How long did it take for you to get to 1 million in revenue?
Took about us about a year to get our first million.
If I copied step by step what you did, could I do the same?
I think most people could replicate the same strategy that we use.
Tyler, what's up, man? How are you?
What up? How's it going? Did you see the YouTuber, I think his name is Lab Coats, who copied, he figured out the Coke formula from scratch after two years of testing. Did you see this?
No. No.
Okay. So, the Coke formula, the flavor for Coca-Cola is top secret. There's like, I don't know, a handful of people in the world who have ever known it at Coke. They never patent it because if you patent it, you publish it and then other people can clone it. And so this YouTuber, after two years of scientific testing, flavor testing, made a chemically identical formula for Coke. So he literally like got it exactly right. And people are worried for this guy. They're like, "Dude, you know, you need security. You know, Coke does not take this lightly." But it's a pretty remarkable thing. And I feel like what you're giving us right now is the sauce just like that. It's like brick by brick way that you can build, you know, get those first 100 users, then those first thousand users, then that first 10,000 of revenue, and get to the first million of revenue, and then now you're at 30 million of revenue. And I'm kind of wondering if we can kind of remix what you did. How long did it take for you to get to 1 million in revenue?
Took about a year to get our first million.
Okay. So, it took you a year to get to a million in revenue. By year two, where were you at? About five million in revenue. So 5x in year two.
And now where are you?
We just did about 30 million in revenue last year, which was our fourth year in business.
Yeah, your growth is bananas and you know you're one of the investor updates that I like to open up. But what I thought would be cool, and we were talking, we were like, what would be fun to talk about here? Really I think it's about growth. I have this book that's on my bookshelf called Steal Like an Artist. And this book is basically about how most of what we think is original is a remix or a straight-up copy of something that came before it. And I feel like your story is kind of like that. You were at Morning Brew and you helped make Morning Brew the fastest growing newsletter and you know it got to 75 million in revenue and it exited and all this good stuff. And then you took kind of like the learnings from that, you remixed it into a product so that anybody could grow their product. And I'm kind of wondering if we can kind of remix what you did and see if we can extract the basic principles so that anybody who's out there trying to, you know, get to that first million in revenue can copy what you did. So, I want you to walk me through what did you do to grow, and not like the high level like build a great product, but like the real, the real, the specific stuff that actually worked.
What was the first thing that worked? You're ground zero. You have no customers, no revenue. How did you get going?
Yeah, I actually think you already hit on it a bit of like I think about founder market fit a lot and the Morning Brew story of actually, and you've talked about this before, of taking something you did at a company or something you've learned previously, become an expert in a low-risk way as an employee and then apply those learnings to start a new business. I think in the founders that I've backed and seen become extremely successful, there's typically a through line between them doing that previously and then launching again. Quick story that I've never actually told before is while I was at Morning Brew, crypto between 2017 and 2020 was the biggest thing ever. I didn't even own any Bitcoin. I had no business starting a crypto business, but I wanted as like a founder, I wanted to get into crypto. And so I found this like open-source library of like a 3D model of like a cold storage wallet. I went to find someone in China who could make them. Bought a thousand of them, shipped them to New York, and then like on day two started just trying to sell cold storage crypto wallets. No, I'm the crypto guy.
And I didn't know a single person who owned Bitcoin. I didn't know crypto at all. I wasn't in any Discord channels. And like the point of that story is like I thought I could will myself into being a founder in the space that I had no credibility whatsoever. I had no connections. I just wanted to be a crypto guy. Lesson learned. I sold three of those and I still have 997 in my basement at my house. In complete contrast to that, what you alluded to at the Morning Brew story, like when I joined Morning Brew as the second employee, I had built the referral program. I had built the growth mechanisms. I've seen what success looks like from the inside of that business. And Morning Brew became this golden child of the newsletter ecosystem. And as newsletters became more and more popular, I became like the newsletter person out of experience and credibility. So, I preface all of that of like what is the first step there? One was like actually just having the experience at Morning Brew and being able to lean in that credibility of I have done this before and now I'm building something that I think we could quote unquote democratize access to the same tools that Morning Brew had.
