Byrne Hobart is a chartered financial analyst who loves writing about the intersection between finance and technology. He writes The Diff, one of Silicon Valley’s most popular newsletters. In this episode, we dive into how Byrne launched his newsletter, how much he’s earning, and how he publishes five times a week!
You’ll learn why Byrne isn’t worried about pirates getting their hands on paid newsletters, and why you should worry about selling hard enough, instead.
Byrne talks about how to build recurring revenue, and writing for different types of readers. He also points out an important factor that affects the churn rate of your newsletter!
Byrne shares further insights on using free social media to lead people to the channels you monetize, and why he competes for readers’ highest-value time, instead of appealing to the lowest common denominator.
Links & Resources
- Jonathan Haidt – Social psychologist – Author – Professor
- Manhattan Project – Wikipedia
- Apollo program – Wikipedia
- Stratechery by Ben Thompson – On the business, strategy, and impact of technology.
- BitTorrent – Wikipedia
- Snopes.com – The definitive fact-checking site and reference source for urban legends, folklore, myths, rumors, and misinformation.
Byrne Hobart’s Links
I wasn’t really thinking of the paid newsletter as this is going to be the main thing I do. you look at tech companies, they often have multiple lines of revenue, one thing they do is 95% of revenue. And the next thing they do is 2% of revenue, and when companies get more mature, it’s sometimes spreads out a little bit, but early on you find one thing that works really well. And that’s what you focus on.
Today’s interview is with Byrne Hobart who writes The Diff. Now Byrne is a chartered financial analyst who loves writing about the intersection between finance and technology. What’s really interesting about his writing is that he’s read by basically the who’s who of Silicon Valley. So it’s not just, you know, a larger email list that we’re talking about today, but really we’re talking about writing the kind of quality content that, You know, billionaires are reading that.
Like I first heard about him from Patrick Collison at Stripe. So this is the kind of thing that a lot of really important, really interesting people are paying attention to.
So in this episode, we’re going to dive into how he launched his paid newsletter, how much he earns. He publishes five days a week.
These are long form detailed con detailed articles that Bern is posting basically five days a week, which is, is a crazy consistency. So his writing process, what inspires them and so much more what’s that then.
Byrne Welcome to the show.
Great to be here.
So I’ve been following your newsletter for awhile and I’d love if you just gave a quick intro from your side what you write about and why you find it interesting.
Yeah, sure. So the idea is that I like reading history and I found that if you read We contemporary coverage of things that are happening at any given time you do get a lot of the details and then you get a lot of stuff that ends up being totally irrelevant And a lot of really interesting developments just are below the surface or they they matter in retrospect but no one really understood them at the time And so what I’m always trying to do which is a really high bar to reach is to write Right things today from a perspective that will still make sense it’d be relevant in the distant future So it’s basically trying to spot the important technology trends trying to spot what mattered what people thought mattered didn’t matter how those perceptions changed how how perception and reality have interacted and the way to do that is one to talk about financial markets because financial markets are Aggregating knowledge preferences expectations et cetera from everyone around the world And then the other thing to do is talk about technology particularly technology companies And the nice one of the nice things about those companies is that they have to be somewhat open because they’re all constrained by their ability to hire people And one way to hire people if if you’re trying to compete with Facebook and Google and Amazon and Microsoft and they can all offer a really generous comp package The way to hire people is to to give them some expectation that this company is going to be totally transformative and amazing So even if the base pay is not quite what you get at Facebook it’s still worth doing either to make an impact on the world or to cash in some stock options So a lot of companies have this incentive to actually tell their story in a way that that doesn’t happen as much in in other fields But at the same time companies have an incentive to hide their story Because if the story is we’re doing X but we’re actually going to kill Google And here’s how you don’t want Google to know that So there’s there’s always this corporate stress He doesn’t where you have to be really appealing and inspiring but you can’t tell the whole truth because it’s too dangerous So I try to parse that
yeah, I think that’s fascinating. And I’m spacing on who talks about this a lot is a book that I read fairly recently, but about how, Now, this is going to bother me of who I never, what book it’s from, if you’ll know it, but how the closer like a startup is going to talk about how they can create a monopoly and they can have all the success.
And then the closer they are to actually creating a monopoly, in and succeeding the less they’re like, Oh no, no, no. It’s not a monopoly at all. No. W like, look at all this competition. We have, everybody has a competitor.
One has that, they have this, this like nber line of. Here’s like everyone, if you’re, if you’re an airline, you’re like, here’s why we’re really special. Here’s why everyone loves Delta. And the United is like, no, here’s why everyone wants United. And then, if you’re Google, you’re like, well, we’re one advertising company among many.
And our customers could go to all sorts of different media, but really Google has a, basically a monopoly on search and search is an incredibly lucrative business, but yeah, they, they can’t quite talk about that. And there are, there are other companies that have these little monopolies, like sometimes, If you, if you look at the, some of the large us companies that had large research labs in the thirties, forties, fifties, in some cases it seems like part of the point of those labs was to give them somewhere.
Somewhere, they could dp their excess profits so that they just didn’t look that profitable. So if you’re at and T you have this incredibly lucrative business with network effects, you have a technology advantage. And one thing you could do with that is, just run it for maxim profit margins right now.
