Making $20,000 per month running an A.I tool after only 163 days

Hello! Can you introduce yourself and tell us about your business?

My name is Dustin, and I'm a small-town boy with big city dreams. 😂 

Well, that's how my journey started, anyways. From small town Pennsylvania to Hollywood and eventually settling down (at least for now) in Bakersfield, CA with my gorgeous wife and 3 rambunctious kids.

I'm the solo founder of Magai (https://magai.co), a game-changing all-in-one AI content creating suite that helps you leverage the best AI models in one seamless interface.

How did you start this business? Take us through the process.

I moved out to California to pursue my dreams of being a professional actor. After several years of grinding it out and barely making ends meet, I knew I had to make a change.

The actor's life is one of ups and downs, feasts and famine, and unpredictable schedules. After meeting my wife, knowing it was my job to provide for her (and our soon-to-be family), I sought to find a way to control my destiny by owning my own business. Having grown up seeing several economic downfalls hit my parents (being on food stamps and government support multiple times), I knew that I couldn't rely on the illusion of "stability" in working for someone else.

To me, being an employee was just as risky as building something for myself—just less rewarding. So I wanted to be my own boss, and build a business that would allow me to work on things I care about, and dictate my own schedule. After discovering I had a gift for design and marketing, I started a little marketing agency to help small businesses create beautiful websites and drive traffic to them with social media and SEO. But after a while, I realized client work was hard for me to scale—I care a lot about the small details, and that made it hard for me to delegate and limited the amount of work I could take on.

In 2014, I came up with my first digital product with the help of 2 friends. It was a WordPress plugin that completely flipped our specific category upside down. We had effectively innovated a space that seemed dead in the water.

And it turned into a rather successful venture, despite it being our only product. In 2020, after a few years of stagnation, and disagreements with my partners, I decided to exit that company for the sake of my mental health.

Of course, after that, I needed to find something new to build. Thankfully, I had been sitting on 2 ideas that were very exciting for me. It was going to take a lot of capital to build them, however, because I'm not a developer and needed to hire out development work.

My saving grace came in the form of 2 investors who believed in me enough to front me enough cash to build an MVP. It took about 9-10 months to finish, and more money than anticipated, but finally the 2 products were released. I went all out on a launch campaign with bonuses for our first customers, contests, communities, and everything I could imagine.

Unfortunately, the market just didn't respond to the MVPs in any significant way. I managed to capture plenty of attention, but user adoption was depressingly low. After over a year of grinding, and losing >$65,000 on the projects, I thought I was completely done. I gave up several times, and was so low that I considered ending my life. It was a dark place to feel like nothing I built matters, and I had nothing left to offer the world. My wife was the rock that kept me moving forward. She reminded me, "if God still has you here, He's not done with you yet." And then ChatGPT came along. From the moment I started playing with it, I knew nothing would be the same. This would change everything. I had been using AI powered writing apps for years, but something always bothered me about them. They all focused on "templates" for doing things. You had apps whose main selling point was how many different templates they had.

And while templates are nice, there are 2 main problems with this way of approaching content creation: 1. The "Paradox of Choice" effect - When given hundreds of options to choose from, the amount of cognitive load it takes in order to just make a single decision is daunting. You never know which template is the "best" one for what you want to accomplish, and when you make a choice, you're always second guessing whether it was the right one. This is bad UX, and it's why these AI copywriting apps never hit the level of mass adoption as ChatGPT did 2. Templates for you to fit YOUR goals, creativity, and ideas into someone else's predefined box. This can be incredibly limiting to people like me, who tend to think differently about things—the "out of the box" thinkers. But with ChatGPT, both of these problems are completely eliminated. No barriers between you and your objective. Just tell the AI what you want, in normal language, and it can give it to you. Infinite possibilities in a single text input box. Wow.

Once I started using it prolifically, as a content creator for 10+ years, I immediately felt the pain points of ChatGPT's UI/UX limitations. Simple things like search/filter for chats, ability to group chats into folders, ability to paste a URL and have the AI know what's on the destination page... these little annoyances started to pile up.

