I think more people are waking up to the realities of actually owning their audience and distribution. Especially in a world with AI, you start to see the power of being able to hit send to your 100,000 readers and 100,000 people receiving that is extremely powerful, and I think that's why we're seeing this huge resurgence in newsletters.
Hello, fellow data. My guest today is Tyler Denk. Tyler is the founder and CEO of beehiiv, a newsletter platform that has grown to over $20 million ARR in under three and a half years. He's also the creator of Big Desk Energy, a newsletter with over 100,000 subscribers. Tyler, welcome to World of D.
Thanks for having me. Good morning.
Good morning. I'm a big fan, also a beehiiv customer, so super excited to dive in. Now, if you think of like the big daddy in this space that had a big exit, which was Mailchimp, I think they sold for like $12 billion. You've said that beehiiv could be worth hopefully a lot more than that one day. Why are newsletters, why is this even like a business? Like, why is this still a big business?
Yeah, I mean, I could probably answer that question a bunch of different ways. I think historically that a lot of content creators have become overly dependent on posting content to platforms that are algorithmically driven. So think Facebook, Instagram, TikTok. The algorithm kind of dictates what content is served to people who follow you or don't follow you. And there's really just email and SMS as kind of the two direct-to-consumer, direct-to-audience channels where you kind of own the distribution and the content that you are sending to your audience. And so I think we've seen a...
Assuming your email gets delivered, like the deliverability is high. If someone subscribes, they're going to see your email essentially. Whereas if someone subscribes to me on X or on Instagram, they may not see my post.
Right, exactly. And I think more people are waking up to the realities of actually owning their audience and distribution. And especially in a world with AI, where a lot of these publishers who were overly dependent on Google and these other channels driving traffic to their website, suddenly seeing with AI summaries and other things that they're getting a fraction of the traffic they saw before, you start to see the power of being able to hit send to your 100,000 readers and 100,000 people receiving that is extremely powerful. And I think that's why we're seeing this huge resurgence in newsletters.
And like, you know, email, it's been around forever, right? The first email was sent, I think, in like '71. AOL was launched like in the early '90s in the email. But like, it still just seems like email newsletters are still one of the most important ways to communicate. Like, do you see that going away in the future, or do you see that just like kind of continuing going forward?
Yeah, I think as many people that had predicted that it's like the death of email and that we already hit peak newsletter, peak email, as you graduate college and enter the real world, like you kind of need email, right, for work. I think most email or most business communications happen via email, whether it's flight receipts, travel plans, the like. Email is really like the core central communication channel for most adults, I would say. Obviously there's SMS and whatever else, but primarily email for doing most business correspondence. And as long as people are tied to their email and have to open their email every single day for work, I think there is a business and a channel to be utilized in terms of transferring information or content or entertainment via newsletters. So, I don't know, when I raised our seed around four years ago, everyone told me that we were peak newsletter then. And fast forward four years, Substack raised at a $1.1 billion valuation. We have 350,000 to 400,000 active senders on the platform today. I don't think we're even close to peak newsletter and think that it has a lot of staying power.
And is from like a product perspective, is the just the most important thing, like there isn't even a number two, is just like getting the email delivered?
Well, if you don't do that, nothing else really matters. So I think that when you think of like product around the email itself, yeah, I think there's only so much innovation that's happening actually within the email. What I think is actually more interesting, where we spend a lot of time, is like the entire suite of tools built around the newsletter, right? So understanding exactly who's on your audience, how did you acquire that reader, how are they engaging with your content, how can you monetize that reader better, how can you serve them? And then everything around the newsletter as a whole, in the sense that a lot of these content creators don't just send a single newsletter, but they have a YouTube channel, they have a storefront, they have a website. And so how can we tie everything together where the newsletter is kind of like this centralizing force of reliable communication to their audience, but whatever they're doing on the back half of that, whether it's community or storefront or you name it, we can play nicely and help them succeed in whatever they're doing online.
It seems it's still really hard to like customize the newsletter beyond just saying like, 'Dear Tyler' and 'Dear Oren,' like it's really hard to actually build like a custom newsletter to people. Why is that so hard?
