Transcript 0:00 Welcome to the Newsletter Operator Podcast. I'm Matt McGarry. And I'm Ryan Carr. And in this podcast, we teach you exactly how to build, grow, and monetize your newsletter. 0:08 We'll talk to the best newsletter operators, creators, and media founders in the space, breaking down their strategies and growth tactics. Awesome. Let's get into it. 0:16 [upbeat music] We are here with Michael Houck. My co-host, Ryan Carr, is on the phone too. Let's get right into it. We've been working together for a while. 0:33 We know each other, everybody in this group has chatted before. But for the audience, Michael, like, tell us who you are, what you do, what's your newsletter called, and what's your newsletter about? Yeah, absolutely. 0:44 So, hey, everyone. Michael Houck. I am a startup founder. My last company raised a Series A from Andreessen Horowitz, also raised a venture fund, and have invested in over 50 early-stage startups over the last few years. 0:56 Now, I write a newsletter called Houck's Newsletter. It's a, an advice column for startup founders, anybody who's looking to build a startup either now or in the future. 1:04 On Saturdays, I write a deep dive about a specific topic or lesson that can be valuable to founders based on my experience or the experience of, of a guest. 1:11 And then on Tuesdays, I curate my favorite resources of the week, so framework, trend, startup opportunity, quote, uh, and tool, as well as some, like, curated links of the week that I'm really excited about. 1:22 So it goes out twice a week. We're at seventy-five thousand subscribers as of this past week, and that's where we're at right now. That sounds good. One question is, this is a pretty new venture for you. 1:32 When did you start this? And when did you go full time on this? Yeah. So it started as sort of a side project when I was at my last company. 1:39 The idea was, you know, let's build up personal brand of me, founder of the company, so that we can attract more folks to what was our, our founder community at the time. 1:48 The company ended up going under, unfortunately, but the newsletter sort of persisted as this side project. And so in... This was last September. 1:55 By January, I had moved on and had just kept writing the newsletter, and basically it had taken off a bit on its own. 2:03 We were about nine or ten thousand subscribers by that point, and I realized that, you know, there was a business to be built there. And so I decided to spend this year focused on the newsletter. 2:13 I told myself if I could hit fifty thousand subscribers by the end of the year, I'd call that a success. 2:17 We hit that by July, and basically in Q1, I went full-time on it, started working together with you, which was a big, [chuckles] a big unlock for us. 2:26 And then have built up a community around it, a subscription around it, and some other business lines as well, including a new, a new, like, creator growth and amplification product called Megaphone. 2:37 How did you know a newsletter could be a business? 2:39 Like, a lot of people are new to this who are listening, and they're like, how, how did you have that inspiration or idea that where you could take the newsletter into business? 2:45 Or was it just, you know, I wanna do something, I'm gonna keep writing this newsletter and see what happens, or did you have a plan going into it? Yeah. I mean, when I started it, definitely no plan. 2:54 But, uh, when I went full time, I'd say, like, fully by, by March, so about, you know, what is that? Six or seven months ago now. 3:01 By that point, I had a plan, and I didn't know what growth channel was gonna be the one that worked the best for us or the couple that worked the best for us, 3:08 but I knew that the economics would work out on, like, on my time and on the upside of the business, right? 3:14 So, you know, talked to a couple friends, people like Sahil Bloom, Lenny Rachitsky, who've built businesses in this space and kind of learned kind of what works and what doesn't work, uh, to some degree. 3:24 Basically saw that there wasn't a newsletter that was focused on startup founders written by somebody who had done it recently and could provide, like, actual tactical advice that was really modern. 3:36 You know, a lot of startup founders will reference, like, Paul Graham essays. Paul Graham is a genius. I, you know, have learned a ton from him and his writing. You know, he hasn't built a company in a long time, right? 3:47 And so nothing against Paul Graham, but I think there's, there's needs for more modern voices about people who have done things more recently. 3:54 And so I saw that gap, and so I talk about fundraising, I talk about hiring, I talk about leadership and management, growth, getting product market fit, and I just basically saw that, you know, no one with recent credibility was doing that really, really well in an accessible format. 4:08 So once I saw that, and once I saw the economics could work, it just made sense to go in. Let's get into how you grew the newsletter, especially initially when you were starting, um, from scratch. So maybe a breakdown. 4:17 I wanna talk a ton about growth because I think you're really good at that. But when you were just starting, how did you get the first ten thousand subscribers? 4:24 Or maybe it could be first zero to twenty thousand, like that first initial chunk. What tactics helped you there? Yeah. I mean, it was different tactics at different periods, right? 4:33 So I had a couple hundred, maybe eight or nine hundred emails that I had from a previous, like, little newsletter project I'd done like two years ago, and so they, they seeded the newsletter, right? 4:46 And so at that, I was getting feedback right away about what people were liking and what people weren't liking. 4:50 But on the growth side, yeah, I, I did a lot of, like, swaps and recommendations with other people early on, and also a lot of content marketing on, on Twitter/X now and then LinkedIn. 5:01 You know, I have decent size audiences on both. I have fifty thousand on Twitter, forty thousand on LinkedIn, a little lower than that earlier in the year. 5:09 And so just creating good content and putting my, you know, newsletter CTA in the replies to those posts, putting them all over [chuckles] my profile and plastering it everywhere, making it very clear where I was driving people to. 5:21 That worked, and that brought in a lot of, like, high quality, high open rate, high click rate subscribers early on, but also swaps, as I mentioned. Yeah. 5:28 So I was diving into this new world, newsletter operator world, and building relationships is always really important to me whenever I'm diving into something new. 5:37 And so I sought out relationships with folks on Twitter who were posting about their newsletters and doing really well and had these very defined niches. Got to know them. We shared tactics back and forth. 