But the other thing you can do with it, if you’re worried about. FDR are complaining that you’re terrible people is you hire a bunch of scientists. You tell them, please just work on something. It should help us. But, you know, we just, we w it’s basically a way for them to defer their profits to some future that’s more politically optimal.
And, and then you get lots of wonderful side effects. The transistor.
Yeah. Oh, there’s so much to that. And so, anyway, I think those are just fun. Examples of ideas on what you tend to write about, kind of staying on the topic before we dive into newsletters specifically, saying on the inflection points in business, I’d love to hear like what, or maybe I’ll start with what’s one or two that you’ve seen in particular this year, since this year has been a very transformative year.
Yeah. So, you can, you can look at the obvious inflection point of, you know, before we were all going to social gatherings and going out to eat and traveling. And now most of us are not doing very much of that at all, but I think one of the inflections there was, this. It results. Some policy argents about the extent to which you can actually solve a recession just by spending a lot of money.
So there’s always this concern of if we spend a lot of money it’s hyperinflationary, but in an economy that’s already pretty levered. There’s actually, there’s a pretty good argent for having somebody stabilize that. Then you can, you could imagine one steady state where we just don’t have as much leverage.
And so you don’t have as many people who, if they lose their job now, they can’t pay their rent. So their landlord. Can’t pay their mortgage. So the bank has trouble with its finances and it just, just bounces through the rest of the economy. in a less levered economy, that’s just less likely, but in an economy where you have this pretty robust financial system, where a lot of people have, fixed obligations, a lot of companies have fixed obligations.
As it turns out when there’s a huge demand shock to the system, you can actually just spend a ton of money and, and things start to get better. So it’s, One of the worst recessions on record, but one of the short-term sessions on record and, it so far has worked well. there is a question of how technocratic we want things to be.
There’s also a question of, did we. Did we stop a depression in 2020 and get something worse than 2021. So there’s still some open questions, but I think it does. It does tell you that some policymakers have, have more power than, than we thought, or it can have, have more powers they can use for good than we thought.
But at the same time, you have a lot of people questioning a lot of powerful institutions because they’re, if you go back to the, the discourse on COVID in January and February, it was, it was kind of seen as, as sort of extreme and paranoid to worry about it. There’s the famous of box piece. Yeah.
These people aren’t even shaking people aren’t even what’s wrong with them. It’s, it’s no worse than the flu, get a grip America, et cetera. So, we’ve had some institutions where we’ve had to seriously question their legitimacy and, a lot of these institutions are fighting back by kind of dodging it like, there’s, there’s been a bit of soul searching and actually, some of the, one of the Vox writers who had covered COVID early, actually talked about how they’re, She could have done more.
Her name is escaping me right now, but she actually did a fair amount of soul searching and actually wrote a thoughtful piece on, part of it was on just the factual question of when was it clear that this was a crisis and what, what should be done about it? And then part of it was this meditation on the institutional incentives.
So. It’s it’s tough to be early, especially. if you are a journalist at a large publication, you have this surface area problem where, the bigger the publication is the, the more risk they take from any one person saying something crazy. And, the bigger they are, the more newsworthy it is. If any one person says something crazy.
So New York times has a lot of writers and it’s also a well-known institution, which means that they actually face a ton of risk from their employees going off the reservation. And. What, what I think you see is that a lot of these institutions they’re converging on some range of acceptable discourse, and they’re just, they’re writing off the set of people who.
Don’t really think that way, but they’re very much speaking to the they’re preaching to the choir for the people who do agree with them. So you actually end up with a much stronger filter bubbles, as a result of this questioning of legitimacy. So that’s, that’s an important inflection point. And, I think the other, the other side of that is that we did learn that.
Tech companies broadly defined, did a great job. They sent employees home very early. the internet kept running. So the telcos did, an excellent job at, not allowing that whole system to fall apart. a lot of, retailers, for example, and manufacturers were able to adapt quite quickly. So there were toilet paper shortages briefly, but then, We got more toilet paper.
there are still shortages in a couple areas, but, stuff like exercise equipment, it’s still hard to find. last time I looked podcasting Mike’s were still hard to find, but in a lot of cases, the, some parts of the system were exceptionally adaptable. So in many ways, you know, if you, if you didn’t like going out that much, if you were already the kind of person who used a lot of, a lot of grub hub and Postmates, Some things haven’t changed that much.
In some ways, things are actually easier because now, now if you tell someone I don’t want to hang out, we should just chat on zoom. It’s actually kind of normal. So, you know, for, for introverts and a lot of these companies are, their workforce tends to be more introverted if they’re tech companies, it’s, it just hasn’t been that big, an impact relative to the worldwide impact.
Yeah, that makes sense. Is there something that, you know, we’ve seen these changes happen right now? The, all the things that work from home and everything else that’s right in front of us, but what’s something that an inflection point that you think has happened, but we haven’t noticed the effects of it and we won’t.
You know, three years from now, we’ll look back and be like, Oh, of course, that changed in 2020. But you know, you think people right now would be surprised or, not actually expect to see that change.
Interesting. I think, one of the interesting changes is this, this, in the. Hardware business. And specifically in chips, there’s been this narrowing of which companies can effectively manufacturer the most cutting edge chips. if you look at the, the nber of semiconductors, your fabs at, at every node of design, as the nodes get more advanced than nber of fabs, that can actually do the nber of companies that own fabs that can do this.
