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Noah Kagan shared in a new podcast episode how he founded AppSumo, a “Groupon for software,” in one weekend. Startup costs were $60; AppSumo made $80 million last year, and Kagan is still its CEO.
In 2010, Kagan was 28 years old and had already experienced what it was like to be the 30th employee at Facebook and the fourth employee at the financial app Mint.
“I think I just felt unsafe in some of these places,” Kagan told fellow entrepreneur Jeff Berman in a June episode of the podcast “Masters of Scale.”
Kagan was fired by Mark Zuckerberg after nine months at Facebook and later at Mint. He realized that devoting his time to his day job was a risk—someone else could decide to fire him at any time.
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“I think I wanted to prove that I was smart or that I was successful or that Facebook, when they fired me and then when Mint fired me, [that] “I can do it,” Kagan said.
The idea for AppSumo, a marketplace for software deals for small business owners or solo entrepreneurs, came about when Kagan thought there was a way to promote software tools and make money doing it. He saw that the website MacHeist was giving discounts on software packages to Apple users and wanted to try to bring these kinds of discounts to a wider audience.
“My interest was in software development by geniuses and my skills and passion were in advertising,” said Kagain.
The deal was made in about 60 hours. First, Kagan found a software he wanted to sell: the image-sharing service Imgur. He contacted Imgur's founder via email on Reddit and received approval to sell a discounted version in exchange for a share of the revenue.
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The next step was to meet with Reddit's founder and engineer to ask for free advertising. And he got it.
The final part was paying a developer to create a website with a PayPal button and purchasing the domain name AppSumo.com.
What was the total cost of starting the business? $60 and a weekend of his time.
AppSumo made $300,000 in its first year and $3 million in its second year, Kagan said on the podcast. Last year, it brought in $80 million in revenue.
Kagan currently has a net worth of $36 million.
According to Kagan, the key part of the business is investing in the problem and being passionate about it.
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“I think that's what people in business are kind of missing out on,” Kagan said. “They're now chasing AI or wanting to become influencers. I think there are areas [where] You think to yourself, “I don’t know if I’ll ever get tired of this.”
There is one benefit to starting a side job or finding an additional source of income – according to Kagan, you have more control over your future.
“If you can give up just 30 minutes a week, if you can give up just one Netflix show a week, if you can give up one thing a week and keep doing that every week, eventually you can build this business,” he said.
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