Everyone always asks, "How do I scale my newsletter faster?" The shitty answer is, "It's a combination of doing five, six, seven things really well, consistently."
That's Tyler Denk, co-founder and CEO of beehiiv, the newsletter platform powering some of the world's biggest creators, publishers, entrepreneurs, and media brands across the globe.
When we want to drive results, whether it's to an advertiser, to our community, to an IRL event, it's all the newsletter.
In this episode, Tyler breaks down the importance of own distribution and the step-by-step playbook to grow and monetize a newsletter.
If you can't take your audience and your content and your subscriptions from one platform to another, then you're stuck.
So Tyler runs beehiiv, a nine-figure brand commonly known for its email newsletters. Stay to the end. We're going to give you guys that full playbook. But I want to start with Big Desk Energy.
It's the best newsletter in the game now. Five hours a week, six figures, using your own product. I want to dive into that playbook, really talk about growth and monetization. There's a lot of people out there that would love to have a six-figure side hustle. So, let's kind of go through that playbook that got you to 120,000 followers. Take me back to zero. How do you actually kind of build the hype and awareness to launch a newsletter?
Also, let's take a step back and say what Big Desk Energy is now. Right now it goes to 130,000 startup founders. It's a behind-the-scenes look of what I'm doing building the business. So my thesis is most founders don't actually share the secret sauce of how they're building a company. A lot of Silicon Valley and startups are this like information silo of if I'm doing well, I don't want my competition to know what's working for us because that's increased competition. I believe and I've built the company incredibly transparently from the first day. So you follow me on X, you see that I share our revenue numbers. I share the ups, the downs, and Big Desk Energy is basically what you see on social on steroids. It's a 1,500-word essay behind the scenes of how we're raising money, what features we're launching, how we run board meetings, how I run a remote company of 130 people, how much revenue we're generating, and kind of like all of the stuff that most people don't see from the outside of building a startup. So that's what Big Desk Energy is. Very intimate, very personal.
I mean, I just saw you had that White House dinner, like showing your personal life as well, too. So, it's very unique to you.
Which I've never put myself in the position of like I'm a creator and it's never really been about me, but I've actually found the content that most of the audience likes a lot is how do you do what you do and it's like a day in the life or a week in the life. So when we sponsor Cannes and go to the Cannes Lions event, when we go to the White House Correspondents' Dinner, I recap kind of my week, the meetings I'm having, what it's like to be a CEO of a quickly growing startup. And I think there's a lot of interest in that type of content. So that's kind of how I backed into it.
It's all founder content for sure.
And it started on X and it started on LinkedIn. And from the summer when I first started building beehiiv as a side project, I was building momentum of here's where the gap is in the market. I was building credibility. We just scaled Morning Brew to four million readers. We got acquired for $75 million. There's this new startup called Substack that just raised at a $65 million valuation. And I think what we built at Morning Brew is so much more powerful than what they were offering. Then when you look at all the incumbents, whether it's Mailchimp, Campaign Monitor, Sailthru, like legacy post-acquisition incumbent email software providers that I knew intimately well from my time at Morning Brew. Slow, the slow boys.
No, no, no hustle, no reason to listen to users, long annual contracts, not actually building a platform that puts their users in the best position to succeed.
And so, as beehiiv is just a side project for me and my co-founders, we kind of need to like be testing our language or build some momentum, share why we believe what we're building is going to be the next big thing. And so, that's how I kind of backed into building in public. It was I think the referral program could be a massive growth driver for newsletters. I did it at Morning Brew. It led to over a million subscribers. I want to build it so any newsletter in the world can have access to what we had at Morning Brew. So, I'd tweet that and then I tweet random stuff like I think the third Friday of every week should be a monthly wellness day where it's a three-day weekend. You recharge, you work, you don't have meetings, do whatever you want to do. And so, I started this whole building in public persona. And that's how I grew my following from two, three thousand followers to now I think across platforms like 150,000.
And this is without a newsletter, without a newslet... you are running a newsletter company then.
This is even before we launched the company. It was again, I backed into founder marketing. Like it was really me just testing the waters of me being very excited about what we're building, sharing it on X and LinkedIn and seeing that there was a huge appetite for what we were building and even a bigger appetite for how do you take this idea, which everyone has tons of ideas in their life, and actually turn that into a business. And I have people that have been following me from when beehiiv literally was just an idea of like that first tweet and have seen it all the way up to the $50 million in revenue that we're going to do this year. I think that's really exciting as a content category. It's business creation. It's entrepreneurship. But again, going back to my initial thesis, everyone keeps it so close to the chest. They're so scared of other people sharing the secrets that makes them successful. And so there's a lot of alpha in the transparency of when we tragically lost my CTO and co-founder. I've shared that story many times. I share it every year. We've almost failed four or five times where I didn't think we were going to be able to get out of whatever rut we were in because of either that instance or the many other mistakes that we made along the way. And I think because once you're on that venture flywheel, you have to give the perception that everything's perfect. Everything's up and to the right. And we've been very fortunate that we haven't had a down month. Every month has been up and to the right. But that doesn't mean there's a ton of things that have gone terribly wrong. And I have owned all of that. And I think that has really been the alpha in the content that I create. I'll own all of the mistakes that we've made. I'll own when I'm extremely burnt out and struggling for motivation. And I think that makes me more relatable to other founders who look up to that type of content. And I don't fear the retribution of investors thinking that one thing or another, that everything is perfectly fine within the org. That's what Big Desk Energy is before the newsletter. It was just me creating content on X and LinkedIn sharing. But you can only go so deep with 140 or 280 characters. And so Big Desk Energy became, well, first it was a Spotify playlist. It's the best playlist that you can listen to.