Just diminishes and diminishes and diminishes. And now we’re at the point where, the most advanced trips can get made in Taiwan or they can get made in, South Korea. And there’s really, no one else has caught up to them. And this is something that, that people are aware of, but I don’t know how much we’ve thought through the implications of, One country that has had, had disputes with China here and there.
And, it was at war with them at one point, in the fifties. And then you have another country that China says as part of its territory and so very, very serious, very deep-seated disputes there. so. These, these countries are, are both pretty, more geopolitically tenuous than, than other places in the world.
And they are the only place where this really essential set of components gets manufactured. So that’s, that is a case where the, the world of geopolitics and macroeconomics starts to intersect with the world of technology. Right. And you started asking what it looks like if, the U S no longer has access to tips, or if China no longer has access to tips, because both of these countries are, very close to the U S diplomatically and, they’re, they’re close to try to geographically, so it’s, it makes the world much more interesting and much more high risk.
And it’s, it’s part of a general force and technology that you end up with. These increases only elaborate supply chains, where there are these really narrow slices that are super profitable. And, as, as they get more profitable, they get harder to duplicate. You end up with more monopolies and those monopolies just, as, as an shrinks from, you know, there are, there are dozens of companies that can do this too.
There are two that can do this. Then you have to stop thinking of this as a statistical process and start thinking of it as, That’s something closer to a narrative where there, there are these very specific entities. There are specific people in charge. They have particular incentives and they think about things in a particular way, and it really matters for the future, how they think and what they decide.
Yeah, that’s fascinating. I. You know, from the, the nineties and earlier you think of oil as being that, that resource that is worth fighting Wars over. And so that’s fascinating that it could turn into chips and it might not go to Wars, but certainly very heavily, you know, a lot, a lot of, geopolitical issues around that.
Yeah, there’s this The good Lord, didn’t see fit to put oil only in places where we’d like to do business, but we go where the oil is. And you can think about that with chips too, where you, if you were designing a, a supply chain for the U S technology sector from scratch, you probably wouldn’t put the most strategic components.
All right. Next to a country that is trying to build its own supply chain. And that increasingly sees the U as a major rival. You’d probably arrange it a little bit differently maybe, but these, these plants in, I don’t know. England, or maybe you put them in America. And the U S is sort of trying to do that.
And the semiconductor industry is lobbying very hard for the U S to do that. Taiwan semiconductor has, has plans to open a facility in the U S and, Samsung is expanding some of their manufacturing in the U S so it’s, it’s slowly edging over that way, but China has. subsidized that business massively, a friend of mine, Jordan Schneider, who writes a China talk, he estimates that it’s something like $1.4 trillion that China has, has spent, or is planning to spend on this industry.
So that’s clearly, clearly they’re taking it very seriously.
Yeah. Oh, that’s fascinating. So I want to transition right now because, and talk more on the newsletter side. Cause this is a taste of the kind of thing you, you write about and the level of detail that you go into. And so this is why, you know, executives and founders at so many top companies are following your stuff.
Cause you’re watching. These kinds of trends and seeing, okay, what are the implications of this? And so I’d love to go back a little bit in your story and just, focus on three years ago, five years ago, what, what were you doing? And what’s the path that led you to this point of kind of being on the cutting edge of, and the narrative of what’s going on in the world.
Yeah. Sure. So, mostly doing equity research. So I worked for a while at a hedge fund SAC capital, and then, worked for some research providers who work with ones like that. And, that, that work was actually really fun because the equity research it’s, It promotes some really healthy mental habits, because if you were trying to decide if a stock is a buy or a sell, you do want to have your thesis, but you actually want to pay very close attention to who you’re arguing with and what their thesis is.
Because the most valuable things you learn are from the people who disagree with you. And if you tune out the other side of the argent, then you are necessarily the db bunny.
So you can get lucky. You can still make money and that’s happened to me, but, You it’s, it’s a lot smarter to know exactly what these guys are betting against and why you think it’s wrong.
So that’s, and that’s. Normally in argents, that’s the healthiest way to approach things is you figure out how to reproduce the other person’s argent and then you figure out what they’re missing or, or you just figure out what fundamental disagreements you have. So a lot of political argents, you think that it’s an argent over, over policy outcomes, but it’s actually an argent over, what is what’s practical to implement?
And, there’s a Jonathan Haidt has a lot of research on that. Or hight has a lot of research on. And this idea of moral foundations where different people just have different things that they care about or different things that are willing to treat as morally significant. And you can, you can have an argent with someone where it seems like the other person is just, Just promoting something totally inhan and evil, because they have a different set of priorities that they’re willing to give credence to.
And if they, if they only, if you only cared about the, the care versus harm moral foundation, so it, it, does it hurt people or does it help them? You get one set of conclusions, but if you care about that, but you also care about things like. Respect for, respect for authority and respect for these symbolic things that, that don’t have real world value, but do matter, in the abstract, then you get to a different set of policies.
And, it’s what hight claims is that when people with different moral foundations try to model one another’s beliefs, they just tend to asse that if someone waits care versus harm differently, it just means they want to hurt people. Whereas what it actually means is they’re balancing a different set of priorities.
with finance, you don’t really have to worry about moral foundations that much because everyone wants to make money. you can sort of have moral foundations with things like, investing in tobacco stocks, but that’s a very quick argent. One person says. This company is a very profitable, and we don’t think that they’re going to shrink as fast as the market thinks.
