What if you could unlock the secret to growing your business from zero to $10 million in revenue? In this episode, we chat with Tim from 1440, who reveals how leveraging the power of compounding growth transformed their newsletter into a massive success story with 3.5 million subscribers.
Key Takeaways:
- How to leverage compounding growth for your business.
- The critical role of focusing on one product and one market.
- Strategies for maintaining a high open rate and subscriber retention.
- Insights into building a world-class newsletter that readers love.
Chapters:
00:00 - Introduction
04:05 - The Concept of Compounding Growth
09:30 - The Story of 1440: From Zero to $10M
15:20 - Flywheel Business Model Explained
21:45 - Tips for Aspiring Newsletter Creators
28:30 - The Importance of Intellectual Curiosity
35:00 - Maintaining Subscriber Engagement and Retention
42:10 - Q&A and Final Thoughts
Join us as we explore the strategies and mindset that can help you achieve similar success. If you found this video valuable, make sure to like, share, and subscribe for more insights and tips on growing your business!
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Tim Huelskamp:
Compounding interest is the eighth wonder of the world, right? You know, we had three or four people and we got up to almost 10 million in revenue because like we were just deeply focused on like, let that flywheel spin because the more it spins, like just kept compounding, getting bigger and bigger. Creating a good product as a newsletter. How do you think about that? It's intellectual curiosity. At the end of the day, it's like, if you are a really smart, thoughtful, intellectually curious human who likes to learn, and then also likes to help other people learn, that's the secret sauce.
Andy Mewborn: Well, man, let's talk about 1440 because y'all have like three, I was on your site just now, 3.5 million subscribers as a newsletter. And for people listening, Tim runs one of the biggest newsletters on the internet today. I believe it's one of the biggest, correct me if I'm wrong, Tim, 3.5 million subscribers, man. So, What our listeners love, I did an episode with Matt McGarry actually a couple months ago. You know Matt, I'm sure. And that's one of our best episodes, believe it or not. People loved it. We got into like the tactics of growing a newsletter, what's working, what's not working. So I'm like, you know what, we should run that back and like, think about if Tim were to start a newsletter today, how would he do it? Because now starting a newsletter is the craze, right? Like Beehive, ConvertKit, all that fun stuff. So I would love to hear from you, man. Like, how would you start a newsletter today if you were to do it again? And I'm sure that's like the magic question because it's a lot, I'm sure it's a lot different than when you started 1440.
Tim Huelskamp: Yeah, it's definitely, definitely different now. Um, yeah. So, you know, I talked to a lot of like pretty green, uh, entrepreneurs that are trying to be like build newsletters.
Andy Mewborn: Yeah.
Tim Huelskamp: And, you know, I think there's like two things here, like one, um, so, okay. So first of all, I'd go very high level here and I would say like, what do you love? Like, what are you passionate about? Like, right, right. What do you love to learn about? Because, you know, these companies, any company, but specifically newsletters, Like you have to put your heart and soul into the thing for like a decade before it actually starts like tipping and like, you know, these like flywheel business models, which I can walk you through how that works shortly, but you have to just love what you do. And like, if you're not, if you're not covering something that you absolutely adore and like look forward to every day, like you're just not going to make it like, you know, cause you just have to have the grit and the hustle to like get through it every day. And it's like very tough. And you basically have to put your head down. And like, as my co-founder Drew says, put one foot in front of the other, like every day for a couple years. to even show like signs of like, oh wow, this might make it. So like before you even start that, it's like if you're doing that on something you don't love, it's just not gonna happen, right? So I think the first thing I would say is like, make sure that you love the content you're covering and like what you're actually gonna do that. I think the second thing I would answer that at a high level is, I meet a lot of these founders and again, like they worry I think too early about like monetization and growth. And they break the cardinal rule of startups, which is basically they don't focus on the customer enough. Right. So like, they basically like I talked to. And at the end of every podcast or session, I'll do the same thing here. I'll do it now. I'm Tim at join1440.com. If I can be helpful in any way, email me. I love helping people and I love actually meeting a lot of smart folks through that. But I meet a lot of founders and they have like, you know, the thing about the newsletter space is the whole thing is very data driven and you can see all the benchmark data in the space as well. Right. So like, you know how you're doing basically. There's open rates, click rates, growth rates. It's all out there. Matt McGarry, who you mentioned, is like best in class at it. He can help you with that. He's a good friend of ours, good partner of ours. I just referred someone to him today because he's just so good at like the kind of zero to a thousand or zero to 10,000. He does that better than anyone. And I think like with all these things, man, they're just like, folks just kind of like, yeah, take their eye off the ball and they're focusing on the wrong stuff. So how do you just create something that really, really helps the consumer? And like, you know, growth and monetization, none of that really matters. And a lot of these founders, they have a 25% open rate. I kind of got off track there. That's where I was going with the data and the benchmarks. They have like a 25% open rate and they're like, can you help me monetize? And I can walk through the business model pretty quickly here, but this whole business model only works if you have a world-class open rate, which means a world-class retention rate, right? You make pennies, you make pennies every, actually I just go with that now. So basically like, we are like one of the higher ones, but you basically make like four or five cents an email, right? On an open. Per person, per person. Per person, yeah. Okay. Correct. So we send out like 3.6 million emails now. We have a 60% open rate. It's one of the highest in the space. So there's like, there's like flaws.
Andy Mewborn: I see like a piece of like feather flying or something. Yeah, yeah, yeah.