Listening to it before you came in.
Yeah. 25,000 followers on Spotify. It's the best work playlist.
That's actually a very unique piece of the flywheel that you can get people either or make them stickier and or bring them in through that. But we'll get to that.
Yeah. No, I mean I think I'd like to say that I'm the first person that has a Spotify playlist to newsletter to media company pipeline. I don't think that's ever been done before.
I don't think so. I don't.
So, it started off as a Spotify playlist with a cool brand. So, Big Desk Energy, retro Windows 98 theme, and then I think it was November of '23 where I had a little bit of time during Thanksgiving break and I was like, I'd love to actually write a newsletter. I have tons of thoughts. I've done the build in public thing on social and I've always wanted to build a newsletter for many reasons. One, I've seen the success. I've seen all of the people on our platform that had an idea, who had a small audience and are now making hundreds of thousands if not millions of dollars in revenue. So, I know the secret sauce. I know how to build and scale a newsletter from Morning Brew and everything that I've built. And I obviously sit in a fortunate situation and position of seeing the success on the platform of what's working for certain types of content creators. And when I initially went to launch in November, I had zero subscribers. And I first started with like a preview of I will not launch this till I have a thousand subscribers. So, pre-launch hype, put it on X, put it on Instagram, put it on LinkedIn. Be obnoxious. Say that I've been working on something that I'm really proud of, but I'm not releasing it until I have a thousand subscribers. Took about three weeks. I launched it the first week of January. And then there's just so many other growth strategies to scale.
So, so you did, so you did a waitlist. Basically,
Basically a waitlist. If you want to see this exist in the world, and obviously I'm good at marketing it. It's everything that happens behind the scenes. If you want this inside look at what it's like to build a high-growth startup, I need a thousand subscribers before I launch this. And so I had a lot of people in the early waitlist promote it to other people. So we had a little bit of like an organic flywheel.
And for the operators out there, it's probably just giving a little like before you're obviously building public via Twitter and LinkedIn. It's probably giving, you know, probably 30, 40 posts. Just give them a little taste of what it looks like, almost like a preview into this.
Give them, just got to give them a reason.
Yeah. And that's what I'd say. Everyone always asks, "How do I scale my newsletter faster?" And the shitty answer is like, "There is not a silver bullet." Like, there's definitely different strategies and things you can do, and I'm happy to walk through all of them, but there's not one that leads to hypergrowth. It's typically the combination of doing five, six, seven things really well consistently that turns into 10 subscribers a day to 20 subscribers a day to 30 subscribers a day to really hit that escape velocity to reach scale for a newsletter. So the pre-launch hype, easy, anyone can do it. Overindexing on the channels that you can already access for free. So X, LinkedIn, Instagram, like most people have some bit of a network on all of those and just leveraging that. The next thing, so beehiiv has a feature that is an email gate. You can do a pop-up, which everyone knows what a pop-up is. You read an article, it pops up, you get it, you get rid of it. There's an email gate, which is just a much more strict pop-up gate, which means you scroll, you can only see two to three sentences, and there's a hard gate you have to put your email in. Every piece of content that I create has an email gate on it, which means I'm driving traffic to content both from social and elsewhere. And if you want to read past the second line, you have to put in your email. This is undefeated.
I think I get so aggravated when someone sends me an article, i.e. raised money and it's like Business Insider or something and I get that gate and they make you pay and I'm like, fuck it, I'm not paying. But for something like this where you're not charging, I would imagine the conversion rate with this gate is...
If you've already clicked through to see, like if I already said here's a crazy week at the White House Correspondents' Dinner, I post that on Instagram. You've... I've gotten your attention. You...
Little social proofing with you and someone important like...
And then I've got your attention. You click on it and then all you have to do is put in your email and I make it clear that it's free. You just have to put in your email to get access. Conversion rate's crazy high.
Guys. Next three days. That's a definite thing right there for the lead magnets. I like that.
Then it's like a lot of like easy things. So I send my newsletter every Tuesday morning. On Monday night, I preview what I'm going to write about. Get a lot of people's attention, post it on all my social channels, and drive it to the subscribe page. Not rocket science, but gets a few dozen new subscribers. Just saying like, "This is what I'm writing about tomorrow. Be the first to get it in your inbox, sign up here."
So it's basically, it's like the pre-gate before the pre-gate. So, it's just all...
And then we publish on Tuesday and then I have the content already written and I give you a cliffhanger of you'll never... like, had I'll just keep using the White House Correspondents' Dinner because I was in an active shooter environment and under a table.
Yeah. So easy to create content for that and I was like, "Hey, White House Correspondents' Dinner was one of the wilder experiences, like an interesting first one. If you want to read about my week in DC, click here." I already have their interest. They click on it, they get to the email gate. So there's like the pre-post hype which is like Monday night for me and then there is the I've already published it cliffhanger, clickbait, whatever you want to say, with the email gate and that's just on rinse, wash, repeat, right?
And you're just going on full offense on Tuesday. You'll tweet about it once, maybe even more times, looping back to that to just really hit that window because it's out of sight, out of mind the next week, quite frankly.