And then someone else says, yeah, but they cost cancer. So I’m not going to invest in that. So that’s a very quick argent. It’s not like they have any disputes about fundamentals. They just quickly get to what the substance of the dispute is. And then. When people debate companies like, like Netflix and there, you know, you have one side saying original content is this bottomless money pit.
And they have to keep spending more and more and more just to, just to keep up with the other streaming companies. And then someone else says that that’s theoretically true, but they actually get economies of scale and they get economies of scale on acquiring users. And so you’re, as long as you’re amortizing content over a larger and larger user base over time.
And as long as you have a lot of pricing power, It doesn’t really matter that it’s expensive to have this original content. And maybe it’s actually good because it means that eventually other companies get scared out of competing in the first place. So you at least figure out what the questions are, what the uncertainties are, and then you start modeling.
You start trying to figure out what does it look like if you scale the, the Netflix movie production function up to X or up five X. And then what does it look like when Netflix raises prices in a country like the U S versus what a, what pricing power do they have in. a much poorer country, for example, so that that’s a really healthy habit where you’re, you’re trying to figure out what you actually disagree with people on, and then you want to resolve that disagreement and, and get it right.
And. Because prices are set by people who are trading. There’s actually an incentive for people to share what they figured out out. If they’ve figured out something novel and insightful, and they’ve already made the trade. So a lot of people, well exchange ideas, they debate very vigorously and they’re in some sense in some totally cynical utility maximizing, since they’re still trying to get at the truth in, in just that narrow domain, but you take the habits from that domain and then you apply them to other areas and it’s generally useful.
Yeah, that makes sense. Before we get to newsletters, I’m realizing I have one more question. what’s something surprising that shaped your view of the world. You have a very unique take. And so I’d love to hear what, you know, what’s something that people wouldn’t expect that plays into that.
Yeah. So I, Very rationalist view of the world. And I’m sure I still, I still try to, I still tend to take a more, more linear left-brained view of things, but, I do think that there’s, there are important coordinator functions that are served by these irrational, irrational behaviors.
So there. So things like financial bubbles, you can look at a financial bubble as just people being bad at math and paying too much for stuff, investing too much and stuff working too hard on, on, on endeavors that are just not going to have any kind of meaningful payoff, but you can also view a bubble as this coordinating function, where for a lot of complicated technologies, you need a lot of things to go right at once.
So you can look at the internet bubble as being this combination of a bubble in, And ISP and telecommunications, but also a bubble in creating content online and also a bubble in selling goods online. If those didn’t happen all at the same time, none of them would have been possible. So if you build amazon.com and nobody has internet access, then it’s worthless.
If you, if you build PayPal and nobody’s buying anything online, worthless, but if all of these things are happening at once, then collectively, they are actually worth a lot. It it’s still very uncertain. And, a lot of people got burned, including anyone who bought Amazon at the peak. It was a very long time before they got back to breakeven, but it did coordinate all of these developments and build something that was hard to replace.
And, I, I think there’s a parallel between that and. What happens with successful mega-projects from governments. So, if you look at something like the Manhattan project or the Apollo program, there are all these discrete components that have to be built for the project to work. And if you build one of them and the other one doesn’t get built, it’s worthless.
So you have one group of people designing a bomb, and you have another group of people purifying, vast amounts of the correct urani isotopes to build a bomb. If you purify a bunch of the right isotope, but there’s no design for a bomb, then you’ve wasted a ton of money. And I believe by the end of the war, the investment in that urani project was actually larger than the total investment in the automobile industry at that time.
So you would huge project could have been worthless. they did a lot of these things in parallel, so they didn’t actually know if the final design would work, but. it’s very much like a bubble. You’re doing this thing that is irrational at one level, but if everyone’s irrational in exactly the same way and you all give up what tasks have to get done, then you end up building something that you could not build on your own.
You couldn’t build it any scale lower than that.
Right. Yeah, that makes sense. Okay. So you’re going from the world of finance and, then, just this year, right. You made the switch or was it last year? You made the switch to the newsletter.
Yeah. So I, messed around for a while, did a little bit of just freelance writing in a couple of different places and did some consulting. And then I, I started the newsletter, mostly promote other writing. So I’ve been doing that for about 10 years, just very intermittently.
And, I started writing the newsletter more regularly and then charging for it in February of this year.
I’m realizing we’re gonna publish this in 2021. So I should do it throw a year in there. so let’s see. Yeah. I mean, going back through your stuff, you’ve been writing for a very long time, but publish on medi. Well, before you got started on Substack. Yeah. But to what I’d love to hear what some of the things that you were looking at when it was like, okay, let’s change it from, you know, we’ve been newsletter as a way to.
Send my writing to people, right. At that point, it’s just a push mechanism. And then that transition to the newsletter as a business. Now, maybe two things, one, what were some of the people you’re looking to for inspiration there, who sort of charted that path for you? And then, what were the, the markers that you were looking for for like, Oh, I should actually do this.
Yeah, I think so there’s There’s what you work on and then there’s how you monetize it and these can be very different. So Nike, for example, in one sense, they are an ad company. They just found a way to monetize by selling shoes. And they’re really good at it. And you can look at a lot of other companies that way that they.
