Episode 794 | From Struggling Side Project to Life-Changing SaaS Exit

Rob Walling:
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You’re listening to Startups. For the Rest Of Us, I’m Rob Walling. In this episode, I sit down with a longtime podcast listener named Zamir Khan, the founder of Vid Hug. And as you’ll hear in this episode, there have been many touch points on this very show where Zamir has sent in a voice message or I wound up chatting with him back in 2021 when I did my call for anyone going through an exit. And I’ll talk to you for 20 minutes. So you’ll hear us recount this in this episode, but it is a pretty incredible story of a founder who started a B2C SaaS company and was really struggling, struggling to get traction, was struggling to grow it, and spent years facing the headwinds that we talk about on this podcast, high Churn. It’s hard to charge a subscription. I believe it was a one-time fee at the time, and it’s just really hard to get momentum in a business where the numbers are against you. 

And then if you listen to this episode, you’ll find out what caused his revenue to explode more than 100 x per month and an eventual offer to buy the company for an amount that we don’t disclose on the show, but it’s an amount that means he never has to work again. And you, dear listener, get to hear the whole show and learn whether he took that offer or not. It’s quite a journey. And in the middle of the show, we’re going to have a clip from episode 433, which I believe was in 2018, maybe, maybe 2019. And we’ll have a six, seven minute clip of his prior voicemail. And you’ll hear me and my former co-host, Mike Taber, answer his question. And it’s all relevant. It all ties in to his story and the eventual outcome. Before we dive into Za Me’s incredible journey applications for TinySeed, my B2B SaaS close today, September 9th. If you want the right amount of funding, an incredible roster of mentors, a world class network, an instant community of some of the best B2B SaaS founders in the world, head to TinySeed dot com slash apply. And if you miss the application, head to TinySeed dot com slash apply. Enter your email to be notified when applications open in the future, or likewise if your business isn’t quite ready, but you want to stay in the loop, TinySeed dot com slash apply. And with that, let’s dive into our story.  

Zamir Khan:
Zamir, welcome to the show. Thanks, Rob. It’s a bit surreal to be here, but I’m very excited  

Rob Walling:
Still. The listeners know you and I were just talking and I knew you were a listener of the show, but you said you were listening since before I bought tail, so that’s 2011 at least. You might be an og, like 14, 15 year listener, which is a trip. So here’s the big question. Are you going to listen to this episode?  

Zamir Khan:
A hundred percent,  

Rob Walling:
Yeah. Okay.  

Zamir Khan:
Yeah, this is a bit of a bucket list thing for me. Yeah,  

Rob Walling:
Awesome. Love it, man. So I’ve obviously in the intro told people a little bit about what you built and how you changed your life through SaaS, but I want to hear firsthand from you what it felt like when you saw millions of dollars appear in a bank account through after a lot of hard work, a lot of skill, a lot of luck. You saw more money than I’m guessing you had ever seen in your account. Walk me through how that felt.  

Zamir Khan:
Yeah, I think the answer may not be what one might expect, but I think the overwhelming feeling is one of relief because having gone through a fairly lengthy process with selling vid hug and one that my sample size is one in terms of experience there, but I don’t think there are sale processes that are a hundred percent smooth, but it had its ups and downs and definitely relief that all of that time and efforts came through. And also, I think I didn’t have the time or the energy to really absorb it fully because I knew next step was let my team know what had just happened. And then my heart was with making sure that they’re feeling secure because the entire company was acquired, the team, I wanted to make sure that they knew that they still have jobs and they’re part of this journey still, and they’re needed with the product. 

So that’s where my mind was. It was seeing that number was surreal and unreal. And definitely there was a little bit of celebration happening with my wife, but then it was like, okay, that’s cool, but we got to move on and there’s still a lot of work to be done here. That was, it was over time, I think as I had the chance to transition into my new role and frankly have a lot of responsibility taken off of my shoulders by the larger company that I was now a part of that I had over time, more time to appreciate the new reality of, okay, life is different now.  

Rob Walling:
Yeah, that’s a good way to put it. I think it takes most people quite a bit of time. It took me months to realize, oh, I love what you said, life is different now. I think there was a moment for me where I bought, I don’t know, a million dollars of Vanguard Mutual Funds. You know what I mean? It was like, I need to deploy this. I’m not going to do it all at once. And I was kind of a little bit of dollar cost averaging in, but I remember being like, who does that? Who buys a million? And it’s like, well, me, I guess now it just blew my mind. And that was a moment because having money in a bank account, it’s just a number on a screen. There’s utility to it, but it doesn’t feel, but to me, owning assets investments was like, oh, this is where the rubber meets road. And that’s where I was like, oh, okay. I’m in a different place than I was a few months ago  

Zamir Khan:
For sure. And I think the question people in that situation often get is, what did you buy to what toy? And I didn’t buy a Ferrari or something like that. I wasn’t in that mindset anyway, but for us, we had actually just bought a new house that needed a lot of work to be done to it. It was an old house. And before this, we were having to make a lot of decisions of like, well, we have a certain budget and we can do A or B, but we can’t do both. And so the difference for us was like, let’s do both. That was the kind of splurge, so to speak. But I wasn’t driving a Ferrari the next week  

Rob Walling:
That came, A year later, you strike me, someone who’s very pragmatic and will not over  

Zamir Khan:
It hasn’t happened yet.  

