From Being A Musician To Founding A $108K/Year Social Network Company
Hello! Who are you and what business did you start?
My name is Mat Sherman and I am the founder of Seedscout. Seedscout is a social network that runs 100% on intro requests and introductions between all of its users, specifically in the startup community.
The three types of users we have are founders, investors, and job seekers. Once a user receives an intro request, they can either accept the intro, which connects the two users, or reject the intro request.
If rejected, the requesting user gets an email saying their intro request was denied. Right now, Seedscout makes about $9,000 a month from 65 paying users. In total, we have over 1,500 users on the platform who are open to intro requests.
What's your backstory and how did you come up with the idea?
I was born and raised in Phoenix Arizona, which is where I started my first try at entrepreneurship…by being a musician. I picked up my first guitar in 8th grade and immediately started throwing up videos online and learning more and more songs.
Eventually, I started playing shows, got some merch, and even dropped a full-blown album on Itunes in 2012 You can find a lot of my music on my old Youtube channel.
In 2014, I had a realization that I wasn’t good enough to make it as a musician. I randomly stumbled upon this startup program called Y Combinator online and from that point on, I dove headfirst into the startup world.
I was hooked on the idea of taking an idea and building a billion-dollar company out of it. After a few soft swings at startups, I took my first hard one in 2017, when I quit my job to start a content marketing marketplace called PubLoft.
After a year of iterating, we found a model and grew from $0 to $24k MRR in 7 months. During this time, I was cold emailing investors telling them we were growing so quickly and that we were ready to raise. It didn’t lead to a single meeting.
Eventually, by showing up TWICE (here and here) as a guest on Jason Calacanis’s podcast, TWIST, and pitching live at one of his events, I got offered to join the LAUNCH accelerator.
They invested $100k and we flew up to SF for three months to raise a seed round. While up there, the SF curtain was lifted for me. I pitched the who’s who but was quite surprised by a few things.
- I was surprised by how inefficient the whole process of raising capital is for even the best founders.
- I underestimated how much “your network” mattered in raising capital. In fact, in the early stages, having a network is everything.
After I got back home from the accelerator, I ramped up a podcast I started a few months earlier called Forward Thinking Founders. The first 20 guests from the podcast with Y Combinator alumni, as a way for me to break into that tier-one network.
But I soon branched out to interview anyone I thought was interesting. This allowed me to build a massive network, but even better, helped me learn about the struggle the everyday founder goes through.
Just like my experience in SF, the founders I met on the podcast had the same issue. Network mattered more than merit. This didn’t sit well with me. (FYI - I still run this podcast, and am 906 episodes deep)
After the company Jason funded failed due to cofounder conflict, and after I took a short break at YC-backed Prenda, I left my role there 10 months later to start Forward Thinking City, which was a spinoff of my podcast Forward Thinking Founders.
Two months later, I realized the issue that founders something called access asymmetry. I needed to build an intro product for the under-networked. On October 14th, 2020, I founded Seedscout Inc. and got my first two investors, Eric Ries, and Dave Goldblatt, on board. The original vision was to sell investors access to founders. And we’re still rolling many iterations later.
Take us through the process of building the first version of your product.
Seesdcout went through dozens of product iterations to land where we are now. The original product itself was the podcast mentioned above. I thought showing the world that I had access to hundreds of amazing companies was enough to charge for access to introductions to them.
The issue with this is that the data wasn’t organized enough for investors. No investor wanted to listen to, at this point, 900 founder interviews. So naturally, I started creating an Airtable list of the founders who came onto the podcast.
Eventually, I automated it. Founders had to answer 7 questions about their company in the calendar link to come onto the podcast. Once booked, the startup data was zapped over to Airtable, so this was very little work for me.
The idea from this point on was to sell access to the Airtable link. Investors want to know who is coming on my podcast since it has such a high signal. I bet that they would pay for organized data of every guest that comes on, even before the episode goes live.
I was right about this.
I had four investors pay me $1,000/mo for 1-2 months. It was good money, but right after they paid, most churned because the value wasn’t apparent. Even if I was interviewing all the next unicorns of Silicon Valley, no one could prove it except for time. So they had a hard time justifying the cost of the subscription. This was around May 2021, when we peaked at about $5,200 MRR.
Around this point, I figured out a business model which allowed Seedscout Inc. to get equity in other startups. Since I was such a good startup scout through my podcast, I felt like this method of monetization could lean more on my strengths than charging for cash.
