How SubMagic CEO David Zitoun grew to $8M revenue and 2.5K customers in 2025.

(4) How I Built my AI Tool SubMagic to $667k/Month With a Tiny Team and No Funding - YouTube

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//www.youtube.com/watch?v=lB6-TBpOuAA

Transcript

(00:00) Today we are at uh 8 million error. Um company is 2 years old between 5 to 10,000 signups a day. Do you have an idea of how many new paid customers you got last month? I think it was around 2,500 customers last time. Last month we have more than 10,000 affiliates today. Uh we have a very like generous program. (00:20) We give 30% revenue on the lifetime value of the customers. Our churn is around 15% today. So it's very high month over month. Do you have a sense of of of you said it's not big? I mean, are we talking like under 20k a month in paid ads? Maybe probably more. I would say between 20 and 50k a month. Hey folks, my guest today is David Zetune. (00:40) He is building submagic.co. It is a tool that enables you to create viral shorts very quickly from short form or long form video. They're launching new products like their AI caption tool today. We're excited to have him on the show. David, you ready to take us to the top? Thank you very much for receiving me. (00:57) Pleasure to be here. You bet. You know, us Americans, all we care about is money. You know, you're you're you're pure still built coming up in in in France. So, I don't want to bury the lead here. Can you before we jump into your product and sort of what you do, can you share what topline revenue is today? Yeah. Uh today we are at 8 million err um company is two years old. We're still very young. (01:18) Um most of our business is coming from the US. So from your country Nathan and we are proud of that uh as we are French originally with my co-founder but uh yeah small team 13 people in the company today and yeah that's incredible and we're recording this on June 5th so everyone has context so David this is obviously a very hard a hot space and um AI and video you know video is obviously tricky to deal with because the files are so huge and there's so much context you have to have and then you have to sort of make the shorts the captions (01:49) etc. So, I'm really interested to learn and sort of get more into the technology. Uh, before we do that though, let's take people through sort of the product experience here, right? So, I went ahead and recorded this just ahead of time just so you could talk through it as we go through it here. So, obviously we're on on the website, right? It's viral shorts. (02:05) Um, we're going to go on here and I'm going to click try for free, create free shorts. One thing you do differently than others, you don't ask a bunch of qualifying questions in your onboarding. You're going to see here you take me directly into like the email and I'm in the interface. Why did you make that decision? Um, okay. (02:20) So one of the reason why uh we did that is that we wanted to build like a trick clicks products and we wanted to do everything in three clicks to make the experience super easy. So this was most the focus of my co-founder that is a technical guy. Uh he spent like eight years before building some magic building a website builder and he learned about like the importance of simplicity and how you can make everything in three clicks and editing videos. (02:46) You said in are you saying are you saying in three clicks? in three clicks. Yes. Three clicks. Yeah. Yeah. Yeah. Uh and it's it's it's very like I would say trendy to say that, but the reality is like editing videos is complex and I'm been using I've been editing videos since I'm 12 years old. I'm 28 today. So I've tried all the tools, Sony Vegas, Premier Pro, all the complex tool and I know how to edit and it still remain complex for me. (03:14) So trying to get this trick experience as much as possible on a short form content product was our I would say the most important things for us as a product. So we try to avoid all the distraction around the product and be really focused on what matters for the users. Yep. This was my first moment where I was like, "Dang it. (03:35) " If I wasn't about to interview this guy, I might drop off here because I uploaded a video that was a 20-minute interview. I'm like, "Oh, it's too long and I don't want to go do the work to edit it down short." But then I saw this extra feature you you guys launched recently looks like over here where it said, "Wait, get clips from long video. (03:50) " So, so I then I then tested that. Help me understand that. Is that was that just a demand you got from the user base? Longer videos. Yeah. So, we we started with with the captions on some magic. The tool was super focused on one things that we wanted to do it better than everybody else. And it was how to we can add like amazing captions on your short form content to make your your your content go viral. (04:13) And so we started with this. We had to be focused on that. And then later on we had a lot of people asking us like, "Hey guys, it would be amazing if we could put like our long form content into Submagic and you find automatically like the