This is episode 9 of The OpenVC Podcast. In this podcast, Max talks about how he started building websites at 13 and later scaled his edtech company, StudyHelp, to millions in revenue before exiting. Now leading Wizard Ventures, he shares insights on acquiring and scaling internet startups, driving traffic, and crafting effective pitch decks.
Harrison Faull (00:00.28)
Hi, Max. So welcome to the season one of the Open VC podcast. It's great to have you on. Thank you for coming. You're a seasoned entrepreneur turned investor, and I'd like to take you all the way back to the beginning.
I think you were 13 years old when you did your first entrepreneurial exploits. What were they?
Maximilian Fleitmann (00:36.641)
Yeah, thank you so much for having me and it's actually a really funny story thinking about this now. So back then I came across the internet, first programming languages, building my first website and I found it very, interesting because it was so much fun doing all of this, but also at the same time, I realized not so many people can actually do it.
So quite quickly companies were reaching out and were asking me to help them with their website and all of these things, but also graphic design back then. And I always thought, okay, that's amazing. I get money for something that I would do for free. And back then I was mainly selling my services through like online forums or bulletin boards. And the other person didn't even know that I was just 13 years old. So they were thinking, okay, this is just some random student or something that is helping us, but I obviously never told them and so I was earning quite a bit of money at the site, but then quite quickly realized that it's not the best business to trade your time for money because then I couldn't really scale it. So I was thinking about ways to productize myself in a way. Yeah, and that was when my first entrepreneurial journey really started.
Harrison Faull (01:52.676)
13 years old, did your parents know? Was it dangerous at all? Was it completely anonymized? Were there any disasters?
Maximilian Fleitmann (01:59.341)I mean my parents didn't know about it and probably they don't know till this day that I did all of this because they would have said Max you out of your mind stop it immediately because for them also the internet I would say is was more of a like a scary thing because in the media it was all about scams and people are putting their credit card information down and then they got their money lost and these kind of things but I really didn't care and I thought Hey, there's only like an upside in all of it. And for sure, some of my clients back then or project that I did, I was a little bit exploited, let's say, by just companies that weren't paying or were just using my stuff. But for me, it was just like a side gig besides school. So I really didn't care about it. And for me, it was also more about the learning journey.
And this is also something that was driving me all my life. So I always wanted to learn new stuff, new skills. And yeah, this was the perfect playground if you even get paid for that.
Harrison Faull (02:57.395)Sometimes the hard lessons are the good ones to learn early because the monetary value is less than later in life when it might matter more. yeah, learning hard lessons early is definitely something that I think benefits all entrepreneurs when they start young. And throughout all these tasks and all these forums and all these jobs you were doing, you became someone that was able to do the complete end -to -end solution of the product. And I think your first product was a game. Is that correct?
Maximilian Fleitmann (03:29.015)
Yes, yes, that was the most fun thing because as I told you, I was always thinking, okay, it's weird if I just change or like exchange my time for money. So I wanted to productize. And back then browser games were quite a big thing. So everyone, instead of, it was like pre -iPhone times and anything. So everyone was playing actual in the browser. And also the games back at that time weren't like 3D animated or something. So it was a little bit more text -based. So also easier to develop.
Maximilian Fleitmann (03:58.637)And so then I created this mafia game where you could build your mafia family grow it and do some jobs And I monetize all of this through like putting ads on my website and also back then banner ads were something that was Quite easy to put on your website and it was also quite nice in terms of the monetization Method for it because people back then were paying way more money for putting the ads down there Yeah, and then I started the product and it got some really really interesting success. So I think the six months in or something, I had 10 ,000 players that were coming back to the game regularly. And I was like, okay, what, is going on? And I was also taking all of the money that I was earning and reinvesting it into the, into the website. And just like buying backlinks, buying also sponsorships, but also making the product a little bit better. And I also like did a lot of stuff myself, but also hired some freelancers, you could say that helped me on the product. And yeah, it was a really, really fun journey to see. that I created something that could scale without me putting effort in on a daily basis.
Harrison Faull (05:04.443)
Awesome. I can see a common thread. I'm making a note to come back to it in the podcast. I can see a common thread about how some of these experiences have I can see how some of these experiences resulted in future business endeavours that you've gone on to do, that you learnt early on. me just go into focus mode. What kind of things would people do with the Mafia in the game? Would it be like criminal activity? Would you have people go around and intimidate to get money out of shops and things like that?
Maximilian Fleitmann (05:39.725)I shouldn't say anything about this without my lawyer. No, no, just kidding. Yeah, it was basically you had your own family and then you needed to rob other people and all of these things. So yeah, a little bit like the movies that you would see in TV. And I think people just liked back at that time to A have something that they can come back to every single day and create like almost like a legacy or something like an evolving past so they wanted to see progress and also people love to get immersed into stories and this was just the story about you building your mafia family and i think they could really really relate to to to this theme in general
Harrison Faull (06:21.401)Awesome. What an incredible experience. And I'm sure you learned a lot along the way there that you then took with you when you founded StudyHelp, which was an editor company. You've managed to raise millions in external capital and in revenue, employing over 30 people. Could you tell us a bit more about the founding story of Study Help.