Tim Huelskamp: Finally, finally spring here. Yeah. Sorry about that. And yeah, so, you know, we make like a nickel every time someone opens it and that's pretty good for our industry. If you're even smaller, you make much less than that. So, you know, these companies are basically, folks are acquiring subscribers for like a couple dollars, right? And if you're making a nickel or less every time someone opens it, you have to have a wonderful product that people love that they're opening every day or many times a week. Otherwise the business model doesn't work. So like some numbers for you, right? So like we send 25 emails a month, roughly. We have a 60% open rate. So basically there's about 15 opens a month. Right. And then call it a nickel, a little less than that, but a nickel. So like every user's worth that opens is worth 70 cents per month, 70 cents per user per month to us. But then they're doing it for in perpetuity. Right. So like we've had, we have cohorts like when we started six years ago that They're still opening like almost like 40, 40, 50% of them are still opening. So they love the product. They're opening every day. We meet entrepreneurs in this space all the time where they're like, I do it once a week. I've once one send a week and I have a 20% open rate and you like do that math. And I try to walk it through. It's like, Hey guys, so like you're making like 2 cents a month or 3 cents a month on your, on your subscribers. If you're acquiring them for $3, that's going to take you literally like a decade to make that back. respectfully, that doesn't work. So go back to the drawing board and work on your product. So I just, I think that's the, that was very long winded, but outside of like writing about something you love that you want to do for the next five to 10 years, it's like focus on the consumer and the product. It's so, to me, it's so basic, but I think a lot of people get a little lost and they're trying to figure about scale and all these other things. And then they're like, you know, your, your product's not that strong. No one wants to read it. Maybe you should fix that before you focus on anything else.
Andy Mewborn: Yeah. There's so much that you said there that I want to unpack. It's like, the first thing is make sure you look what you're doing because you're signing up for at least a five-year journey. When you start anything new, that's going to, in most cases make an impact. Yes. There's the Zuckerberg's and the anomalies that they'll start something in a year later. It'll blow up. Trust me. But in most cases, that is not the case. And so I have buddies too that want to start a newsletter. And they come to me, they give me their idea and they say, should I start this? And I go, no, you shouldn't start it. And they go, why? And I go, because I know you as a friend. and you're not passionate about this, you're going to give up after a month. I'm telling you. But prove me wrong is what I tell them. Prove me wrong. Because a newsletter, people think, oh, it's just writing. It's a newsletter. It's easy. But people don't realize it's a lot of freaking work to make a newsletter work. It is a lot. Mine, I've been writing. I don't even know how many I have, but organically it's grown. I've been all organic. I've got 28,000 subs on my personal newsletter. And it's just, it's incredible. It's incredible. It is, but I will tell you, I worked my ass off to get to 28K. Right. Like I honestly, it was just as hard as growing like a SAS that I've grown. Like it was just as hard. Right. And it was like constant every day. I was posting every day. Now it's like three times a week. Right. And like it's a grind to make sure you keep the quality up to what you want. You're giving insights that people want. You're kind of like optimizing for changing markets and all that fun stuff. Um, but it's a, it's a lot of freaking work, man. And, and I don't, you know, I don't think people realize that until they start and they're like, wait. And if they knew the business model that you just mentioned, which is you're only getting a nickel per open in general for those people. That's crazy. Right. That is crazy. And so now let me go back to you and I know you're mostly monetizing through ads, right. But, um, and so you get an, if we're looking at the ads kind of business model, it's a nickel per ad now. Have you guys tried doing anything like courses or selling like maybe higher ticket, like low or medium or high ticket offerings within the newsletter? And then like, how does that change everything? And this may be kind of a nuanced question, but I'd love to kind of hear that. Cause I feel like that's a better opportunity for people to like push their other stuff. Right.
Tim Huelskamp: Yeah, agreed, agreed. And some folks do things way better than us. Some things way better than us. This is a good example. So we have a premium product, right? So it's like ad free and you get a few more features and that's $10 a month. We have a couple thousand subscribers there. So it's like tens of thousands in revenue, but not huge for us. So we've tweaked that and looked at it, but it kind of really doesn't move the needle that much. So we don't spend a ton of time on it. We've explored the courses. We don't have like a B2B. Well, so we have, it's interesting. We, our audience is kind of B2B, but it's not like. Nishi around a certain topic where like, they're all looking to, you know, like, like Matt's a great example. Like he's all, all traffic is like folks that are building newsletters. So if he did, I think he did one of these recently in class on how to build a newsletter. It's sold out in like, you know, a couple hours. That makes a lot of sense with us. Our, our audience is very broad. Actually. Can I go into that? Yeah. Yeah. Let me hear that.
Andy Mewborn: How you think about that? Cause that's interesting too. Yeah, yeah, yeah.