best like viral moments." So because we know already how to make a content that goes viral with the editing, we added these tools called magic clips that you try to to use. (04:38) Um and so yeah, it's it's amazing. It's great. In this new age of AI, obviously pricing and pay walls and usage based pricing versus seatbased pricing is a very hot topic. So I always like the moment when the user first hits that payw wall experience. You guys chose to put it right here. help me understand sort of why this was the right moment to introduce the payw wall. (04:59) That's a good that's a good question. Um I don't know when you tried that but it's been like I think very recently. Uh potentially I did it like literally 50 minutes ago. Yeah. So we are always testing new things and we love testing things. We don't know anything. We're just trying things and see what what works. So before that before like a week ago Magic Eclipse was free for everyone. (05:21) they could try like at least one magic clips. Um and and uh and so with the result we had is that we had a lot of users trying magic clips with a conversion rate what is pretty much okay but we wanted to see like is it really useful to give like a free clips to this users and let's try to just put the pay wall and see what is the results. (05:42) So we are still in the experimentation but uh yeah I will let you know later what's going on with this. We might go back to what we did before, but it's just test. And I think it's important as a company and this is one of the reason why some magic we we grew that fast is that we were be we've been able to test a lot of things very fast and to it. (06:01) Are you using any tool to sorry to cut you off David there, but are you using any tool to run these paywall tests like super wall or are these all custom coded by your engineering team? No, we don't use any tool at the moment. And I'm I'm I'm not the tech guy, but I know that we I'm pretty sure we don't use any tool. Yep. Yep. Okay. (06:20) So, anyway, so I hit this payw wall. And then I go, okay, well, let me let me see what the monthly price is. Let me toggle off the billing. And then I said, okay, wait, let me exit out of this and explore the uh the interface a little bit more before I before I convert to paid. So, clicked around a little bit. Um wanted to understand more about the product. Let me fast forward here. (06:37) want to see more about the full pricing strategy. I think at this moment, David would be a good one to actually dive into your guys's pricing page and sort of how you guys from a business perspective decided to set up some of this stuff. So, let me let me actually just share your live website here. All right. (06:53) So, this is how you guys have structured. And I think to your point, you're saying this little toggle here is a new thing. You just started adding this as an add-on, the magic clips. Correct. We we started Magic Clips 5 months ago as an add-on. M it was a bet because we could have like put magic clips just available for like the pro plan or the business plan including to the plan but we wanted to try it as a add-on because we it gives so much value for the users and it's so much a product that is not like directly linked for what the users (07:24) was uh used to pay before having magic clips. So we try these add-on things. This it's it's you have a really interesting pricing page because you have like most AI tools basically have this section, right? Which is the usagebased upselling based off some output, right? You do you do number of videos and then the max length of the videos is the bet you're making on the usage metric. (07:49) And then but very few of these new AI tools are are still charging on the seat base. The logic is they want as many team members using it to drive these values as fast as possible. Why did you decide to restrict the team? Why did you decide to basically restrict both to put pay walls up for both? So for the the numbers of videos you can do per month, this is the only metrics we can like this is the number one reason why people are upgrading. There needs more videos. (08:14) So if we don't restrict on that, it's a way for us to improve the expansion. I would say uh the second thing is that we try to sequ to divide the the different plan different based on the different type of users that we have the different type of ICP we have kind of like two type of ICP we have the people who are using some magic for themsel for their own videos small business owners starting short form contents don't know anything about it and want to discover it and then we have the agencies we have so much marketing agencies video short (08:48) form content agencies and those users have different needs so we we like we don't want we we really wanted to try to see like if you are like this kind of SCP you should take this plan this is for you and so that's why we like as a small business owner you don't need to have like five members in your team it's not useful no none of them are you like inviting people um there's a lot there's a lot of folks that always try to reverse engineer virality right they put that that watermark in the