5:47 We shared recommendations after people sign up, and also swapped, like, ad placements in the newsletter for free, and that cross-pollinated our audiences and, and did really well, uh, early on. 5:58 I would say that got us to-That probably got us like around 10 to 13,000 subscribers, and then from there to 25K, which is when you and I started working together at 25K. The delta there was like lead magnets. 6:10 So I made a couple of these like Airtable databases with like, you know, investor information in different niches or accelerators and how to apply to them, or curated threads and, and podcasts that might be useful to startup founders that are tagged by different categories. 6:26 And I put them on Airtable, and I email-gated access to the Airtable. 6:30 And so posted those on Twitter, made sure people like commented and retweeted the post to drive engagement signals, and then had like an auto DM set up through Tweet Hunter so that when people did that, I'd auto DM them the link. 6:42 They'd go to the link, put their email in and get access to the, the database. 6:46 And [chuckles] we did like six of those, I think, over the course of a month and a half or two months or so, and that got us from, from, yeah, about 13K to about 25... 6:55 No, more than that, from about 10K to, to 25K in, in that short period of time. So those were lower quality. I'd say like, you know, 37% to 40% open rates rather than, you know, 55% to 60% or more. 7:07 And so some of those folks have churned out by now, but still super valuable to get us kickstarted and off the ground. 7:12 And another thing that let us do was generate revenue really early, bring in sponsors only a couple months into the business, which was a huge unlock because then let me start working with you, invest in growth on, on the paid side, and kind of just like, you know, rise up that exponential curve of, of how fast it was growing. 7:28 Do you remember at what s- what subscriber count you were at when you started finding success in monetizing through sponsors? [sighs] So once I knew I wanted to go kind of all in on the business for this year, 7:42 I, I started reaching out to folks, both agencies and individual like brands who I've seen sponsor other newsletters or people that I know who I thought might be interested in sponsoring. 7:51 That was around, around 10K, because I think, I think, Matt, you and I actually had a conversation when I was [chuckles] when I was in Cape Town in January, and I think you, you advised me like 10K was like the right number to start there and, and that has proved true in my experience. 8:07 So started reaching out to folks around 10K. Hit rate was low, but we did get some, some success. Startup founders obviously a very valuable niche, and at the time was even less crowded than it, than it is now. 8:20 So yeah, we started reaching out then. I would say we didn't really start having massive success until, until we were in the 20s, like 20K to 25K. 8:29 And then once we got closer to 30K, that's when the agencies started taking us like really seriously, and rather than me pinging them, be like, "Hey, can you send me some, some sponsors?" 8:36 They were like, "Hey, here are some sponsors who wanna work with you." [laughs] That's cool. We gotta dive into how you got your first sponsor too. 8:43 But to go back to those growth strategies, a lot of people don't know what recommendations are or cross promos or stuff like that, so let's just dive into that. So we'll start with recommendations. 8:53 Explain what that is and how you got your initial recommendations. I mean, it's, it's pretty straightforward, but it'd be good to dive into it a little bit. Yeah, sure. So I mean, 9:01 when you subscribe to a newsletter, that newsletter can choose to show you other newsletters that it thinks people who sign up to it will also enjoy, right? 9:11 So for me, that would be like other newsletters that startup founders would wanna read. 9:15 And so I look for folks who have, you know, a newsletter about, you know, finance for startups, legal for startups, growth for startups, you know, whatever it might be. 9:23 These are like s- very specific niches that I'll touch on from time to time, but I'm not writing a full newsletter about it every week. And so it might be useful for folks to go deeper on those topics. 9:32 So I find those creators, I DM with them a bit, get to know them. You know, if I enjoy their newsletter, I'm super authentic about that. I'm like, "Hey, your newsletter's great." 9:40 And so when people sign up to my newsletter then through Beehiiv, they see a screen that shows them a couple newsletters that I recommend, and they can choose to opt in to also subscribe to those at the same time. 9:53 And you can do those for free, or you can do paid ones. And so in the early days, I was just doing free ones, just newsletters that I was, you know, super excited to promote no matter what. 10:04 We weren't generating much revenue at the time, so that wasn't our focus. It was just growth and, and building those relationships. Now, you know, I also use SparkLoop now. 10:13 So SparkLoop is a great tool for these paid recommendations. Beehiiv has their own version, Beehiiv Boost, which is also good. They're different. 10:19 Happy to talk about the, the differences between them if, if you wanna dive into that. But yeah, both are great. And so when people sign up now, they see some paid recommendations and some free ones. 10:28 All of them are newsletters that I personally like and enjoy, it's just some of them offer, offer a, a little bonus to me for, for referring them. 10:36 And then related to that is cross promotions, which is a promotion within your newsletter for another newsletter that you shout at each other mutually. Did those work for you? 10:44 If so, how do you set them up, and should people consider them now if they're, if they're kind of in that zero to 10,000 phase or zero to 20,000 subscriber phase? Yeah. Those, those were great for us. 10:54 I would totally, totally, totally recommend them, as long as you, you know, form the r- relationships is really the number one value, but getting the cross-pollinated audience early on and, and speeding up growth is, is valuable too. 11:04 The way that works is, you know, Beehiiv makes it really easy because you can just put like a little magic link in the post, and so if people click this little button in your post, they're subscribed to the other newsletter. 11:14 But basically, instead of running an ad, you can kind of like train your audience to expect ads in the future [chuckles] when you get big enough to, to be able to command them. 11:24 And- That's a, that's a smart thing to do too outside of growth even. Yeah. You just... The product experience, right? That, that, that matters to, uh, user expectations. 