They Make $1.4M/Year With AI

Summary

In this insightful video, the creators of CM Magic, an AI-driven content creation app, share their journey from zero to $120,000 monthly revenue in under a year. They discuss the importance of identifying real-world problems, leveraging AI to solve them, and the strategic use of platforms like Appsumo for rapid growth. The co-founders emphasize the value of building a brand, using personal networks, and maintaining a lean marketing approach. Their story is a testament to the power of innovative ideas, strategic partnerships, and a strong team dynamic.

Takeaways

• 🚀 The founders of Cast Magic leveraged AI to create content from various media formats, achieving significant revenue growth in less than a year.
• 💡 They identified a personal problem in podcasting and saw an opportunity for AI to solve it, emphasizing the importance of finding real-world applications for technology.
• 🔑 The success of Cast Magic was attributed to solving a personal problem, building a brand with the right creators, and continuously improving product quality.
• 🌐 They utilized platforms like Appsumo for distribution and offered lifetime deals to attract users and build a solid brand foundation.
• 📈 Cast Magic experienced rapid growth with a focus on profitability, ensuring that marketing expenses did not exceed 20% of revenue.
• 🛠 The team used Elixir and Phoenix for backend stability and scalability, highlighting the importance of choosing the right tools for product development.
• 💼 The founders emphasized the value of aligning with co-founders who have complementary skills and shared vision, rather than just personal convenience.
• 🤝 Trust and open communication within the team were identified as crucial for continuous improvement and honest feedback on the product.
• 🏆 The founders chose a product-focused approach over seeking VC funding, prioritizing customer needs and solving real problems over external validation.
• 🌟 They adopted an asynchronous work model with regular in-person meetings to maintain alignment and focus on shipping the product.
• 📚 The script suggests studying other successful businesses to understand their growth strategies and applying similar principles to one's own venture.

Q & A

What is the name of the AI app that the founders created and how does it work?

The AI app is called 'Cast Magic'. It uses AI to create content from the context of videos, audio files, conversations, or any media, allowing users to repurpose this content.

How long did it take for the founders to scale their app to a $120,000 monthly revenue?

The founders scaled their app to a $120,000 monthly revenue in less than a year.

What was the initial motivation for creating Cast Magic?

The initial motivation was to solve the problem of writing show notes for podcasts, which required understanding the context that a random VA might not grasp.

How did the founders approach the idea of distribution for their early-stage startup?

They focused on building something for themselves first and then getting as close to the customer as possible, either by creating inbound content or finding a distribution partner.

What platform did they use to launch their app and how successful was the launch?

They used Appsumo for the launch, which resulted in around $350,000 in revenue and approximately 10,000 users, making it one of the most successful launches on the platform.

What was the strategy behind offering a lifetime deal to their customers?

The strategy was to build a brand and foundation, gather feedback, and establish a solid user base by offering lifetime access to their services.

How did the founders leverage creators for marketing and growth?

They incentivized creators to produce content on social media, some through payments and others through affiliate partnerships, and used Instagram scraping to find and negotiate with potential creators.

What is the pricing strategy for Cast Magic?

Cast Magic offers a subscription model with a cap on usage, allowing customers to access the service within a set limit of content creation.

How did the founders ensure the quality of the AI outputs in their product?

They focused on solving their own problem, building a brand with the right creators, and continuously investing in the product to increase the quality of the AI-generated content.

What is the founders' perspective on the role of VC funding in their current business model?

They prefer focusing on building something customers want and are willing to pay for, rather than seeking validation from VCs. They believe in solving a problem for themselves and their users first.

How do the founders maintain team alignment and productivity despite being in different locations?

They operate asynchronously during the workweek, have regular standup calls, and meet in person every quarter for at least a week to align on important matters.

Outlines

00:00

🚀 Rapid Growth of AI App to $120K Monthly Revenue

The video script details the story of entrepreneurs who developed an AI app, CM Magic, which skyrocketed their revenue to $120,000 a month within a year. The founders, previously working in the startup ecosystem, became disillusioned with the venture capital system and decided to create their own solution. They discovered a method to generate substantial income by leveraging AI for content creation, which attracted 10,000 paying users rapidly. The key takeaway is the importance of embedding an app into an existing workflow to ease the process of content creation, such as for podcasts. The founders, Blaine Ramone and Justin, share their strategies for developing a million-dollar idea, building it in two weeks, and scaling it to six figures in ten months.