free plan and then they (09:18) count how many new users they get from those free plan clickthroughs every month was that an effective strategy or is that an effective strategy for you guys Yeah, there is a premium at sub magic. You can use sub magic for free for three credits on the top like try out three videos without credit card with the with the watermark. (09:36) Uh yes, it's great. Um but um it's very difficult to quantify the impact on the watermark and to see really how much people are posting videos with a watermark online and how many views this video are making. But it's a way for the users to try the product without paying. And I think we love that. It's important for the users to try. (09:55) Oh yeah, it's a it's a good point. Most people when they when they run this virality playbook, there's like a powered by button under the thing. But to your point, you're a video, so you have no way to track if the watermark inside one of your customers videos gets clicked and drives you a new customer. (10:07) You're just betting the extra brand exposures is a good thing for you. Exactly. Yeah. Very interesting. Okay, let's um let's go back to the early days. So you you just you just celebrated your 2-year birthday, uh I think. Um take us back to sort of launch date. Um, I always like to go in here and and and and look at sort of what Perplexity tells me here, but is this accurate? Perplexity is saying 2023 is when sort of the first user was acquired. (10:32) You start off with a team size of nine. We started with I like this table. It's great. So, we started we had two just CF my co-ounder and I um we started the first customer we had it was in May 2023. Yep. Yeah. So, pretty much it. Great. And then you went from zero to a million fairly rapidly. When did you hit a million in revenue? See, you can see perplexity gets this stuff wrong, right? That data is obviously wrong. (10:57) But when did you hit a million of ARR? So we we hit a million in AR three months exactly after we get our first customers. So we had our first customer the 1 of May 2023. We get we reach millionaire the 1st of August. Exactly. Wow. Okay. August 2023 million. And and what drove most the growth from 0 to 83? If you had to pick only two growth channels, what were the two most impactful? I would say short form content. (11:25) I will explain just after, but I would say short form content and timing. timing because um there is a time to mark like time market fit that I really believe in business in general like we were at the right time with the right product with the arrival of chat GPT at this time everybody wants to make like short film Alexi was like literally booming online everybody wants to like start understanding like hey we should do short form content and we should make caption as well because everybody like all those influencers are (11:59) making caption we should do the same. Um and then short form because at the beginning of some magic we had like a lot of like viral short form content coming not from us but from users saying like hey I discovered this new tool called submagics. They can allow you to make like three clicks captions super easily on the product like and they they showed a product like this and so many videos went viral and this two mix was just an explosion I would say. Yeah. (12:29) Yeah, it's interesting. I wasn't expecting you to give those two answers. What I thought you were going to say was um your affiliate program and Product Hunt. Um so I want to dig deeper here. Right. So you saw that natural organic posting like happening, but you then launched your affiliate program I think fairly early on. (12:47) When did you launch that and and would you consider that a key to going from zero to million quickly? We launched the affiliation program pretty much like I think it was 30 days after we have our first customers because at the beginning of some magic we had zero euros to invest into marketing and I was used to do affiliate uh marketing in my first company where I was myself an affiliate for other uh businesses and so affiliation is amazing when you don't have a lot of revenue it's super like it's a good way to like attract people (13:19) and pay them only if they make sales. So we had no choice to do affiliation. So I start this affiliate campaign and I was just telling people like if you make a viral short form content talking about some magic and it goes viral, you're going to make a lot of revenue because myself I did it once and the the short form went I think it did like 100,000 views and it drives like $3,000 MR directly. (13:44) And I say to my users like this is the proof that it's working. You should do like kind of content like this. I really literally teach them how to make viral short form content talking about some magic and they just like keep posting content over content over content every day because they were making revenue. The success of a good affiliation program is your affiliates needs to make revenue and needs to make money out of it. (14:08) So yes, affiliation can you share can you share that number? How many total affiliates today have made money from you? Wow, crazy