A Founder’s Tale
How I’m building a new StartUp to exit for $1.5 million in 12 months
Follow along and join my journey, as I share my progress in public
I am not new to building or running a business.
In fact, this fall marks exactly 36 years since I started my first company.
During this time, I have fallen several times, more than I’d care to count, but I’ve also managed to get up at least once more than the # times I fell.
So, here I am. Ready to get back up one more time.
Background
This story starts with a Tweetstorm I read a few weeks ago. In this Samuel Thompson explains the basic math (and science) to make $1,000,000 in a year.
He calls it “A tangible, step-by-step roadmap”
You can read the full tweetstorm but the crux of it is that it uses a merger and valuation concept called micro-acquisition.
I had been working on this idea of an email marketing automation system for Influencers for a while and this Tweetstorm got me thinking.
If I could build revenue numbers to about 1.5x of what Sam has outlined, I may be able to exit at 1.5x the price.
After all, I’m targeting two distinct audiences here.
And hence this project started.
The Math Behind $1,500,000
Here’s how it works in a nut-shell
A SaaS company, that runs a profit of $15,000 each month equals an income of $180,000 annually.
An exit multiple of 5–6 times, puts the company at a price point of about $1,000,000 give or take.
If I can generate about 1.5X as much profit ($22,500)in a month over the course of a year, then you’re looking at a $1,500,000 exit valuation.
So, the goal should be to earn a profit of about $22,500 per month.
To be on the safer side, if we only assume a 5X multiple, then our number looks like $25,000 per month.
Let’s call that our magic number.
So, what business creates $25,000 in income
I had been toying with two ideas for a few months now.
- Build a SaaS platform that connects eCommerce brands with targeted influencers. Charge a flat fee per brand per month, and it’s not that hard to arrive at the magic number of $22,500 (Incidentally, the example Sam presents in another one of his Tweestorms is exactly this)
- Build a newsletter media company (a business that I’ve run for over a decade now) and build leverage around acquiring more subscribers aka email ad spots.
After much thinking, I merged the two ideas and MailTok was born
I have already set up a website at www.mailtok.io and put some basic content together that explains what we do
Like the logo above, it’s still a work in progress, but it will also evolve
So, what exactly is MailTok?
Simply put, MailTok is a performance marketing engine, that combines the power of Influencer Marketing & Email Newsletters.
In our first version, we are focusing exclusively on TikTok based influencers for a number of reasons, that I’ll share as we go along
How It Works For the Influencers
Influencers get a custom landing page for building an email list, where they drive their fans from TikTok “Link in Bio”
Then, the MailTok system sends out emails to all subscribers every week, which includes interactive animation of the content published by the Influencer last week.
Why Influencers are excited about the idea?
If you are familiar with how TikTok works, most Influencers struggle with what is called “shadow-banning”
The TikTok algorithm can completely downplay your content even after you’ve had millions of views on your previous video.
Nobody knows how this algorithm works, and MailTok eliminates the problem.
The minute new content is published, the Influencers can send an email to their fans and drive engagement back to their content in the native TikTok app, thereby guaranteeing them views and engagement.
Sweet, isn’t it?
Here’s what makes it more exciting
All of this is completely free for the influencers.
Wait, what?
Yes, let me repeat.
All of this is completely free for the influencers.
Care to guess why?
Let me explain
This is where we count the money
Brands get to advertise in these emails, but purely on a revenue-share basis to start.
We hear from hundreds of new eCommerce brands every month, asking us to connect them with the right influencers.
What better way to find the right influencers than getting to test their audience in a one-to-one setting?
Build a bigger content relationship from there
If an influencer list delivers positive ROI results for the brand, we help them strike a larger content-publishing deal with the influencers
Everyone gets something with this method
In exchange for running their email programs for free, we run email ad campaigns for pre-approved brands on their lists.
You see, we’ve eliminated the risk for both parties.
How do the numbers look?
Now we’re talking about my most favorite topic in this business.
Here’s how it works.
Brands pay us a fixed fee per month, and in return, they get the following benefits:
- We send them a curated (and targeted) list of up to 100 new influencers every week.
- Once they approve some influencers from the list, our system reaches out to the influencers on their behalf.
- If influencers approve the brand campaign, we begin delivering the ads on emails within a week.
How much are we going to charge
At this point, we’ve set this fee as follows:
Monthly subscription at $99 per month
Annual subscription at $999 per month
However, we’re also offering a discount of 50% for the first 100 brands.
So, let’s say, we earn $49 per brand per month and are able to acquire 100 brands in the first three months.
On average, between a mix of monthly vs annual subscriptions, let’s assume we’re getting an average revenue per brand of $75
That’s a total of $7,500 in monthly revenue.
Now, let’s extrapolate this to a year, and even if we do not project any growth, we’re at $30,000 revenue per month by the end of the year.
Wait, but what about the churn?
Yes, of course, there will be churn. I’m hoping it will be at or under 15% and still brings us to our magic target number of $25,000 per month
At this point, I’ll leave the Math at that number, and work backward at acquiring 100 brands every quarter, (and that’s about 1.1 brands per day, at a $75 AOV)
How many brands do you think will gladly pay $99 for access to 400+ new targeted influencers every month?
In Conclusion
I have a fair amount of experience with all of the moving parts, but it will be fun documenting my journey here.
It’s going to keep me accountable, and most importantly disciplined.
Oh, and I’ve kept 1% of my equity reserved for Samuel Thompson, as and when we’re able to exit this business, quite simply for showing the way
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If you want to track my progress, let’s stay in touch via email.
I’ll send out one weekly newsletter and will update you on my progress as we move along.