How MySwimPro Maintains $1 Million ARR, Even When Pools Are Closed During the Pandemic

Nathan:

Hey guys. My guest today is Fares Ksebati. He started MySwimPro when he was 23. In sense, it has grown to over a million downloads named app of the year by Apple and has grown to seven figures in revenue. They’re a 100% remote company distributed across 10 different time zones. Fares, are you ready to take us to the top?

Fares Ksebati:

Let’s do it.

Nathan:

Tell you what man. I was living in LA the past couple of months and I was living in a place with a pool and I’ve never been a big swimmer because I would paddle, I go too quickly, I’d kick too much and I paddle too fast, I’d be out of air in like two seconds. And then someone said, “Nathan, all you have to do paddle less, kick less, keep as much of your body underwater.” And I’m like, “Wow, I can swim a couple laps now and not be exhausted.” Would your app help me realize this or how does it work?

Fares Ksebati:

We could do that for sure. It’s funny that you mentioned that I was just at the pool before this call and I was helping like a new swimmer. And so we help swimmers from beginner all the way through more advanced who maybe swam through high school or college and now they’re doing it for fitness. The app is basically like a personal coach. So if you want to go to a gym and you want to get like a yoga class or a swim class, that’s pretty easy. We created MySwimPro because you can’t do the same thing if you want a swim workout. It’s very difficult to get that kind of coaching. So to download the app and to have that personalized training program, tell you what to do step by step, workout by workout, set by set, that’s really what we deliver through our iPhone and Android app.

Nathan:

Okay. This is going to sound like a silly question to the audience, but I bet the answer might surprise you, do you require a pool?

Fares Ksebati:

Yes and no. So what’s really interesting, especially with the pandemic here in 2020, a lot of pools actually shut down. So there was at one point here in 2020, where 90% of the world’s pools were shut down completely, so you actually couldn’t swim. So we actually pivoted the business and in the app, we actually have at home training programs to do without a pool, so you can train holistic experience. So if you do have a pool, great, you can obviously go swimming. If you have open water, you can go in the lake or ocean, whatever you have. And if you’re at home and you don’t have access to a pool, or you want to compliment the swim training, you can do that in your house as well.

Nathan:

Fares, let’s talk money. It sounds like you’ve had some success here. When did you launch the company? What was year one?

Fares Ksebati:

Yeah, year one was 2015, but we didn’t monetize until 2016.

Nathan:

So tell me about what happened in 2015, sort of how did you get the initial capital to get going and how many users did you hit in the first year?

Fares Ksebati:

Yeah, it was all sweat equity in the beginning. So, myself and my two co-founders, we were basically funding it ourselves. We launched the app in 2015 on iOS and Android, and we didn’t launch the subscription until the following year. So we didn’t take any investment actually in that first year. First year, I think had like 6,000 downloads. And it wasn’t until 2016, we did a accelerator program. We get a little bit of initial investment. And I think in our second year when we started monetizing, we hit like 100,000 downloads total at that point. And revenue wise, we’re talking like thousands of dollars at this point.

Nathan:

Yeah, yeah. So just to be clear, 2015 was 6,000 downloads. How much revenue did you do that year? Do you remember?

Fares Ksebati:

We did zero. We just launched, free app, get things going and then the next year we launched-

Nathan:

Okay. So tell me about that. The first year you had at least a paid option. In 2016, you said you hit 100,000 downloads and what was revenue?

Fares Ksebati:

Yeah, first year it was like about 20,000.

Nathan:

And how did you make the revenue? What’s the pricing model here?

Fares Ksebati:

Yeah, so we initially launched with a monthly subscription. It was $10 a month. And the app looking back now, very elementary compared to what it is today. And we’ve made a lot of progress. There’s still a lot more work to go, but it was $10 a month. And then the following year in 2017, we added a yearly subscription option as well.

Nathan:

Mm-hmm (affirmative). Why did you make a decision to add a yearly option?

Fares Ksebati:

Yeah, so actually a couple of reasons. But number one, the members of our community actually wanted that. The people didn’t want to get billed every single month for something that they knew that they wanted for a longterm, which is amazing. The other thing, too, just looking at the unit economics, if you have something monthly, you have to get someone to repay 12 times to equal a year, right?

Fares Ksebati:

And so, if you can position it where you actually get a discount for going yearly, then they save money and it’s perceived higher value because it is, and you don’t have to convince someone 12 times. They have a whole year to keep their loyalty.