man. I I don't know exactly the numbers. We have more than 10,000 affiliates today. uh we have a very like generous program. We give 30% revenue on the lifetime value of the customers. (14:24) So if you Nathan you become a like become affiliate tomorrow and you you just bring a customer to some magic every month that they will pay some magic you will get your commissions and it's pretty generous. Yeah. Which is rare. Most people most people do not do that for life. They do it for the first year then it goes to zero. So I would agree. (14:40) I mean that's a very generous program. I mean c can you quantify that? I mean, if you have a large chunk of your 8 million revenue coming in, it's from affiliates. You will have a large chunk of your COGS be affiliate payouts. Do you know how much you paid out to affiliates last month? Yeah. Yeah, we know exactly. So, affiliation today represents a 20% of our revenue like 20% of our global revenue is coming from affiliation. (15:04) And 20% of the 8 million of your AR today. So, so I mean that's a big chunk. That's 2 million. I mean, that's 1.7 1.8 million. Yeah. Wow. Okay. So, so if that's the case, if 1.8 million of ARR is coming has has is active today on Submagic and has come from affiliates, divide that by 12, that's about 150,000 bucks of monthly revenue and you're paying out 30, you said 30%, right, to most affiliates, correct? Yeah. (15:33) Yeah. So, what that's like 40 Okay, so you're spending out 45,000 bucks a month in affiliate payouts, something like that. Yeah. But one thing I can tell you for affiliation people might see that oh it's crazy you give 30% commission it's it's huge like we had a lot of people like saying like David you're crazy to do that first we didn't have the choice at the beginning like the company was like we had zero customers and we need to be generous and secondly like people see like oh you're going to give 30% it's huge and stuff like that but they (16:00) say like you don't see how much business affiliation is bringing to your business like without tracking the link there are So many videos like when you make a YouTube videos talking about some magic maybe like a small percentage is going to click on the link but a lot of them are going to see the brand some magic again and again and again and this is for free and this is amazing and and you cannot like quantify how much is it so it's it's great. (16:28) So David, just to sum that up, what you're saying is you can directly attribute about $150,000 or about 2 million of ARR to affiliate traffic, but you're also betting a lot of your other 8 million of revenue or other six million of revenue may have been influenced by some affiliate branding even if they didn't click through that link directly. (16:45) Well, for sure makes sense for you know, Nathan. 100% 100%. No, I agree with you. I'm playing dumb a little bit here because right, we want to learn. I want to capture all the good stuff. Take take us back to that first Yeah. The other one, other thing I want to touch on, and again, the reason I'm hitting on all these, I like to sort of create frameworks for for my audience. (17:02) And and one of the frameworks I like to have them think about is there's there's really only about 34 ways to grow your software company, right? There's cheap stuff, there's expensive stuff, there's fast stuff, and there's stuff that takes more time. You over here used influencer marketing, you used affiliates. (17:16) Um, you know, we have Product Hunt here. You you used Product Hunt early on. You did three launches ironically your one in 2023 which was what this was 4 months after you launched. Take us through this launch. Two months after we launched launch first of May third of July someone told us like guys you should do a product and because at this time we had zero customers on the US and my co-ounder and I decided to say like we should change the strategy. (17:42) We are going fully into the US. Forget about the French country. Let's go full in. And so he said like there is one thing we can try is product hunt. apparently is something good for software. So we tried that and from this day it was the best decision ever because like our main market became the US from this day. Yeah, you're a big is is Alex Ramosi an affiliate of you guys? No, we we would love to but he he's not an affiliate of some magic. He loved the product. (18:10) I met Alexi a year ago and uh No, he's not an affiliate. We would love to but he's not. That's great. Okay. any any tactics you would give other founders who are trying to figure out how to hit the number one or number two spot on Product Hunt like you did? Oh, it's it's it's really hard. (18:28) Like I wouldn't recommend everybody to do product again to be honest because I think it changed a lot since uh we launched two years ago. Um to be honest, you haven't been able to really get that same sort of up voting in the past two years. It's gotten harder. It's super hard. It's the energy you have to put to to become like number two. (18:48) It's like 24 hours reaching out everyone to say like please up vote for my product, check in my product. So it's a lot of efforts. I