Rob Walling:
Yeah, yeah. You’re still thinking about it. I want to read a little excerpt. I asked you to put together a timeline. It helps us kind of navigate the story. And here’s a quote from this. You said, I was an avid listener to your podcast, and I completely bought into the philosophy, and yet I found myself on a path that broke most of the rules, B2C, low cost, one-time payment, an industry in which I had no edge. I knew this. I knew I was playing on hard mode, and yet I continued to do it. And I think because someone listening to this episode might be thinking, what the fuck are you doing, Rob? Why do you have a B2C success story on here? This kind of goes against the thing that I’ve developed over the years. We used to take B2C questions, Mike and I, and then I took it for a while, and then eventually I’m just like, I just don’t have anything to say here. 

Most of the time it doesn’t work out, but I followed your story is the thing. And you not only sent us in, I think it was an email question back in maybe 2018. It was episode 433, and I want to play a little excerpt of that here. You not only sent that, but then you and I stayed in touch and to cut forward, there was a few years ago, it was during the pandemic in 2021 where a, now it’s on the podcast. Look, if you’re selling a company right now, it’s the biggest decision of your life probably. And if you need 20 or 30 minutes of my time, do it. And I did a bunch of calls, I don’t remember how many 10, 15 calls with people just to do it. We were all at home not doing anything anyways, and you and I then chatted, and that’s when you told me, I was like, how’s it going? 

What’s going on with vid hug thinking, oh, what? It’s a cute business. And you’re like, someone made me a tremendous offer for this and I was blown away and we had a good conversation then. And so that’s one of the reasons I want to bring you on here. I also, bringing on counter examples, no one’s, right a hundred percent of the time, I have my rules of thumb of when things should work and this and that, and B2B I think is the best, but you’ve kind of proven that you’re the, what is it, the exception that maybe proves those rules?  

Zamir Khan:
Yeah. Let me say first and foremost, I’m not here to say you should go out and do a solo B2C Bootstrap startup. I’m not here to say that I believe that my journey is an example of what an other worldly event you need to happen to actually help you win in that space. As a bootstrapped founder, it’s clear that the pandemic was so big for Vid H’s growth. It was everything. What I tend to say to people is the pandemic was the largest marketing campaign possible for something like Vid Hug. It’s like if we had had millions of dollars of venture funding to do marketing for Vid Hug, it still couldn’t have done what the pandemic did for it. And so I think for any founder to rely on some event like that coming along would be a little  

Rob Walling:
Foolish.  

Zamir Khan:
Yeah,  

Rob Walling:
Because it was a big swath of luck. You were right place at the right time and you were doing things in public and that created an opportunity and you created your own luck. But in essence, yeah, I think you and I talked offline, it’s like if there was no pandemic, vid hug is not the exit that you had. It’s not the product that you wanted.  

Zamir Khan:
No, and I think my email question into you and the rest of my journey is a sign that I am not going to sit here and say I knew what I was doing, and I knew that this shift would eventually happen. I didn’t. And as I put in the notes, frankly, just before the pandemic started, I was at the point of almost giving up on Vida and I parked it and decided to focus more on my consulting because I had a family. I needed to pay the bills. So I’m not going to sit here and say that I knew it was coming, but it is that old saying of luck is when preparation meets opportunity. And I believe this is a firm example of that.  

Rob Walling:
Yeah, I agree too. All right, so now I do want to roll your question, and Mike and I weighing in saying, Ooh, B2C is, oh, I don’t know that I, and I think I’m several times, so it’s a nice side project, but wouldn’t, it’s a step one busy, you know what I mean? I can say that. So we will roll that here. Our next question is about how to approach a B2C company. And this is a long email, so I’m going to summarize it. He says he’s a huge fan of the podcast, started listening about five years ago. He’s a senior developer. He’s always had the product itch, and he’s working on an app. It’s called Vid Hug, V-I-D-H-U-G, vid hug.com started as a scratch your own Itch project for his mother’s birthday. And it’s definitely B2C. It’s low LTV, it’s non-recurring revenue. He says, I feel like I have a mini rob on my shoulder most days saying, what are you even doing with this question mark? 

Exclamation point thing is, I don’t really have a counterpoint for you except for a feeling. And that feeling comes from talking to customers that are now able to do something they previously could not. The plan moving forward is to focus on growing organic channels on the B2C side through SEO and referrals, and also build a B2B side, which would bring recurring revenue. Do you think I’m crazy for even trying this? And just as a point of data, he has basically a free tier, and then he has one that is $15 and it’s a one-time thing for the B2C side. What do you think, Mike?  

Speaker 3:
Well, to answer his question directly, am I crazy for even trying? The answer is yes. It’s just a matter of how crazy we all are.  

Rob Walling:
Exactly. It’s just a spectrum,  

Speaker 3:
Huh? Just varying degrees. Yes. 

So going back to the question of are you crazy for trying something that’s B2C? I would say no. I definitely think that there are opportunities out there for people to build B2C businesses that are solid and profitable. It’s just a matter of making sure that you are methodical about how you pursue your different traffic sources and putting people on your mailing list and optimizing the product itself for revenue and getting people into it and making them happy. And if you can do those things, it doesn’t matter whether it’s B2B or B2C, you’re still going to have happy customers who are going to give you money. But that last piece of it’s the key part, they have to be happy and give you money. If they’re not giving you money, then you don’t really have a business. And I think that’s the challenge that most people run into with B2C companies is that your LTV tends to be much lower and you need a larger number of customers in order to make it work. But if you can get those viral components, and there are a lot of viral components to something like this, you can email out to a bunch of people, and if one person gets in there and they email 50 people, now you’re in front of 50 people instead of just one. That’s a huge viral aspect that a lot of things that try to do B2C don’t necessarily have, and because this has that kind of baked into it, that’s an encouraging sign. It’s not the only thing I would look at, but it’s definitely encouraging.  