Yeah, I think it's because the underlying tech with email is actually very antiquated and hasn't been updated. And so the number one request we've always gotten from day one is, can you add a video into email? And the answer is no. And that's not a beehiiv problem. That's just like an email problem. Email just doesn't support video. And so as so much of the web has advanced, whether it's AI or crypto or decentralized, whatever, and obviously web pages that load instantly and have video, email kind of has remained primarily text-based. And so it feels like it's lagging behind of like what you actually receive in the inbox. So yeah, I think that's kind of like the biggest limitation. Email is, and there's also just so many different clients, right? So when you send an email, it needs to look amazing on Superhuman, Gmail, Yahoo, Outlook, Microsoft, like you name it, and then all these up-and-coming...
On your phone, of course.
Right. And so there's mobile, there's tablet, there's desktop, there's Windows phones, like there's everything, right? So that's like what makes email hard and why customization's always been a challenge is because it needs to, like, we as a platform need to make sure when you send your email, whether it's your grandparents who are still using Outlook 2003 or someone that's using like the latest email client that's in beta, we have to ensure that it looks great. And that puts a little bit of constraints in terms of like design.
But like even just like, I don't know, I mean, classically you do different subject lines to different types of audiences, or you know, you might reorder the, if you've got five news items, you might try to reorder them in a way that is more appealing to some audience than the other. You think some audience is more into sports, you lead with that. If some audience is more into the crypto thing, you lead with that or something. But even that seems really hard to do.
Yeah, yeah. And I think it's possible with like dynamic content, which is something we're building now. But I'd say what makes it hard is not the tech, it's knowing who your audience actually is, right? So a lot of people have like, I have a list of 110,000 people. I have a decent idea of like the type of profile and the people that I'm speaking to based on like my interactions when they reply and like the other data that I collect, but I don't know exactly all 110,000 people like age, demographic, interest, and whatever. So if you don't have 100% certainty in that, it's hard to customize your content accordingly. And I think that's actually like a huge gap with newsletters and something we have a few pretty interesting ideas to build.
And then if you think of beehiiv itself, like it's like World of DAS, this kind of newsletter like we run on it, we get charged about 1,600 bucks a year for like 5,000 subscribers, which is pretty high. Like, I think most of our companies would use it more if it was cheaper, but obviously you've come up with like the right pricing. Like, how do you think about pricing in the way that you've thought about it?
Yeah, surprisingly, that's like one of the first times I've heard pricing as a complaint. I think if you remove Substack from the ecosystem, which like, you know, Twitter and Threads and LinkedIn don't charge you to use the platform, and Substack is becoming more and more of a social platform than it is actually like a software service provider. Removing free as an option, which has anchored everyone to thinking that that is like how you can build a sustainable business, we're actually one of the most competitively priced platforms in the entire market, and I'd argue even underpriced in many circumstances. So price has never really been a factor in terms of why people don't use the platform, unless of course they have one foot in Substack and are used to getting things for free. But what you're losing on Substack is control of your audience. So Substack can send emails on your behalf saying, 'Hey, you should subscribe to these other 30 newsletters because they own the audience relationship.' They take 10% of all the revenue that you generate on the platform. They push your readers that you've acquired into their ecosystem and their app. So really, as soon as you acquire a reader, it becomes their user more than your reader. So those are kind of like the trade-offs of being the product versus paying for the product. And I feel really good about our pricing model.
Got it. So, but like you've come up to some sort of like thing of like, okay, we want to be this to Mailchimp or these like, you're looking at these other kind of competitive dynamics and pricing accordingly.
Yeah, yeah. I mean, the traditional email players, whether it's Mailchimp, ActiveCampaign, Campaign Monitor, like we are competitively to like lower price than almost all of them. We also offer a website builder. So we acquired a website builder a year ago, launched it about a month ago natively in the platform, and that we believe we can compete with like a Webflow, Framer, Squarespace type solution. So it's both website and email in a single platform. And then we also help our users monetize. So we have an ad network with advertisers like Nike, Netflix, HubSpot, AG1. And so we believe regardless of what you're paying us, that you should actually be able to earn many multiples of that in revenue directly. So ideally, most of our users, and like our north star is that our users are generating more revenue on the platform than we're charging them to use the platform.