Nathan:

And what was that annual price you launched with?

Fares Ksebati:

It was $100. So when we launched, it was $10 a month. We actually have changed the pricing six or seven times in the last four years, just tweaking things. So we changed the monthly pricing to $15 a month. So you could compare 15 a month or a hundred a year. So it’s like almost like a 50% discount at that point.

Nathan:

And what is pricing today?

Fares Ksebati:

Today, it’s 180 for a full package for the year or $30 a month.

Nathan:

Interesting. Okay. So let’s just take a step back here for a second. 2015, get going, 2016, you get paid, 2017 pricing experiments. What digit in terms of total downloads in 2018? Do you remember?

Fares Ksebati:

2018, at that point we were probably around half a million.

Nathan:

Okay. I mean, this is not easy, right? A lot of apps launched on the app store. This is not by accident. It’s not just word of mouth. You guys were very strategic about this, break it down for me. How’d you get five and a half million downloads in your first two and a half, three years?

Fares Ksebati:

Yeah. There’s a few factors there. The first one is just the category that you’re in. So for us, it’s a fitness app, but it’s a fitness app specific to swimming and that sub category actually isn’t that crowded. So if you think about like yoga or meditation or weightlifting, I mean, there’s tens of thousands of apps in those categories and there’s a few category winners by far. In swimming, I mean, we were the first mover advantage, so that helps, that helps you get going, so I think that can attribute some of it. We were app of the year by Apple, so we had a little bit more exposure just organically in the app store.

Nathan:

In 2018?

Fares Ksebati:

We were app of the year in 2016. So 2017 is where we started to see those results because they announce it at the end of the year in December. So 2017, 2018, we started to see some that snowballing effect. Now that’s actually not really a significant, but at the time when your app of the year and you get that prominent placement in the app store, that’s pretty big.

Fares Ksebati:

On the content marketing side, really ramping things up. And now we just have a machine that’s pushing things out, so that really helps the word of mouth. And so I think snowball effect is probably the most fitting way to do it because I always tell people, year one, we were getting like 20 to 30 downloads a day and then fast forward, and all of a sudden that’s two to 300 downloads per day, and then it’s like a thousand downloads per day, but it wasn’t you snap your fingers and you instantly go… If you were to spend a lot of money on marketing, you could theoretically buy that exposure, but we didn’t really go that route. It was more organic content, word of mouth placement.

Nathan:

Break that down real quick. So 2016 was average 30 downloads a day. And then when do you get up to like a thousand or a hundred downloads a day?

Fares Ksebati:

Yeah. We’ll go year by year. So 2015, 20 to 30 downloads a day. In 2016 to 2017, we about 10X that over that 12 to 18 month window. So 2017, now we’re looking at two, 300 downloads per day. 2018, 2019, we’ve gotten up to about 800 to 1200 downloads per day. And the unfortunate thing about the pandemic of 2020, with pool access being shut down for 30 to 50%, we’ve actually been cut back pretty significantly. Now today in 2020, we’re looking at three to 500 downloads per day just because the pools aren’t open and people aren’t trying to go swimming right now, but I’m very confident that 2021, when the Olympics comes back around hopefully next year, we’ll start to see that traffic go back to normal.

Nathan:

And so today, how many paying customers do you have either on a monthly plan or an active annual plan?

Fares Ksebati:

Yeah, we have about between seven, 8,000 paying across both of those.

Nathan:

And how many was that last year?

Fares Ksebati:

We’re about flat from last year because of the pandemic, but that’s where we were last year.

Nathan:

Was revenue also flat or have you driven up sale revenue this year across the same base?

Fares Ksebati:

It’s pretty consistent despite actually getting less traffic incoming. So when it comes to a cash basis, we get the yearly subscribers to pay all upfront, that’s really good for the business. So we have less of that now because we have less new people coming in, but we’ve added additional revenue streams, including paid sponsorships, which is sort of like an advertising component. So that’s kind of balanced it out. So we’re about the same. We would have been less probably actually because of everything that’s going on.

Nathan:

And so if we break this down and go look at 2019, what was total revenue in 2019?

Fares Ksebati:

We are 1.1 million.

Nathan:

One and one. And what do you think you’ll finish this year at? The same?

Fares Ksebati:

About the same. Probably one. Yeah. We’ll see about that.

Nathan:

And what percent of that one do you think will come from the new stream of advertising you added?