11:32 But you, you write a little blurb about the newsletter, why you're excited about it. It's always better to do it in your voice. 11:38 You know, you can provide a blurb from the other person, or you can, uh, just use the one sentence that Beehiiv has in like the one-liner of the newsletter. 11:44 But it's always, always better to use your voice because your audience will, will trust it more. 11:48 So you do that, you include it somewhere in your newsletter where you would include an ad in the future, and then they return the favor and, and do the same to you. 11:55 And hopefully, the subscriber numbers that you each exchange kind of net out somewhere near each other, which is usually the case if you're doing it with people around the same size as you.And that's the hard part about both of these recommendations, Ann, is like, do you equal-- 12:07 do you send the equal amount of subscribers, right? So like, do you have any tips for trying to make sure these things balance? 12:13 They're never gonna perfectly balance, and maybe that's one tip is like don't expect them to be one-to-one totally, but what do you think about that? Yeah. 12:20 I mean, again, the relationship is the most important thing to me. It always is. And so I've never worried too much about like making sure I was getting my, my fill or making sure I was getting my allocated subscribers. 12:32 You know, the other person's gonna be happier if I'm sending as many subscribers to them as possible, so I don't wanna like artificially limit that if they're sending me less. 12:41 And if they're sending me more, obviously, like, I'm super grateful, and like I'll, I'll message them and I'll be like, "Oh, thanks for all these amazing, you know, subscribers." 12:47 One thing to keep in mind, though, is, you know, you should pay attention to the actual engagement of those subscribers, right? 'Cause you have limited slots where you can offer these recommendations. 12:57 And so if you're offering a recommendation that, you know, either is not getting a lot of opt-in from people who sign up to your newsletter, which you can see in Beehiiv, or if the folks you're getting in return from them are, you know, maybe only opening your newsletter at like a twenty percent open rate or only clicking through at like a point five percent CTR, you know, that's not super valuable, and it kinda communicates that maybe the match between the two audiences isn't there. 13:22 And so at that point, you talk about like, hey, whether it makes sense to even continue or find another newsletter to kinda take that slot. You're someone who's doing newsletter monetization, I think, really right. 13:30 I mean, you have like a very comprehensive, diversified approach to like taking the audience that you've built, and you're providing with th- th- you're providing them with a variety of ways to better engage with your brand, uh, and like all of them providing a ton of value. 13:44 You've got like the membership. You've got your own products. You mentioned Megaphone. I noticed you have like a recruiting firm kind of aspect, consulting that you do. 13:52 So like a few questions, first of which being which of these is currently the most succ- successful for you, like the most prominent piece of the business? [laughs] Yeah. 14:01 So sponsorships are definitely still number one for us. I think that will not be true by the end of the year. I think Megaphone will, will overtake it, and I can share a little bit about what Megaphone is in more detail. 14:11 But yeah, sponsorships are still number one for us. We sell featured placement. 14:17 We sell, uh, a tool of the week, which is like a, a SaaS tool or some resource that's useful for founders, uh, as like a secondary placement in our Tuesday issue. 14:26 And then we sometimes will include like a s- one sponsored link of the week in our broader list of links of the week. 14:32 And then one thing we've started doing in the last couple months, which our audience has actually really, really loved, is I will interview the founders of like successful startups or founders who have really interesting stories, and I'll take a lesson, I'll like extract a lesson from their journey that other founders can take and apply to their own journeys, uh, or their own companies and how they're set up. 14:54 And it's great for exposure for the brands because they get in front of all these startup founders. They build their, their social brand. 15:00 It's something that their partners or future investors can look at to learn more about how they operate. And so we've worked with YC companies on that. 15:08 We've worked with, uh, a couple others that I can't announce yet, but it'll be coming out soon. I think we've signed six, six of those so far. 15:15 And so those like deep dives have become a really big revenue stream for us in a very short period of time, and we're, we're looking to continue, continue doing those. But yeah, sponsorship's still number one. 15:25 Probably won't be by the end of the year, but, but for now, yes. And you think that the kind of membership, the masterminds that you mentioned, um, you think those will overtake sponsorships? 15:33 Is that kind of how you're, how you're foreseeing it, or is there another... Are there others that have more momentum right now as well? Well, I mean, the membership's, the membership's growing well. 15:41 We have like five hundred, five hundred paid subscribers now, um, which is exciting. That's more than I thought we would get in a, in a short period of time. 15:48 But I think the, the strength of the community, the fireside chats that we do with, you know, people like Emil Michael from Uber or Adrian Schwager from Growth Assistant have really resonated with people. 15:58 We have like a curated library of founder resources, IRL meetups in cities all over the world that we just announced. 16:03 There's a ton going on in the membership that, that folks are getting a ton of value out of, and so growth there is accelerating. But the fastest growing revenue stream that we have is actually Megaphone. 16:11 So Megaphone is a managed marketplace for content amplification and growth on social media. 16:18 So basically, if a founder who's built a great product or wants to build their personal brand, you know, just wants to get the word out about what they're doing, they can subscribe to Megaphone, and anytime they share a post URL with us from like Twitter or LinkedIn, uh, our algorithm will match that with the best creators who are most aligned to their niche and who are currently online, who operate within a budget that they set, and they'll comment or retweet or repost or quote post or whatever on it. 16:47 And that drives impressions, which drives followers or leads. 