SaaS Interviews with CEOs, Startups, Founders
How his side project hit $200k in revenue, new way to A/B test pricing
26 May 2021
Chapter 1: What is the main topic discussed in this episode?
So more like $20,000 or $30,000 last month in revenue. Oh, I wish it was that high. No, last month, we have all this public, by the way. Last month, I think we are very close to $15,000. You are listening to Conversations with Nathan Latka. Now if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com.
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Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise. Or Looker CEO Frank Bien before Google acquired his company for $2.6 billion. We want to see a real pervasive data culture, and then the rest flows behind that. If you'd like to subscribe, go to getlatka.com.
There, you'll find a private RSS feed that you can add to your favorite podcast listening tool, along with other subscriber-only content. Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hello, everyone. My guest today is Daniel C.H.
He created Legit Check by C.H. with his brother, David, who's 17, and they've gathered over 6 million all-time users. Their company helps people authenticate luxury items like clothing, sneakers, bags, and watches. They're currently making 200 grand per year using the simple send order note function of an e-commerce system. Daniel, you ready to take us to the top? Yes, I am. Let's go.
You've got two things. You've got this tool, and then you've got another tool called Price Unlock. Touch quickly on Price Unlock. What's it do? Price Unlock is being built right now because of a need we have. So we need to A-B test prices. To give a practical example, I don't know whether $9.99, $9.99, $9 sharp, or $10 a month is what would work best for us.
And then we also need to localize some prices. So Price Unlock is meant to help you find and set the perfect pricing for your SaaS tool. That's pre-revenue, pre-launch. Yes. So at the moment, it's not even a fetus. It's just being conceived, so to speak. All right. Let's go back to legitcheck.app. They have that on your website. It says authentic, fake. Let's find out. What's the business model?
It's very simple. So we are first and foremost a media company more than a tech company. So this actually didn't even start as a business. In 2017, I wanted to learn how to make an app. And I found out that I don't really like it, that I actually hate making apps. But I did go through and finish it.
So it was literally just a glorified bookmark folder because I've also written a few guides on how to tell fake Yeezys. Fake Fred Williams shoes. That's what was cool back then. And then I just let it there. And long story short, in the meantime, it has just grown. I got very lucky to a point where I think it pulled in 100,000 users before we...
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Chapter 2: How did Legit Check By Ch start and what services do they offer?
What's the total team size today, full time? Between eight and 10, I would say something like that. Okay. And why is that fuzzy? Like, don't you know, wouldn't it be obvious who's full-time and who's part-time? Why does it fluctuate? The question is whether I need to make myself look bigger or not. So that's why I wanted to give an honest answer.
We have some people on some longer term, full-time freelance partnerships, but it's not like employment, employment. So that's why I'm just a bit finicky when it comes to this number. Got it. So between eight and 10, how many are engineers? Um, five. Okay. So heavy, heavy in tech and what's the model. How do you guys make money? People pay us, we come back with a verdict.
And I was just making this post the other day about how that verdict is being sent through. Anybody seeing this, if you've ever used an e-commerce platform, you know you have a function for sending an order note. Like, hey, your order is a bit late. Sorry for that. So that's how we send our verdict.
Chapter 3: How is the new tool Price Unlock designed to help with pricing?
Now, the reason why I'm doing this and why I made the post and this interview as well, thanks, by the way, for having me, is we're leaving that behind. So that was just a scrappy way to get off the ground. We didn't ever imagine we're going to make six figures out of it. Low six figures, I have to mention. So we're coming out with something new pretty soon.
Same business model, but something more elegant than just the scrappy send order notes. And that's what it is. Is it a recurring model or people just pay you one time when they want to get something verified? It's a transactional, so one-off. People pass one time, but 25%, 40% of the people come back. What do they pay, Daniel, one time for one verification? Anywhere between $20 and $100.
Depends on the item, but most of our items are priced at $20. But if you've got a Hermes Birkin, that's going to be $100. And how many verifications did you process last month? Um, six, 700, somewhere like something like that. Okay. And is that the main growth driver? Like that's all you're focused on is getting people more verifications per month?
Uh, honestly, our focus is to, uh, bring more and more readers because we have 6 million all-time viewers of our guides and that's really our main, main product. I know it's not as fancy. Where can we view that Daniel? What's the link? Let you check that app. And if you go in the nav bar, get authenticated, there's going to be a button that says explore the library.
So that's where we've written about a million words on how to spot fake items. So what I forgot to mention earlier is that people can pass 20 bucks or a hundred bucks, but we kind of shoot ourselves in the foot, I guess, quote unquote, by giving people the free guide. So if anybody wants to learn. Sorry, where is that? I'm on get authenticated. I don't see a link to a free guide anywhere. Sorry.
So say again, in the NAFTA, there should be a button that says, yeah. No, my bad. My memory is bad. Library, the first button, explore the library. It says with a blue badge, free guides here. Got it. So these have gotten over 6 million views is what you're saying. Yeah, pretty much. Okay. And this is how you bring new people paying 20 bucks to get verified. They trust you through your content.
Yeah.
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Chapter 4: How does the business model of Legit Check By Ch work?