Right. Right. So you needed a story at the beginning. I was given a talk and I call this the marketing killshot. So some guy stood up and I go, tell me about your business. He says, "We're a marketing agency for CPG companies, usually DTC, CPG." I'm like, "Bro, this guy just threw an alphabet soup at me." And then he goes, "You know, we help with copywriting, packaging, design, you name it, we could do it. We do everything." And I was like, "Okay." So, you threw six acronyms at me and then said, "We do everything." All right. I said, "Let me ask you this. When you're pitching your company, who are you trying to get on board, right? And some new brand you want to work with you." And I said, "If you couldn't tell me all that junk, and you only could say one sentence, but off that one sentence, I had to want to work with you, what would that be?" And he started with, "We do like marketing for consumer companies." And I was like, "Cool. You and a thousand other companies out there that did that didn't do it for me." And I go, "What's the most impressive thing you've done?" And he goes, "Well, we helped launch." And he named like, I don't know, Poppy or like some huge consumer brand. We did all of Poppy's initial branding, marketing, positioning. And I go, "Why didn't you say that?" Cuz that's the kill shot. If I'm a new consumer brand, and I meet you and all you say is we help brands like Poppy launch with their packaging, their positioning, and their copywriting. And then I'm like, "Oh, I want to be like them, so I'm going to work with you." It's an immediate credibility and proof that no general marketing claim could ever touch. And I feel like credibility and proof is so massively underrated. And I like this forcing function of coming up with your kill shot. So for you, I think one of the story, the killshot is I ran growth for the fastest growing newsletter in the world. Now I'm building a tool for you to grow your newsletter. Sign me up. Right? And so that's a very, very powerful story. Now, somebody listening might be like, "Well, but I didn't do that." And so what you're offering is two things. One is first, go get credibility and track record in a low-cost, low-stakes way. Like, go join a fast-growing company. Go join a company that has high potential and go kick ass there. That's one path. But I do think fundamentally like a story can work. So, for example, if you didn't say that you worked at Morning Brew, but you said, "I spent 10,000 hours studying how Morning Brew grew," and all these tools they built internally and I've built them now so that anybody can use them, that would also work, right? Like you know you could just create. So I think it all starts with story and story is so underrated. And so how did that story work for you? What did you actually do with that story to get the word out there?
Yeah, and whether you raise capital or go at it bootstrapped, I think it's important to know like in the early days all you really have is that story, right? Like when I'm pitching investors it is I did this at Morning Brew and I believe I can do it again and do it for more people. Storytelling, I think, is the biggest asset as a founder, especially in the early days, cuz that's before revenue, before customers, before traction.
I've talked before about the way that I know how to make money, about how to build a money-making skill, about how to leverage your time and energy. And the team at HubSpot actually went through the video where I explained all that and turned it into a free downloadable cheat sheet on my four rules of how to make money. Now, this is not, you know, get rich quick advice. It's just core principles, foundational principles about building wealth, things that I wish I knew when I was, you know, just getting started. And so, if you want to download it, it's in the description below. It's totally free. You can go get it. Thanks to the folks at HubSpot for doing the research, making this document, and making it available to all of you guys. All right, back to this episode.
Can I tell you the story I used to grow my newsletter? So, after you launched Beehiiv, I launched a company, and it was called Milk Road. And Milk Road's story is very simple. I was very interested in crypto. I had been for a number of years. And so I wanted to create the best crypto newsletter in the world. And in one year we grew to the biggest crypto newsletter in the world and we sold for millions of dollars. Okay. So this is a great success story, probably the easiest and fastest business I ever built, and I needed a story to start it, and so I started manufacturing stories. One of them was like anti-credibility. So, I told this story how I said, "Can I tell you about the stupidest moment of my entire career?" And people will lean into that story. You're going to tell me about this huge mistake you made. I said, "This mistake cost me more money than every failed investment I've ever had, than every failed company I've ever had." So, you're like, "How could this cost you more money?" And I said, "It was 2017. My technical co-founder, the smartest guy I know, was supposed to come into a meeting." And I was like, "Hey, man. Come on. The meeting started 5 minutes ago." And he goes, "Hang on. I got to buy this." And I go, "Buy what? What are you on eBay? What are you doing?" And he was buying the Ethereum pre-sale. So this, the Ethereum, you know, back when it was like I think 17 cents or something was the pre-sale. And I should have leaned in and been like, "Why is the smartest guy I know, the most technical guy I know, have to go sign up to buy this crypto token?" I should have leaned in. Instead, I was like, "Ethereum, weird name, dude. Come on. We got to go. Let's go do some real business over here in this meeting room." Of course, you know, he made hundreds of millions of dollars off that and I made zilch. And I basically vowed to not make that mistake again, that when there's an explosive new industry where there's lots of growth potential, that I might start as the dumbest guy in the room, but I'm going to ask a lot of questions. I'm going to learn really fast and I'm going to figure things out for me as a non-technical person. Well, guess what? That's what the Milk Road was as a newsletter. And so I told that story of almost anti-credibility as the opening, as the gateway to get people interested in my new thing.