Maximilian Fleitmann (06:45.195)Yeah. So, so quick forward after my mafia game times, I never thought of myself as an entrepreneur. And also from my, my parents and my family, everyone was more talking about, Hey, you should get into consulting or big corporate. It's a safe job and you can really, really climb up the corporate ladder. And so back at that time, I started to study mechanical engineering and to be honest, I hated it because I was sitting in the, in the lectures and I was like, what the fuck is going on because I was learning about thermodynamics and all of these things and I was always more at home in the digital world. So I should have studied for example computer science instead but I don't know from deep inside me I thought okay mechanical engineering is the more is the better path to be set for the future. And in my mechanical engineering studies there were some interesting things happening.
Maximilian Fleitmann (07:39.341)
So some of the exams were so hard that over 90 % of the people that would take it would fail the classes. And we were always thinking, that's crazy, that's insane. And the professor, when they were talking about the topics, they weren't so much interested in letting us pass the exams and they were also not so interested in teaching at all because they wanted to do research and the teaching was more at the side for them. And so back at that time, I met my two co -founders on study help. for study help and both of them were already like two or three years older and they were tutors for technical mechanics. And so they were so good at explaining the difficult stuff to you in a way that you could really just like follow a certain structure and solve the issues. And so a lot of people in our studies were taking tutoring from them. And then at some point together we were sitting together and thought, hey, it's the same issue again as earlier with my graphic design phase. It's weird if we just exchange our time for money. So let's try to scale it in a way. And then we had the idea to not put one -to -one tutoring down, but let's do like 100 people in one room, one tutor, and then we could like 100x the revenue that we were generating. And this is when the first idea for these crash courses came up. And we started to at first do them at my university.
At first in just like one or two subjects and we were asking our friends that were good at different subjects and we added more and more classes on top of this. And it was so crazy that in the first semester we were offering those, over 1500 people were coming to these classes and they were all paying, I don't know, 20 bucks or something. So we had, yeah, 30K in revenue or something in the first semester that we were doing it.
And then we were like, okay, this is quite interesting. It's way better than the 400 bucks a student job that we had before. And then we were thinking, okay, how can we actually scale this? Because it was fun to do it beside the studies and I was still like second or third semester. And so we called our friends at other universities. So we called our friends and said, hey, just do the same at your university. You will get a cut of it and we will get a profit share for get showing you how to do it.
Maximilian Fleitmann (09:55.617)
And so we were expanding to six or seven universities quite quickly, but then realized, my God, it's so hard to keep the quality up high. And it's also so hard because you need to do marketing and everything at every local university. Then we were thinking, okay, what are we going to do now? And came across something that was more interesting for us. And that were the German A levels, because the German A levels are exactly the same all across the country. So it's way, way easier to have the right quality. And also it's way, way easier because obviously everyone that is studying engineering can probably explain the math that is needed for the A levels. Whereas it's really, really hard to find someone that can explain the really, really hard topics in your studies or like the thermodynamics or stuff like that. quick forward or fast forward, we scaled this concept of like in -person events to over 200 cities in Germany and Austria. And at the same time, we also started to develop an online platform because we were always big believers in this like hybrid model of having some of the learning offline and then some of the learning online. And so we were building this online platform and ultimately got to, think at around 1 million visits or something per month on the platform. And so that was driving a lot of traffic back at that time.
Harrison Faull (11:11.112)Wow. I mean, wow, what a fascinating story. EdTech is one of the hardest sectors to be in because students don't have much money and they're very resistant to parting with their money. So You guys must have been marketing geniuses to get one and a half thousand people using you in the first semester. I love how you explained it. There was a massive problem to be solved, a 90 % failure rate of lectures coupled with lecturers that don't really want to teach. So you filled that market gap with experienced students and then found that you could teach one to many instead of one to one. Great business model.
Maximilian Fleitmann (11:54.263)
I mean, I think the pain was good and this is why we were able to solve it and also we were able to scale it because we were always really good at doing these like growth hacks or marketing stuff. But in terms of like business model itself, I think I would never go back to education in the K -12 market at least. So if I would do any education business, I would just do B2B right now because as you said, it was so super, super hard to monetize well because as you said, the students don't want to pay for the stuff. Sometimes you even need to convince the parents that the parents pay for their children. And third up, our goal was always to change something more on a like high level perspective. And for example, also work together with the government and everything. But doing this, it was like insanely, insanely hard. And there were so many obstacles that we couldn't handle. So they are way, way easier business models, let's say.
Harrison Faull (12:54.401)
Understood, I agree. In terms of your position as a co -founder, were you always the technical one or were you also, what was your position within the team and do you think your strengths played together with your other two co -founders?