Rob Walling:
Yeah, it’s tough because B2C is just hard. It’s just a different game with this customer lifetime value. You can’t run ads, you can’t pay salespeople, you can’t, there’s so many things you can’t do. So it’d literally be outreach to bloggers and offering it free to bloggers and sponsoring bloggers. And I keep saying bloggers, podcasters, whatever, people with audiences. If you got, here’s the thing, if you got a bunch of Instagrammers with huge followings, YouTubers, bloggers, podcasters, yeah, it would be possible to grow this, but it’s a completely different playbook than what we typically talk about or what you’re going to hear from MicroConf speakers, for example, or in the traction book where it really is more focused on doing a lot more B2B stuff. So you just have to ask yourself, is that what you want to do? Do you want to build those relationships with influencers? 

And it’s not going to be the core of the hrs workflow or the core of a manager’s workflow. It’s a nice to have. And I think that’s the other thing to think about is I had businesses in the early days that only made a thousand a month, 2000 a month, and frankly, I learned a lot from them. It was a stereotip approach, and I learned how to whatever, run ads and do SEO and do display ads and do AdWords and that kind of stuff. And I took that experience with me to the next thing. So in its current incarnation, do I think Vid Hug can be a mid six figure business? I don’t, and it’s just my opinion, right? It doesn’t mean I’m right or wrong, but I don’t see an angle there as it stands today. But then again, I could have said that about Drip the month it launched because it was just an email capture form, and then we kept pivoting and grinding and customer developing and slow launching and doing all the things that you heard me talk about on this podcast over the years and eventually got it into the seven figure mark. 

And so that’s the thing is as it stands today, vid Hug, it is a cool side project, and frankly, I’m impressed that you’ve gotten it to $600 a month given the price point and all that. But I think it depends on how you’re thinking about it. If you think about it as good learning and you want to build it up to a grand two, three grand a month, that to me seems doable. And it’ll be learning and it’ll be a little bit of income. I don’t know how you would ever get it passed there. Maybe you’ll eventually come to the point where you see an angle to do that. I also had a lot of businesses that never did. I had eBooks and info products, and I had e-commerce site and I had small software products, and I had one time software products and all of those topped out, and I could never get them past, let’s say between 505 grand a month. 

I had several that were in that range, and eventually I either sunsetted them or I sold them as I moved on to bigger things. And so my gut is that Vid hug will fit into that space, that role in your entrepreneurial career, and there’s certainly a time and place for those, and you just got to figure out, I think, how you were thinking about it and where you want it to take you. So yeah, obviously Mike and I were, it’s funny. I think we were right. We were right, but also wrong. Obviously, we were technically incorrect because it became something most, but we couldn’t have predicted the pandemic, where as you said, I love this phrase you used. You said, I basically got to problem solution fit, but good vibes don’t pay the bills. And C, basically the pandemic shifted the market and brought product-market fit to me. Most of the time, you have to tweak the product to fit the market, but the market basically shifted to you, which I think is a succinct and very clever way of saying it these days. Vid Hug is located@memento.com. Memories are made with Memento, and it started off as something that you built to fix a pain point that you experienced with your mom’s 70th birthday. You want to tell us that story?  

Zamir Khan:
Yeah, that’s right. So this was back in this late 2016. My mom was turning 70 years old, the milestone birthday, you want to do something special, and I come from an immigrant family. My mom’s family and friends mostly don’t live close by. They live in other continents. And so we thought, well, what if we got everybody to record a video message to mom and put that all together into one video? And my mom was turning 70, she’s the youngest of her many siblings. And so you can imagine the crowd, the audience that I was trying to get recorded videos sent to me digitally from. And so I experienced the challenge with that. I did actually put together a little webpage where they could visit it, use their webcam, record a video, and that would automatically get sent to me. And that even that, as clunky as it was, was easier than record something and put the file in Dropbox and or try to email it to me, but Gmail attachments won’t allow that kind of thing. 

Then I put them together in iMovie. It took me a long time, even though I consider myself a technical person, it’s just you want it to be good and perfect by the end of it. When I was going to show her the video, I was honestly sick of the project. I was like, I spent way too much time on this, but let’s see, let’s show it to her. And it was as I would find out again and again, and again with Vid Hug, it was one of the most impactful gifts that she’s ever received. She was speechless. She cried. She told me, especially because her generation is not as digital. She told me this one friend that you had in the video from Australia, I haven’t seen her face in 25 years because we write each other letters, but we haven’t necessarily shared selfies because we don’t do that. And so I know that’s a generational thing, but that just showed me the depth of the impact of it. And I think it was my brother’s partner, she said she knew I was techie. She knew I liked to hack on things. She said, you should build something that anyone can do this. And that just started the idea. And I was like, yeah, wouldn’t it be cool if more people did this? Because it didn’t take so long to do.  

