How to Build a $1M AI Business with 2 people in 90 Days | Alex Mashrabov, Founder and CEO of Higgsfield AI

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0:43Alex Mashrabov:A lot of businesses can really scale to tens of millions of dollars today profitably with AI. This is Alex, founder of Hicksfield, an AI company that hit a$200 million annual recurring revenue in just nine months faster than Slack or Zoom. And what he told me about starting a business today completely blew my mind. And you can copy his strategy too. Focus on bringing like the first dollar by day 30 of product development and maybe one million ARR by day 90. That's a lot. I just think it's the next industrial revolution. It's probably more powerful than the internet. For many, many young people, AI becomes social elevator.

1:21For someone who still has fear, like this is moving so fast. I don't know how I can start. Can you give them one piece of advice?

1:26Alex Mashrabov:First, I would start from... I have an amazing guest today. I am so excited to learn from you. Let's get very practical right away. You built Hicksfield and achieved$200 million in revenue in nine months. Let's imagine, I don't want this to happen, but let's imagine a scenario when you have to start from scratch tomorrow and you have 90 days to launch a business idea. From what you've learned with your experience at Hicksfield, what would you do? I think it all starts with maybe a team of two, someone who is builder, who can go within 24 hours from idea to a product. And now it all becomes possible.

2:09Alex Mashrabov:There are so many databases, there are so many payment systems and so on, which simplify creation of MVP. And then someone, as I call it, go-to-market person who has this natural empathy maybe or understanding of the sort of target distribution whom they're selling to and who can come up with interesting kind of new content formats which can resonate with the target audience on social media. And I think this is a very different skill set from the marketing roles of the previous decades. And how many times should they be ready to iterate? How many ideas? For example, for us last year, we were iterating every day.

2:48Alex Mashrabov:So it was six days a week. And every day we were putting new product release as we were trying to find workflows and use cases which have high frequency and which matter for our target audience. And then once the technology gets there, it's important to develop sort of the workflow, which is easy enough, but gives enough configuration as well. This dilemma of the perfect interface is still not solved, frankly. So this is another reason why we embrace daily iteration. And on top of all of that, every month, the whole industry resets. They completely push the boundaries in terms of the capabilities.

3:31Alex Mashrabov:There are probably, let's say, five leading research labs. And each lab is pushing massive updates every quarter. So at some months, we have even two major updates. And it typically requires to substantially rebuild the whole product around those models. So it's exciting time today because product builders like ourselves at Hicksfield, we just try to evolve the product so that it highlights the best possibilities of these models to our customers. But that's a constant race. Yeah, it sounds like a very challenging race. And I think you mentioned that last year was one of the hardest for you when a lot of things were not working.

4:13Can you talk to me about that one thing that actually worked?

4:16Alex Mashrabov:In 2024, we really started from the mobile apps and things were not working well because retention for mobile apps is relatively low. Things drastically changed for Hicksfield when we started to constantly iterate with creatives. And we just asked them a very simple question like, did you see this video? This was a cool AI generate video. And they said, oh, no, how is this possible? What's the cost? and we say, it actually costs maybe less than$500 to make this video. And then we ask, did you actually try these models? What's your experience with AI? And obviously, everyone tried AI by then. Even by maybe February last year, everyone tried AI, but everyone had some issues with that.

5:02Alex Mashrabov:Back then, we realized that the core limitation was around camera control. Like a lot of creative directors, they really want to control all the camera effects, camera angle, and so on. Back then, there was no system to achieve that. So that the initial traction of Hicksfield.ai came from these camera controls, which we implemented on engineering side based on the feedback from creatives. So how many interviews did you have to conduct to come up with this feature? This is a very good question, but it kind of puts me on a weak spot, frankly, because we interviewed eight people. Eight out of eight said the same thing.

5:41Alex Mashrabov:And we talked from Hollywood-level movie directors to regional producers of commercials. Everyone had the same feedback. And how did you select those people? Were they customers already or you just wanted to talk to people in the industry? Actually, this was probably a challenge as we wanted to talk to people who we don't have a very close relationship to just get unfiltered opinion. But the feedback was very consistent. Everyone was missing these camera controls. So that's what we delivered March last year. Then in April, we delivered a library of visual effects. And then I think in June, industry completely changed.

