This AI music video generator platform does $5M ARR

^{A week in AI is like a year in other industries. I hope these issues become your weekly source of AI information, inspiration, and ideas. If we haven’t met before, I’m Amanda Smith. I write about AI and the fascinating folks who are building in this brave new world.}

Good morning. This week’s issue is packed with marketing and positioning gold, especially for those bootstrapping their builds. The founder, who is a physicist turned rapper turned AI entrepreneur, got the company to $5M ARR within 3 years. 

Let’s dive in. 

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Nicolai Klemke was a self-proclaimed ‘computer nerd’ as a child, who was deep in the e-sports world as a teen. He went on to become a physicist, but it was never his passion. Music was. Klemke was a rapper and even toured and recorded with his band. Creating visuals for his music videos was always a pain. He even resorted to using Microsoft Paint for a stick figure animation. 

Klemke kept on a traditional path and landed in a deep tech start-up in Berlin, which is where he got exposed to AI. He got accepted into a startup accelerator, Entrepreneurs First, and lived with 50 builders for three months. While no start-up came out of it, Klemke made a lot of key connections, then in 2022 when ChatGPT came out, he became obsessed with AI animations. He prototyped the Neural Frames platform within six weeks, and three years later, it’s doing $5M ARR. 

Interestingly, Berlin is home to some of the most important music companies (like Soundcloud), musicians and of course, techno clubs. 

What helped Klemke at the start was that his platform was really primitive. He posted about it on Reddit and Hacker News, then went out for dinner with friends. He checked Google Analytics and had to race home to secure the server because of the influx of traffic he was getting. 

“I reached top six on Hacker News that weekend and lots of people reached out to talk. I also got a lot of backlinks which helped later on.” Klemke said it hit a nerve because it appealed to the hacker purists. He went onto live the indie hacker dream for a while before building out the team as revenue flowed in. 

Klemke was influenced by a book that teaches about asking users to pay right away and to bypass the free tier, especially if self-funded. “I gave users some free credits in the beginning and then there was a paywall. The entry tier was very cheap, like $5.” Part of the strategy was speaking with a lot of customers, as with every sign-up, he’d send a Calendly link. 

Neural Frames started out with a broad AI animation focus, but in time, Klemke realized musicians were the sweet spot. He sent out an apology to all paying subscribers (15-20 at the time), then rebuilt the platform for another six weeks. This was the inflection point. 

The platform is used by artists in surprising genres including rock, country, EDM, children’s music, and even church music. Klemke said the age group is also interesting, with many artists 50+ creating music videos. 

“We have some somewhat famous musicians using it, such as the death metal band Satan. They’re a Norwegian heavy metal band from the 80s that made a new album.” 

The largest growth came from making the product easier, he said. In the beginning, he was excited about a complex product with lots of little knobs to tinker with, but it was over-generated. “We had a large cohort of people who couldn’t figure out the product, so we launched Autopilot which allowed people to create music videos in two clicks.” That decision 6x their growth. 

This week, the platform also launched Short-Form Studio, which turns any song into a TikTok in seconds. Neural Frames recently also brought on Hazel Savage as an advisor who sold her company to SoundCloud a few years back and is well plugged into the music tech scene. Users can lean on the music smarts of the team, as they create storyboards before they commit to a full video.  

They’ve used a combination of: 

“I’ve been trying to rank for AI music video generator, but I fear at some point the models will be able to create videos themselves, " Klemke said. He’s focused on vertically integrating across the music category, to position as a visual marketing assistant for audio creators – including short-form videos, album covers, tour posters etc. 

“It’s always tempting to expand horizontally, but there are a lot of music creators out there and it’s a big enough market. It's actually a nice niche to be in because it's not the traditional VC case category, and there's interesting problems to solve today.”

If one of these stories stuck with you, I’d love to hear which one.

Speak soon,
Amanda

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