think when you just started and you don't have a lot of choice, it's something good to do. But after like we we don't care if we are like 18 the day or 10 when we launch again on product and it's just I don't see if Yeah. (19:07) Okay. Well, cool. Well, let's fast forward. So May 2023, you launched your first million of revenue in August of 2023, a couple months later. And then about a year ago, and we're recording this of June 2025, so call it June 2024, um you talk about hitting your 1 millionth user. Walk us through this milestone. (19:24) What drove most of this growth? Yeah, man. It was an incredible milestone. For me, 1 million users is much more incredible than 1 million error. Um because it's a 1 million period and I always like imagine myself like a stadium, 80,000 people multiple by 12, 13. Like I'm like, wow, it's huge. and they they tried my product at least once. (19:47) Um I think it's a mix of the time to market that I told you the good marketing that we did since the beginning of some magic. We push super hard on the brand and on the marketing through affiliation, SEO, paid ads, influence marketing and there is this kind of like wall of mouse that have been driven a lot of growth for some magic. (20:05) We we are super focused on the customer experience and as a bootstrap company like the best marketing we can you can have is like one of most it's free and so we really get inspired by branches from Airbnb about this 10star customer experience how you can give like an amazing experience to your users and so we try to do like super like incredible things with our users creating WhatsApp group with them uh building the product directly hand-to-hand with them I take like approximatively five to six calls with users every day since the beginning of (20:38) some magic. Like everyone can book a call with the CEO of some magic every time they want and because I want to get to be super close to the users and every time like they like this experience they want to talk about some magic around themsel they it's there is no software they can offer that on the market at the moment and that's makes me proud. (20:57) So it's a mix I would say. Yep. You'd mentioned SEO, paid ads and community. The first thing that I hit once I launched to a paid plan was a popup where you said, "Hey, join our Discord community." Um, and so you have Discord here. You just mentioned WhatsApp as well. You got 7,600 members here. Walk besides the strategy for other founders listening saying, "Hey, make sure you invite people into a community. (21:18) Any tactics for how to manage this effectively? Managing the the community is very hard. Uh, I would say we are not the best today on Discord. on WhatsApp we tried to do something very very uh uh it was especially on the beginning what I would suggest to any founders is like the first 100 customer of some magic I took on stripe the information I reach out to them I say send me a text message please I will give you like a discount for the next month but please send me a text message I need to get your number and those people I put them into a WhatsApp (21:51) group and I built the product with those 100 people I was super close to those people they were like we say like I see say like find 100 people that love your product and I try to do the kind of the same thing and this is free and you will understand that those people will become your best product manager ever because they will tell you what features they want and how we should do it like it's so like super like people try to find solution to coaches to online to whatever the solution of your business is in the answer of your customers talk (22:25) to them be close to your customers they have the Um, it's a cheat code. It's a It's a Yeah, it's a cheat code. But be careful. Not all your customers will be good customers. You have to determine like if this guy like feedback is a good customer like if this really like the guys that we're trying to hit with our marketing or not and does this feature is a really like must have feature or it's just a nice to have and just you have to be very careful about listening your users and then taking good decision. But yeah, this is a cheat code (22:57) for me. I want to get into your team here in a second, which you put up a great post on about 3 weeks ago, but we I have to touch on the two other growth channels you said you're using aggressively, which is SEO and paid ads. When I look at your SEO traffic, I mean, really fast growth from 2023 to 2025 in terms of domain rating. (23:15) You saw a huge pop in organic traffic. I'm curious if this was intentional up to 9 million and then drop back down to about 235. um walk us through what's intentional around your SEO strategy. Yeah. Uh so I'm not the best in SEO to be honest. Uh I don't know so much about it. Uh but what I can tell you is the pics that you saw it's a test that we we have been trying is like we we launched free tool strategy at some point at some magic. (23:42) So we created free tools like uh how to compress your video, how to download video from YouTube and stuff like that. And uh those tools were like performing so well