Yeah, I'm always interested just like how people think about pricing because like I know there's like these different tiers. And when I was talking to someone who runs like the World of DAS, like at 5,000 subs, like there's a big jump. So she's constantly like trimming out the subs, which maybe is good because like maybe we don't need those subs and maybe it's a good thing, but like she's doing all this extra work to not get that next tier of jump that's in there. Have you seen a similar thing and you're like, you have a lot of people are like super close to the top tier, but they're constantly trimming out the subs because they're worried about like jumping up to another thing? And is that like a good user experience because people who don't want the emails aren't getting them?
Yeah. So our business model is also fairly unique in most email senders charge based on the volume. So the more emails that you send, the more you charge. So if you sent an email every morning and every afternoon, you're charged for each of those email sends. Where we actually went more the creator-friendly route and figured that people don't want to calculate how many emails or estimate how many emails they're going to send in any given week or month and then get surprised by the billing. So instead, we just have flat-rate pricing based on the subscriber count, which I think is much more creator-friendly.
Certainly good for people who send emails fairly often.
Right. And so yeah, I mean, I'm sure there's some people, I mean, I don't think our price jumps at any point are drastic. And again, compared to any of the other competitors in the space, I think we're underpriced relative to almost all of them. So I don't think we run into too many instances of people turning their list to remove a $20 or $30 a month price increase. But I'm sure there are some people who are more price-conscious than others and are doing that.
Where what do you think? Like, so I mean, we've got this like marketing dollars that kind of flow from like an ad perspective, and I don't know necessarily how much is flowing into email today because it's kind of hard to put ads into email. Like, where do you think that goes over time?
Yeah, I mean, historically there's like the duopoly of Meta and Alphabet being Google and Facebook or Instagram or whatever. That's where most ad dollars go, with the exception of maybe Amazon is the third if you have like a physical product. We obviously are making a big bet that beehiiv can build a massively scaled ad network where advertisers who are carving out their upcoming budget put some into Google, some into Facebook, and then carve out 5 to 10% to hit all of these niche audiences via newsletter. Because to your point, it was more or less impossible to do that previously. You would actually have to have relationships with all of these different newsletters, negotiate one-on-one with the pricing of all of the newsletters, and then follow up, send assets, creative, do the reporting and the invoicing. And like that's impossible to scale as like a smaller growing team. And so what we've built is we have, you know, north of 30,000 active publishers on the platform. We're sending nearly 3 billion emails a month. So we have advertisers like Nike, like Netflix who come to us because they want to get in front of these niche audiences in an ad format that is much less twitchy than scrolling through Instagram. And frankly, less competitive than bidding on Google and more untapped than a lot of these other acquisition sources. And they're getting high-quality impressions from very engaged readers in thousands of newsletters with a single buy. So that's...
Right now, it's kind of an older model where you're paying to almost sponsor specific type of content based on, you know, how many users they have, how engaged they are, the type of content that it is. It's not like a one-to-one type of ad where I want to advertise to Tyler.
Right. And so we do have a feature that allows you to do the latter, and there's more there where if you want to own the relationship directly with the advertiser as a publisher, you can, and you can build your own storefront, facilitate payments. But the beehiiv ad network fundamentally is AG1 comes to us, they say we want men and women in their 20s and 30s, very health-conscious. We have all of the first-party data of all of our publishers, and we know which newsletters have which type of audience historically, what type of newsletters convert well for these types of advertisers and purchase these types of products. And then we can provision that ad to dozens, hundreds, thousands of newsletters at once to choose to accept that advertisement and run in their newsletter, which we think is a huge value-add to these creators.
Have you thought about doing like a custom audience where someone can come in, an advertiser can come in with the audience that they want to run it to, and you'll have some sort of subset of that audience, and then you insert the ad just for those people in those newsletters?