Yeah. I mean, I could have used that back when I was starting my crypto company and sold three of my cold storage wallets. But yeah, 100%. So yeah, I think credibility is huge. The other thing, and it's like the greatest thing about being online and creating content is like you can find people who are interested in the same things that you are. And so as I'm doing this like year building Beehiiv as like a side project on nights and weekends, I'm on Twitter just connecting with everyone who has a newsletter, whether they are a known newsletter, whether they're an up-and-coming, whether they are a writer, an operator, and I'm trying to understand what are the pain points that they're experiencing. So I'm doing consumer research essentially just using Twitter. It is, hey, I'm using Substack, but it doesn't let me customize XYZ, or they don't have a referral program like Morning Brew has, which became like one of our big value props in the early days. And I'm basically, as I'm building with my co-founders, kind of lurking on Twitter trying to see and connect with people in the industry. And I think that's incredibly important because when you fast forward to like how do you get your first users, that in complete contrast to me not knowing a single person in crypto, because of the credibility I built at Morning Brew and because of the people I had been connecting with for the past year on Twitter, I already had hundreds of people who I knew had a newsletter and I know what their newsletter was about, what they're interested in, what their pain points are, and that became like the initial early outreach. So like early days, I think that's like an underrated aspect of just getting around and surrounding yourself with those types of people.
Were you just cold emailing, DMing? What were you doing to get in touch with those people? So let's say how many people roughly do you think you kind of talk to? Is it like 50? Is it a 100? Is it 200? Something in that order of magnitude, right?
Directly, in a few hundred.
Okay. A couple hundred. And how did you get in touch with those couple hundred core people?
Yeah. Either reputation because you see that they are, you can just search newsletter, right? And just see everyone who's talking about or promoting their newsletter on Twitter. I'd follow them and kind of see their story. So DMs primarily. And then what I eventually did, and like as we were approaching launch for Beehiiv, I was never a content creator. I had 5,000 followers on Twitter. So I think when you're like giving tactics of how to scale your business, everyone always looks to like, oh, but I don't live in New York and I don't have that network or I don't have tens of thousands of followers on Twitter and LinkedIn. At the time I had 5,000 followers. I was not big by any means, but I posted a tweet sharing what we had been building. I talked about that we have this waitlist, limited time only. Complete lie, right? Like we had zero people on this waitlist, but you try to build some urgency.
Like I call out that there's only a few spots remaining. Obviously, there's unlimited spots remaining. I started like from studying the people in the industry, I already kind of understand where the frustration points are with other competitors, right? Like what are people who have a newsletter, who is my target customer, what are they already complaining about on social that they can't do with their current solution. And so I work that into the narrative. It's, we have a custom website builder. Substack takes a cut of revenue. We won't do that. We are totally like writer and creator friendly. And so you start to work on your counter positioning and narrative. And then comes the credibility of, oh, and I built this at Morning Brew and giving you access to the exact same tools that Morning Brew had. Do you want to sign up?
Again, not a large content creator. I got 400 people to submit on this waitlist and that really became like my lead list of being able to go out and target these people.
So if we break that down, so step one was story, either a story of credibility or almost anti-credibility, pain point, right? A problem you had, a failure you had and that's what drove you to get smart about, you know, not making that mistake again or fixing the problem. Okay. So story was component one. Component two you said was you went and talked to a couple hundred people who were potential customers before and during while you were building kind of nights and weekends and that gave you, it sounds like almost like a politician gets talking points. We don't take a cut is kind of like your no tax on tips. It's like what are the three or four messages that seem to always get people to nod and eyes light up and cool. I know when I go out there talking about our thing, you know, in 3 months, I'm going to stack those messages one after another. So, I get nod, nod, nod. Okay, I got to check this thing out.