Tim Huelskamp: Yes. Okay. So like, you know, I used to, before this, I worked in private equity for about a decade, you know, investing in like rapidly growing businesses, technology companies, mostly my co-founder drew, it was a $20 billion, uh, you know, big private equity fund. Uh, my co-founder drew was a PhD scientist that worked on Capitol Hill, believe it or not, one of his jobs was basically like to still like really sophisticated documents, like science documents down for folks on the Hill. Uh, so he's a super sharp guy, uh, we're buds and we basically had the same problem. It was like, We're smart. We're busy professionals. We don't have a lot of time. We want to learn across all the different topics. So like sports, politics, you know, technology, culture, business, right? Like all these different things, but even like fun stuff, like fall foliage schedules and Michelin stars and, um, it's like cool stuff. Yeah. Yeah. We just basically felt like, as a busy professional to do that took like hours. You had to go to 20 or 30 different sites, right? It was just like, there's too much going on. So basically in a world, like by design media is very nichey coming to our previous point, right? There's like politics and like, you know, private equity ones and crypto and all these different things. And we basically said, who's kind of the inch deep mile wide provider in a world of the opposite. Yeah. So basically who's going to get everything in one place. And like by everything, like we don't of course mean everything, but like, so we have like a lot of doctor, banker, lawyer, consultant types. And what we find is they like, you know, if you're a doctor, you read like the new England journal of medicine and all the, like the, the, the, the medicine, you know, comment, But so you don't come to 1440 for the science section, but you do come for politics and business and technology and everything else. And ditto as a former private equity guy, you don't come to the 1440 for private equity insights or the business. Like it's very, it's pretty basic for like deep experts, but they come for everything else as well. So we felt like everyone was like niching so well, so down so much that you couldn't even just get like a very high level overview of what was going on across all the different verticals. So yeah, that was like our original pain point. It's like, we want to know a bunch of stuff. We're smart, intellectually curious people. We love to be fed knowledge and learn a bunch of stuff, but just, we're spending way too much time trying to find it and like pull it all together. And then what we found is like, when we did finally find a source, like you would go to Google and like, there's all that SEO stuff that like, kind of like, you're like, not helping. Or you go to Reddit, which, you know, we love it. It's very fun, but You're kind of sifting through things to find stuff. And then there's like misinformation on there. Sometimes you don't know what to believe. And we're like, again, we don't have a lot of time. Can someone just make this easy on us and pull it all together and get rid of all that extra time, you know, stuff that takes time and including like opinions and bias and misinformation. And like, there's a bunch of weird stuff on the internet. Yeah. People don't want to spend time shifting through. So basically we just said, it's really hard for us. We think the media landscape isn't delivering for us in those two ways. We call it comprehensive and then just time-saving, impartial, get rid of all the extras. So we basically started a newsletter seven years ago. We had 78 friends and family. unsure if anyone else cared, right? We MVP'd it, minimum viable product. Everyone knows that, right? And basically we did, so we sent the first two quarters and nothing else, just making that newsletter kick ass. So we did like the first week was 78 and then it went to 91 after a week. Then it went to 104, I believe it was. So like, even though it was very small, we had early evidence of product market fit in two ways. Like one, the open rate was really high going back to my benchmark data. That's the beauty of this industry. You can tell if you like people like your product by open rate.
Andy Mewborn: Instant too, or within a day period or something, I'm guessing, right?
Tim Huelskamp: Exactly. I always tell people, like some industries are really hard. Like if you're selling a t-shirt on the rack at a mall, like you don't get to really see like, are people picking my thing or not? And like, you don't get to get any feedback from them where with the newsletter, they press reply and it goes to your inbox. All the replies still go to my inbox. If you reply to one, it'll come to me because I want to hear the feedback. It's getting to become a lot now. How many do you get a day?
Andy Mewborn: I want to hear how many you get a day.
Tim Huelskamp: So I would say if we cover something like a little What's the right word? Like Trump or the storming of the Capitol or something with Biden's election, something like that. Yeah. Yeah. You know, we'll get 500 emails on a normal day. It's probably two to 300 emails. Wow. Most of them are, are like, are complimentary in nature. Like, I love your service. You're saving me so much time. I'm learning all this new knowledge. Thank you so much. Where have you been all my life? But then a lot of it's like really helpful feedback where like, we've actually changed our positioning or sorry, changed our product. from the feedback. So that's the stuff, it's like gold. And these customers, that's what's so cool about the digital environment is they just press reply and they tell you why they like your product or why they're unsubscribing or why they love you. It's huge. Yeah, so we just took that feedback over and over again, and then just iterated on it and focused on nothing else for the first couple quarters. And then when we got through it, it's like we had a 60% open rate, which is one of the highest in the space, which we still have today. We've had that since our inception. And we were like, oh, wow, people really like this thing. And then, only then, When we had like the world-class open rate and retention rate and click rates, then we said, okay, let's see if we can turn this into a business model. And then we focused on, this model is three things at the end of the day. It's basically write a kick-ass newsletter that delights your customers. No matter what niche you choose, that's the most important thing. Without that, nothing matters. Number two, you monetize it. So basically you have this audience for us. We're really lucky because these intellectually curious professionals like me and Drew, now there's 3.6 million of us. about a third of them have a graduate degree versus about 10% of the United States. It's 50-50 male, female. It's spread almost perfectly across the country. So we have like the coast, we also have like doctors in Detroit, lawyers in Louisiana, like kind of all nurses in Nebraska. Anyway, so we have this really smart audience and usually Not always, but a lot of times with smart audience, that means affluence as well, right? They have money. They like to learn about new products. They can buy new products. So with that, we partner with brands that want to get in front of our incredibly intelligent audience. So they're kind of doing the same thing we're doing on the buy side, which I'll get to a second. But these companies have big budgets. They're deploying them on Facebook and Google and all over the place. They come to us, they know that they can get a certain amount of clicks or conversions for the amount they spend. And as long as it's profitable and we're delivering for them, they continue to spend. So we've had customers for over five years now, some of our best ones. So that's two. So it's monetization. And then the third one is, you know, we try to keep our business really lean and mean. We like to focus and not do too many things. I think a lot of companies, especially in media, try to do way too many things and they have a lot of mediocre products. We have one product. All of our attention goes to that and we focus on it so we can deliver world class to our users. And then we basically just take all of the, not all, a majority of our revenues and we reinvest them back into growth. So basically this is called like a flywheel business model. Warren Buffett always talks about these. So we basically, you know, we're out acquiring new subscribers as well, because we know to my earlier discussion on unit economics, the kind of 70 cents a month, we know how much they're worth to us. And we're out acquiring them on all the different channels, Twitter, Facebook, Instagram, TikTok, all the places. And we're adding about 250,000 new subscribers a month right now.