05:01

🛠 Building and Scaling a Business Without VC Funding

This paragraph delves into the founders' journey of building CM Magic, an AI-driven content creation tool, and the strategies they employed to scale their business without venture capital funding. They emphasize the significance of identifying and addressing real-world problems, as well as the importance of personal branding and content creation for attracting customers. The founders also discuss their experience with distribution partnerships, such as Appsumo, which helped them launch successfully and gain significant user traction. Additionally, they highlight the effectiveness of incentivizing creators on social media platforms to generate buzz and growth for their product.

10:02

🤖 Leveraging AI for Content Creation and Business Growth

The founders of CM Magic share insights on how they utilized AI to create a content repurposing tool that integrates into existing workflows, making it easier for users to generate content from various media sources. They discuss the technical aspects of building the app using Elixir and Phoenix for stability and scalability, as well as the importance of accepting an imperfect product during the initial stages of development. The paragraph also covers their approach to pricing, which involves offering a subscription model with a cap on usage, and their strategy for maintaining profitability by keeping marketing costs below 20% of revenue.

💡 Embracing the DIY Approach and Team Dynamics in Business Success

In this final paragraph, the founders reflect on their past experiences with venture capital and articulate a preference for a customer-centric, DIY approach to building their business. They advocate for solving real problems, creating products that customers are willing to pay for, and focusing on organic growth rather than seeking external validation. The founders also share their thoughts on effective team dynamics, emphasizing the importance of alignment, complementary skillsets, and trust among team members. They highlight the value of in-person meetings and regular communication to maintain alignment and productivity within their distributed team.

Keywords

💡AI app

AI app refers to an application that utilizes artificial intelligence to perform tasks. In the context of the video, the AI app in question is 'CM Magic,' which leverages AI to create content from various media formats. The app is a central theme of the video as it showcases how the founders built and scaled it to a six-figure monthly revenue within a year.

💡Revenue

Revenue is the income generated from the sale of goods or services. In the video, the founders discuss their journey from zero to generating $120,000 a month with their AI app, emphasizing the financial success of their venture.

💡Content creation

Content creation is the process of producing various forms of media such as videos, audio files, and written material. The video script mentions that the AI app 'CM Magic' aids in content creation by understanding the context of different media formats and repurposing them, which is a key feature of the app.

💡Podcast

A podcast is a digital audio program available for download or streaming. The video script discusses the problem of writing show notes for a podcast, which was the initial inspiration for the AI app 'CM Magic,' highlighting the app's utility for podcasters.

💡Distribution

Distribution refers to the process of making a product or service available to consumers. The script discusses the importance of distribution for early-stage startups and how the founders leveraged platforms like Appsumo to launch their AI app and gain significant user traction.

💡Affiliates

Affiliates are individuals or companies that promote a product or service in exchange for a commission on sales. The video mentions the use of affiliates as a marketing strategy, where the founders incentivized content creators on social media to promote their AI app.

💡Product

A product is an item or service offered for sale. In the video, the term 'product' is used to refer to the AI app 'CM Magic,' which the founders built to solve a specific problem and then scaled to a successful business.

💡Marketing

Marketing is the process of promoting and selling products or services. The video script discusses various marketing strategies, such as leveraging personal brands, content creation, and affiliate marketing, which the founders used to grow their AI app business.

💡Elixir

Elixir is a programming language designed for building scalable and maintainable applications. The video script mentions that the AI app 'CM Magic' was built using Elixir, highlighting the technical choices made by the founders in developing their product.

💡Phoenix

Phoenix is a web framework for the Elixir programming language, known for its live view feature. The video script refers to Phoenix as the tool used by the founders to build both the front end and back end of their AI app, emphasizing the efficiency of using a single language for development.

💡Webflow

Webflow is a web design tool that allows for the creation of responsive websites. In the video, the founders mention using Webflow to build the landing page for their AI app, focusing on aesthetics and user experience without diverting development resources.

💡Subscription

A subscription is a payment model where customers pay a recurring fee to access a product or service. The video script discusses the founders' decision to offer a subscription model for their AI app, with a cap on usage, to ensure profitability and customer satisfaction.

💡Branding

Branding is the process of creating a unique name, symbol, or design that identifies and differentiates a product or service. The video script emphasizes the importance of building a brand by partnering with the right creators and investing in the product to increase the quality of outputs, which helped 'CM Magic' stand out in the market.