Yeah. So right now our advertising targeting is newsletter-based. So it's more category, content, and historical performance. Eventually, we're going to move into a world where it's subscriber-based, where when I send my newsletter to 110,000 people, there might be 20 different ads going out in that newsletter depending on who the recipient is. And so subscriber-specific targeting is something we plan to launch sometime in 2026.
Because as an advertiser, like I love custom audiences, and whether it's being able to do that on, there's only a small number of places I can do that on today. I can do that on Meta. I can do that on X. It doesn't really work on X, but I could try to do it on X. I could do it a little bit on LinkedIn, but it doesn't really work that well. And then a little bit on Google. So I'm somewhat limited, but I pay often like four to 10 times more CPM for a custom audience because it's niche. It's those people I really want to reach, and I'd love to just bombard those people with like a specific ad that I'm trying to do.
Yeah, yeah. I mean, our north star from day one of the business was, can we build Meta's, you know, Facebook Ad Manager more or less directly for email? And so everything that you can do within, I don't know if they call it the Meta Ad Manager now. It's been a while since I've been in there, but everything that you can do in there is really the north star of the advertising tools that we're looking to build.
And they've done such a great job because it's self-serve. So you don't have to have like a sales force to go out there. Literally, people just go in and set up. It's so nice.
Right. And then that's again our north star as well. Somewhere in the next six to eight months, I would imagine a self-serve version for the beehiiv ad network where any advertiser can come in, upload their custom audiences, upload the types of content and target demographic that they're looking to reach, tell us more about their product, and we can serve those ads to the right people. So yeah, I'm very bullish on the ad network.
There is a point where like there is some sort of, there's some sort of limit to the number of newsletters you want to pay for. And so you would think that advertising would become a bigger and bigger portion of the revenue that these newsletters would get. Where do you think that kind of breaks down?
Yeah, I mean, that's been my hypothesis and thesis from day one, right? I think we launched beehiiv three to four years after Substack. Substack at the time, and they've seemed to change their tone here, were very anti-advertising and also very pro everyone can monetize their audience directly. You can do subscriptions. There's no such thing as subscription fatigue. And coming from my Morning Brew background, which was, you know, 95% ad-based revenue, like I saw the power of being able to serve high-quality ads to a very engaged audience where the audience got value because it was relevant to them, where the advertiser also got value because they were seeing incredible performance. And I had assumed that there's only, it's hard for Netflix to get people to pay their $10 to $15 a month. It's hard to get newsletter operators to get their readers to pay $10 a month as well, and there is some sort of fatigue there. That being said, we do offer users the ability to monetize via paid subscriptions. So monetize their audience directly. We're actually the only platform in the ecosystem that doesn't charge a percent fee. So what you charge minus the Stripe fees is exactly what you take home. Again, counter to Substack who takes 10% and other competitors who take between 5 and 12%.
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There are people who are putting together newsletters to monetize that newsletter either through paid subscriptions or through, like at Morning Brew, you know, through some sort of advertising. But there's also a lot of content creators who are hoping to monetize other ways. They're trying to get their name out there. Maybe they run a consulting firm and putting out free content, or there's a lot, if you think of all the B2B newsletters that are out there. Often it's because you want people to have, you know, other types of relationships. How do you think about those ultimately?
Yeah, I think actually that is the bull case for when people say that we're peak newsletter. I actually think, one, if you live on the coast and are very in tune with like tech and the media ecosystem, I think maybe you're subscribed to quite a few newsletters. I would imagine that most of the middle of the country and most of the world actually doesn't rely on newsletter as like a huge form of regular information and news. So I think there's a huge opportunity there. But you also hit on B2B newsletters and businesses. I think what HubSpot did in acquiring The Hustle, where they turned The Hustle into basically just lead gen for HubSpot, where every day you're served one to two ads about HubSpot, but you're actually getting information from The Hustle in terms of tech news, like they're speaking directly to their core ICP. They're providing value. They're giving them relevant content with the hope that on the 17th time that you've seen this HubSpot ad and you're thinking about a new CRM that you choose HubSpot and now you're paying them $50,000 a year. And I think this content as marketing and getting people into a newsletter as a top of funnel only to drive them into a SaaS product or a consulting service or something else is actually the minority of businesses who are participating in that. And I think it just takes patience, kind of like SEO. But for those who do have a better content strategy and can acquire their ICP for a dollar or $2 for their email rather than $400 for like a lead in the platform, I think that's a winning formula, and I think you're going to see more businesses do more of that.