Andy Mewborn: Wow. And I have so many questions on acquiring subscribers, right? Because you have to acquire them and then you have to keep them happy. I feel like that's any business, right? Like acquire your customers, keep them happy. Like those are the two things. And for you, but what's inevitable with newsletters is churn. Right? Like people are going to unsubscribe all that fun stuff. So, and I, and I believe, I think I've heard someone else, like Sam Parr talked about the hustle where like newsletters, once you get to that big point, like you're getting a crap ton of people percentage wise, it's not a huge percent, but it's still like tens of thousands after every sin that are like, maybe unsubscribing. Right. But after 3.5 million, that's actually nothing. So how are you, How are you dealing with that churn? Are you just saying, Hey, we're going to, we're going to just make sure we're still always acquiring. Right. And, and then on the churn side, is that how you're dealing with it? Or are you saying, Hmm, is there mechanisms we can put in place in order to get these churn people to come back? Like what's, how's that whole playbook work for you?
Tim Huelskamp: Yeah, absolutely. So there's a bunch of strategies I'll walk through, but the biggest one, the biggest one by many orders of magnitude, I don't know if it's three or five or six is a kick ass product. It always comes down to that. People love your product and you like put your heart and soul and love into it. Like our team does every day. And you have like the highest open rate. It's because people really enjoy the product to just keep like feeding this fed horse. Like, you know, we, we try to, we try to do what we want as, as consumers. So basically when we're doing our little section, like top three sections, like we'll read it and be like, okay, so this happened with Tesla today or whatever. Right. And then like a curious human is like, okay, well, I wonder the 42,000 there's 42, that's a good one. you know, Elon cut 42,000 jobs. The charging, the charging, the head of the chargers. Yeah. Right. So it's like, so like most people just say that, like for us, it's like, well, how many chargers are there in America? How much, like what's Tesla's share of it? Right. So like, we try to like be way out ahead of thinking like, what's an intellectually curious person going to ask next as they're exploring this? Yeah. And then we pull that into our copy. Right. So like, When we summarize these stories, it's like we're thinking three or four steps ahead. And that's what our users love about us. So it's like, thank you. You guys are thinking for me. I don't have to do that anymore. I'm getting smarter and smarter and smarter. And it's so efficient with my time. Yeah. So I think one of the things like, so we have all these, I can walk through like these incredible retention strategies we do, but like at the end of the day, if you're not delivering a kick-ass product, like it doesn't really matter. So like we like, we do them all. Like, so, you know, we have drip campaigns and I mean, to give you some numbers, like 20% of emails, like when you start 15 to 20%, don't make it through, it's a bad email. It goes to spam. There's a lot of black boxy stuff with emails that just unfortunately aren't great. So the, if you acquire a hundred and a cohort, you're basically down to 80 already. And then to your point, To your point, like, you know, even though our product is very wide, wide reaching and like applies to a lot of people, it's not for everyone, right? We have people that like, some people are like far right. Some people are far left. And they think like, we're, some people think we're far left. Some people think we're far right. It's fascinating. So we get some.
Andy Mewborn: When do they, when do they think that, like, is it just because you cover a certain topic and like, they read something inside of it. That's like, oh, that means these people are woke or something like that. or, oh, these people are like super right. Like, like how are they, how are they basically coming to that conclusion?
Tim Huelskamp: Yeah. So, just reading their emails every day, I think I can answer this. Okay. So we try to be, we call it like as unbiased as humanly possible with all of our writing. Obviously you can never be truly unbiased because there's so many inherent biases people have, but we try really hard to just say like, this is what happened. Here's the source documentation. Go read it yourself. Whether it's like there for you. There's a bunch of these rating media ratings agencies and we're like dead middle and all of them like we're like the the poster child like right down the middle not even down the middle it's just like facts first like yeah here it is versus trying to push like a narrative or whatever like hey you should lean this way or lean this way yeah yeah okay And it doesn't mean people on our team don't have opinions or like, like, like they clearly do. But I think, like, I think one of the things is the whole news ecosystem has gotten so, like, polarizing, like, you know, far right, far left, all this. Yeah. There's this, like, growing middle of people that are Democrats, independents and Republicans. We have about a third of each of those. They're just like, hey, I don't care. Like, I don't want your opinion in everything I read. Yeah. Like, if I want a great opinion piece, I'll go to the New York Times, the Wall Street Journal or wherever, but I don't need it in everything I'm reading. I'm trying to learn here. So they're getting frustrated with that. So because of that, I think a lot of the folks, maybe if you're in your bubble, if you're reading all far left news or all far right news and you look at us, you're like, oh, those guys are on the other team, even though we're really not. So they're like, Oh, they're far right. They're far left unsubscribe, which that's fine. Like it's going to happen. You can't serve everyone. And like, we shouldn't try to serve everyone. Um, but so what happens there is like those folks will unsubscribe some people. It's just, you know, you can't, you can't be all things, all people. Right. So we see going from 80. So the a hundred goes to 80 and then the 80 goes like in about two months, it gets to about like somewhere in the fifties and then it flatlines in a good way. Yeah. Flatline's not like game over. Flatline's like it, you know, the, we see product, that's like evidence of product market fit in a chart. Yeah. Yeah. So like over, over half of the people that, that give us a shot read us forever. Yeah. Wow. And then like you do. Yeah. Which is huge. Like, um, there's some little stuff like, you know, technical retention. So like, you know, people change jobs or there's spam filters. We worry about all that stuff too. But at the end of the day, the biggest thing is like delivering a world-class product. And then on top of that, we have, you know, we work with these partners to help us get us in the inbox. And if, If there's a spam problem, they'll call Yahoo and be like, these guys are good. Don't do that. There's all these professional things you can do once you get bigger. But again, if you're not up in the millions of email subscribers with a 50 plus percent open rate, none of this stuff matters. It matters a lot for us now that we're big and we can invest a little bit of money and see a big return on it. It doesn't, like, I wouldn't, we didn't do that until we got up to like, I think a million subscribers. That's what I would suggest to you. Like get up there first. And then those are like, you know, you know, there's 101, 201, those are like 401 problems, not 101 problems.