They do one thing and then they monetize it through something else. So I, I wasn’t really thinking of the paid newsletter as this is going to be the main thing I do. I was thinking of it as I have these different channels and
I’m in one channel, someone else owns the platform and I, I I really like working with them and I still write for them.
but it’s, it’s, it’s not recurring revenue. And so I wanted to have something that’s recurring revenue, what I thought. And I actually, I built this little financial model. Which immediately became obsolete. And I was, I was looking at different income sources, different things I’m working on. And, I thought the newsletter, you know, they could end up being a third of my income.
And so I’d have this diversified set of, of different activities I do. And there’s one that’s recurring, so that’s really safe, but it won’t be that big, cetera, et cetera, et cetera. But, what I should have been thinking was when you look at any. If if you look at tech companies, they often have multiple lines of revenue.
And it’s like, one thing they do is 95% of revenue. And the next thing they do is 2% of revenue, but they break even doing that. And then the next thing they do is Piney Teddy’s revenue. So, I think, and when they, when companies get more mature, it sometimes spreads out a little bit, but early on you find one thing that works really well.
And that that’s what you focus on. that’s, that’s roughly how it happened with the newsletter. I got a couple of people to sign up. It started growing and it just, it grew pretty steadily. Like when I look at the chart, there are these bps, mostly from people recommending it publicly. it’s and those, those have happened just periodically pretty much since I started.
But a lot of it is just this gradual process of. You send an email and a bunch of people read it and some of them send it to someone else and that person reads it, likes it wants to read more. And I have another subscriber. the, the social proof of you got this paid email from some, you got this email, that’s a paid subscription product.
And, so the person who’s sending it to, you knows you and they know you’re interested and they’re implicitly endorsing paying for it. That’s, that’s really powerful. So a lot of it is compounding from that. What that means though, is that posting frequently, as long as you have something to say is really powerful.
So if you have. Five opportunities a week to do that instead of two, then the compounding process should happen lot faster and there is a balance to strike, but in general, there’s a huge amount of information out there. you can, you can always think of just how much competition there is for people’s attention, but a lot of it is for attention that people are implicitly putting zero value on.
So a lot of, a lot of us, myself included have this just muscle memory for. I’m bored or I’m waiting for something to happen. I’m going to open a new tab and I’m going to go to hacker news or Reddit or Twitter or something. And that time is not the time I’m competing for. I try to compete for time.
That’s very, fairly valuable. That’s why, the newsletter is an appropriate form factor because it’s going into the same inbox as a lot of pretty important stuff. I know some people will filter and sort, but. A lot of people have this default approach of I’m going to get a ton of inbound email and I’m going to manually filter through it and decide what’s important.
So I’m generally competing for people’s attention, against pressing business matters. And that’s, that sets a really high bar, but it also, again, adds some social proof where if this is worth the time of a busy person, then it’s worth it. to read
I think that’s something with paid newsletters that people worry about, right. Is that I’ve put this out there and obviously it’s only available to paid subscribers, but are they, everyone has it in their inbox. There’s no lock on the version in the inbox. So I can just forward that on people say like, But, you know, what’s to prevent someone from just giving it away.
And what I hear you saying is nothing. And that’s the beauty of it, because worst case I’m not going to forward it to dozens or hundreds of people, I’m going to be like, know, I’m going to send it to my friend, Ryan, Hey, Ryan, you’ve got to read this. And then that’s exactly what you’re saying of like, Oh, well, if this is $20 a month, I’m reading it.
This was good. Nathan pays for it. So he must think that it’s worth paying for every month. So like, you know, the other four articles a week are really good, so sure. I’ll subscribe and check it out. And you’re right. That’s really high. It’s social.
I would say piracy at some point I’m sure it will be a risk I’m sure it will be a risk and I’m it probably exists in private chat groups that there’s some roster of. Here’s the pirated Stratechery feed here’s the pirated sinuses and feed, etc like that stuff happens, but it’s just. Part of what you can take advantage of is it’s incredibly embarrassing to ask and it’s excruciating to ask multiple times, like, I, I signed up for the information because I was midway through sending someone a text message being like, Hey, I saw another headline from the information.
I really want to read this article. And I was just imagining him getting this periodic reminder that I’m cheap and just dismissing it. I know people will pirate it some people will pirate stuff at scale, but they’re not really, they’re not a huge audience. A lot of people just don’t behave that way.
And in a lot of cases, what we saw in music and movies was that piracy was about usability. That if, if Netflix and Spotify are more convenient than BitTorrent than BitTorrent, it’s still a factor, but it’s not a huge factor. And a lot of people graduate, they, they torrent the first alb but they eventually get on Spotify and then it’s just too easy.
They never stop. And, the, since the economics are a lot better for paid newsletters than for piracy, like, look at the ads that, the torrent sites have to run. Clearly, they are not actually hitting a super high-monetization ultra-desirable audience. So I would expect that as piracy becomes a bigger deal, a the, the newsletter technology companies, the platforms are going to notice it before the individual users do.