16:51 And so that's been growing like crazy, and we have creators with over seven million followers on the platform now in aggregate, and we have over a hundred and twenty... 17:00 uh, actually, actually, uh, as of today, a hundred and thirty paid users on the platform too. So it's growing really quickly. 17:06 I've hired a couple engineers to actually help build that out 'cause it's just [laughs] it's just growing too fast. 17:10 And so I think by the end of the year, that should be our number one revenue stream, but we'll, we'll see. It's still early in that journey, only like two months old. Let's break it down from this perspective. 17:18 Let's say we're talking to a newsletter that has-- they're big enough to get sponsorships, so they're like ten to twenty-five thousand subscribers, so at the point where they can now comfortably. 17:26 From your perspective, how should they go about that? Like, how should they price a sponsorship? How should they get their first sponsor? And then we'll go from there. 17:34 I would agree that it's the easiest way to get meaningful revenue in the door early on. If I were to go back, I would actually probably start my paid subscription from, from day one. 17:43 That's one change I, I would make if I had the bandwidth and, you know, to do so and invest in the community right away, I would do that. 17:49 Uh, but that's not gonna be meaningful revenue right away unless you're, you know, serving up a really high-end premium community experience, and it's like a back-end offer, and it's, you know, two thousand dollars a year or something like that. 18:00 Most of the time, you know, you're gonna be probably under twenty dollars a month per, per user, so it's not gonna beMeaningful revenue from, from day one. But important to start early, I think. 18:08 But yeah, sponsorship is probably the most meaningful revenue you can get early on. Also, I would say consulting. 18:13 So early on, I took on, uh, a decent amount of like advising consulting clients where I would help them with fundraising or growth or go to market or, you know, anything about their startup really. 18:26 [laughs] There are a couple different ones in there. But that was good for cash flow right away. But as far as more scalable, like not linear time to output revenue stream, yeah, sponsorships would make more sense. 18:37 As far as how to get your first sponsor, you know, I just talk to people I know, right? 18:41 I know-- I'm, you know, fortunate to know a bunch of people who run businesses, startups, and who wanna get in front of other founders. 18:46 So I was able to reach out to some of them one-on-one just in like text messages and, and got some folks in. But I do think one-on-one outreach is probably your best bet early on. 18:55 You know, you can use a service like, like an agency, or you can use a platform like, like Paved or, or something like that. 19:01 But you're competing for attention on those-- in those scenarios against much bigger newsletters, and that's where the platform or the agency is gonna be incentivized to spend their time. 19:12 They're not gonna be incentivized to spend it on, you know, you small potatoes. 19:16 So for me, one-on-one outreach, just getting really good at cold outreach, really good at personalized messages has made a huge difference in my career more broadly and specifically in this case too. 19:25 So that-that's what I would recommend. 19:28 I'm interested to know tactically how for the premium membership specifically, and I guess the consulting as well, how do you go about converting your free subscribers to the, to the paid membership, to the consulting? 19:40 How early on in the journey do you introduce it? Do you have automations in place that, that, that kind of remind folks that that's an option? Um, yeah, curious to know. Yeah. 19:51 So these days I've, I've sort of toned down the, the push to consulting just because again, with how fast Megaphone's going, with how much, you know, revenue we're doing from sponsors now, I'm trying to be more intentional about how I spend my time. 20:03 With that said, I do open up some consulting time for one-off calls every, every week, uh, or so. But, but yeah, not as, not as big of a focus anymore. But on the, on the membership side, I'm super aggressive with that. 20:15 I hit people with that right away. 20:17 You know, when you think about what an incremental subscriber is worth revenue wise, if they're on the free tier, you know, that's like how much extra ad revenue are you able to generate per issue, per subscriber, right? 20:28 It's very, very small. It's probably like, I don't know, probably like ten cents, maybe under that in some cases, depends on your CPM. But yeah, I mean, that's, that's nothing, right? 20:37 Over the course of a year, even if you're sending twice a week, that's, that's a very low amount of revenue versus if you have someone on a subscription for a year, you know, they pay us fifteen dollars a month or a hundred and fifty dollars for a year. 20:48 You know, that's somewhere between a, a five and ten X difference in terms of how much you can, you can make. Maybe even, you know, more than that. I'm not doing the math right now, but it's substantial. 20:56 And so for me, I hit them in the welcome email. I hit them in the automated drip campaign that we run for two weeks after that with a couple extra emails. 21:06 I hit them in every single issue underneath every ad that they see if they're on the free tier. There'll be a little, little thing that says like, you know, "Want to stop seeing ads? Upgrade here." Right? 21:18 I hit them again in the footer. It's all over my social media. I'm, I'm hitting them in as many places as I can. 21:23 I wanna remind them time and time again that, "Hey, not only do you not need to see ads, but there's this whole community of founders globally who are helping each other, who I'm sharing resources with, who I'm opening up my time with. 21:35 I do office hours every week with them." And yeah, I'm just trying to remind as many, many times as possible. I think it's super important. 21:42 Do you know which of those placements is most successful or drives the most volume? [laughs] Just out of curiosity. You can share if you want or not, but [laughs] Oh, I totally would. 21:51 Honestly, this is, this is my weak point. I never spend the time to like set up the right like little UTM tracking and, and stuff. So I literally don't know. 22:00 I should, and I feel, you know, my, my-- the former data scientist at, at Uber and Airbnb in me hates me for this. 22:07 But no, I, I haven't set up robust tracking 'cause we test different things so much that it's- No, it, it makes sense. 