Inside Submagic’s journey to $8M ARR in 36 months

Hey, I’m Timothe, cofounder of Stellar & based in Paris.

I’ve spent the past years helping 500+ startups in Europe build better product orgs and strategies. Now I’m sharing what I’ve learned (and keep learning) in How They Build. For more: My Youtube Channel (🇫🇷) | My Podcast (🇫🇷) | Follow me on Linkedin.

If you’re not a subscriber, here’s what you’ve been missing:

1. How Pennylane hit 400k Clients by betting on a new product
2. How Nabla dropped 80% of its product and found PMF
3. Linear’s Playbook for building a world-class Product

Backstory

Founded in early 2023 by David Zitoun and his co-founder Tsi-fei Chan, Submagic set out to help creators and SMBs turn long-form videos into engaging short-form content using AI. The initial pain was simple: creating captivating subtitles and short clips took too much time, even for experienced video editors .

Growth highlights

• First customer: May 1st, 2023
• $1M ARR: August 1st, 2023 (90 days later)
• $8M ARR in 36 months
• ~$615,000 revenue per employee
• Team: 15 employees
• Fully bootstrapped
• 3M+ users

Submagic operates globally, targeting SMBs and business owners who want to grow through short-form content. The company focuses on simplicity: a web-based AI tool that generates subtitles and viral-ready clips in a few clicks. No sales team. No heavy enterprise motion. A lean, remote-first team built around product, marketing, and support.

Milestones

• March 2023: Founders meet and decide to test 12 product ideas in 12 months
• Early 2023: Launch Submagic focused exclusively on subtitles
• May 1st, 2023: First paying customer
• August 1st, 2023: Reach $1M ARR in 90 days
• 2024–2025: Launch Magic Clips and expand feature set
• 2025: Hire first Product Growth PM

I sat down with David Zitoun, Co-founder & CEO of Submagic, to discuss how they built a profitable AI SaaS with extreme focus and distribution-first thinking.

Disclaimer: The organizational choices and technical solutions shared in this newsletter aren’t meant to be copied and pasted as-is. Always keep your company’s context in mind before adopting something that works elsewhere! 😊

Backstory

Submagic began as a founder experiment and later evolved toward a broader AI vision.

David and his co-founder met through Y Combinator’s Startup School platform and decided to validate whether they should even work together before committing long term. They gave themselves 12 months to test 12 products, choosing experimentation over raising money. The rule was simple: build for 15 days, sell for 15 days.

Submagic was just the first experiment.

The idea came from David’s own frustration. He was creating content and spending hours converting long-form videos into short, subtitled clips. Even with editing experience, it was painful. If it was hard for him, it would be hard for others .

They launched in March 2023, three months after ChatGPT’s mainstream release. Timing mattered. AI infrastructure was suddenly accessible. What used to require heavy engineering now became feasible with APIs.

They shipped a first version in about a month. The early product was extremely narrow: generate engaging subtitles for short-form videos. That was it.

“We focused on one thing and tried to do it better than anyone else: subtitles” explained David Zitoun

From day one, they chose to bootstrap. Their reasoning was strategic. They believed AI would reduce the need for large teams. They chose to stay lean and multiply productivity through AI leverage, rather than raising capital to hire aggressively.

The result: first customer on May 1st, 2023. First million ARR exactly 90 days later.

That speed validated two things:

• They had real demand.
• Their distribution instincts were working.

Submagic moved beyond an experiment and became the company itself.

Win through radical product focus

Early traction creates temptation. Users ask for features. Competitors expand scope. The roadmap expands fast.

Submagic resisted that trap.

For months, they focused on one use case: captivating subtitles for short-form videos. They deliberately ignored requests like building a mobile app, adding dozens of features, or expanding too broadly .

David’s philosophy was clear: making choices means excluding options.

“The first time someone asked for an app was one week after launch. We still don’t have one” stated David Zitoun

Why? Because their core customer was not Gen Z creators editing on phones. It was SMB owners editing from desktop. Building mobile would have doubled complexity without improving their core motion.

