The venture capital world was recently jolted by a tweet that pulled back the curtain on a little-known segment of the tech industry. Deedy Das, a Principal at Menlo Ventures, tweeted:
“I recently discovered a part of the internet where a bunch of cracked 18-22yr old indie hacker kids from no-name unis run bootstrapped mobile apps growth-hacked on TikTok. Each app has 100k+ monthly users and makes $1M-5M/yr. Never underestimate the kids.”
This tweet, which quickly went viral on VC Twitter and beyond, shed light on a new breed of young entrepreneurs who are quietly building multi-million dollar app empires outside the traditional Silicon Valley ecosystem. At the forefront of this movement are Blake Anderson (23 years old) and Zach Yadegari (17 years old), two entrepreneurs who exemplify the phenomenon Das described.
In a landscape where venture capital often flows to Ivy League graduates or serial entrepreneurs, Anderson and Yadegari have charted a different course. They’ve co-founded three successful apps: RizzGPT, Umax, and Cal AI, collectively generating an impressive $15.4 million in annual recurring revenue (ARR). Their story not only validates Das’s observation but also provides a blueprint for a new generation of tech entrepreneurs.
The Journey Begins
In a recently held X spaces, Anderson and Yadegari described their journeys of how he got into the tech world and started so early. “I got started programming when I was seven,” he recalls. “Was really into making video games. That’s why I got into it.” After building a few unsuccessful games, Yadegari struck gold with an unblocked gaming website that allowed students to play games during school. “That took off, marketed it myself, just recording TikToks, blew up to 5 million users, and then I sold it for six figures,” Yadegari explains.
Anderson, Yadegari’s co-founder, had a similar early start. “I built a few small projects, but then met Zach, and we built Cal AI together, which is currently doing 8 million in annual recurring revenue,” says Anderson.
The Secret Sauce: Viral Marketing and Product Ideation
Anderson and Yadegari attribute their success to a unique approach to marketing and product development. “The primary thing that has made these apps work is our marketing strategy as well as sort of product ideation,” Anderson explains. Their approach can be broken down into four key steps:
Step 1: Defining the Problem
The first step in their process is identifying a clear problem to solve. Anderson shares an example: “For Riz GPT, I had a roommate that was like, ‘Dude, what should I say to these girls on dating apps?’ And so my problem was very straightforward: Build an AI application that helps people with what to say.”
To validate problem ideas, they scan social media. “If you see content on social media doing millions and millions of views of people struggling with exactly what it is that you are looking to solve, it’s a good indication that you’re going to be able to scale your product,” Anderson advises.
Step 2: Becoming the Audience
Once a problem is identified, the next step is immersing themselves in the target audience’s world. For Umax, Anderson explains, “We set up social media accounts. These don’t have to be the official accounts you use. These could just be random anonymous accounts. And we started engaging with all the looks maxing content.”
This deep dive allows them to understand the audience’s mindset and design products that resonate. “We realized that there were two things that people were looking for. One, they wanted to become more attractive, and two, they wanted to know how attractive they were,” Anderson says.
Step 3: Building and Testing
With a clear understanding of the problem and audience, the team moves on to building and testing. Anderson emphasizes the importance of simplicity: “All of the apps that I built are super simple in nature. So if you try to build like a complex consumer social app, this doesn’t apply to you.”
Yadegari adds, “Don’t overcomplicate the technologies you use. You don’t want to use something that’s very low level. You want to use a very high-level programming language, something simple like maybe just Python or Node.js.”
For initial validation, they show prototypes to friends and family. Anderson notes, “If their reaction is supportive, then it’s probably you’re probably not headed in the right direction. If their reaction is like, ‘Dude, what the fuck that’s cool,’ then there’s a much higher probability that you have a viral product on your hands.”