Fares Ksebati:

Up to 10% of it actually. Yeah. We’ll see. I think last year it was zero. So last year 0%. this year, maybe up between eight and 10%. Next year, I could see 20 to 30% of our revenue being that new revenue stream.

Nathan:

And what does that ad pitch sound like to someone that sells, I’m going to make this up, to a Speedo who sells swimsuits and they want to market in your… what is it? You give them a placement in your app, your newsletter, what?

Fares Ksebati:

All of that. Yeah. So the pitch is we’ve developed the largest digital community of swimmers in the world. And this is a really attractive audience that we have a good connection with. If you want to get in front of this audience, either by sponsoring it, nav challenge, placements in our social media, email newsletter, a 90 second spot in our YouTube channel, that’ll cost you X amount, and we’re going to be able to deliver half a million impressions or whatever placement that you’re looking for. It’s pretty customized. We don’t have like a one size fits all.

Nathan:

And so how many total people do you have on your email list, users that have signed up that you can reach with ads?

Fares Ksebati:

Yeah. So we have an email list about half a million, social media audience also about half a million, and then we have the in-app placements. Our YouTube channel alone is about 50 something thousand subscribers growing three to 5,000 subscribers per month. People are watching these videos for like 10 minutes. It’s a very engaged audience there. And we’re sprinkling in the sponsorship placements throughout all of those channels.

Nathan:

Talk to me Fares about capitalization as you grew. Have you raised capital today? And if so, how much?

Fares Ksebati:

We’ve raised about a million dollars in the life of the business. A lot of different sources, like most entrepreneurs, everything from we did a startup accelerator, we’ve gotten grants, I’ve won pitch competitions. We did two rounds of equity crowdfunding, which a lot of people ask me about that. We raised online via We Funder. So we have 300 investors across 36 different countries through those two campaigns that we did, which total about $600,000 in investment. And then we have a little bit of like VC in that and outside of that as well.

Nathan:

What year did you do the We Funder campaign?

Fares Ksebati:

We did the first one in 2017 and then we did one in 2019.

Nathan:

How much did you do in 2017?

Fares Ksebati:

The first campaign was 130,000 and then about 460 and some thousand in 2019.

Nathan:

What’s the secret to making that work?

Fares Ksebati:

This is the most common question I get. I get at least one question per week about how to raise online equity crowdfunding. And I made a few videos about this because people are so interested. So the key is to figure out where is your loyal audience, like who knows who you are already because that’s what you have control over. So if you have an email list or people know who you the entrepreneur, if you’re a category expert or something, that’s what you have to leverage. So for us, it was an email list and it was my personal network. And you have to just build out the strategy, your campaign, like last year, our campaign was open for three weeks that you could invest. So I primed all the people that I knew that were on my existing lists, email lists like personal list, separate from our company member list and then build out the strategy. And then three weeks, we raised half a million dollars.

Nathan:

Of the 500,000 you raised in 2019, how much of that did you get committed before you clicked launch on We Funder?

Fares Ksebati:

That’s a good question. I think it was maybe a third or maybe a little bit less than that, maybe a quarter it was committed. So you can invest before it even opens publicly and no one can see the total and then there’s people who like soft committed. So I would say if you include the soft committed, didn’t actually put the money in yet like on day one, that was probably a third.

Nathan:

Yeah. This is the secret I’ve gotten out of all the people I’ve interviewed that have done crowdfunding. If you want to raise 200 grand, what you do is you say, “We’re raising 300 grand.” You will go get soft commits of 200 grand so that you hit 200 grand on day one, and so you’re definitely going to hit your target and then other people who you don’t know coming and do the last hundred grand, and then the momentum and the press gets another a hundred grand and then boom, you raised net new 200 grand. You have to do see it. You have to prime it. A lot of people don’t understand that. Yeah. Very interesting. And you had an audience to do that, which makes a ton of sense. So talk to me about teams today. How many people?

Fares Ksebati:

We have 10 full-time and two part-time distributed across five countries.

Nathan:

How many engineers?

Fares Ksebati:

About half the team. So half the team is on the marketing side I would say, and half is on the engineering side and it’s a good mix, but we’re still growing.

Nathan:

Turns critical in a SAS company is certainly critical in a B2C subscription company like this. What’s your turn look like today, especially considering COVID?