💡Profitability

Profitability refers to the ability of a business to generate profit. The video script mentions the founders' focus on profitability, ensuring that marketing expenses do not exceed 20% of revenue, as a key principle in growing their business.

💡Co-founders

Co-founders are individuals who start a business together and share ownership. The video script discusses the dynamics of the co-founders' relationship, their alignment, and the importance of complementary skills and trust in building a successful business.

💡Venture capital

Venture capital is a type of financing provided by investors to startups with perceived long-term growth potential. The video script reflects on the founders' past experiences with venture capital and their decision to focus on building a product that customers want and are willing to pay for, rather than seeking external funding.

Highlights

AI app 'CM Magic' reached $120,000 a month in revenue in less than a year.

The app leverages AI to create content from various media formats like videos, audio files, and conversations.

The founders discovered a solution to a personal problem which led to the creation of CM Magic.

CM Magic was built in 2 weeks and scaled to six figures in 10 months.

The app offers a lifetime deal to its customers, providing access to services forever.

Partnering with Appsumo helped establish a solid brand and attracted 10,000 users.

Incentivizing creators on social media was a key growth strategy for the app.

The founders operated a marketing team with one person and contractors for specific verticals.

Building an imperfect product initially is emphasized as a part of the development process.

Elixir and Phoenix were used to build the app for stability and scalability.

Webflow was chosen for building the landing page due to its ease of use and templates.

The subscription model of CM Magic has a cap on usage.

The founders believe in not spending over 20% of revenue on marketing to ensure profitability.

The team's success is attributed to alignment, complementary skills, and trust.

Prior experience with VCs influenced the founders' approach to building a customer-centric product.

The founders meet quarterly to align on important business decisions.

Monday and Friday standup calls are used for team alignment and operational efficiency.

The founders advise not seeking validation from VCs but building something customers want.