Yeah. No, 100%. It's doing customer research and really just leaning into where your customers are and understanding that story and narrative. And then three was the false urgency, the false scarcity. So, saying waitlist, few spots left, limited time, you know, who wants it? And then you're going to get the early adopter types, the type of people you want early on. They like trying new products. They're okay with things that aren't perfect. They love to give feedback. They're enthusiastic. They share once they find something cool. And so they, you know, that's what they want. And so what was the result of that waitlist?
Yeah. So we had about 400 people sign up initially. And in the questions that we asked, one of the questions was why are you interested in using Beehiiv? So they are basically on a silver platter serving exactly what intrigues them, whether it's limitation with their previous platform or they love the Morning Brew, whatever it is. And so now as a team of three, I have this 400 person list that I can go after. I have their email, I have their social handle, and I'm just like, you know, it's like the Paul Graham essay of do things that don't scale. Like it's the non-sexy things at the beginning. Everyone glamorizes the oh zero to a million in my first week of business and now there's these AI companies that have like that straight vertical revenue. I think the truth is for most of these startups getting off the ground, it's a lot of like the dirty gritty work of just doing the cold outreach yourself. And also like one thing that I've always found a competitive advantage is it's almost like people try to go too close to the let me automate everything, build like this 15-step automation funnel, we'll use AI to make sure that the messaging hits at the right time to the right person. I didn't use HubSpot. I couldn't afford it at the time. I was just doing cold outreach on email once a week every week to all 400 people and I got 25% of the people convert in like the first few months.
Wow. And so this, your thing you're showing here is literally the back end of the form they filled out and the most important one is basically like what got you interested in checking this out, which is kind of you were basically trying to figure out what's the burning itch for you. If I was going to sell you, how would you like me to sell you?
It's an underrated question. You know, in our sales, whenever I try to help our sales team in one of our companies, it's always, dude, you got to ask, you know, what makes this a win for you? Like they just sit there and the sales guys want to tell them all about us and our pricing and our packages and our features and our benefits. And I'm like, dude, you don't even know what they want. You have no idea what their dream outcome is from this entire interaction. And as I said, just ask them what would make this a huge win for you. You start with that, right? Or you're like, you know, hey, I know you're a busy guy, but you, you know, you booked a demo or you wanted to check out what we're doing. I'm curious what's the pain? You know, what made you want to do that? Cuz I know you wouldn't just, you're not just kicking tires for no reason. So, you kind of set them up with a reputation. You're a busy guy. You don't waste time. There must be a reason that you're here. Why did you walk through our door? Tell me the problem. And then I know exactly how to sell you, right? If we're a fit for what you do. And I think that people don't really use those two kind of core discovery questions to get that. Is that kind of how you felt as you were asking these questions and sort of like were there features that came out of this or marketing messages that came out of this?
Yeah. And so a lot of the feature and kind of like research was done in this like prior stage, but you kind of, as you alluded to earlier, you figure out the messaging points that really resonate. Whether it's the we don't take a cut of your revenue, that's your revenue, we don't touch that. Back when I was at Morning Brew, the first project I ever built was I built the referral program. We saw the scam. They were taking off. They had this massive referral program. Everyone was raving about it. And Austin Rief comes to me. He's like, "We're going to copy them and do it better than they do." And so before I was even a full-time employee on contract, I built this referral program. We refined it a million times over and it was a massive success. It led to over a million subscribers.
Wow. That's a huge number.
Huge. And people would reach out and I kid you not maybe a thousand a week would reply to the email and be like how did you build this referral program? Like how are you, what software are you using? Like how are you able to build this because I want to do it for my newsletter. And these were either independent journalists, writers, they worked at another company. But that was the signal of like oh, what we built at Morning Brew was actually valuable because other people who had newsletters wanted what we had and one of the biggest hooks was that referral program. And after being asked and forwarded emails hundreds of times through my days at Morning Brew, I was like, you know what? I'm just going to write an article. This is like where my building in public started. I was like, I'm going to write a Medium article and break down exactly the back end of how we built this referral program. It got thousands of claps or whatever Medium uses. But like that was like the signal that I used of like what I had personally built is valuable to other people who want this tech. And so like another thing to lean into on these like early stages is like what is that core differentiator? A lot of founders like try to run away from competition. I think we entered one of the most competitive spaces. I could name 25 competitors that were existent and still exist today that are infinitely bigger than us. But what we had is like that case study of I already knew what had worked at Morning Brew and I had people by the thousands who were using our competitors asking about this like very particular feature. So when we launched Beehiiv, one of our value props was this referral program, the same one that Morning Brew used to scale to 4 million readers and get acquired by Business Insider. You get that out of the box for free by signing up for Beehiiv. And so that was really like our edge into the market.