Maximilian Fleitmann (13:08.363)
Yeah, so I think looking back now, we did one main mistake and this was not being clear about our roles in the beginning. And I wouldn't do the same mistake again now with my new company. So at the beginning, obviously everything was excited. So we were taking a lot of decisions together and we are sitting together every single day discussing stuff. But obviously this massively reduces the amount of speed that you can run at. So nowadays I would just do like divide and conquer, clear roles. clear responsibilities and then let's separate and run in our respective fields. But nevertheless, back then, I think one of my co -founders, he was really the sales genius or the one, the visionary that always was thinking big and saying, hey, okay, we're just going to do it. Then the other one was more of the like CEO, COO, let's say. So the integrator and I was taking care of the technical part to really, really build systems and infrastructure that would make the scaling possible. And especially for this business model. It was one of the hardest businesses that you can create. And I think we were just able to scale it because we were building these systems ourselves from day one. Otherwise we couldn't have scaled with the business at all.
Harrison Faull (14:20.959)
Wow, yeah, I really like what you said there. think it's good wisdom. Startup founders need to move quickly. And it's one of the biggest advantages of having a small team versus these large incumbents. You don't have the bureaucracy that these other guys do. And your product iterations can be hours, not weeks and days. or not weeks or days. And you need to stay nimble to get to that product market fit quickly before you run out of cash in most cases. So you had an extremely positive experience with StudyHelp and that gave you some liquidity which helped you do your first acquisition of the business, I believe. Is that correct? Base template.
Maximilian Fleitmann (15:05.357)
Okay, so there are some things correct about what you said and some things that are not correct So I think the most important thing to understand with study help so we bootstrapped at first for a couple of years and This was quite easy because as I said, we were doing like I don't know 20 30 K and revenue in our first like season of Doing this so we were always working with that money and at the same time Our costs were super low. We were all just living together. The cost was 600 bucks or something. So super, super easy. And then after two or three years, we had just crossed the million dollar in revenue mark, I think. And then we got an acquisition offer from a private equity backed company that wanted to move into the German market. We declined it because back then we thought, we don't want anyone to control our company and we will be the market leader one day. And then decided to raise VC money instead.
And with the VC money, think back then I had a huge problem because I didn't understand how the VC world works. So for us, our understanding was we are going to raise one round of funding and then we will be profitable again and then everything will be fine. But ultimately what I didn't understand, so for any investment that a VC fund makes, it needs to have the potential to be a fund returner.
And so they will always try to push you to grow as hard as and big as as evenly possible. The thing is, we weren't understanding this at that time. And that led to some like confusion on our side, but also maybe some miscommunication with them. And ultimately we also realized the business as we had built it was not a venture case. And that was quite of a painful situation because then we were increasing our revenue, people, team and everything.
but also our costs and at some point we realized, okay, we need to be on more solid grounds again. So we restructured the company. Everything was fine. We are profitable, but obviously not a big win also for our investors at that point so far. And during that journey, I realized two things for myself. So first of all, I got extremely interested in the VC world because I wanted to understand how all of this works and when a company is actually VSKIS scalable and when not.
And second up, I realized the, with my co -founders that we wanted to take different paths on going forward. I always wanted to take more of the like technical approach and invest into new product and these kind of things. And they were more like, Hey, look, let's just take a look at the business and what's doing well and just focus on this one. And so ultimately at that point, I decided to move out of the company on an operational level and do something new. And.
Maximilian Fleitmann (17:53.601)
moving out of it on an operational level didn't give me any liquidity. So I'm still a shareholder in the company. Some of the shares I needed to go back, give back investing to the company so that they could hire some new people, but there wasn't any exit yet. And probably there will be in the future because also the funds are now end of lifetime. And now then there will be some liquidity event maybe in the future. But this was not how I made some money. So the money that I made to, for example, acquire the first business and also do my first investment was mainly coming from early crypto and the stuff that I was doing earlier before with these mini projects. So I was back then, for example, the browser game that I had when I was 16, I was getting some money out of that, then putting this into a crypto or other stuff. And so I earned a little bit of money through that. And now I wanted to double down in my entrepreneurial journey. And I always had the idea in mind. hey, how cool would it be if you not always start your company at zero, but maybe at one? And so I was thinking, hey, let's do a mini private equity experiment where I acquire a company and then try to grow it from one to two or one to three. And this is what I did back then in 2019 with base templates.
Harrison Faull (19:08.491)
Okay, wow, okay, thank you. What an explanation. A lot of ground to cover in there. I think the main takeaway for founders listening to this is knowing if you're VC backable. Most decks I see are not. And what that means is, for fans listening, the investment that the fund makes in you, the 10%, 20 % of equity that they're buying, needs to become valuable enough to return the entire fund. So that's a $100 million fund. Their investment, their equity stake in you, after dilution, needs to reasonably grow to something that is around $100 million, if not. And very few things, as you mentioned, can scale to that size and quick enough for a VC to actually make a good return to their investors. And that's fine for most businesses. Most businesses should be lifestyle businesses. There are very few that need to grow as quickly as what Bench Capital do. And actually, as you were saying all this, it reminded me that Travis Kalanick, he cut his teeth in EdTech before we started Uber, teaching SATs for people who to pass their SATs.