Users, some users might notice and complain. You know, if they see this reader opened the newsletter 500 times and clicked 2000 times on different links, like, okay, that’s something something’s going on there. But the people who will notice it at scale and actually start detecting it and perhaps come up with countermeasures perhaps just say going to happen, but it’s not economically a huge deal for you.
that’s, that’s probably going to be platform-side
Well, I think what’s most interesting about it is, is not just that it’s a small, like piracy being a small issue, as far as the overall monetary side, like, you know, whatever those people were going to pay you, but also that it may be a benefit of, of exposing new people to it. You know, like your friend who sends you, the information says, Hey, you got to read this article.
And then later you’re texting him, like, can I read that article as well? You know, he introduced you or she introduced you to that quality of reporting and then kind of got you hooked. And so, you know, it’s interesting to think about it being potentially a good
Yeah, I, I think Piracy is not just, you get an email that you paid for and you send it to someone like piracy is you, you do that systematically, or like you have a special Gmail that a lot of people log into and maybe, maybe they’re paying you like $10 in Bitcoin every year to get access to the giant email list.
that’s that is, there are definitely, there’s like a pretty discreet gap and yeah. It’s it’s kind of, like you can, there’s always the continu of how monetizeable a given media, given the physical instantiation of media can be. if you look at the music industry, you could, you could monetize by selling physical albs.
You can monetize through radio, you can monetize through touring. You can monetize through merch there’s, there’s a whole spectrum of price discrimination and you, you generally want to have some aspects of it that monetize very poorly because they have low frictional cost of sharing. In fact, that’s a, there’s an interesting dynamic across different media sites where sometimes there is a low-monetization low-friction site.
And then there’s a high-monetization high-friction site that has the same kind of content. But the, there are people who use both of them and they use one to get followers for the other one. And so you can, there are people who will use TikTok to promote their YouTube channel. They know that YouTube subscribers are stickier, they can get advertising on YouTube.
A lot of people including me, will use Twitter to monetize Substack So Twitter by design is supposed to be this ultra-seamless process for sharing stuff and having it go extremely viral. Substack is just not going to be extremely viral. There, there are examples of viral emails, but they’re all in the distant past.
And it’s It’s viral. But if you look at the, the forward line, it’s like 150 people read about it. And then someone posted it, to Snopes.com or something.
Right. So let’s dive into that on the growth side. I think Twitter is a very common path for growing a newsletter. They, it just has distribution in a way that. You know, email doesn’t have built in, or I should say discovery, as discovery built in, in such a good way, what’s worked for you on, on Twitter and maybe a couple of examples of either threads or individual tweets or articles that have been right.
No, I have, I don’t have a good one sense of what actually works in terms of getting a payoff in subscribers, because it seems to happen. So asynchronously that it’s more like. If you, if you tweet and people like it, they will follow you on Twitter. Eventually, if you occasionally tweet links or as I do shamelessly tweet links to your newsletter, eventually some of them will subscribe on the free list if they get enough free issues, some of the most apart from the paid list.
So the conversion funnel is really gradual and, because. You don’t have, you don’t have a good way to track the, the user, path from, they saw someone retweet you, but didn’t interact too. They saw a tweet. They followed you all the way down to, they paid you money. it’s, it’s tough to see them through that entire funnel, unless, well, sub-sect dismissed the rors that Twitter was going to buy them.
So that will happen. Probably probably for the better anyway. so it’s, it’s really tough to say other than just, if you can be the, the Twitter ISE 280 character version of what you are in long form on, on a newsletter, then you will, you’ll give people a pretty, pretty close approximation. So I’d say that my Twitter.
My Twitter feed. I will sometimes tweet general observations. Sometimes I’ll tweet something about a story that I end up writing in more detail for the newsletter. Sometimes I’ll ask people questions on Twitter. Like if there’s just something where I have an open question, I haven’t found a good answer from Googling, and I know there’s a good answer out there.
I’ll ask people. I, I do occasional Twitter things that are just things that have to be that day and it, It feels not, not like a good deal at all for someone to put the email newsletter on their expense account and then get a story about a toddler. So, that does not make it into sub stack, but that’s just because a lot of my friends follow me on Twitter.
So it’s a way of keeping in touch with people. I, one of the things I do on Twitter pretty regularly is when I write a post that is paywall, I will generally tweet out a link to it. And I will often tweet out a screen cap of something I said in that post, the only annoying thing there is that I want the screencap to be interesting, but I don’t like to post spoilers.
Is one of my rules. So I will, I will often screencap a tangent or a footnote or something else in the piece that just gives you a sense of what I’m writing about, but doesn’t give away the whole thing for free. And I don’t know, I don’t know what percentage of the content ends up being given away for free versus, charged for in theory, I, I tell people I’m going to post three times a week.
I generally post five times a week. one of those posts is free and the other one’s okay. Walled usually, but I will occasionally take something out behind the paywall. So, I had a piece on Palentier that I wrote after the S one was filed and I was just really proud of it. And, I was also kind of disappointed in the overall media coverage of Palentier, which is some combination of this is the evil empire and this company is fantastically overpriced.
But when I looked through the S one, it was clear to me that. There’s, it’s not logically impossible that they’re evil, but if you actually look at what they’re saying, and you look at what they’re doing, they, they make a pretty coherent case that they are fighting for. Good. And. Later on. There was more commentary on them, some interviews with, with the founders.