Transcripts

these guys went from0 to

$120,000 a month with an AI app and the

crazy part is they did it in less than a

year I drove out to Miami Florida to ask

them exactly how it works and how one

platform got them 10,000 paying users in

a matter of days so was a sort of like a

great springboard for us in order to

establish a solid brand the boys started

their Journeys working at VC back

startups

but they grew sick and tired of the

system so they got together to build

something for themselves and along the

way discovered something that would

change their lives the main reason I

think C magic won is in this video

Blaine Ramone and Justin share their

exact blueprints on how to come up with

a million-dollar idea how they built it

in 2 weeks and how they scaled it to six

figures in Mr in just 10 months I think

one of the key things here is

I'm Pat walls and this is starter

story hi right Ramon thank you for

having me we are here in this beautiful

Miami apartment with your two

co-founders Blaine and Justin and we are

here to talk about this amazing app that

you built tell me about what you built

yeah so we built CM magic. which

leverages AI to create content with the

context of your videos audio files

conversations any media really you can

repurpose purp it and we started cast

magic about 10 months ago and today

we're north of 120,000 in Mr let's talk

about the opportunity of AI apps what's

going on here I think if you can embed

yourself into an existing workflow and

radically remove the friction of like

the barrier to entry to doing something

such as creating a podcast those are the

tools that are really taking off and you

know I think these are real needs and

not just a sort of vitamin it's more the

painkiller an allergy thing yeah all

right so we got blae here he's the

co-founder and uh he runs product tell

me about how you found the idea for this

app yeah so essentially I host DTC pod

with Ramone and I noticed this problem

which in my mind at the time was just

about how do you write show notes from

your podcast I can't just like assign it

to a random VA who isn't going to

understand the context of like the

person I talked to and all of that so

that was kind of the inspiration when we

saw AI coming up we're like wait a

minute like I think AI might be able to

do this the real lesson there for any

founder is just by doing something and

putting yourself in a situation where

you're constantly doing you're going to

unearth problems that are worth solving

and maybe those problems have bigger

implications than you thought they would

in the first place yeah yeah you figured

out this problem that you have and then

you decide to make it a product what

happens after that I think distribution

for an early stage startup is something

that's like super super critical

starting with yourself at the core of it

build something for yourself and then

very quickly get as close to the

customer as you can either create

content that attracts people to you and

so they can kind of come inbound so

that's why I think personal brand

putting out content is such an important

thing or find a distribution partner

that can like really help you scale so

we're talking with the team at appsumo

and they said hey we we've got this

opportunity would you guys be down to

like launch 2 weeks from now and we're

like oh 2 weeks but that's a really

good opportunity to get distribution and

start growing basically yeah let's talk

about marketing and growth you guys grew

zero to 120k Mr in 9 months how did you

do that so appsumo was a sort of like a

great springboard for us in order to

establish a solid brand we launched with

them and I think it's been one of the

most successful launches ever on appsumo

so you know around

350,000 in revenue generated gave us

probably around 10,000 users or so we

offered a lifetime deal which means that

our customers have access to us and our

services forever for people that self

subscription say well in this world

would I ever do that when I can get

recurring subscription but we needed to

build a brand we needed to build a

foundation we needed the feedback the

other thing that worked really well for

us was creators we started incentivizing

people to create content on socials you

know some people we were paying some

people we were reaching out as to be an

affiliate and one of the best ways to do

this is like scrape Instagram scrape the

platforms find companies that might be

adjacent Industries look up those

hashtags and then build volume once you

build volume and respon responses now

you have leverage to negotiate with the

rates and then just go from there and

start paying out based on cpms and then

decide who's worth sponsoring and get

enough volume to test if it's a viable

channel for you or not yeah you have a

oneman marketing team you don't have

some big marketing team you've grown

this business to 100,000 120,000 Mr how

do you operate a marketing team with one

person I have contractors that help me

on a specific vertical but something

people don't do enough is like research

you can actually go and like map out how

did this company that is similar to us

that serves our same exact customer base

how did they get distribution and so in

our case I went back and tried to find

businesses that really grew through

Affiliates so like how do I set a system

here and a tangible example here is I

noticed myself going back and forth with

a bunch of the creators on like ideating

content Concepts and then I was like

this isn't going to scale so I created a

whole notion document of a bunch of

Concepts now I don't have to get on a

call with them and iiz on the content so

it really just all comes down to systems

rone and the boys are proof that you

don't need funding to start and build a

million-dollar business in less than a

year all you really need is a simple

idea and the right strategies to bring

it to life and the best way to do that

like Ramone said is by studying other

businesses so if you're serious about

building your own product like the boys

at Cass magic but don't know where to

start well right now you can download

our Deep dive SAS report for free it'll

break down over 52 different micro SAS

business ideas making millions along

with trending ideas growth strategies

and tons of other stuff you'd want to

know just head to the first link in the

description to get it now let's get back

to how these guys actually built this

thing all right let's talk about tools

what coding languages and what tools did

you use to build this app in the first

two weeks I can't emphasize enough how

much you have to accept building an

imperfect product a bit of a

unconventional choice to a lot of people

I built this with Elixir it's very

stable it's a language that scales

really well and because Elixir has a

tool called Phoenix and live view you're

able actually to build the entire front

end and back end in the same language

for the landing page we built it in

webflow we could make it look good using

templates and therefore we could spend

all of our time as a development team

working on the part that mattered most

to our users which was the product all

right let's talk about pricing how how

is cast magic priced and how did you

come to that strategy we offer a

subscription build monthly with a cap on

usage it's funny we really just kind of