22:13 And I think the coverage, to your point, like just having it everywhere is more important than like the, the individual placement anyway. So it makes a ton of sense. Yeah. I mean, the... 22:22 It would be different if, if I was like, "Oh, well, if I put it here, am I increasing my churn rate?" Right? Because then it's a trade-off between what am I getting versus what am I losing. 22:30 But I haven't seen anything, I haven't heard anything in feedback to indicate... Because I talk to my, my readers all the time. I haven't heard anything in feedback to indicate that like, 22:39 you know, it's driving people to unsubscribe or not open the emails or anything like that. So I don't think it's... I don't think there's any like downside. 22:47 Has there been any type of, type of promotion or type of messaging or type of copy that has worked well to convert people no matter where it's at? It could be discounts. Uh, probably discounts isn't the best example. 22:57 Or like certain benefits that people like. So w-we do do a free trial, and we get, we get good conversion from the free trial. 23:05 I think it's like seventy-five percent convert from the trial to actually continuing on to be a paid subscriber, which is honestly higher than I, I expected. So that ha- drove up our, 23:16 our, our, our revenue growth for the new-- for the subscription a bit. I, I'm just super direct with my copy. Like I'm, I'm like, you know, "Upgrade now." 23:24 Like, "Here's the benefits you'll get," being super explicit about what those are. 23:29 Whenever I post like one of the IRL meetups or happy hours that we do in a, in a different city, I always post like photos afterwards, and people actually see that, hey, I can meet founders by doing this. That drives it. 23:42 When I post like Fireside Chats that I'm gonna do with, with experts, that'll drive, that'll drive some. But the biggest bumps we always get are when we actually send out the email. 23:51 So I send out, you know, a newsletter Saturdays and Tuesdays. The Saturday sends are three out of the four we send each month are p- are paywalled, like, you know, twenty-five percent of the way down. 24:02 So you read the first twenty-five percent, you read the hook, and then you're like, "Oh man, I wanna read the rest of this."But you can't 'cause it's paywall. That works really well. 24:08 That drives a bunch of subscribers every week. 24:10 And then second way is in Tuesday Send, we like will conditionally show some information to paid subscribers only, so extra links of the week, more analysis of the trend of the week, deeper dive on like the business model of the startup opportunity of the week, right? 24:27 If you wanna get that extra analysis, be a paid subscriber. I like that you're selling by showing, right? So like every time... 24:35 every example you mention, like you're showing what they're getting, not all of it, and like you're selling that way instead of making some big promise or something in the copy or some crazy long sales letter. Yeah. 24:45 It was, it, it was funny. I think we talked about this 24:48 when I first launched the community and then the subscription back in like the very end of May, early June, when we just had like a sales page and we were like, "Hey, here are all the benefits you're gonna get. 24:58 It's great. You should join." Conversion, lower than we expected, right? 25:02 But then when we're st- showing people things, either content they can get or experiences they can have, that's what motivates people to actually pull the trigger. 25:12 And I think one of the key learnings for me since launching has been, you have to make the newsletter content good enough to pay for on its own. 25:19 You also have to make every other component individually worth the $15 a month. 'Cause some people are gonna pay for the content, some people are gonna pay for the community, right? 25:30 And so you have to make sure that the vector that people are using to make the decision is a no-brainer $15 a month. 25:36 It's not like, "Oh, well, this is part of something else, and the other stuff I'll probably use it, so I'll pay for it." No. That's not gonna drive conversion. It's gotta be the exact thing they're thinking about. 25:46 That's a good insight. Ryan, do you have any other insights on free-to-pay conversion or other benefits that have worked? 'Cause you do a ton of like free-to-pay stuff. You did trends.co. 25:55 Anything that you've seen that might be good advice for people? Well, I mean, I really liked how you mentioned gated content. I feel like that was always a big, um, seller for us, especially like if... 26:05 at Trends specifically, sending out either gated reports or previews of reports that we were releasing, we would always expect like a big flood of conversion when we would drop a new report and then kind of like send out a preview of that. 26:19 And yeah. What- You guys got me. Oh, really? You guys got me. Oh, awesome. [laughs] I love that. [laughs] I forget who reported it, but yeah, that's how you- Sweet. 26:28 And I, I also like how you mentioned that if you s- you know, day one, if you were gonna go back, that was one of the questions I had and you, you went and answered it, which is, you know, if you were gonna go back and prioritize a route to monetization earlier on, and you, you mentioned that you would start the, the premium membership first, which I think is a pretty emphatic answer to a question that Matt and I get a lot, which is, when should I start that premium membership? 26:49 You, you mentioned that you collect a lot of reader feedback. Did you utilize feedback in crafting that premium membership at all? Like, were you asking your users what would be most valuable? Yeah. 27:00 I, I ask my users as often as I can in as many places as I can. You know, I know a good portion of my readers, um, from, you know, just like my network, so I'll like text them, get their take on things. 27:12 Communities like, like Matt, what you have with the Newsletter Operator community is super valuable to see what's working for other people. But yeah, I listen to my readers all the time. 27:19 I have feedback surveys that I put out every issue we're getting. We put a poll in there and we see what people like and don't like about it. They leave comments, they leave votes. 27:27 And whenever there's a negative vote, I not only just like leave it at that, I like will reach out to the person and I'll be like, "Hey," like, "Sorry this," [laughs] like, "Sorry this sucked. 27:35 Tell me, tell me what could've been better about it." And so that helps me make the newsletter better. 27:40 But yeah, whenever you're planning a new product launch, whether it's a community, or a software product, or even an info product, or a course, or whatever, super important to talk to as many people as possible. 