6:18Alex Mashrabov:We saw the emergence of AI native marketing agencies. So essentially, those agencies, they completely go end-to-end with AI. And very often, they try to bypass incumbent tooling, like, for example, Adobe or something else, and go end-to-end with AI. On the one side, they are very limited because AI capabilities back in June were a little limited. On the other hand, they drastically improved their margin profile. and they kind of showed their clients that they can build ads within days. A lot of brands actually want to have constant content flow on their socials and they want to embrace AI. And then from June to December last year, this new industry of AI native agencies completely exploded.

7:13But basically you said the start of your growth was the multi-angled camera view and it came from talking to people in the industry. I love that. And also the number eight is actually very consistent from what I'm getting talking to other founders. It's normally like 12 to 20, but it's not too many interviews because I feel like a lot of people think they need to talk to thousands of people to figure out the problem, but it's actually like around 10 interviews.

7:38Alex Mashrabov:Yeah, absolutely. So eight people who actually helped us to shape the product and then I think we hired four of them. Oh, you also hired them. Yes, so now we have this feedback loop within the team. That's awesome. And that's how we realized that probably the best product in creative AI is going to be built in symbiose, like in collaboration between engineers and between creators. So today, roughly half of our, maybe 40 % of the team are engineers, maybe 40 % are creators. Like you said, two founders, right? One is technical, one knows the consumer. It's basically reflected in your team. Okay, let's get back to that tough year because I feel like for a lot of people, that's what they're scared of.

8:19So when you were building this and nothing was really working, and then Google releases the new Vue model, did you ever think about giving up on that particular market and starting something else because this was getting so crowded?

8:32Alex Mashrabov:I think we were committed to figure this out. There are two reasons why we had a conviction. First is that prior to that, I was at Snapchat, I was running Gen.AI there, and I saw the uprise of TikTok and CapCut. CapCut became top five apps in the world. and it's unprecedented. It says it's not a messenger, it's not a social media. And this was a strong signal for me that the needs of social media creators are simply unmet in the markets. And the second reason why we had conviction, we constantly heard that creators feel a burnout from sort of feeling pressure to record multiple videos a day for socials with their own face.

9:21Alex Mashrabov:Mr. Beast, he spoke very openly about that. But I think that has been a primary challenge for the whole industry over the last four or five years. And then what was surprising to me is that advertisers have the same problem. Most of the advertisers talk about maybe mid-market brands. They can be spending hundreds of millions of dollars on marketing, and they don't have any production team.

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10:38in a classroom of sodas most stay quiet then there's mr pib sweet cherry bold outburst the kind of flavor that gets attention so you chose the right part of the market this is what i'm hearing so i feel like for every entrepreneur who's watching uh when you see a big opportunity in the market you also have to spot who's paying the most not just go after each user right Absolutely.

11:04Alex Mashrabov:We live in a very interesting era where all the powerful companies try to give AI to everyone. Literally, Meta, XAI, Google, Microsoft, OpenAI, Anthropic, Bydance, and many, many more. I think each of those companies want to give AI to all its customers, really. That's why startups have to have more nuanced view of the world and have to have more nuanced set of customers. And I think startups today are sort of incentivized to stay cash flow positive and build real business from day zero. This is what I see across Hicksfield and other top application AI companies. so i think this also creates a very interesting dynamic that the target audience should be maybe tens of millions of users who are willing to spend hopefully a couple thousand dollars a month so it is not for everyone but the delivered value should be so strong so the product should be so good so that it kind of sells itself i love that and i love that you have a concrete number two thousand dollars yeah two thousand dollars i'm not sure like with hicksfield for example this is the core metric which we are tracking like how much of the value we believe we provide which is more like through the user interviews but also how much we charge users annually so this is one key metric and we are not chasing just monthly active users for example because the monthly active user's number can be inflated through some viral effect.

12:48Alex Mashrabov:Monthly active user doesn't really speak to the frequency of the usage and the value delivered. So that's why for us, really daily active users and average ACV, average contract value, those two metrics are the most important ones. Can you give advice to people who are watching who haven't started yet, but they haven't started because they think a large company is going to take over? How should they think about their defensibility? I think each company can really keep their focus on maybe two or three top priorities. Interestingly enough, people like to say about Anthropic that their major success from MCP and CloudCodes actually was not like a top-down, but really bottom-up.