Andy Mewborn: Yeah, yeah. And question for you, you know, like my background is mostly in, I dabble in newsletters, right? Like I have my own 28K organic, like, and I'm a big like content person in general, right? However, one thing that I'm curious about from you I kind of just had a brain fart and lost where I was going, but it was going to be a very interesting question. Is, oh, here it is. When you're building software, cause that's mostly my world. You can't, you know, when you're recruiting talent, you have the 10 X engineer and you have this engineer that like this person is going to be a 10 X engineer. What is that in for the newsletter? Is that copy your copywriters? And that's like finding just the best copywriter, like. What's that 10X kind of recruit you're always trying to make to keep making your product better, right? Because your product is a lot of writing, it's imagery, it's a newsletter, but within that, first principles, right? It's copy, right? And it's personality in a way. And so how do you think about that, right? Like creating a good product as a newsletter. Because let's say someone wants to create a good product and they're like, well, what do I need to be good at? Which I want to hear from you. This may be as obvious as is what we're thinking, but maybe not. So.
Tim Huelskamp: Yeah. I'm going to sound a little bit like a broken record, but I think it's truly understanding what your demo wants and then being so intellectually curious and in love with that topic that you're doing all that exploratory work for them.
Andy Mewborn: Got it.
Tim Huelskamp: And so it's, it's, it's intellectual curiosity. So like we've, we've like, we've had some writers, like one go and, uh, we haven't lost an employee in three years, which we're really proud of because we try to build like a real culture, which I would love to tell you more about later. But at the end of the day, it's like, if you are a really smart, thoughtful, intellectually curious human who likes to learn, and then also likes to help other people learn, that's the secret sauce for us. So it's like, you know, someone can go away. Cause if you're just, if you're, again, if your heart's not in it and you're just kind of like, Oh, here's some links, put them in a website and shoot it out. Like that's not going to work. Right. You basically need to put that extra layer of like thinking multiple steps ahead. And I think that comes from curiosity at the end of the day. It's like, I'm trying to learn about Bitcoin or cancer or the Fed, whatever. And it's like, I'm really curious about this. So I'm going to go the extra mile and learn about this for a couple hours. And then I'm going to come back and say, okay, I went down this rabbit hole and this is what I learned. And I'm going to help other people learn that. that too, but saving their time.
Andy Mewborn: And so they don't, they don't even have to be necessarily copywriters is kind of what I'm hearing. It's just like an intellectually curious person that would go want to find these little nuggets and then put them together for someone to read. Right. And I'm guessing then there's an edit and this is news question. Right. But, and then as a big newsletter of 3.5 million people, you maybe have an editor that like, edits the people's writing to make sure it's on par with what you typically put out. I'm guessing that's kind of the process there.
Tim Huelskamp: Yeah, yeah, yeah. We have a wonderful copy chief. Her name's Ashley. She's been with us for almost four or five years now. So she's making sure, she also writes for us too. She's super, super smart, super intellectually curious. But so at the end of the night, she's making sure everything is, you know, copy edited and looks perfect. Yeah. Interesting. Okay. Yeah. The big, the big TEDxer is intellectual curiosity.
Andy Mewborn: Really? And you've had these people for years, so you're doing something right. I don't want to get to that. But with that, how did you like test for that? You know what I'm saying? Like when you're going to, cause when you hire a writer, it's a big deal. Like, it's like, Hey, this is going out to 3.5 million people a day. You know, when I ship a new feature or something, yeah, it's going out to new people, but it's like one little thing that like, you're lucky if like everyone clicks on that one thing that you maybe push this week. Right. Um, but for you, like, how did you test for that? Cause that's, that's what I'm curious about.
Tim Huelskamp: Yeah, so, you know, we've only seen people have actually written the newsletter there's like five or six people that have written the newsletter so it's not like we hire someone and they're writing it the next day. But when we're doing the interview process it's like, it's basically. like a dry run of what they would do here. So you can be like, go, go, go study, you know, Alzheimer's and summarize it for us and show us the best links you found. And you can feel it. I know, I know this sounds crazy, but this is what I feel in my inbox every morning. It's like, you can feel the love someone puts in the product because they're intellectually curious. And because they love to learn and because they love to help others learn as well, you can feel that in writing. And that's what we have, in my opinion, I think 3.6 million people agree with us. We have that in our writing. So when we're trying to onboard or hire a new person, you can see if they have that by them doing the work.
Andy Mewborn: Yeah. Yeah. Interesting. So yeah, you have them kind of try it out first, give you a piece of writing and then you're like, okay, this person like definitely went down the rabbit hole, did it all. Um, and now, now I'm guessing that might be harder to test with like GPT or can you see right through GPT at this point, uh, yourself. And do your writers use it? Do your writers use it?