So we stopped driving 100% on the cash business model and started asking dozens of startups for equity in their company in exchange for intros. And it worked. We called this Seedscout Alpha and we got equity in nearly 30 companies.
A few have even since popped. The primary issue with this business model is that while we were focusing on a long-term asset, equity doesn’t pay the bills. So even though the model was working, I couldn’t afford to pay myself or invest in the company.
Seedscout Alpha was mainly an introduction facilitation platform, but it was all manual. I just manually made intros for the founders of the program. I had an insight in early 2022 to simply keep doing that work, but instead of charging equity, we charged cash instead.
So we made the switch and started charging cash for the model. All of a sudden our revenue started growing rapidly. We grew from $0 MRR to $16k MRR in 6 months. With the revenue, we re-invested in product development to build an intro product that wasn’t reliant on my intros. It needed to be displaced from Mat Sherman and my network. It needed its brand.
We finally shipped our first self-serve version of Seedscout in November 2022, and since then, Seedscout has been operating 100% autonomously. We are bringing in $9k/mo, and it works whether or not I am working.
It took us nearly 2.5 years to figure out what the right product was to build from the time that I started Seedscout, but time was well spent.
Throw it at the wall, see what sticks, and let the user feedback + your internal gut lead the way.
Describe the process of launching the business.
Seedscout never had an official launch. I think we have launched on Product Hunt nearly 4 times by now, all with different models as we got closer to the one we have now. You can see the taglines go from very far away from the current model to exactly the current one.
We started by selling to investors. Then we started selling to founders and equity products. Then we sold them a cash product. Now we’re selling to professionals, in general. And that angle can be seen in the Product Hunt launches and the website evolution.
Figuring out what the solution was going to be to solve the problem we cared about was very hard. But instead of thinking about it in a silo, we just tried stuff. Threw it at the wall, see what stuck, and let the user feedback + our internal gut lead the way.
The Product Hunt Launches aren’t the only evidence of the many iterations we had. Look at some of our early websites.
As you can see, the product and messaging journey are intertwined. I finally feel good about where we landed though. Because we were/are a build-in public type team, we attracted interest from a lot of investors who were following my journey while we were iterating.
From 2020 to 2023, we brought in $435,000 in angel investment from about 15 different investors. Most of them weren’t even based in AZ, and I still haven’t met almost all of my investors in person. But we launched Seedscout during the COVID era, and remote investing was in style while we were tinkering around. We benefited from that.
The key thing to learn here is that we didn’t raise the capital the common way. We didn’t raise the $435,000 in bulk. They came in small chunks, so we never had more than $35k in our account at any point, aside from maybe 1-2 moments that lasted a week or two.
If I could go back, I would try to get all the capital in at once so I can actually budget and spend accordingly, vs. wondering if another check is going to be coming in.
If your gut tells you it’s a bad idea, run. Always trust your gut, or in other words, think for yourself.
Since launch, what has worked to attract and retain customers?
Since most of our capital goes to recurring costs, R&D, and my salary, we have had to get creative on how to get the word out about Seedscout. Our main three channels are outbound emails/messages, organic social media, and word of mouth.
For outbound emails, we use a combo of Crunchbase (for scraping emails), Neverbounce (for cleaning emails), and Mailshake for sending outbound emails to users. We targeted both founders and investors to see which ones would prefer better for us. Every new user we get makes the Seedscout network more powerful.
We also use Dripify for LinkedIn automation. This is primarily used to expand our investor network. I use my clout on LinkedIn to get their attention, then use good copy to get them to reply. 25% accept my invitation and 7% replied, to which I then get them to join Seedscout.
Here is our copy for the first message:
Hi %%first_name%%. I am building a platform to help investors connect with other investors (co-investors, LPs, etc.), founders, and techies. It's free to join and we have a pretty large Denver/Boulder presence where we throw events sometimes. Any interest in giving us a shot? It's called Seedscout.
And if they accept the intro request:
Thanks for the add. You can learn more about the Seedscout investor network right here. Feel free to make a free account if you feel compelled.
Seedscout.com/investors
Retaining Customers
Customers will stay on Seedscout if they feel like the money they spend every month is worth what they get out of the Seedscout network. Due to this, it’s in our best interest to keep new investors joining Seedscout who plan to be active.
This keeps the intro combinations growing on the platform growing for paying subscribers. When we get new subscribers, we also point them in the direction of investors that we know would dig what they’re doing, and are also on Seedscout.