And it did actually seem like they thought through all of these objections. Like if you’re, if you’re smart people, if you’re, the founders are people who majored in philosophy, like they’re, they’re these used to thinking about moral issues. obviously majoring, yeah. Philosophy doesn’t make you a good person.
It makes you a person with a better vocabulary for explaining why you’re going to do what you want to do. But at least it means that they, they do have this whole, This whole toolkit for, for wrestling, with these issues. And, almost a lack of plausible deniability. Like you, if you know what, what the great thinkers in history have said about things like, is it moral to help, Bad government do something that is going to cause less harm than if you didn’t help them, but they’re still doing something bad and maybe you’re enabling them to do more.
And maybe the more that they do will be worse. Like that’s, that’s stuff people have been thinking about for a couple thousand years now. So, they had been thinking about that and, I was actually really happy with the feedback on the volunteer piece because a lot of people said this. this explains what this at least gives like this counter view to the view that they’re evil.
But I also had people ping me privately say, yeah, I worked there and this is, this is actually right. Like we, we do believe we’re fighting the good fight. that there’s a lot that they can’t say publicly, in part, because they’re working with the government and like a lot of that stuff should not be publicly disclosed, but, that, that was a piece that I made public.
More because I thought that it actually contributed to the overall discourse, but a lot of the, a lot of the stuff stays paywalls and, that’s, that’s something that if people want to pay for it, they should. And in a lot of cases, like the vast majority of people do not, they sign up for the free version.
They don’t sign up for the paid version. That’s fine. And, I’m happy to write for a large audience and get interesting feedback and be an interesting people. even if there’s no monetary component whatsoever to that,
On the ratio of free to paid and then also the price. So you went with $20 a month or $220 a year. I’d love to hear. You know, is everyone’s so many people are like $5 a month and I’m like, no, no, no. Or more like, raise the price for newsletter. It’s not, it’s not cite there. but what went into choosing the price that you
So I originally kind of newsy high quality publications that were at 10. And I saw sinus ism was at 15 and Sinocism struck me as very close to what I’m trying to do, which is provide a lot of depth. and be something that you, you could read on your own, but you could also expense at work.
either one would make sense. So I basically just said, I’m going to let these people do their, do my research for me. And since cynicism was near the top of the, the meter board, I just went with that. And then, I decided just to see what would happen if I raised the price of it. So raise the price from 15 to 20, I made a big production about it.
So I told people two weeks in advance and then when we can advance them the day of, I was like, you need to subscribe by 11:59 PM Eastern time, or it will permanently be. And then, you know, told them. How much they’re saving, if they subscribe now, sub-sect does grandfather people in, which is a huge relief to me because I remembered hearing that somewhere and I wrote it in the newsletter.
I was like, if you’re a subscriber, don’t worry, your grandfather did. And you have nothing, nothing you’d have to do. And then I tried to find where on the substantive website, it actually said that, and I couldn’t find it. And I was like, I’m going to be Venmo showing hundreds of people $5 a month every month until everyone turns out.
And then I found it in that help page somewhere. So that was a huge relief. Anyway, I did that. I sent the, my one actual sales letter to just the free subscribers and it was fun to write. I used to be a copywriter a long, long time ago, and I always liked these bombastic sales letters. And, I occasionally like reading them, like, I like reading Ramit and his sales letters on money and personal finance and career and stuff.
And I know I’m being sold to, but it’s actually enjoyable and he’s really good at it. So I learned a lot from that. I did the sales letter, many thousands of people opened it and plenty of them converted exactly. One person unsubscribed and said, I didn’t like this. It was really salesy, but he wasn’t even mean about it.
He was just like, this isn’t really what I wanted. And I was like, that’s fine. So, that works out there’s there are these, Metta maltheisms. So. Malthus talked about how, when the population grows, you end up with too many people for your food supply. So it always stabilizes at near starvation. And there are a lot of other phenomenon life like that, where if you’re not experiencing problems, you could be going further.
So, the, the Peter teal quote is if you’ve never missed a flight that took your life in airports. And I think with newsletters, it’s, if you’ve never gotten a nasty email or even a slightly peeved email from someone saying you’re really selling this too hard, You’ve never gotten that you are not selling nearly hard enough.
And I also think there’s, there’s this, near-moral obligation to sell your stuff. Well, if you think it’s good. And I think that part of why people are reluctant to sell is imposter syndrome or maybe some form of cowardice. It certainly is a reason that I’m sometimes reluctant to sell or has happened in the past.
And, I it’s, it’s a way to signal that you actually believe in what you’re doing. If you’re willing to slightly embarrass yourself with a sales letter and with a sales pitch, and you were willing to pull all the little copywriter tricks, you know, the bullet points and the endorsements from, from celebrities or e-celebrities all of that stuff.
Here’s what you’re getting. Bam, bam, bam, bam, bam, all that stuff. I think there, there are people who can’t get away with it and there are people who can get away with it, but don’t try it.
I think that’s a really good point that, that, that you need to be pushing it to the point where at least some nber of people are complaining. If no one is complaining at all, then you’re, you’re not charging enough. You’re not, you know, something like, you’re not confident enough in your own value. Because, yeah, there’s always someone to complain on the internet.
It’s if you’ve managed to find this perfect community, then, then yet you’re selling yourself short. now I want to get into your writing process because five newsletters a week, and you’re officially promising three, which is good. Right. We’re under promising and over-delivering, I think there’s something.