Since I had already begun exploring building my own AI powered mini apps using no-code tools, I already had a foundation built where I could create my own version of ChatGPT that solves all of these little annoyances.

In just 8 weeks, Magai was ready for public beta testers.

How did you get your first initial customers?

As a seasoned digital marketer, I knew all the ways I could go about launching Magai. But I wanted to do things differently this time.

After following the #BuildInPublic journey of many indie makers that I respect, I decided this was the approach I was going to take.

I didn't need to acquire massive amounts of users out of the gate—I wanted to grow slowly and steadily to ensure I could sustain the product and work out all the bugs + challenges without having to hire help first.

So I started with just leveraging my Twitter, Facebook, and Instagram audiences. Of course, I also made an announcement of the product to my email list from the two other failed products (which has SOME users, just now many).

Since launch, what are your marketing strategies or channels to get new customers?

My primary marketing channels at the moment are:

1. Build in public - still an effective way of getting the word out + maintaining visibility with my audience

2. Affiliates - our vocal advocates who want to earn a little extra income by recommending Magai are strong

3. Email - sending updates to current customers and those who have opt-ed in for free content

Little by little I've started doing some traditional marketing such as social media and blog content creation. Currently in the brainstorming phase of coming up with free tools that would attract my ideal target audience.

I've also started experimenting with some paid social ads. Nothing exciting on that front yet.

How does your business make money?

Magai is a monthly subscription product.

Plans start as low as $9/mo all the way up to $249/mo based on (a) how many words per month you need written, (b) how many team members you want to invite.

Currently Magai is sitting at $200k MRR and growing at a rate of 70-90% per month. We're struggling with a high churn rate (20%), which I'm working on, but growth is exceptionally strong.

My cost at the moment is around $3k/mo, which is completely dependent on how much Magai users use the app.

We're leveraging 3rd party APIs to do most of the work (AI models) and so that means we have a direct cost for every AI action a user takes inside the app.

Take us through a typical day in your life running the business as a solo founder

Most days are pretty chill. I wake up around 7am, shower, and make my morning pour over. I get to my desk around 8am and start with any support requests/message that have accumulated.

Once I knock those out, I focus on high-priority, high-urgency tasks (if there are any). My calendar and my todo list dictate most of my day. I use Todoist to manage projects/tasks, and work using the Pomodoro technique (20min intervals of focused work).

I try to make at least one improvement to Magai every day. Whether it's a small quality of life fix, or a big feature addition, I can't rest until I've made something better.

I only check my emails at specific times during the day—I hate email. Usually it's 2-3 quick sessions, and I make sure to get to inbox zero each time. Spark email is my app of choice as it allows me to quickly discard unneeded items and easily snooze items that aren't urgent.

I've been working from home since 2014—before it was cool. My office is a dedicated room in the house (one of the reasons we bought this house in the first place). I get some good separation from the rest of the house since there is a hallway, kitchen, and dinning room separating me from the living + bedroom areas. Thanks to our tile floors, however, I'm well aware of everything happening in other parts of the house though (for better or worse... mostly worse). That's why a set of noise cancelling headphones is essential to my sanity.

Since I don't have a "commute" in which to detach from work mode, I end my day with a session my Xbox. Usually a good 30min is the perfect way to destress from the day and get out of my business mentality so I can focus on my family after typical business hours.

Before you go, what advice would you give to another who wants to start a business like yours?

Never start a business unless you have spent a lot of time with an audience that matters to you.

If you know your audience you will know how to serve them best. You can't gain this insight through reading articles, market reports, or just your "gut feeling." Spend time talking with the people that you want to serve.

Invest in the relationship with your audience, and the business side will flow naturally.

Where can we go to lean more about you and your business?

Here are some links you can go to learn more:

Website: https://magai.co 

Personal site: https://dustinstout.com 

Twitter: https://twitter.com/dustinwstout