Tim Huelskamp: Maybe for… No, no, no, no, no, no, no. We never use it. So, you know, we're using automation to help us find more interesting things to read and summarize. But, like, we think… I mean, obviously, AI is, like, going to completely change a bunch of industries, and we think content's one of those. But, yeah, we still think that there's, like, magic in, like, the human curation and, like, humans going out and finding things and learning things. If you go on ChatGPT and you say like, find me the best, it's incredible at summarizing. If you say like, I want a 101 on X, it's incredible at that. It's not that great yet, keyword yet, at saying like, show me, I want to learn about the Fed. Show me the best links possible that a human would find fascinating. It's not great at that yet. Got it. So it's, it's, it's coming. And like, I'll probably watch this in a couple of years and laugh that I said that, but it's coming, but right now it's not there yet. We still think there's a lot of value to like humans, like the human curiosity and humans learning and reading and like coming back and saying, cause, cause even like, you know, we find these articles that do really well. We'll be like, um, you know, like a, like a human interest piece on, um, I should like Alzheimer's as an example, like we, we've like covered Alzheimer's lately. And there was like this, this piece we found where, um, a guy is, is going through Alzheimer's disease and he writes this piece about, do I have an identity? if I'm losing my mind. And it's this beautiful piece that makes you think about your whole life. Wow.
Andy Mewborn: I'm going to read that actually. I don't think you find it. Yeah.
Tim Huelskamp: Yeah. I love this. I'll send it to you with the deep dish pizza. Yeah, yeah, yeah. Yes. I love it, man. I love it. Yeah. Yeah. So stuff like that, that's the stuff that the yet or currently that the big AI misses. And we still think that's beautiful and humans do that really well. It doesn't mean like we're not going to use technology to help our humans be better workers. Like obviously we'll do that. Like that's a tale as old as time, but we still think there's like magic in like the human curation and creation of our content.
Andy Mewborn: Yeah. Yeah. I still think, and I can look at stuff and pretty much be like, okay, this is GPT. It has like a certain, it has like emojis and like, It tends to say a lot of the same words. I noticed like, like a mirage, like it uses that word all the time. Whenever I see someone, I'm like, that was GPT, right? Like there's little, because I played with it so much, I know, right. You know, by having, used it right and I use it just say like hmm write something and then maybe it'll give me good ideas to use and then I take and kind of write myself so I use it more for like creativeness of like oh that's a good point that I maybe missed right or that's something or I like that line Right. The way they use that analogy or something like that. So I will use it in that capacity for little little areas of my newsletter. Right. Where I'm like, oh, OK, I'm talking about this like go to market. You know, how do you use courses to scale a SAS business? Right. And then I'll like write it out, bullet it out. And then I'll be like, hmm, I think I'm like there's something here that I'm like trying to compare this to. And I'll kind of give it a blurb, you know, do it. I'm like, Oh, this is a really good way to kind of like put up the beginning or whatever. So I will use it for that versus like just saying, Hey, write me my whole newsletter. Right. And like where that, yeah, I definitely don't think it's, it's there. Right. I think it's more of like creative kind of like workspace to like, you know, spark some ideas versus it is like write the whole newsletter. But again, that may change too, right? Exactly. That may change. Now, Tim, I got a question for you, man. Let's say, I love hearing about the cold start problem that people have, like right when they're starting something, right? Was this just like, you mentioned it, you know, it takes years to build something great, but how did you essentially figure out how to get momentum with this thing? And I kind of want to take it back there. Like, was it, did you just know, Hey, go to straight paid ads or like, what did you do to get momentum? Right. Cause that's what everyone's looking for after they're doing that thing every day, day in, day out. And then you finally start to feel it. Or was it just small and gradual? Like, what was that for you?
Tim Huelskamp: Yeah. So different folks approach this different ways. The way we thought about it was we wanted, so we knew we had product market fit with our newsletter and people liked it and we saw the deal. We knew that, so then we de-risked the monetization. We saw that people wanted to buy it. Sorry, we could sell ads against our newsletter. And then we saw that we could use those profits to generate more and create that flywheel model the way that we thought about it. And not everyone thinks about it this way. And there's different successful strategies, but we basically said, okay, we've proven that out. We have the basics of a flywheel business model, which like, you know, Buffett, I think he's quoting Einstein, which are two not bad individuals to copy, always says like, compounding interest is the eighth wonder of the world, right? It's just like these numbers get really big. And I think you're starting to see that now with our product. So for us, it was like, we know that the flywheel business model and compounding interest works. How do we get there as fast as possible? So for us, that meant having a lean and mean organization. Yeah. So to reinvest everything. Yeah, exactly. three or four people and we got up to, I should know this number, you know, like almost 10 million in revenue with like three or four people. Yeah. Because like we were just like, deeply focused. And we had some part-time people helping us, like deeply focused on like, let that flywheel spin because the more it spins, like the, like the, you know, it just kept compounding to get bigger and bigger. So I think a lot of companies will, they'll do early on is they might say like, Oh, we have evidence of product market fit. We have 50,000 newsletter subscribers. Let's do a podcast. Let's do this. Let's do that. And we were like, Well, all the contribution margins coming from the newsletter and we want the flywheel to spin, keep the thing lean and mean and focus on nothing else. Just let it spin. Don't complicate the business. Don't overinvest. Don't try to do too many things. and just get to the point where that thing can spin as fast as possible. I think one of the benefits we have to our earlier discussion, because we're up here, we have a very large total adjustable market or TAM. So if you're doing that for We think our TAM is like 50 to 100 million Americans because it's like busy professionals. They're across the country, across political ideologies, male, female. It's a big market. If you were doing that for like Austin, Texas car enthusiasts or whatever, there's only, I don't know, 10,000 of those. So it might not make sense to do that. But for us, we knew that the TAM was so big. So we're like, keep it lean and mean, keep it focused and just get that thing spinning as fast as possible and like just let it go. So that's what we did and just didn't focus on anything else.