So that's just an interesting crossover. Okay, so we're back. You're thinking you want to start from one instead of starting from zero, which is so much harder. How did you go about looking at what you wanted to buy? What was your decision criteria and how has that evolved over time? Why did base templates stick out to you?
Maximilian Fleitmann (20:33.901)
Okay, yeah. So nowadays I would do it totally different, obviously. Back then I was just having a look on online platforms, but also reaching out to some cool websites that I liked. back at that time, I was having a slot on a pitch competition for a business idea that I had. And I was looking for a pitch deck template that I could use.
And I came across this website, Base Templates, and I bought the template on the website and I thought, Hey, this is a really, really cool template because most page tag templates that you will find online will just be 500 different slides with the lorem ipsum placeholder text in it. But the deck from Base Template was really just 100 slides, like three to five different variants per slide type. So for example, three different ways of visualizing the competitor slide.
Maximilian Fleitmann (21:25.587)
And it was pre -filled with an example. And this was the number one difference because why I thought this is way, way better than any of the other templates out there, even if it was like, I don't know, five times the price of the stuff that you would get on all of these marketplaces. So I bought the template. went to this pitch competition. I won this pitch competition actually, with just like a random idea. And then somehow I reached out to the owner of Base Templates and he told me, Hey,
Maximilian Fleitmann (21:54.277)
he wanted to sell the business because he wanted to create a new business and I was like that's an interesting interesting thing that's happening here now because I was actively looking and so I said hey please send me over all the information that you have so analytics revenue numbers and all sorts of things and then something interesting struck with me because this guy was generating income on a daily basis without doing anything so very very passively let's say Obviously he had done some groundwork with writing some SEO, getting some backlinks and there was constant traffic to the website, but I thought it's crazy. He just goes to sleep and earns money. Okay. So then I was trying to negotiate with him and said, Hey, I want to buy the business. And back then my idea was, okay, I can maybe pay a multiple of let's say two to three X on the yearly profits so that I have a buyback period of like two to three years of the stuff. Okay, we negotiated and it was a little bit scary also to do it because it was quite a high amount of money for me at that time and the guy...
Harrison Faull (23:01.814)
You weren't using a broker, there wasn't any type of verification or validation of the numbers that he was sending you. This was super high trust and confidence.
Maximilian Fleitmann (23:07.617)
I mean, I was invited to the Stripe dashboard so I could take a look myself and I was doing the DD myself basically. But yeah, it was still something where I was shaking because I was sending this guy and he was living in the Ukraine back then. I was sending him the money and I was sending half of it before and then half after the full transfer of the domain and everything. And my bank in Germany flagged the transaction and said, What are you doing? Are you really, do you really want to send money to this guy in the Ukraine? I said, okay, let's do it. So I sent half of it. Then we did all of the transfer of the website. I paid the other half. And then something really, really interesting happened that scared me a lot because before every single day sales were coming in every day, at least a couple of sales. And then from that moment, I bought the website for the first nine days, zero sales.
So I was already okay, I'm screwed. bought some shitty website. It was all a fraud or something, but it was just, he was still communicating through that phase and said, okay, it's just random that there are no sales or something. And after the nine days, the sales started coming. So I was a little bit released afterwards. And also then after I started to do some changes and everything, the website grew quite quickly and my payback period for the money that I spent on the acquisition was not two to three years, but it was less than nine months that I had all of the money that I paid already in my pockets again. And after that, then the fun journey began.
Harrison Faull (24:54.281)
What was going through, like, I suppose once you've bought it for those nine days where you're panicking a bit and you aren't seeing any sales coming through, you don't really have many options because the money's gone, the deal is done. You must have backed yourself though to make some pretty critical changes to the marketing side of the business that were delivered.
higher sales numbers to the website. So what kind of strategies did you implement to drive more visitors to the website and increase your conversions?
Maximilian Fleitmann (25:24.289)
Yeah, that's a really, really interesting question. And also, I think first of all, if I'm thinking about my entrepreneurial journey, I'm always taking maximum risk. So I don't have the feeling of risk at all. So I don't have a family, I don't have kids. The only one that I need to take care of is myself. So I can take any risk that is out there and I have no problem about doing this. So even if the money would have been gone, it would have been
would have been shit, yeah, I would have figured it out some somehow in terms of growing the business. So I took a look at it and realized two things. So first thing was there was already constant traffic coming in through some of the sources. So basically a lot of like content, let's say about pitch decks, fundraising in general. And so I thought, Hey, for me, it's so easy to also share my lessons about fundraising because I was exact in the same shoes.