Rob Walling:
And so you built an MVP and it seems like spare time, 20 17, 20 18 hacked something together. And did you originally give it away for free, or did you have kind of a Stripe link from the start?  

Zamir Khan:
No, the bare bones MVP was very, I had read the Lean Startup and I was trying to be good. So my MVP was simply a webpage where you could submit videos, and it was me, I moving the clips together on the background. 

And so I was doing that for family friends. I was kind of advertising it as a service just to validate, is this something other people want? And I got good feedback from that. Then I was like, I don’t want to iMovie these things. And so the technical challenge was like, can I build the video editing automation on the background? So I built that in the cloud, very rudimentary, and that’s when I first started charging for it with Stripe. And that was very basic. It just put the videos together, no background music, no audio normalization, almost no graphics of any kind. The process would succeed probably 85% of the time. And the rest I was I moving? Yeah. So then incrementally, there were newer versions after that that were faster, better graphics, more music. And actually the last incremental version that I made, which was a really big step up in terms of what the user got, was released a couple months before the pandemic.  

Rob Walling:
Wow. So just luck meets opportunity type or preparation meets opportunity in that case. So when you added a strip link to it at middle of 2018, I have in the notes, and did it make any kind of money over the next year or two? Was it this like hundreds a month?  

Zamir Khan:
Hundreds. So yeah, I wrote into the pod, I got to 600 a month, and that was because of some fortunate marketing on my parts. I was a technical person figuring out how to market. I was on Quora answering all the special occasion related questions. And at that time it was tough because not only had I picked B2C, I had picked something new that people didn’t really know was an option for them. They weren’t searching for group videos, so I had to find who were the people who really, really needed this product and were desperate for it. And so I was trying to get into communities related to, let’s say family with people deployed in the military and people in long distance relationships basically I found were the ones that really were coming to this product. So yeah, hundreds of dollars a month. It was a side project. Obviously I was still doing technical consulting work to pay the bills, but I was passionate about it because every user that came along and used it had that same reaction of like, wow, this, I only spent $15. A lot of them told me I would’ve spent a lot more had I known what the impact was.  

Rob Walling:
How much were you charging? It was a one-time fee, right?  

Zamir Khan:
Yeah. I think I started at $12 and then I increased to 15. And again, early stage, I was that founder who was like, I was putting 90% off coupons out there just to try to get people to use it, and gradually got away from that. And so you can see the mountain, you have to climb $600 a month is not a lot, but it’s a decent amount of users you have to attract. And they churn every time one time, right? One time. So  

Rob Walling:
You need 50 new people to convert and pay you every month to get to 600. And that’s where one time is difficult. That’s where B2C is difficult, the pricing is low. And so I think what we said in the podcast episode is like, you just don’t have money to market. You can’t really do much. You can’t buy ads. It has to be these free marketing approaches, which is free, which is your time, and that you did Quora and Reddit and Facebook. But here’s the thing. You went out, we talk about hard work, luck and skill. You put in hard work. You reached out and got a crucial backlink from a blogger who had a listicle about long distance gift ideas where they said video, and you’re like, Hey, can you just add a link to Vid Hug? And that was a flywheel for you, right?  

Zamir Khan:
Yes. Yeah, I love that story. So I was still listening to the pod at the time, and I knew I needed content. And so I did start a blog for Vid Hug, and I was writing my own, but I knew, again, that was a long-term thing that wasn’t going to happen right away. So I knew the terms I was interested in were related at that time to long distance relationships. And so one of the top terms for that was a listicle about long distance birthday gift ideas. And it was from somebody who had an e-commerce business where they sold birthdays in a jar basically, or a gift box, but it included birthday cake in a jar, I believe. Really a lovely idea. And they had this article of here’s the ideas, and obviously their product was in that list, but number four was make a video. 

And almost all, I remember all the 10 links or all the 10 items in the list had a link, but the fourth one didn’t, the video one. And so I thought about it and I didn’t want to just cold approach them. So I actually did a little bit of research on this founder. She was on an interview somewhere. I listened to it. And so the one, I reached out to her, I had done my research, and so it was an approach where I, I had spent some time learning about you, and I think that made her receptive to talking to me. And we actually got on a phone call together and had a good talk. She was a solo founder of an e-commerce business. I was a solo founder of Vid Hug at the time. And she just said, yeah, I’ll do that. I’ll put that link on you for there. And because of where she ranked, that was immediately like boom, one to two sales a day just from that link, which I know again, doesn’t sound like a lot, it’s not a lot of money, but for me at that time, that was a level that was a stair step for Vid Hug, and that actually gave me more motivation to keep going with it.  

Rob Walling:
And that’s the thing I like to underscore on the podcast a lot is flat revenue, no revenue, even just any type of flat revenue is really discouraging. And spending tons of time nights and weekends and having the number not go up is harder than most people realize. And so getting, as you said, one to two a day, 30 to 60 a month, that becomes, it’s not technically MRR, but it is recurring ish as long as that keeps ranking. And so that’s what you were seeing, which can really help boost your motivation for a while so that if we smashed forward, that was in 20 18, 20 19, you put the Stripe link on, you did a lot of one-time things that don’t scale, like we said, Quora and Reddit, Facebook, you get that link. And if we smash cut to February of 2020, right before the pandemic starts, you had vid hug up to a thousand dollars a month still on paper use. And so that gives people an idea of you were spending years, nights and weekends to get it from, it was at 600 I think in 2018 and then a thousand dollars a month. It’s a tough thing. And you said, I considered selling it even had interest, but didn’t complete the sale. So you were kind of just like, I don’t know if I want to keep doing this. I mean, you were kind of done with, yeah, what was the story there?  