Andy Mewborn: The lesson there is like focusing on one freaking thing at a time. Right. Like that big lesson there. And I think I, I fall to that mistake all the time where I'm like, oh yeah, I'm doing the newsletter. Now I'm going to do a podcast. Now I'm going to do this. Now I'm going to do this. Right. And it kind of gets like, holy shit. Like it's hard to just do one man. You know, it's, it's hard to do one. And I make this, I have friends that make that mistake, you know, and like the newsletter, I got to 20, I'm like, okay, this thing's kind of like growing organically. I just want to do it organic. Right. Like, you know, we've got a high open rate. Let's keep it. Then I started the podcast right now. I'm like, let's integrate the podcast into the newsletter as, as content to push out. And so we distribute it via the newsletter. So it's like podcasts as part of the newsletter. Right. But it's still the newsletter. And so I kind of use that as my like hub to basically push everything out from there, you know, courses, my software, my, you know, every, every single thing. And so that's crazy from you. And it's a great lesson for everyone that to get to three and a half mil subscribers, sometimes you just got to do the one newsletter and that's fricking it.
Tim Huelskamp: Yeah, I think it's hard and it's like, you know, really easy to like we used in private equity used to call us like when the CEO is like the manager seems like chasing shine, chasing shiny objects, right? Like, yeah, but like, yeah, look at most companies, like the big successful companies. they really don't diversify their products until they're much, much larger. And like, even when they, you know, you get bigger, like Google, like, is it 85% of revenue comes from search, right? Like they focus most of their stuff on that. And they're, they're doing the, the special projects and everything else now. Like, cause it's coming back like 20, 10% time, but it's like most companies are all the power comes from like having one world-class product in a big total adjustable market. And they just like, let it grow into it.
Andy Mewborn: Yeah. Yeah. And that's why it's, it's interesting. Cause I was, uh, you know, from a software perspective too, like I've been at a company where we had one successful product, we went from zero to, you know, 250 million revenue or whatever. And, uh, and then we launched multiple products right after that. Right. We're like, okay, like VCs are telling us to do multi-products. So we're going to build these other products and we're going to get a crap ton of revenue from them. And guess what? That was hard as hell. And it's still hard as hell for that company. I'm no longer there. But the idea is that one main product, the first product is still like the cash cow, right? That's still the one that like everyone's buying, everyone's doing. And so it's interesting that you say that because I think a lot of companies got into this whole like, Oh, you have to launch multi-product, you know, whatever. And I actually think that's having been through it and tried it. I think it's dumb. I think it's like, no, pour the gas on your main product. There's no way that you've cornered every single part of the market. Right. And so, um, it's interesting. Cause there's like, you cover product equity. So you probably, you probably understand this as like push them to do this one thing. you know, which is multi-product, but at the end of the day, for most companies that I see, it's always freaking still the main product, unless you're Salesforce, right? And like, or Google, right? But still even Google, 85% comes from search, you know? So I think it's crazy that a lot of people push this multi-product stuff. In my opinion.
Tim Huelskamp: When I was in private equity, actually for a little time, I worked on a candy company, believe it or not. And I remember we were interviewing CEOs for this small candy company and we had like 50 SKUs, so 50 products. Some of them did 10 million in revenue, some of them did 100,000 in revenue. We hired a new CEO, we got guys from Mars and Hershey's, the best companies in the world. The first thing they all said when they looked at the business was, why the heck do you have 50 products? What are you talking about? And their whole thing was, if Snickers does 700 million in revenue, and Bit of Honey does 10 million of revenue, which one do you want to grow 20%? And which one do you want to focus on growing 20%? So those big companies, like they just sell those little, like Bit of Honey, they sell them off to private equity companies. Cause like they care about getting it from 10 to 20. It's worth their while, but those big companies are shedding those assets. Cause they're like, we want to put all of our, our, our, our, our, our focus and attention and energy on yeah. Growing the big company, 10%, 20%, right. It's huge, huge dollars.
Andy Mewborn: Yeah. That's crazy. Yeah. And that's a good way to look at it too. When every founder gets shiny object syndrome, I feel like it's a thing. How did you battle that? Like, cause I'm sure a lot of people were like, you need to launch this or your competitors, what morning brew hustle, they're all launching courses and a bunch of other stuff. Like how have you dealt with that? Do you just not worry about what they're doing or is there something you go through where you're like, it doesn't matter, man. We're just going to do this. Like how do you mentally go through it?
Tim Huelskamp: Yeah, I think it's a couple of things. One, it's like, yeah, I think like focus on the customer, not the competition, right? Like the markets are very large. And as long as you're providing a wonderful service, you don't really need to worry about, I mean, you do, but you don't need to like over worry about competitions. I think that's number one, especially, especially in our industry. Like, you know, this isn't a winner take all industry. It's not like, you know, there's no second LinkedIn, like social networking for professionals. Everyone's on LinkedIn with newsletters. Some people get 30, some people get three, like, you know, you can, It's not a winner-take-all industry. So I think it's all about focusing on the customer. I think the second thing too is the profitability, especially in media companies. I think just because you're growing employees and sometimes revenue doesn't mean you're growing long-term profits. So a lot of these companies, they expand into new markets and there's no profits long-term there. And we're basically bootstrapped. We're not like a venture capital back, like go to the SoftBank, gave us money. We don't do that. Like we like built like a very durable, profitable business model that again, like compounds every month with our, with our flywheel model. So we just look at it and it's like, okay, we could launch a business or, you know, a science newsletter, like, you know, a podcast, but it's like, it might add a couple hundred thousand dollars in revenue, but we have to like hire three more people and complicate the business. And then you like, look at the P and L, like we do the work you do. Like you look at the P and L and you're like, All right, so in year four, it might add $200,000 of EBITDA, but we had to invest a million dollars to get there. It's like Why? Yeah. Like who cares? Right. Again, I will say though, like if we had a smaller total adjustable market, if we were doing Austin, whatever I said earlier, or even like maybe like just Texas, I think that's different because you can only get it so big and then you have to go out. But for us, we look around and like, we think there's a lot of room to go because again, we're like up here, third, a third, a third, male, female. Like we think there's a large TAM. So we're just like, you have that successful product that's like wicked profitable and has a huge contribution margin. Like why go chase these little things when you have the, I mean, it's kind of like the Snickers and bit of honey. Why go get bit of honey when you could just keep going on Snickers, right?