And you can take your content and great use for the MCP is like, hey, can you take this article that I've already put five hours into writing and create a tweet thread with that? We'll break that up into like an engaging five, six tweets. So then you just repurpose that content on Wednesday or Thursday, but instead of giving the entire post in a thread, give the first three to four and be like, "For the rest, click through."
For everybody out there listening to our AI guys, they have a new MCP, which is absolutely amazing. Stay tuned. We're going to get into that very, very deep. It's doing so much work.
For us right now. What about these referral programs? Tell me a little bit more about those.
Yeah, so context of the referral program. Back when I was at Morning Brew, we built a referral program. And what a referral program really is, is you already have your audience. I have 130,000 people that are opening my emails and reading every week. How do I engage and incentivize my existing audience to refer more people? And we did it extremely well at Morning Brew. We offered coffee mugs, t-shirts, exclusive content on Sundays, a community at 10 referrals. And everyone has their own referral link. You as a reader of Morning Brew or Big Desk Energy, you enjoy the newsletter and for one referral, you get access to X. For five referrals, you get access to something else. So, it worked extremely well for Morning Brew. We grew by over a million subscribers from people who came in from referrals.
Which is crazy. And so...
And you, and ultimately it's like a, you want to obviously keep your cost basis as low as possible. You want to give out as much free stuff as possible. You can create almost like a little mini pyramid at the top. You know, you'll fly them out to go to this game. You can create as big as you want, a big as a big...
And so that's kind of like what we did. The most important thing to realize is you have to have a brand for people to want to go out of their way to share your content with someone else. So Morning Brew had an amazing brand. I actually say that was probably the most important differentiator for Morning Brew is you can read the Wall Street Journal or Yahoo Finance, but Morning Brew actually stood for something for a certain amount of people. And getting a t-shirt with the Morning Brew logo or sticker or whatever actually said something about that type of person. So, Morning Brew built an amazing brand, or you could lead with value. And so I write to the 130,000 founders. One of the rewards that I give at one referral, you get access to my Series B deck. So again, total through line with everything I said earlier. Most founders don't share how they raise capital or their numbers or how they actually raise this $33 million Series B. And I tell you, if you refer just one person to my newsletter, I'll send you that deck. Totally unedited, raw. So useful for...
All right, that's nice.
So for any founder who's seed stage, Series A, who wants that type of, you know, insight into like what does a Series B deck look like that actually works from a company that I respect, from a founder that I'm already reading about every week. And so it's one referral.
And I would put that under kind of the lead magnets universe, but that's like a lead magnet on...
It's a lead magnet for your existing readers who already have an affinity for you because they're already reading your content. And so my goal with the referral program is of the 130,000 people, how many can I get to like my content enough and be incentivized by whatever reward that I'm offering for them to copy their link and put it in their group chat or recommend their friend or their mom or their coworker or their co-founder. And that's kind of the name of the game for the referral program.
The Big Desk Energy vibe. We're going to pop this up. The aesthetic is crazy vibey. That'd be some, I'm not even going to call it merch. That would be some good product.
Well, I have merch as well. And so that at three. So I only have two incentives in my referral program. One is the Series B deck at one, which I actually think, and you kind of alluded to this earlier, like the game is how do I offer as much value for as little cost. So many people go into I'm going to ship them a t-shirt and a crew neck and a hat. Like that's cool, but now you're also dealing with buying actual physical goods, shipping them. People claim they don't get it. You have to send them another one. There's like, there's cost involved. What we did at Morning Brew was at three referrals, you got access to our Sunday newsletter called Light Roast. It was a hit because it cost us absolutely nothing to produce. So if someone's, it was a writer's time to create an additional newsletter,
Which gets advertised to pennies once.
And everyone already on the list obviously wants more business content because they've already signed up for Morning Brew. If they're already going to refer someone else, like there's a high intent that they want more content for whatever reason, to be competitive, to be in the know, to understand whatever you want to get.
We are not doing this. We are idiots. This is an easy, easy, low-lift one that we have to be doing.
And we have so much, especially free stuff to offer, like unique one-of-one information that we can just stack the deck here.
And so one of the examples that I always use, and I got a lot of inspiration for mine, was Milk Road, which was a crypto newsletter.
Of course, Uncle Ben. Uncle Ben and Uncle Sean.
They launched their newsletter, I want to say, in January of 2022. They got acquired for seven figures eight months or 10 months later.
And so they figured out this crazy flywheel of how to grow as quickly as possible. But they did the referral program and because you're reading Milk Road because you're interested in crypto, they said for one referral, we'll give you a guide of what 15 crypto experts think is going to happen in 2022. So like the alignment of incentive and people who are reading the newsletters one-to-one, and because it was free, it took them I think eight hours, like one afternoon to create that guide. I think it led to 30,000 subscribers. And so we are ideating right now for ourselves.
This is a live session. This is amazing. Yeah. No, we do, the lead magnets are absolutely great. We'll put one down below. But I feel like we have so much, the pattern recognition across all of the episodes. We have so much interesting information and we could double-click on any topic whether it be hiring, firing, marketing, digital marketing, sales. So we can code B...
MCP too. Take the transcript and have the MCP spit it out.
Love this. On the growth side, what else? You're talking about referrals. I see often on newsletters referring kind of other newsletters. Talk about like the cross-pollination of utilizing other newsletters to grow yours.