Zamir Khan:
Yeah, so again, like you said, that’s early 2020, and as somebody who was a freelancer consultant, that’s the time that I did my annual taxes for the previous year. And 2019 was the year that I took the most time away from billable hours to work on Vid Hug. And it was easy for me because I enjoyed working on Vid Hug. Again, it was a fun project from a technical perspective, and the customers were having great experiences, so there were good vibes, but it allowed me to ignore the stuff we’ve been talking about with the low revenue numbers. And so that was staring me in the face at the time of doing taxes. It was like, whoa, okay, I’m having fun and I feel passionate about this project, but I have a wife, I have a family, and I have a mortgage. And I think anybody who’s been a freelancer consultant also knows that you don’t get promotions when you’re in that position. 

You don’t get a new job title every year, and you probably have a peer group where you’re seeing people make real tangible progressions. So that combined with like, whoa, my income was a lot less than it was in previous years, and UG is what I have to show for. It really made me examine it and think, obviously I wasn’t ready to fully step away from it, but I said, I’m going to put it on the back burner and I’m going to focus on my consulting. There was one other piece there that was making me feel that, which was, the other anecdotes is about the support that I had to do for Vid H because it’s a B2C business, low cost, and actually, I think you’ve said this before, sometimes the lower the cost, the more support you might have to do for those users. And so most of the users of the products were, I mean, almost all of them, lovely, but it’s a technical thing, and it’s attracting people who are non-technical. 

And again, I’m the solo founder. It’s a side project. It was buggy at the beginning. So I remember one time I was with my family, we were at a nice cottage in the back country, doesn’t have wifi and not good cell signal, and I’m trying to have a Help Scout conversation with a customer, and my family is inside playing board games, and I’m standing on a rocky beach holding my cell phone out to try to catch a signal until I feel my phone buzz with the next response from Help Scout. And that combined with seeing what it meant for the bottom line, it was like, this has been fun, but is it really worth it? That was kind of the feeling.  

Rob Walling:
Yeah, I’ve been in that same situation up on the coast of Maine at one point early on when I was doing everything myself, 2008 or oh nine, and I was there with the family, had a young kid, and I remember trying to get sales service to answer responses, and I also had some one-time sales stuff at the time, and it was just like, what am I doing? What is happening right now? I don’t want to be doing this. And especially for 12 or 15 bucks one time, every email you respond to is like, well, I just kind of, you know what I mean? None of this was worth it. So yeah, I could see how you’d be discouraged not only lack of growth, but the support. And then one month later to March of 2020, and I think you sent me a graph, which is awesome, but it’s like your daily active users goes from, I dunno, approximately 250 a day to 5,000 a day by the end of March. So it’s not like a 20 x increase. And obviously this has something to do with the lockdown. You want to talk us through the logic that caused that to just spike up? Was there suddenly search volume or were you being mentioned? What was the real, or was it just all direct and people were somehow, yeah, I just dunno how they were finding you.  

Zamir Khan:
Yeah, it was a crazy time. And I think the funny thing is that I think most people assume that because I was deep in this product and I understood who needed it, that I would know right away what would happen, but I feel a bit stupid. I was so focused at that time when things started locking down, when they announced that our kids wouldn’t be going back to school, I was focused on, I’m back with my consulting business. I’m moving that from the coworking space back to home. My wife and I need to watch our three kids as they’re at home and make sure that they’re still getting some education. And of course, I was watching the news and frightened about what’s going on. Vid Hug was at that time, like a Google Analytics tab that I kept open on the side. I like to see the real time, who’s on the site and how many people are using it and that kind of thing. 

And I remember trying to pay attention to my consulting work and noticing that the number of users on the site kept growing. You could watch it literally in real time. And as you saw in that graph, it just kept going. I wish I had the a hundred percent clear attribution to say what drove that. But what happened was that people couldn’t celebrate in person anymore. I knew that Vid Hug helped people celebrate who couldn’t be together in person because I knew it was used by people in long distance situations, but now everybody couldn’t celebrate in person. And so my feeling was that it was a combination of a few people found the product and knew about it probably through that link that I landed. But after that, it’s got a viral loop built into the product. That’s one of the advantages. So if somebody does a vid hug, we call them the organizer, they’re the one that’s commissioning, they’re making the video, they then invite their friends and family of the person that it’s for to participate in the video. 

Sometimes they invite 100 people, 200, sometimes 20. But a lot of people, all of those people come to vid hug and record a video. They’ve now seen the platform. They understand in a sense what it makes. And if only a handful of those people, a small percentage of them later say, oh, my mom’s birthday is coming up, or My son’s birthday is coming up and I don’t know what I’m going to do because it’s, that’s what happened. And the thing that surprised me, many things surprised me, but we would see happy second birthday videos on there. People were making birthdays for the kids, which I didn’t never thought this product would be for that because kids have birthday parties in person. And so we were seeing that. We were seeing schools use it immensely for teacher appreciation, for just staying connected with each other while they were all at home. And so from March, April, may, that growth just kept going like a freight train.  

