Many entrepreneurs believe marketing is an essential ingredient for success. But computer scientist Raj Karmani took the opposite approach when growing Visual Quiz Builder (VQB), a tool that helps Shopify retailers personalize their online store through interactive quizzes — and it worked.
“It was 100% focus on customer’s success and support, 0% focus on sales/marketing,” said Karmani, who created the SaaS (software as a service) through his data-focused startup AskWhai. They build affordable — and in the case of Visual Quiz Builder, low-code — tools for business owners with the goal of “democratizing AI” (artificial intelligence).
His “emphasis on the business and helping its customers find success was the secret to growing the company,” Karmani said.
With a small team of developers, he grew the tool to hundreds of customers until selling it for $1 million to Alleyway Capital in September 2022.
Raising angel funds for Visual Quiz Builder
Karmani has long worked in the startup world. Fresh out of studying computer science in grad school, he started a food-tech company. While the venture didn’t succeed, it led him to join another food-tech startup as its CTO. In 2018, Karmani felt it was time to go back to his roots in computer science and AI, so he founded AskWhai.
Visual Quiz Builder, launched in 2019, was the first data-driven personalization product created by the business. Shop owners can utilize the quizzes to learn more about their customers, and then recommend good-fit products, thereby increasing their conversion rates. The most significant benefit is the goldmine of data the tool provides, which helps shop owners understand their customer’s needs and habits.
To fund VQB, Karmani turned to angel investors. As a repeat founder with involvement in a couple of startups, he was able to raise $600,000 for AskWhai, giving away 10% equity, he said.
That funding was used for customer research, product research and product development. While Karmani initially invested in hiring U.S.-based developers, during the pandemic and the economic uncertainty it caused, he moved to an offshore model, and has since grown his team to six full-time developers.
Karmani spent zero dollars on sales and marketing, yet the product spread through word of mouth, mainly via the Shopify ecosystem. Costs for the tool start at $9/month and there’s an option for a 30-day free trial.
How inbound interest prompted the sale of Visual Quiz Builder
While Karmani wasn’t looking to sell Visual Quiz Builder, he received cold, inbound interest from potential buyers. One such solicitation in January 2022 from an e-commerce tool aggregator got him thinking seriously about the opportunity.
After running the idea by his investors, he decided to explore the buyer landscape further by listing VQB on MicroAcquire.com (which has since rebranded to Acquire.com). This process opened the door to other inquiries. After filtering them for seriousness, Karmani landed on Alleyway Capital, an investment firm that buys small SaaS businesses, often called micro-SaaS.
The due diligence process took about six months, Karmani said: “The negotiations and dealing with the lawyers were the most challenging part.”
In September 2022, the sale of Visual Quiz Builder was completed for $1 million, a 4-5x multiple of revenue, Karmani said.
It was the first acquisition for Alleyway Capital, and they explained in detail in a blog post why they bought Visual Quiz Builder. “We see the opportunity to grow this 50x,” they wrote, partly because this kind of data is “getting more valuable with rising customer acquisition costs and the issues around privacy with third-party data.” They expect opportunities to tack on other synergistic companies in this domain, they wrote.
Following the sale of VQB, Karmani returned about 50% of the capital he raised, plus profits, back to his investors. They will continue to support him in developing his next product, he said, a personal digital assistant called Moon that offers a single place to file stuff away and access it anytime and anywhere.
For those inspired to emulate his success, Karmani has some words of wisdom. “Focus on the business and its customers,” he said. “Everything follows at the right moment.”