It’s not perfect, and our churn hovers between 10-30% every month, but I see that as a natural part of the network. Churn allows old customers who have stale data to leave and opens up the floor for new customers to sign up and try their luck/skill on Seedscout.
Combining the outbound campaigns with having an active presence on both Twitter and LinkedIn and doing good work for our customers, you can see our organic traffic growth is small but is growing over time. This is without deploying pretty much any capital to any marketing/or growth channels. I’ll take it.
And here is a breakdown of how some of our users hear about us.
How are you doing today and what does the future look like?
Right now, here are our key metrics:
- Our MRR as of July 1st is $8,826
- Customer LTV is $364.21
- We have over 7,000 people on our email lists
- We have 18,000 combined Twitter followers and 15,000 LinkedIn followers
Luckily, we are profitable, just by a thread. We decide how many paid experiments we want to run based on how our revenue is doing in the month. If the revenue looks like it may take a hit, we are less aggressive that month, as well as the following month. If it’s a great month, we may bake in an extra experiment or two the next month to try to learn something about our growth levers.
Our goal now is to grow the Seescout network as much as we can, because it naturally gets more valuable the larger the network is. As we bring in more revenue, I want to practice some growth tactics so we can nail down a CAC, which right now, we don’t have any idea about.
Once we figure out what a CAC range is, we’d focus on building a real scientific growth engine and grow the network by investing the proper amount into the right channels.
In the mid-future, we can imagine building similar networks in different industries. Hollywood, Wall St., and DC all have the same problems as Silicon Valley. It is obscenely hard for outsiders to break in.
In a perfect world, there are dozens of Seedscouts being used that span far beyond tech/startups. The only commonality between them all is that an outsider to any of these industries is that an outsider from anywhere will be able to break in faster because Seedscout existed.
Through starting the business, have you learned anything particularly helpful or advantageous?
The most painful lesson I learned while running Seedscout was how to over-invest in a growth channel before it’s proven. Without going into specific examples, there were marketing channels that were “bougie”, but came with a premium price.
Without going into them with a fully thought-out plan, I spent the money and thought I would figure it out along the way. Unfortunately, it rarely works out like this. In the future, I will only spend a sizable size of cash on something only once I have a full plan to execute the marketing tactic once the money is spent.
On top of that, Seedscout has taught me to think for myself and listen to my gut. We are building a consumer platform, which is largely reliant on hard-to-understand consumer behavior.
For a while, I listened to advice from others thinking that, based on their experience, I should listen. It took me years to realize that I know the future that we’re building better than anyone, and although it makes sense to take in feedback, I needed to learn to better trust my gut when it comes to product decisions. This has served me well.
What platform/tools do you use for your business?
Seedscout was very reliant on no-code tools for the first two years of its life. The most important tool we used was Airtable, which served as the database for all the users. We also relied heavily on Typeform, Zapier, and Stacker.
Typeform got data into the app. Zapier made sure all the data stayed together while moving from API to API. Stacker allowed us to create a visual interface on top of the database, so it looked like a full-fledged product to our users.
For marketing, we are heavy Hubspot users for our CRM and engaging emails to people in that CRM. Outside of that and the outbound tools I mentioned above, I am also a big fan and user of the following tools:
- Superhuman - An amazing email client that helps me get to email zero every day
- Zoom - How I run all my calls or podcasts
- Loom - A key tool to record my screen and send demos to potential customers
- Descript - My podcast editing tool
- Twitter - How else would I get the word out about the Seedscouy thesis?
What have been the most influential books, podcasts, or other resources?
I am a big fan of The Lean Startup and the Eric Ries school of thinking in general. I am sold on long-term thinking, and what to do about it, because of him. Also, This Week in Startups by Jason Calacanis was one of the first podcasts I listened to when I got into tech and was very formative in helping me learn about the scene. Lastly, I am grateful to Y Combinator’s startup school and all the free resources they offer to all founders.
Advice for other entrepreneurs who want to get started or are just starting out?
I think the biggest piece of advice I can offer other founders is to think for yourself. The business world has tons of people with different incentives, and most don’t have an incentive to tell you what theirs is.
Many times in business, something may not feel right. It could be a hire, a strategy decision, or even a new customer who wants to give you money. But if your gut tells you it’s a bad idea, run. Always trust your gut, or in other words, think for yourself.
The only other big one is that most of the big names in business are fakers, and the real ones are people you haven’t heard of. It’s okay to build and not be a personality while you’re at it. For some, it’s natural, but many go down that path because they think that's what they need to do to be in business. Plenty of billionaires are silent killers, you can be one too.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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