Rob Walling:
And the viral loop, I think is a huge key to that. I talk in the SaaS playbook about SaaS virality, specifically different Facebook virality is different than SaaS virality, but within SaaS demarcated, strong virality and weak virality. So let’s do weak first. A good example of this is Savvy Cal or Sewell, Sal’s Scheduling Link. Sewell is electronic signature. I can send you a link to book me. I don’t invite you to be a user. I don’t invite you to contribute, but you’ll see Powered by iCal, and that’s what I call weak virality. Same thing with electronic signature. You’ll see, oh, he’s sending documents through Sewell. Cool. Strong virality is when I invite you, virality is Slack, where I’m the tech lead on my five person dev team, and I invite my four other people. They create an account and they do stuff, and they interact with it more deeply than just clicking a link or clicking a thing. 

And so Vid Hug has, at least by my arbitrary definition, strong SaaS virality, even though you still weren’t SaaS, you were still one time, but it drove the attention. And once people have used it, then they get the idea, oh, well, I could send this to my friends and my family and all that. And so you hit milestones. I love that you listed this. I hit milestones. More revenue in one hour, then usual in a day, more revenue in one day than usual in a month, more revenue in one day than all of 2019. Then you started working seven days a week, 14 hours a day. And so your wife must have, I mean, she was just on taking care of three kids duty. You had no time to do anything. What was your time spent doing? Was it mostly support or was it scaling and bug fixes?  

Zamir Khan:
All of the above. There was a lot of supports, and again, when we plot out the metrics of how many users that used Bid Hug actually needed support, that percentage is very low. But because a single customer brings 100, 200 people to the platform, people who record videos would still come in to support and say, often they’d have a webcam issue that wasn’t our problem, but they’re on Vid Hug using it. And so we would support them through that. Or somebody who’s being sent the video, I, I’m trying to watch the video, but my old Windows machine doesn’t have the right codex on it, that kind of thing. So yeah, even though it was a low percentage of the number of active users that needed support, my Help Scout inbox was just full. And so I was doing all of that. Luckily, I had, again, this is preparation meets opportunity. 

I built Vid Hug with a serverless backend using the serverless framework. So it was using microservices on the API side. And that actually scaled fairly well. I had some minor hiccups there, but I do feel like if I had it running on, and I’m not advocating this as a reason, because again, this is such a one-off, but if I had running on a small server, it would’ve completely just, it would’ve been trouble fallen over. So there was little things. It was all in AWS, but definitely had to tweak some things there. And also if people remember during that time, even large services were having trouble because everybody was moving to work from home. Everybody was going remote. The internet was just under strain. So a lot of the issues that we ended up having were larger third party services that we relied on going down. We had an AWS outage. We had at one point in time, vid Hug was using Digital Ocean and they had an issue. So those kind of things, but of course, your users don’t know that. That’s, to them, that’s a vid hug issue, and that’s fair. There was that and yeah, bug fixing, because at that time, I’d never had so many people with so many different devices and browsers, recording videos in the browser has come a long way. At that time, it was still device dependent, browser dependent, lots of those things.  

Rob Walling:
And to give people an idea, I had said, you went from 250 actives a day up to 5,000 a day by the end of March, and by the end of April, you’re at almost 80,000. So it just, I mean, talk about exponential. And in April, again, we talked about you were at a thousand dollars a month plateaued in April. You did six figures of revenue. And I remember you emailing me during this time, you could probably pull it up, but I remember you were extremely stressed and you were like, this is brutal. And in the notes here, you sent me, it sounds ridiculous to say that I experienced trauma from a wildly successful growing business, but I did. You were staying up till 3:30 AM at one point because there was this service in Romania that went down and they were asleep. And the downside of Vid Hug is quoting you. The downside of Vid Hug being so special to users was that when it didn’t work, you were responsible for ruining someone’s birthday or anniversary. Every single user was truly there for a special occasion. So this sounds like not fun at all.  

Zamir Khan:
Yeah, yeah, absolutely. So it’s the upside of experiencing the user’s joy when their occasion comes off. But you get to experience the downside of that too. So in that time was again, a third party service to have our videos recorded in the browser and then transcoded and sent to our servers. We used a third party service by some bootstrap founders who were in Romania, and they built a great product, frankly, and for the most part it did work. But like I said, that early stage of the pandemic was not really a good time for many services. And so they did have some downtime when they basically got, my understanding is they got DDoS by one of their other customers, another customer who didn’t realize that they were going to have so much volume. And so that meant that nobody could submit a video to Vid Hug during that time. And I think I have this in the notes too, just to give you a picture. At our peak in May, a video was being submitted to Vid Hug every second incredible  

Rob Walling:
Volume.  

Zamir Khan:
So every second, or maybe a little bit less than that, somebody was not able to submit a video to Vid Hug. And these people were, I’ve been invited to be part of my friend’s birthday, and now they’re not going to get my video because it’s not working for me. Or I remember talking to someone like, I’ve been working on this video for my husband for weeks and it’s birthday is tomorrow, and I want to surprise him with it, surprise him with it, but it’s not ready because the rendering platform isn’t working. And while those times were rare, my heart was so intertwined with this product as its creator, as its founder, that I soaked in when the products worked well, and I loved that, but I felt heartbroken when this happened to users. And I remember that night, I remember, I want to say I remember it well, but it was not enjoyable. 