Fares Ksebati:

Oh yeah. I mean, if we’re lucky, if we’re keeping at this point for yearly subscribers, like 30, 40% over a year. So it’s not very good compared to what I had speak with other apps. So that’s something we’re continuously focusing on improving. It’s another reason why the yearly subscription is very valuable as compared to the monthly just because getting someone to pay 12 times compared to once. We want them to pay multiple times on the yearly plan obviously. And that’s what we’re focusing on.

Nathan:

And what’s your fully weighted CAC to get a new customer paying $30 a month?

Fares Ksebati:

Yeah. So we actually don’t spend that much on paid advertising right now. That’s a channel that we’re looking to expand on, so that way we can throttle that. So if we have our yearly subscriber, for example, $180, if we can get the CAC under that, we get an immediate payback. That’d be fantastic. That’s something we’re looking to scale up. We’ve seen just from initial testing, a CAC around 100, 150. I’d like to get that lower. I’d like to get more money behind that, so we can have a better idea of what those numbers look like, but it’s mostly been content marketing is where we’ve been focusing

Nathan:

Fares, on that note, let’s wrap up with the famous five. Number one, favorite business book?

Fares Ksebati:

Favorite business book. I like Tim Ferriss’ book, The 4-Hour Work Week.

Nathan:

Number two. Is there a CEO you’re following or studying?

Fares Ksebati:

Oh, I can’t give one. So any fitness app CEO who has hundreds of thousands of subscribers, I try and connect with all of those guys.

Nathan:

Number three, what’s your favorite online tool for building the company?

Fares Ksebati:

I like LinkedIn.

Nathan:

I meant to ask you this, by the way, of the million you’ll do this year, do you have to give 30% of that to Apple?

Fares Ksebati:

No. So some of it’s web, some of it’s iOS, some of it’s Android. Not only is it not 30%, but if you get a subscriber more than a year, it becomes 15%.

Nathan:

Got it. How much will you pay Apple this year total you think?

Fares Ksebati:

I should know this a bit better. At least six figures.

Nathan:

Yeah. Yeah. Okay. That makes sense. All right. Number four. How many hours of sleep do you get every night?

Fares Ksebati:

Okay, so now I’m getting like eight hours of sleep. Before, it’s all over the place. Sometimes it’s like five or six. Eight is a lot for me. Normally, it’s less than that.

Nathan:

Got it. Fair enough. Eight. And what’s your situation? Married? Single? Kids?

Fares Ksebati:

I’m single and eligible.

Nathan:

Eligible and no kids running around, right? All right, Fares, and how old are you?

Fares Ksebati:

I just turned 29 a few days ago.

Nathan:

Oh congrats. Happy late birthday.

Fares Ksebati:

Thank you. Thank you.

Nathan:

All right. The last question, take us back nine years. What’s something you wish you knew when you were 20?

Fares Ksebati:

So I gave a TEDx talk and I gave this quote by Bill Gates. I’ll say it here. So he says, and this is what I wish I realized more at the time that most people overestimate what they can do in one year, but they underestimate what they can do in 10 years. And it’s the concept that you just got to stick with it, compound the impact of whatever it is you’re working on and you’d be surprised what you can do in 10 years.

Nathan:

Guys, MySwimPro they’re going to break, or they broke a million dollars in revenue last year from $20,000 a year back in 2016, launched in 2015, three co-founders again, helping people understand how to do workouts related to anything in the water and swimming. They charge $180 a year or $30 a month. They have over 7,500 customers paying, also now putting ads to their platform to folks that want to spend on ads. They’ve done this all raising $1,000,000, team of ten today, five engineers as they look to continue to scale their testing some paid spend. Caught $150 CAC right now to get one of those $180 per year accounts, trying to get that down so they can scale the channel. Fares, thanks for taking us to the top.

Fares Ksebati:

Appreciate it. Thanks for having me.

Nathan:

One more thing before you go, we have a brand new show every Thursday at 1:00 PM central. It’s called Shark Tank for SAS. We call it Deal or Bust. One founder comes on, three hungry buyers. They try and do a deal live. And the founder shares backend dashboards, their expenses, their revenue, ARPU, CAC, LTD, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday, 1:00 PM central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2:00 PM central. To make sure you don’t miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live.

Nathan:

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Nathan:

In the meantime, I’m hanging out with you here on YouTube. I’ll be in the comments for the next 30 minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We got to push them away. Click the thumbs up below to counter them and know that I appreciate you guys’ support. All right, I’ll be in the comments. See ya.