Yeah, so there's two things. We have a recommendation network, which is exactly what it sounds like. You can recommend other newsletters, they can recommend you. The key there is you get a hub of other newsletters who are not competitive with you but are like tangential. So I write about startups. There's other startup or creator-focused newsletters that I recommend. In return, they recommend me. And so everyone who signs up to my newsletter, as soon as they put their email in, a little pop-up comes up and says, here's four newsletters that me, Tyler Denk, am recommending that you should check out.
Is this a barter system or is everything for free?
Everything. So there's both. There's an altruistic free, I recommend you because I know you're recommending me back and when you grow, I grow and vice versa. So it's good for all of us. So that is like the recommendation network. Then we have something called Boost, which is exactly what it sounds like. It's boosted recommendation. So you can put money behind it and pay other newsletters in the ecosystem to recommend you. And so like I have...
You could selectively decide who you want. They need to say that they're offered and willing to do that.
So, for example, for me, I have a Boost offer for $3. And I'd say that any newsletter on the beehiiv platform that wants to recommend Big Desk Energy can apply to recommend me. I get a full download of who you are, what's your audience size, what's your content. Like, if you're writing about sports, it might not be a good fit for my newsletter, right? But if you're writing about business or tech or startups, then it's probably a better fit.
This is where value of audience becomes so crazy because you can charge a premium if people want your readers, right? And so you could sign on to beehiiv. You could see that Big Desk Energy is offering $3 per subscriber. It's a great revenue opportunity for you because you know you're making, you are growing 100 subscribers a day. And if half of them, so 50 of them actually opt in to my newsletter, you're making $150 every day hands-off, not doing anything.
So why it's so powerful is it's revenue for one side of the market. It's revenue for your newsletter and it's growth for me. You're sending me emails. I'm paying you $3. And what we built is we built a lot of different mechanisms to protect and like make sure that they're actually verified. And so I only actually pay for subscribers who are opening emails. So it's kind of like paying for Facebook ads where you only actually pay for customers who buy something. Like I'm only, the $3 only goes from my account to your account if the email that you sent me is actively opening my emails. So it's totally risk-free.
So you guys create very, very safe parameters on the back end. Do we get to control those parameters or you guys...
No. So, it's a black box because once you let the user control them, then you can kind of game the system. So, we have like a bunch of different mechanisms to track like this is fraud, this is like a fake email, this is this person's not engaging or this person's opening every email and clicking and it's not suspicious. Thus, it's a real subscriber.
And this is no friction. It's after the fact like someone has subscribed and then they're getting like a pop... like it's no friction.
You sign up for Big Desk Energy, you see who I'm recommending and vice versa. So, those are like the two different flavors of like the network effects that we have. We have 55,000 active publishers in the ecosystem. And so you can benefit from this recommendation network where some people recommend you and vice versa. Or if you're willing to put money behind it, you can pay $2, $3 per lead and emails will then be sent to you from whoever you approve that can do that Boost recommendation.
I feel like that is safer. Like I know people that play the game and they play like the meta game where obviously there's way more to it. You have to monitor it. You have to create the creative. How good is that email, period? Quite frankly, and this is like pre-vetted that you'd probably pay...
Hyper-focused for email, right? Like we have a mechanism where you can auto-approve one. So if you're like, if they have a 40% open rate and higher, they're based in the US and they write about business, I don't even want to like approve it. Just like know that that's good. And so it's like autopilot. And then inversely you can set it up so like every newsletter is very different in terms of quality and how good their list is and what type of leads they're going to be sending you. And so you can like auto-clean it as well. So if your newsletter is sending me subscribers and their open rate is, call it 20%, I can say anything below 20%, just cut off that thing and then you can no longer send me more emails.
Yeah, we need 40% plus. 40% plus is the benchmark.
Yeah. Hey, just an example. But yeah, totally agree.
When you kind of look at all these things like in a pie, I imagine that is just like a crazy flywheel. On the lead magnet side, I feel like for everybody out there listening that wants to start, it's like what do you have that is such high value that is uniquely you, one-of-one, i.e. this money raise deck, and you obviously have social proofing around it. You've raised, I don't know, $30, $40 million. How big has that single lead magnet been as far as like in your growth? Is it 15%, 20%?
That's also where, so the two other levers that I get to on growth, one is lead magnet. So I'd separate referral program. I use a lead magnet for the referral program, but referral program is me incentivizing existing readers to share with other people. beehiiv also has a full website builder and so you can build custom landing pages, multiple landing pages, lead magnets, interactive web pages, like whatever you want. It's a full website builder with like an AI integration as well. So you can just chat with AI and say, you can upload a screenshot of your favorite website, be like, I want my landing page to look just like this, but in my brand, in my colors, and it can do that in a few seconds. So with the website builder comes a whole world of possibilities where you can build different lead magnets. And so I'm running lead magnets for our seed deck. So the Series B is like the referral program. If you want access to our seed deck where we raised $2.5 million, they just put in your email and I run ads to that as well. If you want, we're running a remote company of 130 people. If you're curious how to run a remote company, I have a remote playbook and you can go to that landing page. You put in your email and I email it to you.
Boys, more lead magnets. Lead magnets next three days.
