are you the sole founder?

Co-Founding With His Wife and the 50/50 Split

Francisco Cornejo

08:02>> No. Actually, my co founder, she's the brains and heart and soul of the product. She's the one who came up with the idea and who writes the stories and creates a content for storybook.

Nathan Latka

08:13Is she your wife?

Francisco Cornejo

08:14>> Yep.

Nathan Latka

08:17All right. So you guys are co founders. You split it fifty fifty at the start?

Francisco Cornejo

08:21>> Yep.

Nathan Latka

08:22Very cool. You didn't give her a little more, let her have 51%, you take 49%?

Francisco Cornejo

08:26>> She deserves that. She deserves everything. Absolutely.

Nathan Latka

08:29That's amazing. Okay. So you guys split fifty fifty. You sold 10% to angel investors. So it's like sort of like like forty forty ten or forty five forty five ten, something like that right now.

Francisco Cornejo

08:38>> Yeah. Well, yes. They they were safe. So not equity as as of now.

Nathan Latka

08:42Yeah. Yeah. Yeah. But but but when they convert, it'll be somewhere around there. I assume you're planning to raise it higher than the cap on the note, 8,000,000.

Engineering Team and Where the Team Sits

Nathan Latka

08:49>> Of course.

08:49Yeah. Very cool. All right. So 20 folks on the team today. How many are engineers?

Francisco Cornejo

08:56>> Our engineering team is five people.

Nathan Latka

08:59Five people. Okay. And what do the rest do?

Francisco Cornejo

09:02>> So the growth team and the product team take our bulk. We are 16 people full time and four people half time scattered across the world. We have people in Spain, Colombia and Argentina, Ecuador, one person in Australia. But the rest of the team is the product team and the growth team.

App Store Commission and Direct Sales

Nathan Latka

09:26Of the $700,000 in revenue you'll do this year, do have to give 30% of that back to Apple?

Francisco Cornejo

09:30>> No. There's a couple of things. We also sell directly to our website. But most interestingly,

09:40>> both Apple and Google now have a 15% commission if you are selling less than 1,000,000 a year. So they don't they take 15% fee.

Nathan Latka

09:50I see.

Francisco Cornejo

09:51>> So we're making the most of that. Next year, we won't be able to do that. See. Well, it's fast.

Nathan Latka

09:56Can you just launch a version two that starts from zero and just keep that under 1,000,000

Francisco Cornejo

10:01>> I'm guess I'm guessing you can, but you will be losing on all the rankings and all the history of the app.

Partnership Strategy

Nathan Latka

10:08Yeah. Very interesting. Okay. Got it. So that makes a lot of sense to me. You mentioned partnerships. Name a partner that you'd love to that you think could drive you a lot of customers.

Francisco Cornejo

10:18>> I don't want to jinx it, but we have been working with really interesting companies in Latin America. We're talking with a company in The US and we're about to close a deal with a consumer, very big player in the baby product space that we aim it's gonna give us at least a million new downloads in the first thirty days.

Nathan Latka

10:43Very cool.

Francisco Cornejo

10:44>> So, yeah. Don't want to just

Famous Five Rapid Fire

Nathan Latka

10:45We're rooting for you. Let's wrap up though now with the famous five, Francisco. Number one, favorite book.

Francisco Cornejo

10:51>> Wow.

10:53>> That's a hard one.

10:58>> I don't know. The most recent I read was working backwards.

Nathan Latka

11:02Number two, is there a CEO you're following or studying?

Francisco Cornejo

11:11>> Not really.

Nathan Latka

11:12Number three, what's your favorite online tool for building storybook?

Francisco Cornejo

11:19>> As of lately, I'm a big fan of Notion. I don't know if I can replace that.

Nathan Latka

11:24Number four, how many hours of sleep do you get every night?

Francisco Cornejo

11:27>> Between four and five.

Nathan Latka

11:29And what's your situate well, we actually we know you're married. How many kids?

Francisco Cornejo

11:33>> Two.

Nathan Latka

11:34Two kiddos. And how old are you?

Francisco Cornejo

11:35>> I'm 34.

11:37>> 34.

Nathan Latka

11:38Last question, Francisco. What's something you wish you knew when you were 20?

Francisco Cornejo

11:42>> Tech startup world.

Nathan Latka

11:45Alright, guys. There you have it. Storybook app launched in 2018. They did, call it $90,000 in revenue. In 2020, they broke 400,000 in revenue. This year breaks $700,000 in revenue, 1,500,000 total downloads of which 10,000 have converted to a paid plan. It's parents who want to help their kids go to sleep faster. Quality time right as they're falling asleep. They raised $1,000,000 at a $8,000,000 cap. Looking to raise maybe a 5 to $10,000,000 series a here

12:08soon. We'll see what happens. Francisco, thanks for taking us to the top.

Francisco Cornejo

12:11>> Nathan, pleasure. Thanks so much.

Nathan Latka

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