27:49 Do the brunt force, like 15 minute, you know, 40 us- 40, 15-minute user interviews and kinda just like learn what problem people actually have and what they see your value of being able to solve them is, and then position your messaging around that. 28:04 So yes, 100%, I do it all the time and, and totally recommend everyone else do it. If you launch without talking to your customers, then you're just kinda shouting in the wind and, and hoping for the best. Yeah. 28:15 And, and on that note, let's say some- we have a lot of people who have a free newsletter. They have 10,000, even 100,000 subscribers. 28:22 They're, they're using sponsorships, affiliates, but they don't have their own product they're selling to people. What advice would you have for people who want to either start a paid subscription, a membership? 28:30 Let's, let's think like education, digital products, because SaaS is a totally different ballpark with totally different dynamics, right? Any advice for people who wanna launch their first digital product? 28:39 It could be a course too. How they should go about that, what they should do? Yeah. I mean, [sighs] you, you gotta do, you gotta do two things. 28:47 You, you gotta find a trend, and then you gotta find individual problems to solve within that trend, right? So you gotta be really, really specific. So if you wanted to make... 28:55 If I wanted to make a course, maybe I would say, "Oh, I wanna make some course about fundraising," right? 28:59 And so I'd go talk to a bunch of my readers who have filled out my info survey who have said they're interested in fundraising content, and I'd be like, "Okay, cool. 29:07 Tell me like what, uh, fundraising advice would be most useful. What stage of the process are you at? Where did you run into the most pain points?" And I just look for patterns between those, right? 29:17 If there's more than a couple people who are saying the same thing and it's something that is like a painful problem for them, 29:24 though that index of those two things probably means that there's, there's willingness to pay there. So what I would do is, is super simple. You know, I've done this with every product I've built in my entire career. 29:34 Just talk to people. Talk to your users. Prompt them in certain ways, but don't lead them to an answer, right? 29:41 It's very important that you kinda let them find their way there, give you authentic responses, not what they want... not what they think you want to hear from them. 29:50 If you have people who can do that for you, that's the most important and first essential step every single time. And so that's how we develop the product. What would be the go-to-market strategy? I don't love that term. 30:01 But like, so- [laughs]... we, we develop the product, we make the product. How do we sell it now to our free subscribers? To free subscribe... I, I mean, you know, there's [sighs] 30:12 Well, it depends how big your list is, first of all, right? If your list is big enough to just sell it through there, then just sell it through there. You can do a specific email blast for the product. 30:20 You can include it as like a, like a secondary email in your welcome drip campaign, right? So for us, we have our welcome email where you see like, "Oh, here's like the details about the newsletter. 30:31 You know, remember to put it in your primary folder, not your ads, promotions folder," all that stuff. And then the second email they get the next day is like, "Hey, Megaphone is super cool. We can amplify your content. 30:43 You should pay for this." [laughs] Right? "Here's why it's valuable." And that's another good place. Social media content marketing is really big. 30:51 I actually seen, uh, a lot of creators use like affiliate programs really well, and I'm evaluating that myself for, for an upcoming product launch as well. 30:59 But, you know, offering generous affiliate commissions like 40, 50% either for at least a year or maybe indefinitely, that incentivizes people to, to make moves 'cause it stands out. 31:09 So the more that you can align incentives with other people who maybe have bigger audiences than you, you should. 31:14 It's worth it, not only for the revenue you'll get from the product that you wouldn't get otherwise, but also for that relationship, and they can continue helping you. 31:22 The social brand capital that you'll accumulate by working with them is good. So yeah, I would just say those are some places that it could go, things you could do with it. 31:30 There's definitely more, but just, just put it everywhere you can. Just get it out there. And I think also the other thing is have like a coordinated launch plan. 31:38 A lot of people, I feel like, will just throw it out into the wind and then like try to build it over time. 31:43 But if you can drive a ton of attention to that one moment in time and own that moment on social media, whatever it might be, it's gonna be more beneficial than like gradually dragging it out over, over a longer period. 31:56 Yeah. That's a really important note. And I think those two last pieces of advice I, I would emphasize. People... You say put it everywhere. That seems obvious. People don't do that. 32:05 They barely promote their paid product. It's like the fifth email on their welcome sequence when it should be the second. 32:10 [laughs] It should be in five places on their website instead of one, and they don't have a launch plan either, so very, very smart stuff there. Yeah. We, we learned that, my last company, with our fundraisers, right? 32:21 Like we did a really, really good job when we... the two times we raised outside capital to, to drive a lot of attention to it, and as a result of that, it raised the profile of our company forever, right? It was... 32:34 You know, we were getting talked to by publications, great founders wanted to come be our customers and, and join our community. 32:40 So yeah, it's super important to have that launch moment and to really own it and like brand it in, in your voice and in your way. 32:48 I wanna talk a little bit about social media growth in Megaphone, and they relate to each other of course. And so you, you've grown a ton on social. 32:55 I forget where you're at on Twitter and LinkedIn now, but it's, it's big, and you've also generated a ton of newsletter subscribers and customers from social media, Twitter and LinkedIn. 33:03 And so w- we don't need to dive into like an overview of how to grow on Twitter, 'cause that's a little bit maybe too high level. But maybe talk about what Megaphone does with... I don't know what you would call it. 33:14 Would you call it engagement? Get engagement from other creators in your niche and how that boosts your content. So if you have great content, it can go even further. 