So lead magnets are one massive thing that I do for growth and then I would say ads, which is what every newsletter at scale eventually gets into the paid acquisition game. You just can't hit escape velocity unless you're mega viral and can constantly create such amazing content that you can drive a ton of traffic. I think every successful newsletter that I know eventually gets into paying mostly Meta for different ads either to your landing page or to your lead magnets. And so landing page, like just the subscribe page, there's no button, there's nothing to do except for subscribe. And then you just lead with social proof however you want to, or however I want to promote Big Desk Energy. Or you use a lead magnet and say, "Hey, I raised $2.5 million and this is the exact deck that I used. Totally unedited, totally raw. Put your email in and you'll get it sent to you." And so then I'm kind of grouping together paid acquisition with lead magnets.
We got to get you on that ManyChat steroids. I don't know. I don't know how they're not a partner of this. I'm like literally the mayor of ManyChat. I love it. It does this all automated.
Quick break and it's a big one. In the coming weeks, we are doing a live and free email workshop with beehiiv. Me, Tyler, the beehiiv team, and some of the world's best email operators in the world are going to walk you through how we grow and monetize our email. This is the same exact playbook that Open Residency uses to run our newsletter. And you're going to get the same playbook at no cost. And remember, your Instagram does not belong to you. Your YouTube does not belong to you. Your email list does. Stop renting your audience and start owning it.
The reality is, is this is all backing into, I mean, you're putting a lot of dollars behind this. I mean, if you're talking about referrals, $2, $3, Meta, let's just say it blends out to two, three, $4, you have to make money on the back of that. What are the actual ways to monetize a newsletter? Ultimately, this has to be a profitable business here. So how do you make money doing this?
I think it's also worth to hit on how much I am spending because I just tossed out a bunch of different numbers. I probably spend $5,000 a month on ads on Meta and I probably put three to $5,000 a month into that Boost network. So, call it $10,000 a month that I'm putting in. So, costs are $10,000, platform's negligible outside the fact that I'm the CEO, but it would still, we're very efficient cost-wise. So, $10,000 of my cost. So, like to run a profitable business, I need to make more than $10,000 a month in revenue. And that discounts like all of the second and third order effects of like how the newsletter benefits my business, right? All of our, a lot of our users read my newsletter. We've gotten tons of enterprise users from reading my newsletter. So like me breaking even, I consider to be a win.
I mean, hypothetically, this could be a loss leader and you're going to win on the second and third effects for sure.
Totally. But how I actually make money, just ignoring the second and third order and like focusing on the newsletter. There's a few different ways. I think the most common is advertisements. And so you can do advertisements a few different ways. Morning Brew, we had, you know, three, four million readers and we were able to get brands like Apple and Visa and Mastercard to spend $70,000 to get in front of a single newsletter because they're reaching so many people. I think that like set the model for how to do it at mass scale when in reality we're seeing so much success in these like niche B2B areas where you only need, if you wrote a newsletter to 5,000 CMOs, that audience is so valuable. The amount of companies like HubSpot that would spend an egregious amount of money to get in front of an engaged audience of CMOs is so high that you actually don't really need the three, four million readers that Morning Brew has to build a very successful business. So the ad market has evolved quite a bit recently. But ads are probably the easiest way to monetize your newsletter.
And is this flat rate? Is this a CPC, CPM? Like what...
It depends, like there's like a full spectrum. So we have something called the beehiiv Ad Network which is hands-off. You don't have to do any work. You log into beehiiv, you type in backslash ads and we have an entire archive of different advertisers. We have Roku, we have Netflix, we have AG1, we have HubSpot, like brands that want to get in front of your audience and we're able to match. We know that these brands are looking for certain types of people that you have in your list. And so that is a CPC or CPM model typically. So you can get paid between $2 and $5 per click or $3 and $7 per thousand opens are kind of like the two main metrics for CPM and CPC. And that is like totally hands-off. You don't have to do sales. You don't have to talk to anyone at AG1. You don't have to negotiate. You don't have to do tracking links. You don't have to report back to them. Like it's totally one-click added to your newsletter. You get paid a few weeks later. So the 20th of every month, we do payouts for every dollar you made the previous month. So...
How much you paying out on that? What does that look like?
About a million dollars a month right now.
And the brands crush it on there because one, we're very creator-friendly, but at the end of the day, our customer for the ad network are the brands. They give us a $100,000 budget for Q2, and we want to prove ROI as much as possible.
I mean, that's a good look for you to have X logo on your newsletter.
A random person with 100 followers looks like they have...
AG1 and Nike on the sponsorship. They're like, "Holy shit." And like they're, "Oh, I just signed up." It's amazing growth lever for us, too, right? If you have 100 subscribers and you have a Nike logo in your newsletter a week after you launch and everyone's like, "How the hell did you get Nike to sponsor your newsletter?" "Oh, it's the beehiiv Ad Network. I literally clicked one button and I just got paid $15 for that ad." Which is another thing we try to do. Like one of our north star metrics is how many of our users are actually generating more revenue than they pay us. It's like the old quote of like a platform is, I'm going to butcher the quote, but it's when everyone in the ecosystem is getting more value than the platform itself. And if we can have all of our users generating far more revenue than what they're paying us, one, it gives us the pricing power to increase pricing, but two, like why would you ever leave if we're actually net in the black for you and you're making more revenue. So yeah, the beehiiv Ad Network's amazing or you could sell it yourself. So ads are one thing. I use both. So to swing it all the way back to my newsletter for Big Desk Energy, I have great inbound, so I sell my own ads or I'll use the beehiiv Ad Network. We also have something called a direct sponsorship storefront, which is if I want to sell my own ads, where's the page that I can send a Nike to say, oh, it's $5,000 for sponsorship. And so, we kind of are building the infrastructure around what it means to sell your own advertisements.