Maximilian Fleitmann (26:20.715)
at the people that are coming to the website right now. So I started to create content in terms of blog, but also started to publish a little bit on LinkedIn and these kinds of things. And this was the first driver of traffic. Then second thing that I thought, hey, fundraising is not only about your pitch deck. So there are other things that you need to add on top of it. So for example, investor CIM or a financial model. So I expanded the card value, let's say, by just like...
creating new products and then cross and upselling these products. Was a huge driver. And then the biggest one, and this is the strategy that we have been using for all of our businesses that I ever created. I call it side product led growth. So everyone knows product led growth where you have something built in your product that lets you scale because other people, for example, would see it. So if I send you a Calendly link, you see, what is this Calendly thing? I want to check it out. That's product led growth. But for us,
We were building these mini products that were useful for our audience. So for example, if I'm a founder and I want to fundraise, I want to practice for myself the questions that any investor could ask. So we were building this little tool where I could practice with the randomly generated questions that any investor would ask. Or we were creating this huge database of famous pitch decks. So thousands of pitch decks that would give you inspiration on how other people would show their business.
And these mini tools were really, good for two reasons. First of all, they were building a lot of trust in that audience because the people that were coming to the website saw, okay, these guys understand what they are talking about and also the products that they are selling. And second up, they have the sort of virality that you want to have as a business that doesn't have too much cash to spend on paid acquisition. So for example, this database of pitch decks, that's called pitch deck hunt .com.
It was all around the web on some news outlets that were sharing it and we were getting ton of backlinks, ton of traffic and this ultimately led to new sales. And these were the two main strategies to grow base templates.
Harrison Faull (28:24.916)
Wow. So I want to dig into this.
in two ways. You're a pitch deck expert, you're fundraising expert now and I really liked one of your quotes when you said, good pitch deck is about what you leave out. Could you explain a little bit of what you mean by that?
Maximilian Fleitmann (28:43.34)
Yes. So 99 % of the pitch decks that I see as an investor, but also as someone that was consulting or sharing some lessons around pitching is they are too crowded. What do I mean by that is founders tend to put all of the information that is inside their head into the pitch deck. And obviously they know a lot about the business that they are doing. They have a lot of information, but this is not how it should be because most investors that see your pitch deck for the first time.
will spend a maximum of three minutes on your deck. So you need to be very, very cautious about the information that you show in these three minutes, because I can't look and read through a deck with 20 slides, everything full of text in three minutes, impossible. So for you, it's always only about to get the foot in the door with the investor. So high level story, what is the problem that you are solving? What is your solution? And why should the investor care about it? Care in terms of, okay, how big can it get?
what is the team that is doing it and also the traction metrics. And so the best decks are always about leaving information out and just focusing on what's relevant. Because obviously the investor will have a call with you afterwards or ask some questions, but this is something that can happen in a personal meeting that is longer than three minutes. This will probably be a 30 or 60 minutes meeting and you don't need to put all of this in the deck.
Harrison Faull (30:08.114)Wow, awesome. Thank you. I completely agree. And founders, it's hard for founders because they want to say as much as they can because they believe everything is really important and relevant. And the advice there is maybe try and talk to someone that isn't on the investor side and work out what's going to resonate with an investor with your particular idea. What's the differentiation? What's the bit they're looking for that would actually have them interested?
Harrison Faull (30:42.019)
The second question I had about that was fond of base templates was how much as a percentage of traffic do you think was attributed to your slide projects? Things like that random question generator for investors and famous pitch decks. Did it become like a significant percentage?
Maximilian Fleitmann (30:57.644)
Okay. So a yes, it was a significant percentage of direct traffic that was coming through that. I would say, I don't know, maybe 30%, 25 to 30%. But even more importantly, these things helped to rank for all other keywords. So I would attribute at least 70 % of the success of base templates just to these side products, because all of the other articles were also ranking better because of these side products.
Harrison Faull (31:27.641)
Okay, wow, that's amazing. And I imagine the customer acquisition cost is quite nice when they're coming in through these side products because you're not
Maximilian Fleitmann (31:34.411)
Yes. So, so we, we always had the issue that the money that I spent on the acquisition, was almost all of the money that I had. So we didn't have so much money to do paid acquisition for, for the topic. So we always needed to come up with smart ways to do it without any paid, acquisition. And luckily I was always really, really good at building these mini products. was good at understanding what kind of content that people wanted. So I was just putting it all myself together. And then obviously it was super nice.
And base templates till the moment of our exit, 98 % of the sales that we were doing was organic. So we didn't spend any paid acquisition. So the only money that we spent was on affiliate partners and we are just paying them once the sale has already happened. But all of the other things, 0 % or like $0 marketing spend.
Harrison Faull (32:14.402)Wow. Wow, that is actually really impressive, especially in the modern digital age. the product really has to resonate and stand out from your competitors to be in a place where you can be 100 % organic and get to the size where someone wants to acquire you. So you had an exit and then was the next entrepreneurial venture, Magic Design.