33:20 Maybe explain just like not just Megaphone the product, 'cause you gave a brief overview, but how that helps people reach more people so they can grow on social and grow their business. Yeah. 33:30 I mean, look, the, the dirty secret of newsletters is that paid ads runs the majority of growth for all the biggest newsletters in the world, right? 33:37 The similar dirty secret of social media is that engagement groups where you share posts between big creators and cross-pollinate your audiences and share engagement and comments and stuff, that drives majority of growth for, for big creators too, right? 33:51 So finding that, who's gonna be in that group chat has been super important to people on social media for years and years and years and years and years. It's how meme accounts, meme networks grew. 34:00 It's how big folks on, on Twitter have grown in the past like, you know, three to four years. Um, it's just how it works. Um, and so th- that's why those relationships are really, really important. 34:10 But not everyone has access to those relationships, right? Um, it's like you can't just go and ask, uh, Elon Musk to comment on your stuff. It ha- it's gonna be a huge impact when he does. 34:21 Anyone with a big audience is gonna drive a ton of impressions, a ton of views to your profile. And your profile-- If your profile is optimized, you'll convert some of them to followers. But 34:30 you can't like just ask these big accounts to do that, right? And so for me, I was fortunate to build a lot of those relationships and be able to grow that way over the course of the last three years or so. 34:42 I think I'm at 50, 50K on Twitter now and 40 on LinkedIn. So not huge, but, you know, not, not huge, and it's been great. It's been super beneficial. 34:51 Having those people comment on your posts or repost them or quote post them or whatever it might be within the first, you know, hour or so of you making the post will drive a ton of impressions, because these social platforms want to show what's fresh, what's new, what's happening right now, where the conversation is. 35:09 And so if they see big influential accounts commenting on something, the algorithm will naturally push it more, 'cause they think that's an important, an important conversation to, to have, right? 35:20 So what Megaphone does is we basically take that idea and democratize it, make it accessible to anyone. 35:25 You don't have to have the relationships that I was able to build to get the benefits of growing faster on social media. 35:32 So what we do is, yeah, you share a post with us, and we find the most optimal creators within your niche and, you know, respecting the budget you have for the post, and we share it with them, and they'll go engage with it and drive impressions and followers and leads to your content. 35:50 Yeah. I, I like that. It's like a productized way to do it, which I don't think has existed before. Um, so it's like, so if you have good to- content, it makes sense to use that. 35:58 I think I, I'm gonna, I'm gonna try more of that myself when I take content more seriously. I haven't posted enough recently. 36:03 But talking about like the, the dirty secret and the, the engagement groups, I wanna talk a little bit about that, 'cause like I haven't really heard any information about it. Like how do you... 36:10 I mean, s- I guess it's pretty straightforward. Like you build relationships, you DM people, you ask them about this. 36:15 But like how do you build-Like for someone who wants to do it like I do, I don't have an engagement group. How, how do I build that and make it successful so we can all reach more people? Yeah. 36:24 I mean, look, building the engagement group is, is tough. They die easily when people don't add value to them, when they're just, like, extracting. 36:31 Like, the best engagement groups are where you're not only just sharing links of posts back and forth, but you're also sharing advice on content. You're giving each other feedback. You're invested in each other's growth. 36:42 You know, I've been in groups where that's happened that have lasted for years, and I've been in groups there where that hasn't happened that have died out within two months, right? 36:50 [chuckles] Even if it's, like, the same people to some degree. So it's just a matter of are you intentionally driving the group forward and making sure people are engaged. 36:59 So most groups that do well have, like, a group leader who organizes it and kinda keeps it going and keeps people engaged with it. 37:05 So they usually have rules like, oh, you can only post this amount of times per week, or, um- Post in the group, right? Post, like, in the group- Yeah... request your, your content to be engaged with. Right. 37:15 The amount of requests you can make per, per week or whatever. But yeah, again, the problem, the problem with that is that, A, you have to know the right people to make the group. They have to be in your niche. 37:22 They have to be similar or a slightly larger size audience, because people who are really big won't wanna get in a group with someone who's super small just so th-they've no... 37:30 there's no benefit to them to do so really, unless you're paying them or something. 37:33 So what Megaphone does is it basically abstracts away that work, but it gives you the same benefit, if not more, because you're pulling from a larger group of, of creators or with bigger audiences. 37:43 So I saw it as just like a, hey, you know, this worked for me. It's not something a lot of people know about or have access to. 37:49 Let's, let's solve that, and let's let creators kinda earn, earn some money along the way too. Yeah. I think that's smart. 37:55 It's something that literally everybody does, and it's like you can see it from the outside, but you can't, like, confirm it, and be like, "Oh, this- [chuckles]... these people are always engaging with each other. 38:02 I know there's something going on there." You also get the outreach from, like, anon Twitter accounts saying, like, "I can blow up your following," like, and it's just, like, kind of a retweet. 38:10 Like, it's probably the same thing, but they just, like, retweet you pretty much, right? And like, yeah. Yeah, dude, I, I love those guys because they help so much. Right. 38:17 Those anonymous groups with, like, you know, where are their followers from? Are they engaged? Are they real followers? There's a lot of questions that folks come to us being like, "Oh, I got approached by this group. 