And I'll say this a few times probably throughout this interview.
We're like very unopinionated on how our users succeed. I think there's not a one-size-fits-all to being a content creator. Whether you monetize with paid subscriptions or with ads or with affiliates or with events, we know that one content creator can do and succeed very differently from others. And we don't force our business model on any of them. If you want to sell direct, we make no money from that whatsoever.
I love that third bucket, by the way, too. I've never heard you say that since we've spoke. I love that you get the basically, you're basically sending the one-page PDF or a media kit direct to the brand.
It's a media kit. Exactly. It's like a landing page for people to see your menu of what you're offering with like a media kit that comes inbound and we make zero dollars from that and like that's totally fine. My thesis has always been from day one, if our users are having success, they're growing, they're making money and we are helping them do that, then we don't need to be this predatory take rate model where we are constantly trying to figure out how to extract revenue. I think we're playing the long game of we know that we...
can provide the best software and the best service without also overindexing and finding ways to extract revenue wherever we need. And so that's been our thesis from day one, and it's one of the main reasons why we don't take a cut of revenue on anything that we do.
So in this bucket, the sponsorship bucket, we talked about three. We talked about the ad network, we talked about you doing it directly, and then we talked about this conduit via direct sponsorship where you guys don't take a cut when you do it direct, or you just have the ability to be a little bit more creative and storytell and just charge a premium outside of the CPCs and CPMs. Is that basically what it...
So yeah, to answer your question from earlier, CPM, CPC is like the ad network. The other way that's probably more preferable for larger content creators is like flat rate, which is you're actually the benefit of you advertising Big Desk Energy isn't just the clicks, it isn't just the impressions. It's the brand association of being in my newsletter and me actually saying that I get a lot of inbound, but I chose to work with this partner because I actually believe in the product, and ideally it leads to conversions and revenue for them as well.
But that's some salesmanship there as well too.
Sure. And so, and that's what we see there. There's like a barbell approach. I think there's the long tail of content creators who are happy with the $3 CPC. They know that they're going to make, you know, $500 every single send. That works well. And then there's the upper end of the market that knows they have a very premium audience, and the CPM CPC doesn't make as much sense. It is for me, if you want to sponsor Big Desk Energy, it's $7,000. And I think over the course of two to three different sponsorships, one, you'll get a brand lift from me having a very loyal audience that's very engaged, high click-through rate, everything. And also me sticking my neck out and saying that this is a brand and a company that I believe in, which is what I think all of the larger publishers and content creators do.
That's pretty crazy. It's an extra 300,000 of just net new money if you do that one time a week.
Damn. Love that. So, double clicking on that direct sponsorships, the media kit. I actually checked out your media kit. I love it. What are some of those key things that you think need to be in a media kit to get kind of the sponsor over the hump?
Yeah, I think you're either overindexing on one of two things. Sometimes both. One is size. So, how big is the audience? That's the Morning Brew play. It is we are reaching four million people. The other one is like who is that audience? And like how premium, how engaged are they? Morning Brew works so well because it had both. Morning Brew, the pitch was you can sponsor the Wall Street Journal, the New York Times, whatever other newsletter you can find. But Morning Brew has 18 to 34 year olds that live in coastal cities with high disposable income that are upwardly mobile in their career and really care about the news content, current events. So like they're the people that most brands want to get in front of. It's a long way of saying that. And so you need to figure out are you selling like the niche thing of like for me it's 130,000 mostly founders and early startup employees. And so if you are a software vendor who is trying to have B2B, B2C companies adopt your software, like you need to get in front of founders to be able to sell them, and like that's why you would come to us. Or you can sell size, and I'm getting to the approach we can kind of sell a little bit of both, but those are the things.
And I think most, what most newsletters, so maybe it's true of YouTube and some of these other channels as well, but to use the example of you having a sports newsletter, say you have 100,000 people on this list, do you actually, you know who those people are? Like, do they like the NBA or the WNBA or MLB? Are they male? Are they female? Do they live in the US? Do they live in these types of cities? What are their hobbies? Like, email doesn't really give you that out of the box. You just have 100,000 emails of people who kind of open your email to read about sports, but you really don't know who they are. And so, that's actually a big thing that we're focusing on now is how do we hydrate and augment all of that data to be able to tell a publisher exactly who your audience is. The way that you've done it historically is like at Morning Brew we'd send a survey every quarter. I have like an intake survey. So another feature that we built at beehiiv is that...
Like a little Typeform type thing.
Yeah. You can build your own survey. Again, our thesis is a lot around consolidation, that content creators and publishers don't want to manage 15 different pieces of software. And with our own survey feature, so the way that works, you sign up for beehiiv or you sign up for Big Desk Energy. First thing that comes up is the popup. It's here's the four newsletters that I'm recommending. You choose you want to sign up to them or you cancel it. The next step is a survey where I'm like, this is what I'd like to know about you so I can cater my content for you. Serves two different purposes. One, I do want to know who my audience is. If I can see a shift in age, demographic, interest, like I would maybe change my content to accommodate that.
And you could probably UTM that based on the specific newsletter.