So it's a lot. It feels like a lot of work to write all this. You write all this personally? No, no, we get help from people. We got into a point where we have a system put in place where we have some internal guidelines on how to make a guide, how to test it, how to make sure, you know, things don't slip through the cracks. And that's basically our expertise.
That's why we beat our own drum that we have earned expertise, not self-claim, because there are other people doing this, but they just set up shop one day and they say, I know how to authenticate, but that doesn't have any claim, any backing to their claim. So 700 verifications last month at $20 a pop means you did about $14,000 in revenue last month. Is that about right?
The ARPU is a bit higher because we charge $60 for our certificate. So if you've gotten scammed with fakes and you wanted to get your money back, we charge $60 and we make that into a nicely looking letter that is trusted by banks, by PayPal, by Amex for that matter. So more like $20,000 or $30,000 last month in revenue. Yeah. Oh, I wish it was that high.
No, last month, we have all this public, by the way. Last month, I think we are very close to 15 grand. But then the previous months, we're doing a bit better as we are riding the wave of, unfortunately, the coronavirus pandemic. I'm very picky with sponsors I have on the show. Usually I use the show and you guys, the audience, as leverage to ask for a great deal.
And I simply won't take on the sponsor unless, number one, I love the product, and number two, they're giving us a special, unique deal for our audience. Well, Zendesk reached out recently. And you know, me personally, I've watched other tools in Zendesk, the customer support space, increase price. They try and upsell you 20 different products.
It's expensive because they want to move to the enterprise to make their investors happy. Well, Zendesk is publicly traded, and that means they have a lot of cash to throw around, which means they can afford to give startups a great discount. In fact, all these enterprise tools, I convinced them to say, you know what? We'll give it to your audience, Nathan, for free for six months.
So here's the caveat. If you're pre-series B... or you have fewer than 50 employees, you're eligible today. Go to nathanlaca.com forward slash Zendesk to get their best customer support tools totally free for six months. Again, that's today, nathanlaca.com forward slash Zendesk. So what was total revenue last year, 2020? 2020, I don't know. I can look it up.
But what I've checked for that post was that May to May, so May 2020 to May 2021, it was $200,000. And it should actually be a bit more because we made some charges outside of WooCommerce. So let's say $220,000, something like that. How are you splitting your time? Obviously, I get more excited about price unlock. You're building a tool so that you can use on your own application.
My gut tells me that that's the thing that's going to take off over the next five years. Yeah, who knows? I mean, I hope to link back to this specific episode and say, look, Nathan predicted it. Well, what's the URL? Where can people check this thing out? buychgroup.com slash price minus unlock. I have priceunlock.com, but I can only start using it in three days from now.
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Chapter 5: What was the revenue growth for Legit Check By Ch in its early years?
But what if you're actually pricing too high? And, you know, I just wanted people and myself actually to have some knobs to turn when it comes to pricing. You know, kind of like being able to experiment by turning the knobs. That's what I mean. Yeah. Now, if price unlock takes off, would you sell a legit check app if someone offered you 200 grand upfront all cash? Just for a year of revenue?
Yeah. Well, probably not going to sell regardless of even if I'm getting a very juicy multiple because in my head, it could be way more. It just needs to be a slow burn because it's bootstrapped, completely bootstrapped, so no VC money. Is it profitable today? Yeah. It is. Well, it's pretty much we can operate on 95% margins if we fire everybody and do the authentications ourselves.
So there's a fancy word metric, which I don't know. The ones, net income? I don't know. How much money you make before, only after putting the fixed cost? Discretionary and like founder discretionary. Yeah, that one. That's the one. Yeah. Okay. Very cool. That's good. Profitable. Good to go. Launching a new tool. We're going to watch you carefully. Let's wrap up here with the famous five.
Number one, favorite business book. It's not a business book per se, but it helped me become a better business person. The power of now, no doubt about it. That's a good one. Number two, is there a CEO you're following or studying? Scott Galloway. Number three, what's your favorite online tool for building a business? Getlatka.com. You really use it or you're just trying to make me feel good?
a bit of both i'm not gonna lie but i actually use it because some of your episodes are um look i was looking at upload care the other day we're going to use upload care and then i said hold on a second let me see if these guys are not gonna just go bust in two years with all my pictures and then you had an episode so get latka.com was up there yeah there was that was a good episode all right number four how many hours of sleep do you get every night
At least eight, nine is really the answer. And what's your situation, married, single kids? No kids. I'm building my future with my partner who I respect and love a lot. She's great. And she's actually been not only inspiring to me, but I look up to her. I can say that proudly. That's great. And Daniel, how old are you? 23. 23. Last question. What's something you wish you knew when you were 20?
That was yesterday, man. Maybe when I was 13. No, I'm joking. Building wealth is a function of saying no. That's what I would tell myself. Guys, there you have it. Legit Check app launched a couple of years ago with his brother. They did $30,000 in 2019, their first year in business. And in 2021, last 12 months, they've done about $200,000 in revenue.
They help consumers submit pictures of purses and bags and watches, and then they verify it for between 20 and 100 bucks a pop. They did over 700 verifications last month, but now he's frustrated with his pricing. Is it too high? Is it too low? He's building a SaaS tool called Price Unlocked to figure that out. We'll see what happens next. Daniel, thanks for taking us to the top.
Thank you for having me. I'm honored.
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