Yeah, exactly. That was your Big Mac, right? That's the number one thing on the value meal that people want. I got a couple of kind of related stories cuz I want people to see this. So the first is Ryan Hoover from Product Hunt did this a long time ago. I think Product Hunt now is probably a little underrated, but there was a time about 10 years ago where Product Hunt was the... It was the number one most talked about favorite product in Silicon Valley. It was like your favorite founder's favorite founder was Ryan Hoover. And one of the things he did to get off the ground, he had no marketing budget, but he realized really quickly, there's only so many times people are going to care to hear about Product Hunt. Because that's about us. But if I make it about you, and what he did was he went to Fast Company. And if you go look at Fast Company, he says, "How we got our first 2,000 users doing things that don't scale, you need a crowd to launch to, and here's how we got one." He doesn't even tell you what his company is. He doesn't tell you what his product is, but he went, he wrote this guest post there about the scrappy do things that don't scale. It's literally the same thing. He was looking for anybody who was launching a product. He would go personally email or DM that founder, be like, "Hey, this is really cool. I just downloaded it. It looks awesome. You know, you should consider putting this on Product Hunt because there's a community of people who like discovering new products there." And then when he would go there, then he would retweet what they're doing. And he created this thing and he used to go to Phil's coffee every day 6 a.m. And his work looked completely unproductive. He was just on Twitter. He's just emailing, cold emailing random people, but that's what it took to build that initial user base. And he was religious about it. And so I saw him do that. That reminds me of what you know what you're doing. The second example, it comes from Emmett at Twitch. So, when we got acquired by Twitch, Emmett, who's the founder, now we're probably whatever 12, 13, 14 years into the company's existence. You know, the company was big now. It had whatever it was like the fourth most traffic site on the internet. It was, you know, 2,000 employees. But I asked him, I said, "What did you do in those first, you know, 3 to 6 months to get to make Twitch work?" and he goes, "What I did was I went and I talked to a hundred streamers that were on other platforms. We were new and there was, you know, other platforms out there and I interviewed a hundred of them." And Emmett is not the most sociable guy. So I was like, "What did you do? You don't strike me as like this anthropologist, this thoughtful researcher who will observe them and come up with this nuance." He goes, "Oh, no, no. The interview lasted like seven minutes. I only asked the same three questions every single time and I'll send you the Google doc of what I asked and all of their replies." And so he sent it to me and I read this thing through and he always asked three questions. So he would say, "What do you like about your current platform?" "What do you dislike about your current platform?" And "What would it take for you to switch to Twitch?" And most of them hadn't even considered it. But a few people were like, you know, I do like Twitch, but the thing that I don't, you know, the thing that it's missing is X. And then he would go build X and he'd go right back to that person and be like, "Hey, we built it now. That was the thing you said you would switch for." Like, and he's like, you know, sometimes there was actually two or three objections, but they would eventually they would sort of cave to my level of ferocity of how I was approaching this. And one of the biggest features, the number one revenue driver for Twitch came from those conversations. There was one streamer he wanted to get on board. And the guy goes, "I want to be able to make money." And he goes, "Yeah, but you have such a small audience, dude. Like your ad revenue will be so small." He goes, "No, I want them to be able to pay me five bucks a month." And he goes, "H, you know, people don't subscribe to individual creators. That's not really, it wasn't really a thing at the time." And he's like, "That's not really going to work for these 10 reasons." He goes, "Well, that's what it'll take." So he goes, "Okay, I'm going to build this feature. It'll never work, but his current platform doesn't have it. If I build it, he said he'd move over." So he builds it. The guy moves over. And he goes, "Indeed, he wasn't making big money." He goes, "But I got a very valuable insight. Making any money streaming video games, even if it was just 5, 10, $17 in a month. You know, their hourly rate was like in the sense that to them felt like there's a path for me here if I just keep going." And he goes, it was unbelievable. I thought five bucks would never change anything for these people and it immediately changed their behavior. And that feature subscriptions today drives like, you know, probably close to a billion dollars in revenue for them. And that was a feature he never would have built had he not had those conversations.