The strategic insight: global markets + narrow use case = huge TAM.

They took inspiration from companies like PhotoRoom, which built massive scale starting from a single, focused capability. When you operate globally and solve one painful problem exceptionally well, depth beats breadth.

This focus had 3 benefits:

• Faster iteration cycles
• Clear product positioning
• Strong word-of-mouth around a specific strength

Submagic became “the subtitles tool” before becoming a broader video AI suite.

Turn distribution into your unfair advantage

Submagic initially grew through influencers and affiliates.

David brought a playbook from previous ventures in influencer marketing. In 2023, applying influencer and affiliate mechanics to AI SaaS was still early.

When product-market fit hit, it was obvious.

“You feel product-market fit when your business grows and you don’t even know why” stated David Zitoun

Influencers started promoting Submagic organically. Affiliates earned money. Viral loops formed. Videos about Submagic generated more videos.

Only after eight months did paid ads become profitable . That delay mattered. Bootstrapping forced discipline. No early ad spending to mask weak fundamentals.

Their acquisition stack today:

• Influencer marketing
• Affiliate programs
• Paid ads (YouTube, Instagram, Google)
• Strong word-of-mouth (NPS 52–53)

The lesson is clear: distribution comes before complexity.

You can build a SaaS in two weeks today. Winning attention is harder than building software.

Design your company around your desired game

Submagic deliberately chose not to build a sales team.

At $8M ARR, that is unusual. Many founders at that stage push into mid-market and enterprise.

David views it as a strategic identity choice.

“The question is: what kind of company do you want in two or three years?” - David Zitoun

Enterprise motion means:

• Sales hires
• SDR layers
• Longer cycles
• Different culture

Submagic is optimized for:

• Self-serve
• Global reach
• Lean team
• Speed

They believe $100M ARR is achievable without sales. Whether that holds long term is secondary. The key insight is alignment: growth strategy must match founder energy and product DNA.

Bootstrapping made this alignment easier, with no investor pressure pushing founders toward an operating model they did not want to run.

Hire growth when you have volume leverage

For two and a half years, Submagic focused almost exclusively on acquisition. They had never deeply optimized activation, retention, or referral .

When volume became significant, small percentage improvements suddenly mattered.

They hired their first Product Growth PM in 2025. The objective was clear: improve conversion and retention inside the funnel.

The reasoning:

• Large traffic base
• High test velocity
• Clear opportunity to reduce churn and increase activation

With strong data flows, tests generate fast signal. Within months, they identified features correlated with 50 percent higher conversion rates .

The strategic insight: hire growth when you have enough scale for compounding effects.

Early-stage teams often hire generalists too soon. Submagic waited until there was enough surface area to optimize.

Mistake to avoid: confusing complexity with progress

One recurring challenge David mentions is the temptation to expand too fast.

Feature requests. Mobile app pressure. Enterprise curiosity. Pricing complexity.

Each seems logical. Together, they dilute focus.

Bootstrapping protected them from premature expansion. Limited resources forced prioritization. Marketing budgets were constrained, so organic growth had to work. Hiring was deliberate, so roles had to generate leverage.

Another subtle challenge: pricing experimentation. They tested price increases expecting revenue to rise. Results showed that higher prices sometimes reduced overall performance . Assumptions had to be validated through A/B tests.

The broader lesson:

• Complexity feels like growth.
• Focus builds foundations.

Submagic grew fast because they repeated one core loop exceptionally well before expanding the system.

• Bootstrapping can force strategic clarity and prevent premature scaling decisions that dilute long-term strength.
• Extreme product focus on one painful use case can unlock massive global markets when distribution is strong.
• Product-market fit often reveals itself through pull dynamics and organic demand acceleration.
• Influence and affiliate distribution can outperform paid ads in early AI SaaS stages when positioned correctly.
• Self-serve represents a deliberate company design decision aligned with founder motivation, rather than a default choice.
• Hiring a growth PM makes sense only when traffic and usage volume create measurable leverage.
• Pricing must be continuously tested rather than assumed, especially in fast-evolving AI markets.

‍