Andy Mewborn: Yeah. Yeah. And yeah, it's such a good lesson for people there that are listening, which is like, you know, staying focused on the one thing, especially for those that want to start a newsletter that might be listening, right? Like if you're going to start a newsletter, just focus on the newsletter. Just focus on the newsletter, but I'm sure Tim throughout the years, you've had some newsletter ideas for like specific, more niche newsletters. You know, there's some for different gardening. There's some for, uh, every niche you can imagine. Someone has a newsletter for it. What are some newsletter, like business ideas you've had or some newsletter ideas you've had that like, you're not going to execute on maybe because you're like, no, we're focused on this. But is there anything out there that you're like, oh, this would be a good idea?
Tim Huelskamp: Yeah, it's a great question. I mean, so we are working on something else. We're still in the works. I'd love to come back on and tell you about it more when we're ready. But it's like, it's a much, we think it's a bigger TAM. It's what we do well, but it's like going bigger. So it's like not like little stuff. But yeah, I'm the, I'm the, like the smaller stuff. I don't know. Like to me, this industry is very similar to like newspapers and magazines and, and 20 years ago. So I still think like you mentioned gardening, there's a cool one like Epic Gardening. This guy Kevin something recently started.
Andy Mewborn: Plant Daddy or something. Was that Plant Daddy? Is that the guy on Twitter named Plant Daddy? No, maybe not.
Tim Huelskamp: I can't remember, but like I just to me it's like, I think like, I think there's, I don't know what they are, but I bet you if you went and looked at whatever like the magazine circulation numbers were, and I'm totally making this up in 2000, not, 2001 or before the internet hit. That stuff really doesn't change. Obviously, AI newsletters didn't exist 20 years ago, but people's passions, gardening, reading, romance, novels, all these things. I bet you there's one that hasn't been cracked yet where it's actually a very large total adjustable market with maybe like 5 or 10 million people that really like something. And it's the same thing. It's just all this information all over the internet. It's hard. You're spending too much time going to get it. Could someone just pull it together for the audience so that they love and you're serving the folks that love that same audience. They can feel that love in the product every day and you just pull it together for them and help them save time and learn a bunch of cool new stuff. That's what I would suggest. I don't know. I bet you Matt McGarry has some of this, but it's almost like a white space analysis of every human interest on this side and how large the TAM is and has it been done. There's definitely some white space in there. I just haven't done that work. So I actually can't think of any right now, but I see them all the time where I was talking to someone two weeks ago. I forget exactly what it was. And I was like, that's really cool. I've never seen that before. I see most of the newsletters. Yeah. It sounds like a really interesting space. Like I would, I would definitely spend some time there.
Andy Mewborn: Yeah. Yeah. For me, I'm going to say this, but, and you know what, we're going to say it because we like to give ideas here too. But if I wasn't so busy building my current company, Distribute, right? Software product, what I would say, I would start this. I even thought about starting this on the side, but then I said, nope, no shiny object syndrome, but like don't do this. But dude, I think a killer newsletter right now, and maybe there is one that's killer. I haven't found it is one for like F1. Right. F1, because F1 is huge on Netflix. People love it. They love that. There's so many intricacies to it. The drama for the drivers, how they build the cars and like all the intricacies. Right. Like the engineering that goes into it is insane. Think how many people like cars. It's basically every dude that likes cars, likes F1. Yeah, I think that, you know, wonderful idea. Yeah. And then you can make it fun. Like, you know, like the, the four to 40, you know, milk road style, or, you know, it's got jokes and memes and all that, dude, that would be a killer idea.
Tim Huelskamp: I totally agree. I'm trying to think, I don't think I've seen that. And yeah, the demand, the demand is going to be growing like crazy as I come to like Austin and Miami. and everything. I think it's pretty cool too. You can like go to Google keyword planner. We use this all the time. So Google keywords, like you go see like the search demand for certain things. I've got two ideas.
Andy Mewborn: Yeah, absolutely. Cause it's like getting bigger. Yeah. And then the, like, if you think about the, a lot of, I mean, it's a range of people, but a lot of people that watch that stuff too, like their average income, I bet it's huge because it's a cars and TV people that like cars have like, you know, or, middle-class, upper middle-class kind of stuff is what you would think, right? What I would assume. So I bet you that too, there's definitely some great stuff in that business model where you can sell like, I don't know, F1 related stuff, merch, all kinds of crazy stuff. So if anyone's listening, someone start that. Let me invest, though. Let me invest, because… Make Andy proud.
Tim Huelskamp: Make Andy proud.
Andy Mewborn: Yeah, make me proud. And let me invest, because someone should go do it. I just don't have the time to. Yeah, so that's a good idea. Well, Tim, it's been amazing, man. Yeah, man. So good talking, Tim. Dude, we'll catch up. I'm actually talking to your team later this week, too. So I'll let you know how that goes, man. Yeah, we're going to do a whole LinkedIn, like, masterclass thing. All right, awesome.
Tim Huelskamp: When you send that email, send me your address, too. I'm going to send you some deep dish.
Andy Mewborn: Oh, yeah. Send me yours, too, because I'm going to send you this ice cream, dude. Hey, don't be eating it all in one place, Tim. Be careful, man. I'll be careful too.
Tim Huelskamp: All right, man. Awesome talk.
Andy Mewborn: Thanks so much for your time. Talk soon. You're the man, dude. Later.