threw out numbers that we wanted to test

and found that it worked and we are

always analyzing what we're spending on

llms and transcription making sure that

we have enough margin to justify the

outputs that we're giving our customers

and so far we've been able to keep those

in Balance so that both our customer and

us can win from the relationship okay we

are back with Ramone to talk now about

AI it's changing like crazy

differentiation tell me why was cast

magic successful when there are

thousands of other AI apps that weren't

so the main reason I think cast magic

one is for three reasons number one we

solved our own problem number two we

build a brand by partnering with the

right creators and number three we build

and continue to invest in the product to

increase the quality of the outputs

that's really what it boils down to in

an AI product it's not just how does a

platform work but what is the quality of

the output that I'm getting here and are

they taking any shortcuts in the back

end and clearly we weren't so so then

the customers are now invested into US

you have to ask yourself how do I

position myself and how do I build a

brand for the long term here all right

so what do you do when chat gbt comes

out with a new model and then they

essentially replace your product how do

you think about that we are solving our

workflow problem and there's always ways

in which you can continue to optimize

that process more and more that isn't

Chad gpt's business Chad GPT is there to

provide the infrastructure they have a

future not a prodct

they solve one small pain point they

don't solve like an entire solution that

only a platform that covers a workflow

from A to Z can solve yeah tell me some

of the numbers some of the financials

behind this business turn single digits

like net turn is single digits that goes

back to the value of like you know

solving like a existing problem not not

creating a novelty we have over 120,000

in Mr we're growing over 20% month over

month I think one of the key things here

is we don't spend over 20% of our

revenue on marketing marketing always

has to be less than 20% and that is

because we want to make money we want to

be profitable so far it's working and

you know those are principles I think

that we'll continue to to use to grow

the business yeah so you guys built this

three friends tell me about why your

team works and why why you guys work so

well together I think the reason we work

so well together is because we've all

been through the Journey and we know

it's a long one and initially in the

beginning we're not getting stuck in the

small details

and we also know when to have fun

yesterday we were meeting we did our

whole road map thing and we took out

some time to go and play nine holes of

golf it's not that serious so I'm

curious on Blaine's take here though in

Justin's yeah I mean I think the biggest

thing is just like alignment right I

think so many co-founders especially

maybe first time around they partner

with people out of personal convenience

or because out of necessity almost

rather than like true true alignment the

second thing that I think is so so

important is that you have skills that

compliment each other so everyone can

stay in their Lane having a team that

doesn't like overly overlap and step on

each other toes I think is massive so I

think finding not only alignment but

also people that you can build with that

you like Vibe with but also compliment

each other other's skill set is like the

best thing that you can do I think a a

big part of that is the trust that we

have in each other too and we're very

honest about what we're building like

we're not afraid to say like hey this

isn't as good as it could be and I think

that shows and where we are today and

and what we've built let's talk about

about VC you guys have all gone through

the

VC I'm going to be the anti- VC poster

tell me a little bit about your past

with VC and how you're thinking about

these days yeah so I've had two Venture

back companies in the past the first was

seated their series C they've raised

over $80 million to date the second one

was called Omni panel we were backed by

CRV we raised a $2.5 million seed and

this time around it just feels very

different it feels like we spent all the

time we would have spent like talking to

VC's exping like the broad vision for

our product and we just spend it talking

to customers and building crap for

ourselves that we ended up using um so I

think that's something that's really

valuable for anyone who's getting to

start don't seek validation elsewhere

build something that customers want

they're willing to pay for and that you

yourself that solves a problem for you

and you'll be in good shape and then if

you want to take VC to accelerate that

growth that's up to you and you can

figure out if that's the right decision

for your business yeah I think in my

experience I built a business called

trend. iio I tried Racing for that

business for almost 4 years the effort

that it took to actually get good at

fundraising it's a skill set in itself

if you're not great at building a

business and generating revenue and you

choose to get great at fundraising

you're just going to have the whole

thing backwards how do you guys all work

together how do you stay aligned how do

you meet as a team I think from a team

perspective what's really cool about how

we operate is you know Ramon's in Fort

Lauderdale I'm here in Miami Justin's in

Austin a lot of the work is async during

the work week but what we're really mind

F and the reason we're all here today in

Miami is because every quarter we get

together for at least a week to like

meet on all the important things so I

just think it's like a really great

model for startups or Founders who are

like looking to get the business started

it's not like where you are where your

office is ETC it's like find a great

group of people wherever they are in the

world and you know do your own thing but

like make sure that you know you also

get together to get like really aligned

on the things that need to happen in

your business the other thing that we do

just in terms of operationally is we do

a Monday 30 minute standup call and a

Friday 30 minute standup call just to

align on product what everyone's doing

but we really try to block out the

calendar and not be stuck on calls all

day and more focus on like just shipping

yeah all right thank you guys for having

me in this amazing apartment this

amazing business that you guys built do

what they did follow this advice and you

have a $120,000 Mr AI app good luck guys

hey guys I hope you took away some

golden nuggets from that video that'll

help you along your business Journey and

for anyone that still feels a bit lost

maybe you don't know where to start or

you need some inspiration on some good

marketing strategies well I got

something for you right now if you head

to the first link in the description you

can download our Deep dive SAS report

for free it has over 50 different micras

businesses making millions along with

the tools they use the business models

they run and tons of other stuff that

will help you on your journey just click

the first link in the description to

grab it and if you're serious about

building something consider joining

starter story it will help you do it

much love and see you guys in the next

one peace