And this is where MCP also comes in great, right? It'll do all of this. So take your survey responses and do that type of analysis of where they came from and who's answering what. So that there's one is like from the content angle of understanding who is my audience for like me creating content for ideally them. The other one is more self-serving is if I know who my audience is. So I know that I'm 70% male, 30% female. I know the average age is like 28 years old. I know that 60% of them self-identify as a founder. All of that information that I collect in my survey I then put in my media kit and that's what I'm selling advertisers. And so that's the historical way of like getting that data. We are thinking creatively of how do we augment and hydrate that data so we can actually do a lot of that for you behind the scenes.
Man, that is literally, and again, I'm just thinking about switching costs. Like I know that you guys are consolidating everything and you're already doing X and X and X here, that if you bake this in, that's huge because that's literally everything. Like we keep incrementally... We're going to retouch on MCP. We're going to get to MCP soon. It's just like all these little things of knowing age demographics. We now know via Spotify, we have show crossover. So, we know that 53% of you guys watching right now listen to Diary of a CEO very, very often. We know 41% of you guys like Joe Rogan. So, I think every single one of those little pieces of the pie just make it that much easier to sell the direct sponsorships, which quite frankly is where you're going to get the most amount of money.
Yeah.
That's insane. What are those baseline metrics so people are selling this in via Media Kit? I said 40 plus open rate. What are some of those kind of core numbers that people out there should know that like this newsletter sucks, it's above average? What are those core numbers they need to know?
So I guess like the downside of newsletters is that there's just not that much data to work with, right? So there's open rate, which is the percentage of people that open the email that you've sent, and that has been obfuscated a bit because Apple has privacy things and there's other inbox software. So open rate is directionally correct but less accurate than it was maybe 5, 10 years ago. There's click-through rate, which is the percentage of people who open the email and actually click on links. So is your content engaging? And you can do click-through rate just for advertisements as well. So you know, like a good, to give you a benchmark, I'd say anything at like the 0.5% click-through rate on an ad is pretty good given it's an advertisement.
Under the notion that you probably have multiple links to click.
Right? Yeah. But group them together, right? So you group all the ad links together. 0.5% of people who are opening that are actually clicking on the ad is like pretty damn good. Anything over 1% I'd consider like incredible, like best-in-class. I think most ads are in like the 0.25 to 0.75 or 0.25 to 0.5 that I'd say is like good.
Is there a direct correlation between the number of ads and that click-through rate? Like the more ads you have, the lower the click-through rate.
I'd probably assume that.
But yeah, if you're a brand and you're talking to newsletters, one, like open rate is like are the people that are receiving this email even excited enough to open it? And if open rates are below 30%, I would consider that like a wishy-washy audience. It's like they'll sometimes open, but it's not like crazy high engagement. For the Morning Brew story, right, we're selling size, we're selling who they are, but we also had a 45% open rate while I was there. And so what we were also selling was these are people who have built Morning Brew into their daily habit and are super passionate and reliably open this email. So the same thing for us, right? I have like a, my last newsletter was 45%. And so these are founders who are interested in this type of content, who have a high click-through rate. They're clicking on ads. They trust my recommendations because I don't just advertise any brand, and they're opening 40, 45% of my emails. So they're looking forward to this and building it into their habit every Tuesday. And like what I just repeated is kind of like the motions you have to go through as a content creator or publisher to craft your story of why would a brand give you dollars to advertise when they could also invest in Google and Meta and Snapchat and TikTok. And so email subs like convert crazy high. They're very engaged audiences. But you have to be able to tell that story.
Yeah. You have to know at the most granular level your audience. I think for people out there listening, a lot of people out there are usually an operator and they have their own company. I highly recommend that if you are, you should also become a creator because obviously you'll own the audience and that's going to scale and give you a lot of leverage is knowing not only who your reader is, but also who are the companies that are going to pay you for that reader. And you can look at different industries and some of them have a declining CAC. And like if you're talking about AI in your newsletter right now, and let's just say you have a unique POV, guys, they're paying a lot of money.
Well, that's what I'm saying. A lot of money. When people try to figure out what type of content should I create, I think it's important to understand why, like what type of newsletter are you going for? Are you doing it for your personal brand just to grow an audience and so people recognize you and read that content? But if you're like, I want to monetize with ads and I want this to be income in my life, then you should back into how am I going to monetize with ads and what type of brands would even sponsor to get in front of my audience. And AI is like the perfect example. And if you go hyperfocus within AI, let's just say obviously Claude is leaning more on kind of the technical versus I would say OpenAI is probably winning more on image, is like if you just did just technical in the Claude world and it was like 3,000, 4,000, especially people that are trying to compete with Claude, like those CPMs would be through the roof.
Yeah. 100%. Roof. And you guys have to think about that before you start because that's also going to inform you on like what is the type of content that I'm going to put out because is that person going to be interested.
Yeah. And the example is perfect because you have all of these AI companies raising hundreds of millions of dollars. They raise hundreds of millions of dollars to be able to get hundreds of thousands of customers. Where do they get those customers? And they will use Google, they'll use Meta, they'll use out of home. But if you have a newsletter of 50,000 people who are super technical into AI and they can sponsor your newsletter for five, $10,000, like that's a drop in the bucket for them and it's a new channel for them to get customers. So I think that's like again, that's like the business side of email and just content creators in general that you have to start thinking about if monetization and advertisements are going to be a part of how you grow your business.