like in in one months it explodes. Um and the one that really can you quantify that in any way like number of website clicks, number of customers, any kind of quantification there? The conversion rate was really bad to be honest. Yeah. And we learned from it. (24:06) We had like n like at some point 1 million visitors a month. Like it was crazy like maybe even more. I don't remember exactly but you saw the peak. H it was huge. But the reality is that those things don't convert and don't attract really good customers and after months or two we had um Google that blocks that because they don't want people download videos for like uh trying to like download YouTube videos. (24:33) So they block this page. That's why the the the the traffic went down. But uh it was a good learning. um we still going to make some efforts to improve this free tool strategy. Um but it's not what drive us the most revenue in terms of SEO today. Yeah, it's it's a really good strategy. Uh we put that up here in terms of free tools because we've seen other companies just crush it with this. (24:56) But to your point, if if if Google stops your ability to sort of process YouTube videos because of your niche, it makes this particular tactic hard. But it's super cool to see that spike when it was working going up to like nine million views per month. I mean, this is just insane organic traffic. One thing you I would say is like free tools can be awesome for your company, but you need to really be careful about what kind of free tool should we do and you need to make sense regarding the the value proposition of your product. So for us (25:25) like downloading your YouTube videos is too far from why people should use sub magic and otherwise doing something like compressing your videos or finding titles is much more linked to why people should buy sub magic. You need to just put your place at the at the place of your clients and and it need to make sense. So I think it can be awesome. (25:45) I see so many great strategies about free tools. We still need to learn a lot from that. I love that. David, I want to be respectful of your time and we're at the limit we set. Do you have 10 more minutes to keep going? Yeah, sure. We can do that for you. Okay, great. So, that was free tools. (25:59) Before we jump into your team, can you touch on paid ads for a second? Are you spending a meaningful amount per month on paid ads? Uh, I know that we're spending on Facebook ads, Google ads. Uh, we going to start LinkedIn ads soon to try. Um, I cannot tell you exactly how much we spend uh on this, but it's not like huge. (26:18) I regarding our old marketing is not it's not representing something huge. We try to avoid paid marketing as much as possible but not. Yeah. Yeah. I mean as a boot you're and you're basically I mean you're very you've raised it. It sounds like a small How much have you raised total? It was a very small amount, right? Oh, we we never raised Oh, you didn't do like a like a community round of like half a million bucks. No. Ah, okay. Okay. (26:39) I misunderstood that. Yeah. So, you guys are bootstrapped to 8 million bucks of revenue. Yeah. Yeah. I love that. So, so obviously paid ads that those are the most expensive advertising you can do. Um what is do do you have a sense? I'm on your guys' Facebook page right now. Do you have a sense of of of You said it's not big. (26:55) I mean, are we talking like under 20K a month in paid ads? Uh, maybe probably more. I would say between 20 and 50K a month. Maybe like around 50k, I would say. Okay. Scaling. How have you set that up? Did you hire internally someone on your team to do that? Did you use an agency? How are you doing this? Yeah, we have like someone fully dedicated to ads at the moment on Facebook ads in our team. (27:19) uh his name is Antoine. He's absolutely legend. He's um he's just trying things all day long and we have also agencies that help us crafting some good product like content ads. It's not easy. Um but we we try stuff and we have also an agency that we work with for Google ads that is a that is not part of the team but it's an agency. (27:42) Do you want to recommend them? Should we give him some love? Uh yes, it's a French agency. If you want, I can give you the name, the full name, and you can put in the description. Um, it's called K. It's called Kers Kai Kai. Kai I bs. It's a French agency. You can key agency. If you This one uh uh No, sorry. Remove the E K I B E B. Yes, exactly. (28:13) Why? Premium DDC growth and creative agency. Exactly. Very cool. Are they also so f a French group that you guys found? Yeah, it's a French. It's a French agency. This one? Yeah, exactly. Great. That's awesome. Very cool. Okay, so give them some love. Let's You told me it was really important. You got to give some love to your team. (28:32) I mean, you guys are 8 million of ARR. You are 13 people. I mean, so you're cranking $700,000 of revenue per employee, which is really impressive efficiency. while I play this awesome reel that you made on your team. Walk us through your org chart today. What's it look like? So, okay. So, the the team is divided in three. (28:51) We have...