Maximilian Fleitmann (32:48.236)
Yeah, so it's a little bit of an interesting story also. So base templates for me was always something that I was doing at the site, let's say, with like, I don't know, 10 hours or something per week. Besides doing that, I was doing two things. First of all, I started to invest myself as a business angel and we had a thesis we wanted to create a crossover between like, let's say a VC and a private equity fund.
So for my personal angel investments, I spent some time on them. That was fun for the thesis that we had for the fund that we wanted to do. it didn't work out. So the thesis was not working out and we realized that. And then I also realized through that, I want to be on the operational side again. I'm a way better operator than investor, I would say. So back then I thought, okay, this time venture scale business from day one, I'm now looking at hundreds of ideas, very structured process to find one that can really flow off.
And I started to do that. So my long list, hundred ideas, I was narrowing it down with interviews, with research, and ultimately had like five ideas or something that were quite good and that I built MVPs for. And some of these MVPs already got some good traction and even paying customers, but nothing felt right because none of these ideas were something where I would say, okay, this is what I want to spend the next 10 years of my life on. And that made me so frustrated.
Maximilian Fleitmann (34:14.497)
that at some point I said, okay, I just don't care. want to do anything basically. And this is when I came across a really interesting concept about the internet holding. So there's a company in Canada that's called Tiny Capital. And basically what they do is they acquire and build majority owned businesses and they are running them as they're holding. And the size of Tiny comes to life just by the pure amount of businesses. So all of these separate businesses don't need to be venture scale. Can be also a business that has 5 million revenue and 1 million in profit. But if you have 10 of them, it's already getting quite interesting. And I thought, wow, that's perfect for me because I always like to try out lots of different things and I get easily bored if I'm spending too much time in the same business. And I love the phase of going from zero to one. So back then we thought, okay, let's create a European version of it.
This is then when we created Wizard Ventures. And Wizard Ventures, then we did two things. First thing is we merged Base Templates as one of the first businesses into Wizard Ventures. And my co -founder already brought also another business with him that was also in this startup and VC space. So it was a huge community, news center and venture capital job board. So we already had the first two portfolio companies. Then...
We added another one on top that was like a capterra or G2 specifically for the VC space where we were doing reviews of tools that VC investors would use. So you can already see the space was something that was really, really interesting to us. And we wanted to create businesses in that space. And then we started to grow these businesses and realized two things. First thing is the space of founders and investors is hard space to be in.
Maximilian Fleitmann (36:03.968)Because same as education, both of them doesn't like to pay or don't like to pay. Founders are always broke and investors also don't want to spend too much money on tooling and all of these things. So also a hard market. And the second thing is what we realized. So we were financing with adventures at that point with our own money. And the thing is we couldn't hire enough people yet on the holding level to take care of all the different complexities in the businesses.So we needed to do almost everything ourselves and then the complexity was increasing like crazy. So we were all around with our heads trying to fight fires. And so back then we had the following decision or question in our head. Option A, we raise money, hire people on the holding level and then we can just have more time to build the businesses in the holding or acquire new ones. Or second up.We need to incubate a business ourselves that is very close to cash, that is very profitable and that can be driven by founder led sales. And that is when we came across Magic Design. So Magic Design was initially being thought of as our internal cash cow to finance stuff that would take way, way longer to do. And Magic Design, so we started at the beginning of last year, did exactly this. It was crazy. It was one of the businesses that I was doing that was scaling the quickest. So first two weeks of doing the business, we had the first three or four clients, but we didn't even have a designer in -house. So we needed to do all the designs ourselves at night.
Harrison Faull (37:39.291)
But just to let people know Magic Design, so it's outsourcing anything you want designed. So instead of hiring an internal designer, keep all going on to Fiverr and finding an individual that you haven't got any sort of history with, working with, you can go to Magic Design.
you guys already have contracts with designers you know you trust you've trained and then any designer anytime they can upload it to the portal and have it worked on is that a correct summary of magic design?
Maximilian Fleitmann (38:11.852)
Yes, correct. And the special thing about this is why people use it. A, it's maximum flexibility. So you as a company, have it as almost like a Netflix subscription. So you can start today and you can cancel every single month. So especially if you are a startup and for example, want to extend your runway, you can just pause it or cancel it. Very, very easy. Second up, obviously the speed. So getting a result back in 48 hours from us, it's crazy fast. And also you can skip all of the phase of hiring designers in -house or vetting freelancers online. And this is such a huge pain that we take away of the companies that yeah, that people really, really loved the concept. And then as I said, the product market fit was better than in any business that I did before.
Harrison Faull (38:58.979)
Awesome. How did you come across that problem? You launched it. Was it on one of these ideas on the list of 100 ideas that you testing and building on MVP?