38:28 Like, what do you know about them?" 38:29 And it's like, well, you know, I don't know for a fact where their followers co-come from, but yeah, it just helps a service like Megaphone that, you know, works with very reputable creators who are not these anonymous meme pages or trusted people that I know. 38:43 It just makes it stand out even more. Yeah. I got... On that note, one more topic and then we have to wrap up. 38:48 So that's one way to promote your content with, like, I wouldn't call it paid, but I guess paid, paid promotion of social content, so you can grow that way. 38:55 Let's talk about paid ads real quick, or just paid acquisition as a, as a channel in general. How has that worked for you? What paid ad platforms do you do? 39:04 What are recommendations would you have for newsletters that wanna get into paid ads if they're just starting from scratch? That's a couple questions. I'll let you get into this. Yeah. 39:12 I mean, they should talk to you or, or you, Ryan. One, one of you guys, right? [laughs] No. 39:17 Honestly, like, I tried my hand at paid acquisition before we started working together, and I, like, I was not good at it, right? 39:26 I think I was getting, like, a three fifty-ish CPA at the time, which, you know, I didn't know what I was doing. 39:34 Working with someone who actually knows what they were doing brought that down considerably by, by quite a lot, actually. 39:39 And so, yeah, if you have the capital, if you're bringing in sponsorship revenue or consulting revenue or affiliate revenue or whatever it might be, reinvesting that in growth is super, super smart. 39:49 You know, I like to tell people that I'm not running a solopreneur business, I'm running a startup, right? 39:54 And so I'm thinking about my newsletter like a startup, which means that I'm not trying to take ninety-five percent margin off the top. 40:02 I'm trying to run zero percent margin or negative margin even for as long [chuckles] as I possibly can afford to, so that I can grow to a big enough size where the business is... 40:10 it has a center of gravity around it, is known, and, and has a firm place in the market. It's not fighting for, for market share to the same degree that it would be if it was, if it was smaller. 40:20 So yeah, for me, paid growth is a great way to do that. 40:23 If you're super clear on your messaging, if you're super clear on your target customer, which you should be if you're writing a newsletter, then yeah, it's, it's a great way to, it's a great way to grow. 40:32 I think we do a lot of stuff on Facebook and Instagram, Instagram in particular. We do a lot of stuff on Twitter. We've tested out various types of ads. 40:41 I think the videos tend to work the best, but a lot of meme ads, a lot of testimonials, other things like that. You know, I'm, I'm very a, I'm very big advocate for it. 40:51 There's also platforms like, as I mentioned, the paid recommendations on, on SparkLoop or Beehiiv Boost. Those, you know, those can be a little, a little lower open rate because... 41:01 and CTR because folks are not necessarily subscribing to... for your newsletter. If you see an ad about a newsletter, you subscribe to it, you're making that decision. 41:12 If you subscribe through, like, one of these, like, recommendation networks, Beehiiv lets you opt in, SparkLoop makes you opt out, so it's a little bit of a different mental calculation. 41:21 But in both cases, I think we've gotten our highest quality paid subs from, from the ads that we run. 41:28 I think it's interesting that you run at this low margin, where most entrepreneurs and creators and solopreneurs do it the opposite way. 41:35 They wanna have a ninety-five percent profit margin, but you want to grow as fast as possible, and I think that's smart because in this business, it's kind of unlike some startups where sometimes they grow really fast and profitably and they can't cut it, so they're... 41:45 and they don't ever become profitable. But with a newsletter, you can just cut your marketing spend and it becomes a very profitable business. So is that your philosophy behind it or what do you- Yeah... 41:53 what do you think about that? One thousand percent, and it's funny because our margins have naturally gotten better because we've grown so fast, right? And we're able to charge more for sponsorships. 42:01 Our subscription rate is going up. Megaphone's growing so fast. All that stuff is making it so that our margins are getting better, even though I'm not trying to, like, improve them. 42:08 But yeah, look, you know, every new industry or every new... Not that newsletters are a new industry, but there's definitely k- they're having a moment right now, right? Beehiiv has kind of accelerated this trend. 42:19 A lot of people are jumping in and creating newsletters right now.If you want to be one of the ones who, you know, in a year or two from now is acquiring the losers versus being one of the losers who gets acquired, you have to grow. 42:32 There's no other way about it. And so when I think about starting a new business, I don't want to be in a vulnerable position for any longer than I have to be. 42:40 I want to get big enough so that I can choose where I eat versus let myself get eaten, right? So personally, I think there's going to be a wave of newsletter M&A at some point in 2024, maybe into early 2025. 42:53 If that happens, you know, I want to be acquiring some of these newsletters that, that, you know, aren't sustainable and seeing if I can either turn them around or fold them into my own. 43:02 I've done two of these already, and they've, they've worked pretty well. They folded in, their open rates and CTR are, are good. 43:07 So yeah, I just think it's really, really important to, to chomp on new trends rather than, rather than letting yourself kind of grow at the pace of the trend. You got to get ahead of it. Yeah. 43:18 That's a good point to wrap up, and I think a really, a really smart insight for people. So where can people find you? Like, where should they go to subscribe to your newsletter? Where can they follow you? 43:26 What's your handle, stuff like that? Yeah, sure. This was great. So join.howke.news is sign up for the newsletter. 43:32 If you're a startup founder or thinking about building a business at any point, would love to have you there. 43:36 megaphone.network is our growth service, and then if you want to find me, I'm on Twitter @callmehowke, and I'm on LinkedIn, just Michael Howke, so it's just my name. Awesome. Thank you for coming on. Thanks, Michael. 43:47 Thanks for having me, guys. This was great. Always, always love to chat with you guys. [outro music] Thanks for listening. 43:55 If you enjoyed this episode, make sure to follow the Newsletter Operator podcast on Apple Podcasts, Spotify, or wherever you get your podcasts, and give us a five-star rating to help support the show. 44:05 If you want to learn even more about how to grow and monetize a newsletter, go to newsletteroperator.com. 44:10 And if you'd like to work with Matt or Ryan directly, check the links in the description and apply to work with our agencies. 44:20 [outro music]
