Couple spent $0 to launch business from their tiny apartment—now it brings in $26.5M a year and makes money ‘while you sleep'

Tessa Barton and Cole Herrmann lived in a 250-square-foot New York studio apartment, with a showerhead that spit brown water and a radiator capable of giving second-degree burns.

You'd never have known it from Barton's Instagram account. At the time, in 2017, she was a freelance photographer — gaining followers by posting images of their living space that made their home life look aspirational.

She and Herrmann, a software engineer, realized they could bottle up her aesthetic into pre-made photo filters and sell them. Her followers could make their lives look Instagram-worthy — no fancy cameras or editing programs required.

That idea is now Tezza, a Los Angeles-based company that makes collage kits, apparel and its claim-to-fame photo editing app. The business, which the husband-and-wife duo run as co-CEOs, brought in $26.5 million in sales last year, according to documents reviewed by CNBC Make It.

Tezza has been profitable almost since its inception, the founders say, due to its lean business model. The editing features are time-consuming to make, but once they're done, they bring in relatively passive revenue, giving Herrmann and Barton time and funds to create more features and expand Tezza into a larger lifestyle brand.

"There's a way to be making money while you sleep," Barton, 32, tells CNBC Make It.

A 'naïve' trial-and-error process

Barton used the name Tezza for her side hustles while attending the University of Utah. She worked as a wedding photographer and content creator for brands like Urban Outfitters, helping her build a following before influencing was considered a full-time career.

She and Herrmann got married, then moved to New York in 2016. Barton wanted to combine her side hustles into something that helped non-professional creatives explore new kinds of art, but didn't know where to start.

Together, the couple tried selling books, and invested in a denim jacket line that never officially launched. As those early business ventures struggled, they noticed that lots of people were engaging with social media posts of Barton's life, including a collage wall of photographs and artwork above their bed.

In response, they started designing and selling photo collage kits — made up of printed quote cards, artwork and photography — so people could decorate their homes like Barton and Herrmann's studio.

The collage kits went viral over the next year, but they were costly and time-consuming, and the physical packages took up a lot of space in their $2,800-per-month studio apartment.

"We just naively thought, 'People are into this, [so] we'll make them and they'll keep flying off the shelves," Herrmann, 31, says. "But with a physical product, we had to buy inventory, we had to fulfill orders and ship them out. We knew if we kept growing, we'd eventually need a warehouse."

'Done is better than perfect'

One day, Barton realized something: Her followers didn't just like the content of her photos. They liked how the photos looked. With their pre-owned cameras and editing tools, the couple didn't have to spend any money to build a set of pre-made filters available for purchase on Adobe Lightroom.

After selling the filters through Lightroom for 15 months, Barton and Herrmann launched the Tezza app — with bright red, chunky fonts to stand out from its clean-cut competitors — in June 2018.

For four years, the couple and a single assistant were responsible for Tezza's product design, social media presence and marketing. Today, the company currently has 14 employees, including Barton and Herrmann.

Tezza is best known as a photo editing app, currently ranking between competitors Lightroom and VSCO on Apple's app store. Barton and Herrmann want to expand the brand into physical spaces, they say: They design and sell apparel, for example, and launched a physical magazine during New York's fall fashion week last year.

But the app is still the company's main source of income. Its free version offers a limited number of filters and editing tools, and users who want more pay either $5.99 or $9.99 per month for tiered access to Tezza's full photo and video editing suite. That includes new filters which Barton and Herrmann continue to develop today.

Together, they make a good team, they say: Barton's perfectionist streak from her freelance photography days balances out against Herrmann's mantra that "done is better than perfect."

"You learn so much [more] by just getting stuff out," Barton says. "Being on social media, people will just tell you what they like and don't like. Then, you can improve as you go and let go of the fear of launching something."

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