Maximilian Fleitmann (39:05.578)
No, no. And I also never, I never wanted to do something that is agency like. So I would never describe my magic then as an agency, but in a sense it is because we are trading time for money. And this is what I never wanted to do. But my co -founder was talking about this idea already for three years and he said, Max, we need to do it. And so then at some point I said, okay, screw it. We are just going to do it now.
And ultimately I had the problem also myself so I knew the problem at least and second up there was some pre -validation because some of the players were already doing it in the US and it was working really really well and now obviously it's popping up everywhere also across Europe But yeah, this was ultimately the start
Harrison Faull (39:52.418)
And it's actually, it's been a bit of a rocket ship. You haven't raised external financing, you bootstrapped it, you've crossed a million euros in ARR.
and you have over 50 customers. What do you think is the secret source of the success when it comes to magic design? What really caught fire when it came to product market fit?
Maximilian Fleitmann (40:18.605)
Yeah, so first of all, I think I agree when you say it is kind of a rocket ship at least when it comes to Me comparing it to my other businesses before because it was always taking longer But obviously I'm not satisfied at all at the point where we are standing right now and it it haunts me every single night that we are just at this point because I really believe we could be already at
I don't know, 3 million ARR something if we wouldn't have done some of the mistakes that we did. So I think with magic design, two things are really, really interesting to look at. So first of all, every company out there has a huge demand for graphic design. So no matter the company, you need graphic design for your website, for your socials, for, don't know, if you go to an event and you need business cards. So the need will always be there. And
The thing is that the need is even increasing because nowadays you need so many different assets. Back in the days, you could have one Facebook ad that is running all year long, won't work anymore. You need new creatives every single week. So high demand of the customers. And the second thing is people are just so swamped with how many people are offering graphic design. So many options. So there's Fiverr, there's Upwork, there's the local agency, there's, don't know.
hiring someone in -house and they just want to have someone that gives them a little bit of guidance and also shows them that you know exactly what their pain points are. And I could pitch Magic Design so well because I knew exactly what the problems on the other side are. And I could also use my previous track record to say, look, this is what we already built before. You can trust us. We know what we are doing. And so the sale coming from me was super, super easy to do.
And the hard part about Magic Design is more about the operations itself. So it's a business that will only scale with people. And we have been going from zero people to I think 20, 22 or 24 right now in one year. And obviously it's really easy to screw up your name and your reputation because you need to trust the designers that you are hiring and also your project managers to deliver great work on a daily basis. And that's super, super hard.
And we can't have a person or a company walk around and say the experience with Magic Design was not good or was shit because then we are screwed. So we were putting so much focus on delivering high quality results from day one. And this was also a success factor because then the clients were really happy and were recommending it to their friends that were working in other companies. So word of mouth and referral is one of the main channels also for us till now. But still obviously the scaling of the team is quite a struggle over time.
Harrison Faull (43:18.11)
Okay, well, do you do paid marketing for Magic Design, or is it all word of mouth? You love organic sales!
Maximilian Fleitmann (43:23.008)
So what we do from, yeah, no paid marketing. So it's a lot of word of mouth. Then we were doing a lot of outbound sales at the beginning. And then we are doing side product led growth.
Harrison Faull (43:37.361)
Okay, I like it. So doubling down on your key strengths, you know how to drive demand for a very low customer acquisition costs. I love it. Wow. In terms of, you mentioned before that you had three clients before you had one designer. Now this business requires designers. So how could you possibly have had three clients before you had a designer?
Maximilian Fleitmann (44:00.941)
I mean, my number one learning of doing business for over 10 years now is that I would always try to sell first and then build the product because I've done it too often the other way around and then you are screwed because no one wants it. So I was just selling the subscription and then my co -founder and myself, we were doing the designs ourselves for the first month.
Harrison Faull (44:22.623)
Wow, I love it. It's a great technique and you need to prove that people will put money where their mouth is because they might say something nice in an interview but actually having them hand over money is a different game altogether. I loved hearing you speak about how you guys tested the pricing strategy for Magic Design. You tested a variety of different prices. I think you went down to as low as 999 euros per month.
And it currently sits at just under 2 ,000 euros per month, your main subscription. Could you tell us a bit of what you found experimenting with the price? Because I thought it was quite interesting.
Maximilian Fleitmann (44:59.116)
Yeah, so I was always struggling with pricing in general in my businesses. I think for most of them, I was pricing everything too low, just out of my own discomfort, let's say, because it always feels better if you can say to someone, hey, it's only 990 bucks instead of saying it's 2 .5K or something. So with Magic Design, our strategy was the following. So...
First of all, we did some market research. So what are other companies in that field charging? And we realized that they are charging somewhere between $500 per month to at the top end, let's say 8K or something.