13:30Alex Mashrabov:And CloudCode success was not sort of planned. And I think it's true that these large companies, they definitely can benefit a lot from applying top-down approach from two to three initiatives and really consolidating all the resources to make the most progress there. I just think it's the next industrial revolution. It's probably more powerful than the internet. So the number of products and ideas to be built, I think, just overweighs a number of ideas which OpenAI or Anthropic can push internally. That's why I would encourage builders to build, especially today when like a quite small team of maybe 10 people can build like high-scale products.

14:13Do you think that we have a certain gap in time when we can build? So for example, I've been hearing a lot in social media that we only have two years to build something new, because then we're going to have some companies that reach AGI and it's going to be impossible to find a gap in the market because those companies are going to be filling those gaps.

14:31Alex Mashrabov:This is a good question. We definitely make tremendous progress as an industry to automating work in digital world. And for sure, maybe next decades, there are going to be a lot of applications of AI in physical world. It's difficult to forecast how much progress we all are going to make there. But this decade is definitely the era of digital economy completely changing with AI. That's for sure. I really don't want to believe in the future when there are going to be maybe three labs who have the best models and these models controlling all the world. This could happen. That would be a very difficult future.

15:14Alex Mashrabov:So I try to stay optimistic and encourage everyone to stay optimistic and really focus on building and delivering value. Like, for example, today, I just want to give you a very concrete example. So I recently spoke to a very large, very, very large property management company, which actually uses Hicksfield to sort of advertise their buildings, their apartments, and so on. like no one is building for this industry like in this industry there is a very specific um workflow of a customer like customer needs to learn about about the property then they need to go to the website and get all the details then they need to call then they need to show up then they leave deposit and the whole customer journey no one is actually building solution specifically for this industry to cover this journey end-to-end with agents.

16:14Alex Mashrabov:And the reason why agents are going to deliver lots of value in this specific business is that customers who want to maybe, let's say, rent apartment, especially in certain price points, they want to make a decision rather quickly. So every day of delay, every day of just moving from one stage to another is just lost revenue. So, and this business owner just said to me that no one is building for their industry. And I'm confident there are many more examples like that. Yeah, so riches are in the niches, as they say, from your experience, when you pitched VCs with another AI idea, what makes a pitch stand out these days?

16:54Alex Mashrabov:I think today there is definitely fear that OpenAI, Anthropic and other labs are going to just be very acquisitive and just trying to expand their product offering to multiple different verticals. Pretty much every week there is Cloud4X launched and stocks go down. That definitely happens and that creates a lot of fear. And I would just say that the core insight for me personally was that most of these hot and hyped AI companies, they are actually cashflow positive. Like maybe it is a wrong mindset to go and raise venture capital today. I think there is plenty of pre-seed capital available today, but I'm not sure everyone needs to raise Series A, B, C, D, and so on.

17:47How much revenue did you have when you raised your first round?

17:50Alex Mashrabov:For me, with Hicksville.com, it was probably easier because I had a previous exit and we basically raised$16 million without having any revenue, just with maybe having like million users for our mobile app. But this is not exactly the way how I would recommend to build today. I would recommend to focus on bringing like the first dollar by day 30 of product development and maybe one million ARR by day 90, and then decide if someone needs VC funding or doesn't. needs. I mean, a lot of businesses can really scale to tens of millions of dollars to do profitably with AI. And for such businesses, there is no need to attract VC funding.

18:36Alex Mashrabov:I can give you a very simple example. So there are so many websites we just allow to make professional photoshoot, like for basically for passport. Many of them make tens of millions of dollars. None of them are going to be venture capital-backed business. Well, and you said something,$1 million by day 90. ARR, meaning like 80K a month. 80K a month in three months, that's a lot. And so the playbook to achieve that is basically generate ads and launch them and test whether they're landing with your target audience? Paid ads are very difficult today. I think a lot of distribution comes through organic social media and creator integrations.

