How TikTok's first engineer spends $3M in funding for his $5k MRR open-source project

29-year-old Owen Chen was the first engineer at TikTok, but he quit because the company was blowing up, and he missed the good old days of going from zero to one.

So he built an open-source product, brought in significant capital at a stellar valuation, and got to work.

Now he's bringing in $5k/mo and spending $30k/mo.

Let's take a peek at his finances.

Building TikTok

Owen built TikTok. That’s not something you hear every day.

He joined as the first engineer right after he finished university, and was tasked with creating the first version of the app. His role involved a lot of localization work, as it was essentially a rebuild of a Chinese app called Douyin.

But the reason that he joined TikTok is also the reason that he quit — he wanted the excitement of being in an early-stage business and seeing the impact of his work. And as TikTok got bigger and bigger, he found that his personal abilities were overshadowed by the company itself. He was doing tedious work instead of innovating, and he says his “growth curve flattened.”

So when TikTok was right around 100 million DAU, he quit to start his own company.

And no, he did not have any shares.

Building an open-source product

After leaving his job, he did some freelancing with startups to keep the lights on.

And, while doing that, he realized that, while large companies had sufficient R&D resources to create internal portals for themselves, startups did not. And the products that were available on the market, like Retool, were cost prohibitive for early-stage founders.

So, he built ILLA, an open-source, low-code website and app builder that is monetized as ILLA Cloud.

Here's what it's bringing in:

• Revenue: $5k MRR

• Funding: $3M in angel investments

• Business bank account: $1.5M+

• Personal bank account: $200k

• Founder pay: $4k/mo

Securing angel investment

Owen got his first round of funding in 2021, and that's when he started working on ILLA full time. Now, he has received $3M total in exchange for 26% of the company.

If you run the numbers, that means his business was valued at about $12M. He says this high valuation was due to the fact that his investors believed in him, personally. That's because he approached funds that he knew.

But perhaps Owen got the investment a little too early.

I think it is more effective to find investors to scale the product after it has achieved product-market fit.

Monetizing an open-source product

ILLA is open source, and Owen says that makes monetization very challenging. He had a hard time deciding which features to commercialize.

But the goal is to be fully accessible to early-stage founders, so he currently only charges for team management features. It's $20/mo per seat for teams and $50/mo per seat for enterprise accounts.

While monetization — and community maintenance — is hard, Owen says that the great thing about being open source is that many users sign up after seeing their product and on Github.

Leveraging lifetime deals

In the beginning, they also dabbled in life-time deals. They put the product on AppSumo, which brought in a loyal group of customers with a higher tolerance for new-product issues. These users provided a lot of invaluable feedback.

They also brought in about $4k, which was helpful in the beginning. Owen now sees that he was selling the LTDs at too low a price, but it got people in the door.

Spending $1.5M of his angel investment

Owen keeps costs down by using technology stacks and products that are already available instead of building them out. He says that, while you have to pay the price up front, it is more cost effective in the long run.

As an example, he uses a lot of serverless services. This allows him to “fully utilize without any waste.”

He spends about $500/mo on tools like DigitalOcean, Flyio, SendGrid, and Arcade.software. That last one is Owen's favorite — he says it is "simply amazing".

His only other expense is his team. And it's pricey. He's currently spending roughly $4k per person, per month, and he has a team of seven people. That's about $28k/mo.

Team payments are responsible for the majority of their spend to date. They've spent half of their investment, or about $1.5M. And he says it was worth it — he's aiming to build a product that is “functionally good”; not just “marketing good.”

Money comes from hard work

Owen doesn't put a lot of focus into saving money.

Money comes from hard work, not saving.

That’s not to say that he doesn’t save at all, though. He has saved a lot over the years — about $200k, in fact. But he really likes to buy things like trendy clothes and “quirky electronic gadgets” that he doesn’t end up using much. And he values doodads over saving.

He reckons he spends about $2.4k/mo. Everything else, he either saves or invests.

• Rent: $600

• Travel: $900

• Food and misc: $900

Find global opportunities through travel

A significant portion of his expenditures come from travel. And that's because Owen thinks travel is incredibly important — not just for him, but for his company.

If you don’t experience other cultures, it’s impossible to create a truly global company. Needs are discovered, not imagined.

He says that traveling much of Asia and the US has given him unique insights about what he needs to build. Plus, he loves it.

Invests should align with values

Owen doesn't invest in crypto, despite thinking that there is a lot of opportunity in it.

There was a time when he was buying lots of Aircoins. But he says he got greedy, so now he has to remind himself not to gamble anymore. And crypto, in general, is a gamble.

Instead, he invests in two US stocks: FuboTV (FUBO) and Solid Power (SLDP).

He thinks FuboTV is a good investment because, “America needs its sports”. And he loves sports too, so it's a good choice for him.

As for Solid Power, he said, “I believe the various characteristics of solid-state batteries meet the requirements for future batteries, and Solid Power is a leading startup in solid-state batteries.”

Again, this investment aligns with his personal preferences. He's a firm believer of protecting the environment. And he believes his investments should align with his values.

You can find Owen on X or check out ILLA.

Please note that the above are opinions. This is meant for informational purposes only. It is not intended to be financial advice.

And if you'd like to be featured as a guest in a future interview for this series, let me know in the comments!