I was exhausted, and I remember just sobbing with my wife next to me. She was kind of comforting me and frankly saying to her, I don’t know if I have it in me to keep going. And I did. It sounds crazy to say when you say the revenue numbers, I thought about pulling the plug, thought about putting up a static page and saying, sorry, folks, I just can’t do it anymore. And I’m happy that I was able to connect with some advisors and hire some help and dig out of that place. But I almost got to that place where it wasn’t worth it to me no matter how much money it was making.  

Rob Walling:
And that’s a really weird place to be, huh? Because as an entrepreneur or an aspiring founder, when you’re doing it nights and weekends for years and years and years, all you want is success and sometimes success, even when it doesn’t come this quickly, it can still be extremely stressful. I can certainly speak to experiencing that with Drip, which again, didn’t grow nearly exponentially like this, but I remember thinking, shouldn’t I be happier? Is this what I’ve wanted for 10, 15 years and now I’m here? And it’s like, this is not very fun. And that’s a really, really interesting place to be. Why do you think you didn’t pull the plug?  

Zamir Khan:
I definitely want to give some credit to my wife that she was very supportive and she wasn’t the kind to say, no, don’t pull the plug. You should keep going that strongly. But she was there for me and kind of in a way, this will pass. These things always do pass. And it did. And what I found, even though I was answering so many support questions during that time, almost everyone was so understanding. They were like, oh my gosh, I’m speaking to the actual creator of this product. I had in my signature er, Khan founder and CEO of Vid Hug. Little did they know I was the only person working for that company, but they felt special. And they said, oh, you’re looking at this right now. You’re responding to my email in the middle of the night. Thank you. And so that made it a bit easier. But I have to give credit to my wife, Heather, just like when I was out on that beach holding the phone out for Signal, she wasn’t saying, why are you wasting time on vid hug? It’s not paying the bills. She never said that. And so I think for a lot of founders who have been through this journey, they know that it takes more than just one person. There’s other people behind the scenes that make that happen.  

Rob Walling:
My wife, Dr. Sherry Walling, has a phrase that your spouse or significant other, your life partner is your original investor, your original. So if you raise subsequent funding, your original investor is that person was there with you because they put up with your bullshit. And I say that about because she put up with my bullshit for years and years of the nights and weekends, and I think that is almost a requisite to be able to pull it off. It is hard to do this alone.  

Zamir Khan:
I love that term because yeah, they go all in, right?  

Rob Walling:
Yeah. And so obviously you get this popular this quickly. You received inbound interest from a lot of investment firms, including Sequoia, including Punchbowl, which is a digital invitation and greedy card platform that wound up acquiring you in 2021, I believe, is when it finally closed. But you were getting this inbound interest to raise funding, and you’re thinking to yourself, I’m just trying to keep this thing afloat. I’m a bootstrapper. Do I need to raise funding? Do I want to raise funding? Right. It’s going to complicate things. But in 2021 it was Matt is the CEO of Punchbowl reached out again, and instead of investing, he says, maybe we should buy you. Was that even on your radar before then of selling? Were you thinking about, I mean, or were you just trying to keep your head above water? I’m guessing by this time you’ve hired some help, you have some support, help. This is a year-ish, nine months after pandemic started, but what was your mindset as you entered this negotiation that eventually resulted in an LOI and them closing the deal?  

Zamir Khan:
Yeah. First, I want to take it back to that early time period when I first had that inbound interest, and including from Matt at Punchbowl, who at the time I did not know at all. I consider him a friend now, but at that time, it was just some random guy from a company that I hadn’t heard of, and he reached out to me. A lot of people at that time reached out to me say, Hey, I was in a vid hug, or a friend gave me a vid hug, and I love the platform. Let’s talk. So at that time, like you said, there were still so many fires that I was fighting. I used the phrase building the airplane while flying it, that I didn’t even have the capacity to entertain such ideas. And as far as investment, I said, look at the company’s bank account. 

I’m not spending that money right now. I don’t need an influx of cash. I need other things. And so it was hiring that we needed to do team building because we basically experienced what you might consider four years of growth in three to four months. And so the company had a lot of catching up to do, and that’s what we did over that time period in 2020. So when Matt came back around, and that was unexpected to me, he came back around in 2021 and said, Hey, how are things going? Do you have time to chat again? And when the conversation came to, I’m not interested in investing, I’m interested in buying the company, then I had time because I had a team in place. I wasn’t working such a crazy schedule. The product had improved to the point where it was working well, and we were actually looking at, we were doing active marketing, we were looking at building out different features, maybe going after a B2B market a little bit. 

And we had already had also some other inbound interest for, it was never like, we want to buy your company. But it was like, let’s talk about integrating vid hug with our product in a way that I knew the eventual goal. There was just, it was an audition. So when Matt came around, I was in a place where I had the time to have that conversation, and I was also in the place of someone who had gone through four years of growth in four months, and I was burnt out. And I was like, oh, here is a company, a strategic buyer who has a team who has been at this for over a decade full of smart people who can help me and work alongside me. And that seemed very appealing. I was like, I still want to work on vid hug, but being the CEO of this company, which means a lot more than the stuff that I’m great at, which is product development has taken its toll, combine that with just pandemic life with kids. I knew there was a change coming. I knew the pandemic would end, and I knew that we would navigate our way through that. But that was daunting. And so when this opportunity came along, I was like, let’s talk.  