I would say one more thing that makes that very valuable that I just want to lay in there for people out there listening. Getting sponsors that have high CAC, meaning it costs them a lot of money to get a customer, you have to hit less home runs, less people need to click through and win. People that have high LTVs, they can lose on the front and win on the back. And then another big one is price discrimination is, let's just say randomly I have someone here listening that manages $700 million and I get that one person for a B2B company and that person's going to spend a gazillion dollars. Like you want to be able to get that asymmetric benefit. Like if it's just a flat cost throughout, you could get a huge fish, but they're going to pay the same amount as someone that doesn't pay much. So those are like HubSpot for example is a $50,000 CRM, right? I only need one person to buy HubSpot and they are in the black for five advertisements.
And so I think that's the way you have to think of, like that's very B2B-centric, but it's relevant for anyone who's doing advertising.
Okay. So sponsorships is one of the ways that you monetize. I feel like that's the most common that people would know that. What are other ways that you can monetize your audience through a newsletter?
So, the other most popular I would say is one that I actually don't use, but paid subscriptions, which is the Netflix model, the Substack model, if you want to call it that. Basically, readers pay 10, 20, $30 a month for whatever you want to give with your subscription. The most common model is you send, you know, a free newsletter and you send two paid-only newsletters. So, it's like exclusive content, but there's other ways to bundle your subscription. It can be a private community. It can be a monthly webinar. It could be IRL events. But a subscription, so turning your free readers into recurring revenue and building a subscription business around that is the other common one. We are very differentiated from every other newsletter platform in the market where we don't take a cut of revenue. So it kind of goes back to my thesis before of we just genuinely want our users to succeed. We don't think we deserve revenue from hooking Stripe up and playing middleman. Like I think that that's like a very predatory take rate model that puts creators and locks them into an ecosystem and also leaves them vulnerable to potentially pay more as take rates potentially increase, which Patreon went from a 4% take rate to a 12% take rate. Gumroad went from 4 to 10%. Etsy went from 3.5 to 6, 12%. So there's a history of platforms that charge a take rate to return capital to investors or to grow revenue. If the only lever that they have to create more revenue is to increase take rate, then I would consider those content creators to be in a pretty vulnerable ecosystem to expose themselves to that.
Will you on the record with an evergreen episode that will live on YouTube forever tell us that you'll never raise that rate?
So we have zero. So they're staying there forever.
Yeah, for sure. 100%.
Look in the eye right there. Yeah, it's on camera. Okay, so let's just call them like kind of digital products and paid subscriptions.
Two separate things actually. So paid subscriptions for sure. That's the recurring revenue. Digital products is something we launched in November, which means you can sell templates, guides, courses, time, like whatever you want. Again, we don't take a cut of revenue for that either. And an example of that is obviously, as you've heard me speak, I've scaled my newsletter to over 100,000 subscribers. That's something that a lot of people want access to knowing how I did that. And you can either listen to this podcast which will be really helpful for you, or I created a digital product of Zero to 100K Full Playbook. It is a 50-slide deck and then a 30-minute video recording of me kind of going through the deck and adding more color. Sell it for $10. I've sold a thousand of them. I've promoted three times. So...
Guys, we're going to give a little bit of that sauce down below. You got to give us a little bit of that sauce.
That took me I think 30 to 40 minutes. I had to build it for a presentation. And so it's work that I've already done. I flipped it into a digital product that took 10 minutes of time and then I've sold a thousand of them for $10,000 and beehiiv takes 0% of that. And so that is like what I consider a digital product. And then the two last ways I monetize, there's another flavor of digital products called like booking time, consulting, coaching. It's kind of a blend, but for an hour of my time, you can book time with me directly. It's $1,000. And I've done four of those calls and beehiiv handles all of like the video conferencing, the scheduling. You hook it up to your calendar.
And again, I'm a broken record, but we take zero cut of revenue. So any ways that you're monetizing your audience on the platform, we don't take a cut of that. And we offer a very diverse range of different ways from ads to subscriptions to digital products and you can monetize however you'd like.
I know a couple companies that do that. The latter, the one that you talked about is, you know, people paying for the time. Everyone takes a rip.
It's a good play. You're basically trying all of these kind of micro business activities, you're just rolling them all up under this umbrella, no take rate, and just land grab.
Yeah. In general, I think it goes to unlike other companies in this competitive space, they have a different business model. They are very opinionated on how their creators make money. If you only make money from paid subscriptions by taking a 10% fee, then your entire platform and business model is how do we get more people to run paid subscriptions, whether that's the right business model or not for that individual content creator. We have none of those misaligned incentives. We know that one creator looks very different from the next creator. A paid subscription product might be perfect for one and terrible for another. And we don't take a cut of revenue from any of them, but we are still innovating and supporting them and launching new features every week towards these different feature suites. And so the thesis is as long as you have success on our platform that makes us more successful. We have no take rate, we are not opinionated on how you generate revenue. We have full data portability. So if you don't like using beehiiv, you can export your list, you can export your content, you can export your subscriptions and take it to whatever platform you want. Data portability is super important for content creators for a lot of reasons. If you can't take your audience and your content and your subscriptions from one platform to another, then you're stuck with if they fall behind in competition, you're stuck on their old tech.
I've dealt with that before. On the... I just, I feel like beehiiv is for all creators, especially operators that are creators, but on the ecom side, we used probably some other companies that you know of. And dude, they didn't give us any of their... when we left them, they didn't give us anything. It was like a battle back and forth.
