SaaS Interviews with CEOs, Startups, Founders
Closet.Tools 1 Man Show, $250k Profits, $360k in Revenue, Wow!
04 Aug 2020
Chapter 1: What is the main topic discussed in this episode?
I honestly should increase the price a lot today. There's a couple features I came out with recently where people are making hundreds of dollars a day using it. So I certainly could increase prices, but people like that it's, you know, reasonably priced.
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Hello everyone, my guest today is Jordan O'Connor. He was born and raised in rural Western New York. He went to engineering school and worked as an electrical engineer for seven years. He started Closet Tools, that's closet.tools, as a way to pay down student loans and transitioned to full-time founder when it made more than double what he made at his full-time job.
All right, Jordan, you ready to take us to the top? Let's do it. All right, how much in debt were you coming out of college?
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Chapter 2: What inspired Jordan O'Connor to start Closet Tools?
Yeah. Crazy. Okay. So what does Closet Tools do and when did you launch it?
So I started that just over two years ago. It's an interesting story. So I actually started it for my wife. So she actually started selling clothes on Poshmark. just as a way to get some additional income. And she was doing a lot of manual tasks. The way that Poshmark's set up, you have to share your items and you have to engage with other users and stuff like that.
And she was spending a lot of time doing that. And I looked at it and I was like, I feel like I can automate that. And I was just in the middle of learning some web development stuff and learning JavaScript. And so I wrote a little script. It automated a few things. She was using it. Her closet was doing really well with it. And I wrote a blog post about it on my personal blog.
And then it was maybe a few months later, Google picked up on it. I started ranking in some SEO for some SEO terms.
Chapter 3: How did student debt influence Jordan's career decisions?
And I started getting emails from people saying like, can I use this? What does it do? How does it work? Um, and so that was kind of in the back of my mind for almost a whole year, uh, before I even started closet tools. Um, I, I kind of had that validation of like, people want this thing. Um, and, and so that's kind of how it got started.
Well, how were they finding on Google? Like what keywords were they searching?
Uh, so I had written like a, like kind of a short blog post, like this is a Poshmark you know, automation scripts. So anybody that's searching that, right? Like Poshmark automation, Poshmark bot, those types of things. My, my posts started coming up in those search results.
Yeah. You rank, you have one article that brings in most of your organic traffic. It's at closet.tools forward slash Poshmark hyphen bot. And you rank number one for Poshmark share bot, Poshmark bots, Poshmark bot, Poshmark algorithm. And these bring you several hundred clicks per month. So this is, this was how you got your first customers then.
Um, no. Well, so, I mean, that's today, right? Uh, you know, two years ago I, I, I bought the domain, right? So you don't have all that traffic coming in.
Um, how much was that?
I mean, it was just a, you know, it was like 12 bucks a year or something like that. It was, you know, it's nothing crazy. Um, but My initial traffic actually came from Reddit. There's a Poshmark subreddit. And they were pretty lax back then about Poshmark bots and stuff like that. So I actually was like, hey, I made this thing. Give me your email and I'll give you the beta script for free.
And then you give me feedback. And then so I did that and I got about 150 signups for the free one. And then... I took about two months and kind of wrapped it around a SaaS package. So, you know, I did billing and stuff like that and made an actual GUI for it. And then I flipped it on them and sold it for $30 a month. And I got, I think, 10 customers the first day.
Of the 150? Yep. That's amazing. How many customers today?
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Chapter 4: What challenges did Jordan face when transitioning to entrepreneurship?
It's all strategy. Um, yeah, that's, that's, that's been huge for me. And I think, um, uh, you know, over the last two years, I kind of wrote them all very quickly in the beginning and then I'll do like a 2020 update, right. Where I add some stuff for, for now, but it's still ranks good.
Yeah. How many, sorry, you put out how many total articles you have?
Uh, it's something like six or something. It's nothing, not a lot.
Guys, so there, I mean, there you have it, right? SEO strategy doesn't have to be like launch a blog and hire 20,000 writers and do it as you can just hyper target six, six things, update them once a year, make sure they're smart and build a $30,000 a month business, right? Jordan, that's the way to do it. That's right. What were you at 12 months ago in terms of revenue?
Um, I mean, do you want me to look or you want me to just guess? Let me look.
Tell us what you're doing too. So what tool do you use to track this?
So I use all Stripe for everything. Let's see, 12 months. 12 months, I was at 12, basically 12K.
12,000. Okay, interesting. And you've done all this bootstrapped, right?
Yeah, 100% bootstrapped. And, you know, it helped having a job. So, you know, I didn't have any, you know, it's not like I quit my job. I actually kind of had them both in sync for about two years. And so, you know, yeah, it's 100% bootstrapped.
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Chapter 5: How did Jordan validate his business idea for Closet Tools?
Rough math. That sounds about right.
I mean, yeah, that math, that math works. That's also impressive. I mean, you have a thousand total customers and you're adding 200 new customers every month. That's like a crazy, that's a high, high growth rate.
Yeah. It's growing faster now than it ever has really. Um, You know, I don't know. I think, I think word of mouth, honestly, is a huge driving factor. There's a very, you know, the people that actually use bots, they, you know, are very close with each other. So they actually talk about it a lot. But I also think I actually just started doing advertising back in March, I think February.
So I mean, that just obviously amplified that the free trials I was doing probably closer to like, um, you know, 200 free trials, you know, several months ago a month.
Yeah. That's interesting. Yeah. I mean, would you, why, why wouldn't you go try and maybe raise like $60,000 in like debt so you don't have to sell equity and use that money to run some ad experiments to keep fueling this growth?
Um, I don't know. Uh, mostly because I don't know what would actually happen. Um, obviously I could probably pay it off and it would be fine.
Um, but for now it's actually kind of nice that it just grows consistently because I'm able to manage, you know, I have to do all the customer support, you know, I have to do anytime that anything breaks, you know, because it's a third party app, it's not like there's an official Poshmark API.
Um, you know, things break when Poshmark updates the site, I have to spend all night fixing the app so that the next day people can use it. Um,
Jordan, try something with me real quick. On your computer, go to founderpath.com and scroll down to the second part. You'll see a big calculator. Okay, okay. And type in like, okay, you're doing three grand a month in ads. Let's say you want to run an experiment and spend another 5K. Type in like 60 grand. Okay, okay. What's it tell you on the left?
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Chapter 6: What marketing strategies did Jordan use to grow Closet Tools?
That would be in the last 12 months because I had it set up.
Okay, so 15% annual churn.
Yep, yep.
That's actually not horrible for this price point. Interesting. Very cool. And obviously profitable, right? I mean, so you pay yourself, you pay someone ad spends. I mean, what are you profiting per month? Basically like 20 grand?
Yeah, it's ridiculous at this point. Yeah, it's something like that. It's kind of crazy. So yeah, 20 to 25, something like that.
So if someone came to you and offered you something like 5x EBITDA multiple, so if you're doing $25,000 a month in profits, that's $300,000 a year in profits, essentially. If someone offered you, I don't know, some multiple on that, would you take a deal?
I don't know. I think I'd want to get it a little bigger. If I got probably above maybe like the $2 million, $3 million mark, I'd probably take it. Um, I did get some offers several months ago, but I was making, you know, 20 K they wanted, like they wanted to do like 600 K or something like that. And I was like, eh, I mean, I'm going to do that anyways, probably.
So, you know, in the next year or two. So I don't know. It wasn't really worth it for me. Yeah.
Yeah. Not worth giving up your freedom. Yeah, exactly. Yeah. Very cool, man. All right. Let's wrap up with your famous five. Number one, favorite business book.
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