Rob Walling:
Yeah. And I remember when you and I talked on the phone, then in that early 2021 timeframe, I was surprised at the amount of money you were going to get because I thought of it as a one-time B2C. My valuation criteria obviously is going to be skew better for B2B for subscription. And you certainly had the growth, but even I remember we talked about, I was like, if you don’t sell now, when the pandemic ends, does this keep going or does it not? It doesn’t seem like it will. And there was a whole thing about that. And so I was also, because to me, that’s, it’s not platform risk per se, but there’s an existential risk to the revenue. And so when they made the offer, I was quite positive about it, or at least in my heart. I don’t know if I couched that on the call or not, but I remember being like, dude, this isn’t enough money. 

You never have to work again. I would in your shoes, seriously, seriously, seriously consider taking this. This does not seem like a bad decision long term. And this allows you to work on and do whatever you want forever rather than worrying about, Ooh, as the pandemic goes away, declines ends, whatever we want to phrase it, is this business still viable? With all that said, all exits are painful. There are no smooth times of selling your company. And so as we wrap up, because we are hitting time, I’m curious, can you summarize from LOI to close? Was it happy go lucky? This is amazing, everything’s great. Was it like, holy shit, this is way harder than I thought it would be. And man, I wish Rob and Sherry had written exit strategy five years earlier so that you could have read it and it would tell you how painful it would be.  

Zamir Khan:
I definitely wish I had exit strategy on my desk during that time, a hundred percent. It was not easy, and that’s not to say that I was dealing with anything unusual, but it’s a process. And again, with a small company, with a small team, this is not something that I wanted to present to my team and say like, Hey, we might sell the company, but it might fall through. So I knew that’s something that I had to do quietly keep the company operating because there was a lot to do, and also have these conversations and go through this due diligence. So that was challenging. It was extra work. And then at times, at one point, the other side went quiet for a long period of time, and that was incredibly stressful for me because I didn’t know what was happening. Later. I would learn that that had nothing to do with vid hug, nothing to do with me. 

It was just something that was going on on their end and not intentional, but even up until I would say one or two days before closing, and we’re talking about a process that lasted several months, there were points in time where I thought, oh, this might not go through. That’s incredibly stressful because throughout that process, you’re trying so hard to stay level and say, this may not happen, and we’ll continue with the company and we have a plan for it. But I think anyone who’s been through it knows that at some point in time, you get to a point where if this doesn’t happen, I don’t know how I’m going to go on.  

Rob Walling:
Yeah, exactly. That’s one of the hardest parts is you get attached to the money, but you also get attached to the idea that it’s not going to be so stressful and that you’re going to have to be able to hand off a bunch of hard stuff probably that you don’t want to do to someone else. You get attached to the idea of, yeah, I think you can really clearly see a future that you like better than the present. And to realize that could just get taken away from you at any time. It’s like, oh, this is hard. It’s a hard way to live.  

Zamir Khan:
Absolutely. It was that. And also I had put so much time that process that I could have put into growing Vidhu and preparing for what you said, the market shift that was coming. I knew what we needed to do, but I had just taken so much time away from that that I could have put towards it for this. So it was a bit of a sunk cost feeling too, that fear of  

Rob Walling:
Yeah, for sure. And so you actually stayed working with the acquirer who is now called Sincere. You worked with them for another four years, which is unusual for someone to hang around that long. You didn’t have golden handcuffs for very long, if at all, but recently just what, four or five months ago, you flew the coop, you went solo, you’re hanging out. Are you building another thing? Don’t build another thing, by the way. Not yet. Give yourself a minimum. Six to 12 months is what I want you to take because you do have the luxury of that time. So how you’ve been spending your time and why has it been some of the best months of your life? I remember this time where I was just like, oh, this is why I did all of this for, this is amazing.  

Zamir Khan:
Yeah. I think one thing about staying at Sincere for a while, which I had a great time at, great people. I loved continuing to work on Vid U, which became Memento. One of the things that allowed me to do is slow down from founder mode to executive employee mode, but still it’s different. It allowed me to bring some work life balance back and it allowed me to start building things into my life that I knew I would want to do after that journey ended. And so one of those things was I became a fitness instructor, like a group. If you think of those fitness classes at the gym where there’s like 30 people working out together, I do that. I started coaching my daughter’s soccer team, those kind of building in those activities that good for mental health, physical health, and also keep me from going all in on some other projects in the near future. But the way that I stay in touch with what I love is building new products and startups. I have invested in a few startups locally, actually, founders that I kind of came up with through my journey. And so in advising them and working with them, I get to still, I think as Rob still get that taste of the trenches and the ups and the downs, but I also get to step away from it at times and not have it be on my mind all the time.  

Rob Walling:
Yeah, it’s a really nice, really transition. Well, man, hell of a journey. Thanks for chronicling it here in so many ways on this podcast. From your email back in the day to tell on your full story today. If folks want to keep up with you, you are on X Twitter, it’s Zamir Khan, KHAN, but the I is a one. So we’ll link that up in the show notes if folks want to follow what you’re up to next. And of course, memento.com if they want to see what you’ve built. And you’re on LinkedIn as well. Thanks again, man, really appreciate you coming on the show.  

Zamir Khan:
Thanks for having me, Rob. It’s been a pleasure.  

Rob Walling:
Thanks so much to Zamir for coming on the show and telling his story. And thank you for listening this week and every week. This is Rob Walling signing off from episode 794.