19:14Alex Mashrabov:And just make sure that by day 30, there is monetization in place. and then there is a way to constantly grow to a revenue to, let's say, 1 million ARR by day 90. Many successful companies scale very quickly today. Just different verticals have different capacity. In some verticals, the ceiling could be just 50 million. In other vertical, 1 billion. In other verticals, like 100 billion. Any tips on landing first customers in the first 30 days? initially, at least last year, Twitter has been the social media where the distribution starts from. It starts from like small communities, then it goes to AI news pages on X, then from AI news pages on X, it goes to Instagram news pages, then from Instagram news pages to creators, then it goes to Telegram and like other social media.

20:11Alex Mashrabov:That's what we have seen with Higgsfield and with many other products as well, that they went through the same sort of journey of popularity and news through various social media. But it all originated on X. I think now it's being kind of changed. Today, a lot of hype, at least like a lot of companies, they sort of try to use X to boost their product. Sort of signal to noise ratio just drops. Twitter becomes less relevant, but still it's it's the main place for new ai products launch that's awesome i'm still trying to correct the the x strategy i feel like if you add a word breaking or just in to whatever you're posting in the beginning and it should be in clubs like then then perform and it's some something should be like cloth cooked yeah like something like that just wiped this out of the market Yeah, it has to be very sensational on X.

21:06But you're so right. I've heard so many, and I know a lot of creators who build their whole email newsletter, 1 million subscribers just off viral X posts. That's amazing. I love this life hack. Thank you so much.

21:19Alex Mashrabov:Although this has been the primary life hack of the 25, and I do believe that the media evolves itself as well. So 26 could be different. I always see LinkedIn on the right. Maybe LinkedIn. Maybe LinkedIn. Your previous company, you sold it for$166 million. Were there any key learnings from that business or mistakes that you made that you will never repeat in this one? It's like never say never. But one of the key learnings for me and the key takeaways was to embrace meritocracy, sort of. like I'm 30 and I feel sometimes that I'm quite old for this new era of AI like a lot of new ideas in Hicksville today come from this kind of fresh grots maybe 23 25 who sort of maybe never worked in a large company we're doing like freelancing with some vibe coding tools who are doing vibe coding before the term vibe coding basically and they they just think differently and I think that's sort of maybe the right mindset.

22:25Alex Mashrabov:So traditionally in any like corporation, those people would be just simply, no one would just simply listen to them. So, and the same applies to the creative role. So there is definitely some resistance from people who especially build like, let's say, like large Hollywood projects, that's all AI is dangerous. It's not authentic. And in the same time, it's really exciting that for many, many young people, AI becomes social elevator. And I sort of strongly relate to that personally, because for me, I had to do a lot of competitive programming, you know, like who solves more problem within like five hours, you know, like everyone in the world competes.

23:07Alex Mashrabov:So this was social elevator in 2010, maybe. And this applies both to creative and to software engineering as well. I love how you said that AI is a social elevator, because I feel like social media was the social elevator for me. Now it's the era of AI. I think you mentioned that video models could be a path to AGI and that you're also building a world model. Can you talk to me about that? And for everyone who's watching, just wanted to explain. I was just in Davos and everyone was talking about LLMs having a ceiling because basically just describing our world with words is something that we're used to.

23:43And there's a lot of information on the internet. but understanding the physics is the next level and once we understand the physics then we're going to have robots walking around our house and doing chores if i'm explaining this correctly

23:53Alex Mashrabov:absolutely i think demis from google and elon from xei they started this narrative and definitely they are top influencers in the space that's why now the narrative goes to masses to everyone. It's still unclear if that's sort of the path to AGI, although that's definitely a path to advanced robotic systems. Like, I think Elon proved to the whole world that self-driving cars can work really well through just cameras. And I think the same logic is going to apply to more advanced robots as well. That's why developing perception and visual understanding is critical for next wave of athletics. And it's a top priority for a lot of research labs as it's the next frontier.

24:41Alex Mashrabov:And there is no other way to improve video generation without visual understanding. Roughly, it takes around, I think people like to say that in one minute, we can read 200 words. One minute of the video, it can be described with maybe 10, 60 ,000 words. There is just so much going on. If you and I were having coffee after this episode, I'd certainly pull up my phone and say, look what I tried this week. It changed how my tea works. This is what I do all the time. To share these kinds of things that don't fit into the podcast, I started my own newsletter. Every week, I write about AI tools, strategies, and experiments I'm running in my own business with real numbers, real results, templates that you can use, and also honest mistakes.