Episode of My First Million with Sam Parr and Shaan Puri.
Transcript
Note: This transcript was auto-generated from YouTube captions. It may contain errors and lacks speaker identification. A full Gemini audio transcript will replace this.
Kind: captions Language: en [Music] another great opportunity right now is uh free so i look at the whole software market as really backwards okay in which right now it doesn’t matter if you’re a hubspot or canva eventually someone can just create a me too company and just undercut you on pricing and what i’ve learned is if you can create a software company that already has a brand that has a free product and you just make it really good for free and you just keep adding more and more to it a great example of this is photo p so there’s this company called photo p it’s uh uh we love it photoshop and it’s like they make very little to no money so i hit up one of my buddies who uh is great at outreaching and i told him i want photo fee i offered him 10 million he said no offered him 20 million he said no i can take photo p make it a really good canva competitor undercut him on pricing whatever be worth 10 20 40 billion whatever they are no but i probably can cashflow that thing to like four or five million a month in ebitda right it’s like who cares what it sells for what it’s worth you’re saying make it free and you’re saying a cash flow is like a [ ] so what how do you take a free product in cash like how would you explain that well he said he said a canva a canva knockoff canva knockoff so you make you make almost 99 of it for free you charge for one percent but that one percent is enough where you can drive in the revenue so you don’t ever make as much as like a canva or like a mailchimp or a hubspot but hey if you can make millions a month in profit it’s still good what’s your math there so when what’s the calculus when you were thinking so like let’s say photo p according to similar web has 10 million uniques a month or something what was your math is that right yeah it is right we researched it yeah so like what was your calculus to get to uh four million and even a month like what would how many people would you need to run it and what was the what’s the calculus there sure so i can probably get the thing from 10 million visitors i can so let’s say i bought it for 20 right he wouldn’t sell it to me for 20. um i’ve never outreached him but i had a buddy outreach to him for me who just does all my outreach so let’s say i bought it for 20 i’d put another 10 into it so now i’m out 30 million dollars i’m really good at growing traffic and i know i can grow the team to roughly 40 million uniques a month i just have a i don’t know how but for some weird reason i know traffic really well and how to calculate what i can get it to and all this kind of stuff right and i’ve done enough research and competitors of what features drive x amount of traffic just looking at so many competitors in the space so let’s say if i get it to 40 um what is it called 40 million and what what are the one or two things that you’d get at the 40 million like seo basically so uh more seo more virality uh increasing the quality of the templates increasing features uh adding ai in there like click a button we can automatically detect backgrounds remove it filters for social media because a lot of people use them for social media logo generator website as a lead gen [ ] like that right so then so let’s say you got up to 40 million right at 40 million i can easily monetize let’s call it like one percent of the traffic or let’s get even more conservative like a half a percent 200 000 people if i have 200 000 people hypothetically paying three dollars a month okay that’s 600 000 the reason i give you on average three dollars in certain countries you may want to charge different pricing like india and stuff like that so it’s more affordable so three dollars a month and at three dollars a month if a customer stays for 10 months that’s 6 million dollars you can probably run the thing with less than a million million and a half and burn each month so then you think oh so then for a million and a half burn you would need once you have tons of revenue right when you don’t have tons of revenue your burn is much lower on a monthly basis yeah but so then how many people then if it’s you’re looking at 30 people you need to run that operation i i don’t even think 30 but let’s say 30 total so i think i can actually run the thing for under a million dollars a month right so i’m just trying to do the math in my head but i mean the revenue was like 100 million to two there it was like 600 000 or something right 600 000 a month but if a customer stays for 10 months you’re looking at 6 million dollars okay if they’re paying three dollars a month if you have 4 40 million not 4 million but 40 million you’re converting a half a percent that’s 200 000 paying customers a month if they pay you three dollars a month that’s 600 000 they last for 10 months that’s six million dollars a month in mrr over a year you’re making 72 million dollars in revenue that’s crazy wasn’t that long ago that this whole operation was just the captain me and a couple of parents but hubspot helped us grow our business across all seven seats hey celebratory cannons hubspot grow better