Okay. So this was the first element that we looked at. Second element, we were doing our own Excel model and just trying to figure out, okay, how much are we going to pay one designer? How many clients can one designer serve? And to come up at a margin that makes sense for us. A margin that makes sense for us. So Magic Design is a business that should be around 40 % profit margin or EBITDA margin if scaled up to a certain size. That's the goal to have it. So we could do some calculations around that. And then third element.
when we were getting started, I just wanted to sell something because it's always easier to have some money in the bank and work with it and then increase prices as the other way around. So I was saying for the first people I spoke to, okay, look at this, it's 990 bucks for the first six months or first three months, then it will automatically increase. And so it was super easy to get the first ones on board. And then we were gradually increasing the prices over time. Also because there was...
yeah, sometimes more demand than we could actually handle. So our way of handling it would be to increase the prices, to lower the demand a little bit. And I think now we are at a point where it's working for both of the clients. It's cheaper than hiring someone in -house, it's cheaper than an agency, and it's also working for our unit economics.
Harrison Faull (46:59.369)
Wow, okay. So Magic Design is a roaring success. It's still growing very well. And it's one of the portfolio companies of Wizard Ventures. Wizard Ventures being the strategy is acquire or build several tech startups. They don't have to be unicorns, but lots of small successful wins in the tech space. Could you tell us a bit more about where you got to with Wizard Ventures?
What kind of startups you're to acquire or build and also if you're an investment what's the situation?
Maximilian Fleitmann (47:27.936)
Okay, so started with adventures in summer 2022. As I said, were emerging in base templates at that point, we were emerging in the second company from my co -founder called Startup NVC. And then we started to build this company called VCstack. So they kept Terra for VC tooling. Okay, then we started with all three of them and tried out another product in the SaaS space about competitor monitoring that was called
toner. So we already had one, two, three, four companies at that time, plus Magic Design. So five things happening. And through the first year, we realized, okay, there are some requirements a company needs to have to make sense in our holding model.
So it needs to have a certain size. needs to have certain stuff like a lot of like organic traffic. Let's say it needs, it can be run by someone else than us. And so ultimately we realized at the end of summer, almost one year ago, we need to change some of the portfolio companies that we have. So what we did is we exited base templates at the end of last year and we exited startup NVC and VC stack together. So both of them were sold to separate companies in the U S and then for Tona,
our competitor monitoring says we built that one to an MVP stage already had the first paying customers, but it never really found great product market fit to be honest. So in early gen we sold that one too, but more as a yeah, let's say fire sale or as a sale where we were just getting a little bit of money back, but not a big win, but to free up some space.
So then Magic Design was the only leftover piece in Wizard Ventures for now. But we are ready to launch a couple of new things now that we were working on in the background. One of the companies, it's called Table. It's a personal CRM solution, AI first.
that we just launched two weeks ago and there will be two more ventures coming this year, later this year. So really really exciting and yeah hope to move forward with that one and obviously we are also all the time doing discussions with potential companies that we could acquire and we are always looking for a great fit let's say.
Harrison Faull (49:53.4)
Wow, okay, so a lot going on, but overall looking to acquire online businesses, doing well, lots of organic traffic.
And maybe the management doesn't even want out because they could stay on and continue running. Yeah, awesome. I know that's what Tiny do. And I was just going to ask, because Tiny Capital is the model that you thought was working well in the US. They're based in Canada. Where did you hear about them? Was it on the Acquired podcast? That's where I discovered them. And as a shout out to the Acquired podcast, because those guys do an incredible job.
Maximilian Fleitmann (50:04.972)
Yeah, 100%. Yeah, 100%.
I think I heard about them. So there was someone writing a piece about micro private equity a couple of years back. So I think it was like a subsec newsletter or something and then they were mentioned and then I was diving into that. And then I was like, this is actually insane what they are doing because the
scale that tiny is doing it at it's just crazy and there are so many companies for example like dribble that I'm using every single day and I didn't know that they were owned by a holding company like tiny because I thought okay they are all venture -backed businesses themselves
Harrison Faull (51:05.432)
Okay, no, really interesting. Where's Max going to be in five or 10 years? What are your goals and what are your ambitions?
Maximilian Fleitmann (51:14.614)
Also a quite good question.
First thing is I'm really happy with where I am right now because I have built myself the perfect playground for the stuff that I enjoy doing and as an entrepreneur myself, so I have never really worked a day in my entire life. I would do all of this for free and it never feels like real work. Obviously there are shitty times when shit hits the fan and something is annoying, but overall that's super amazing. I just want to be able to
Pull myself a little bit more out of the of this stuff So right now I'm so operationally involved a lot of in a lot of the the ventures and the issues that are happening and I need to become better in terms of hiring the right people that will do it together with me and then Second up even spend more time on the stuff that I'm really really good at
Because right now I would say I spend around 50 % of my day on stuff that I enjoy doing and I'm really really good at and 50 % I do stuff that other people can do way way better than myself
Harrison Faull (52:23.507)
That's awesome. That's a really strong answer and you've worked very hard to get into that position and now I wish you all the success in the future. This has been a great episode. Thank you very much for being so open. There's loads of lessons in there for founders and investors. Thank you.
Maximilian Fleitmann (52:31.747)
Thank you so much
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