How do you think people are going to end up like consuming this? Because you get a newsletter in that maybe you want to read, but it takes some time to go read it. So it's not just like a quick two-line email you can respond to. So for maybe some people have like filters and they're filtering it into like a read later folder. Some people are, you know, maybe bookmarking that somehow. Some people just delete it because they don't have time to go through it. Like, how is the user going to engage with all this content?
Yeah, I mean, I think the same way that they have been for like the past five to ten years. I think we've seen more companies and more content creators adopt newsletter and email as a strategy. I think at the same time, depending on who you are, you've also received a lot more cold email. It's like the proliferation of all these different AI tools. And so I think the inbox is more crowded than ever. I think that the Superhumans of the world and these other inboxes will get better at filtering out mail that you actually want to read from mail that you don't want to read and don't need to respond to. But I think it all goes back to as a content creator, if you're creating quality content that is providing value to people, people will go out of their way to read it. And if you go out and prove to your inbox that this is content that you want to engage with, they'll continue to surface that content.
Like, I mean, you now have data on billions of emails, thousands of newsletters. Um, like, do you have a sense, like, what you can learn both about the behavior of these people that are subscribing and about the content creators?
Yeah, I mean, I think the content creators that are the most successful are very consistent, and I think you hear that from any type of content creator, whether you're an individual or a business, is having a reliable schedule where your readers know to expect content being delivered at that time, and the type and quality of content I think is super important. I think we see a lot of content creators kind of test, like, sending at all different times. They send it one week when they feel like it and then go three weeks without sending again. I think if you can't create a habit with your readers and audience, it's harder to get adoption and really scale anything. So I'd say consistency is something that we see the most successful content creators have.
And I find, like, content creators, like, some of the successful ones send at all different times. Like, I get good ones on Sundays, even I get good ones on Fridays. Like, they're, they're kind of like all over the map.
Yeah, and I don't think there's like a specific winning time by any means. It's just consistent for you and your audience, right? So I get some on Friday afternoon, which I would never think is like an optimal time to send an email, but like I know the three that are sent on Friday afternoon, I look forward to them every week. So like it's, it's the expectation of behavior that they've created.
Um, as far as like readers, I think it's what you would expect. A lot of people who read newsletters read many newsletters. So there's very few people in our database as readers who like have only subscribed to one newsletter. Most of our readers subscribe to, and I don't know the exact average, but more than one newsletter. Um, and so whether that's through our recommendation features or whether that's just because people who consume information in their inbox are more likely to consume other types of information in their inbox. Um, but that's something we see in the data as well.
I imagine you have a sense of like there's this content void that people really want to read about. Um, and you could potentially help content creators fill that void, or I don't know, like is that something you could somehow figure out?
Uh, you would think so. And maybe if that's right, I spend a lot more of my time. Maybe I'm super heads down on the product side of things. I listen to users all day long that are trying to scale their newsletter and what features and things we could be doing to help them. And that's where I spend most of my time. But do we have the data? Maybe. I think one of the, one interesting things that, um, maybe Ben Thompson said years ago was that the internet's so much bigger than people give it credit for. And it's kind of like the thousand true fans thing, where if you are passionate about anything, whether it's gardening or a certain type of truck, there's probably tens of thousands at a minimum other people in the world who have that same fascination and interest. And so it's really just finding that audience. So I don't know if I'm the best arbiter of what's interesting and valuable to people.
If it's like super interesting to you, there's somebody, there's enough people probably that's super interesting to them. And then you just have to figure out like where do those people live?