Step 4: Launch and Marketing
The duo’s marketing strategy revolves around influencer partnerships and careful metrics tracking. They use two key metrics:
- RPM (Revenue Per Mille): Revenue generated per 1,000 views
- CPM (Cost Per Mille): Cost to generate 1,000 views
“Ideally, you can build a product with a high RPM and a low CPM,” Anderson explains. Their approach involves testing with smaller influencers across different niches related to their product, then scaling up with the most profitable channels.
Yadegari adds, “The idea of RPM and CPM with influencer marketing, calculating the CPM per post is probably the hardest thing, and probably what makes it so unprofitable for so many companies is that they cannot guarantee the CPM they need.”
Scaling Up: The Power of Compounding
While finding new influencers daily is crucial, the team emphasizes that their growth is not linear but exponential. Yadegari explains, “When you have a proven strategy that works, when you see that acquiring new influencers is bringing more views, which brings more revenue, this is something that this is a sign that you should hire people to help you.”
This compounding effect is further amplified by network effects within the influencer community. “The more influencers you have, the generally more influencers will be referred to you by your current influencers,” Yadegari notes.
Pricing Strategy: Balancing Revenue and Growth
Anderson takes a nuanced approach to pricing, challenging the common practice of optimizing solely for LTV (Lifetime Value) multiplied by conversion rate. “I believe that you should assign greater value to the number of people that subscribe,” he explains.
For Cal AI, this philosophy translates to a relatively low price point of $10 per month or $30 per year. Anderson justifies this strategy: “Even though this doesn’t make us the most money, it drives more people to using our application.”
Yadegari adds, “Public perception definitely has a big part in it. That’s also why we only price it as $10 a month as opposed to $20 a month.”
Onboarding and Conversion Optimization
The team puts significant emphasis on the onboarding process and paywall placement. They use Superwall for optimizing paywalls and split-testing different locations and triggers within the app.
Yadegari shares a recent success: “We just did a split test between conversion rates in CaliEye and found that showing cooler animations in between screens and not solely asking for information has increased our conversion rate by about 10%.”
Looking to the Future
As their app empire continues to grow, Anderson and Yadegari are exploring new markets and refining their strategies. They see potential in applying their viral marketing techniques to non-Gen Z products, such as apps for parents or grandparents.
“I think that there’s massive opportunity to apply these strategies to non-Gen Z products,” Anderson notes. “Apply it for parents, even grandparents, you know, amongst others and just apply these distribution techniques.”
Lessons for Aspiring Entrepreneurs
For those looking to follow in their footsteps, Anderson and Yadegari offer some key advice:
- Focus on solving real problems: “If you see that content on social media, I’m going to reference it once again. If it’s doing millions and millions of views of people struggling with exactly what it is that you are looking to solve, it’s a good indication that you’re going to be able to scale your product,” Anderson advises.
- Immerse yourself in your target market: “Become one of these people,” Anderson suggests. “This sort of in-depth understanding of how these people thought led us to build out this six-factor rating system where you have, like, your overall score, potential score and other attributes.”
- Start small and iterate: “I would not over-index on an influencer’s view count if they have a poor comment section,” Anderson warns. “Not all views are created equal.”
- Be prepared to pivot: “If you don’t see it after a couple promos, it could be worth experimenting with different niches, but most of the time, it’s not worth the effort, and you should just move on, fire off something else quickly,” Yadegari advises.
- Collaborate: “I would highly recommend working with people,” Anderson emphasizes. He suggests using platforms like Y Combinator’s co-founder matching platform to find potential partners.
Conclusion
Blake Anderson and Zach Yadegari’s story is a testament to the power of understanding your audience, leveraging viral marketing strategies, and constantly iterating on your product. As they continue to grow their $15.4 million ARR empire, the tech industry will be watching closely to see what these Gen Z entrepreneurs do next.
Their journey serves as an inspiration and a roadmap for aspiring app developers and entrepreneurs looking to make their mark in the highly competitive world of mobile applications. With their finger on the pulse of Gen Z consumer behavior and a proven track record of creating viral products, Anderson and Yadegari are well-positioned to continue their upward trajectory in the years to come.