You know, you could, take from that, but like Tyler, Cowen has this thing that talks about like, what’s the Tyler Cowen production function. Like how does he, he’s one of just an incredibly prolific, creator, like what makes him tick? What, like, how does all the work that he does happen? That’s the question that I have, you know, just watching all of your stuff.
Like what, what is your process? And then, you know, starting from. What sparks the inspiration to all the way through to being able to publish, you know, a detailed well-researched article, every Workday.
I’ve always read a lot and I’ve gotten more systematic about it now that I have the defacto daily deadline. So I have lots of RSS feeds, probably a hundred. I don’t really keep track as a lot of them. It’s someone who publishes once a month, but it’s always good. And then for some of them, it’s, this site publishes 50 or a hundred articles a day.
Most of them, you read halfway through the headline and it’s garbage, but occasionally you’ll see something interesting. In terms of what I read of, I try to read one major business publications business section from each of the 10 largest GDPs, the countries with the 10 largest GDPs. I think there’s one or two that I’m missing, but I just try to get this cross section of business stories that are going to be local to one place today, and then they’ll get big tomorrow or next week.
a lot of blogs, I read, the major tech blogs, and then there’s this long tail of things like, Industry specific sites. So someone like a semiconductor digest or ad exchanger, finance sites like pension investment online, a lot of these more niche ones where I’m done, probably not reading every single thing that they post, but, I’m looking at the headlines and I’ll often find something worth diving into, when I come up with article topics, the structure of the newsletter by the way is, It’s one long form piece, only around a thousand words, but it varies a bit.
And then, maybe half a dozen short links with commentary. So. A lot of the things that I read, they end up going into that is short links with commentary thing. And that’s what I definitely not trying to do is be one of the morning news dp emails, like the deal email. Cause those are, those are really valuable for knowing everything that’s going on.
And I try to write for someone who either a. Already gets deal books. So they don’t need one more of those emails and there are dozens and dozens of them, or be someone who actually doesn’t care what’s going on. They care about what’s. What’s interesting. So it’s either, and this is why it’s called the diff it’s from the, the, the Unix function.
So I’m, I’m dipping against, like I’m trying to diff out the, the, the interesting stuff and the inflections from just the general flow of news. So I try to, I try to extract that stuff and, be your value added for people who are already immersed in this stuff all the time, which is like a lot of the finance people who read it or to be what interesting thing happened today to someone who’s not reading the daily news, for the longer form pieces, there, there are a lot of ideas that sort of vaguely linger in my head for a while.
And then. I eventually write something about them or there’ll be a pattern where I noticed that I’ve, I’ve seen five different instances of this same kind of thing happening. And so I should write a full story about it. So, one example of that from fairly recently was I noticed that retailers and brick and mortar retailers keep launching some kind of ad business that is adjacent to their e-commerce business.
And I was wondering why that was, and I realized that. Amazon did it and did it really well because they have all this first party purchase data. So if you are selling anything, Amazon probably knows everyone, almost everyone in the country who has purchased something like that, or who’s statistically likely to purchase that.
So they should be really good at targeting ads. If you look at someone like, target or CVS or Walgreens or someone like that, they actually have a lot of this offline purchase data that’s tied to individuals and their e-commerce position is relatively weaker, which means that their ratio of. First party purchase data to e-commerce data or to e-commerce revenue is really high.
So it actually makes sense for them to monetize some of that through ads rather than through selling products directly. so that’s, that was one, one case where there was just this ongoing pattern. Another pretty frequent source of things to write about is companies that are just going public. That’s often the first time that you get this look into the unit economics of a company that people have known about for a long time.
And, there’s this tradition where. Company files their to go public and it gets posted to hacker news. And someone pulls out a line from the risk factors saying this company has never reported an accounting profit, and doesn’t expect to necessarily the future and is like, this is a disaster it’s worth zero.
And someone has to chime in and be like, well, if you look at their free cash flow, they’ve actually been making more money than they spent for a long time. They just have to appreciation or whatever. But basically having, having a cogent answer to the question of why is this not worthless when the company’s not reporting an accounting profit, or if it’s really profitable, why is this interesting?
So, that’s, that’s another source. And then sometimes there are just general trends that I might not have written about or general patterns I might not have written about where I think it’s worth a long treatment. And, that can be, that can be anything from just an economic phenomenon that I know of that, That isn’t talked about that often.
So one of my early pieces that I was really happy with was about, this economic law for determining the optimal amount of a resource of a finite resource to extract where the paper was. They went through a bunch of complicated math and the basic argent was your, all you’re doing is saying. Do I want money now or money in a year.
And, like, do I want to drill for oil now and have money now or drill oil in a year and a half the money then? And that, that depletion rate is determined by how much you expect the price to go up. So it ultimately comes back to interest rates, but. If you, if you actually try to operationalize that the interest rate that you should think about is not just what does a treasury bond yield it’s actually like, what, how much do you value money right now versus in the future?
And what that means is that in a lot of really unstable countries, it actually makes sense to drill way more or drill for way more oil than you otherwise would because. If you are, I don’t know the dictator of Venezuela, you don’t actually expect to be in power in 20 years. So even if you think oil is gonna go way up 20 years from now, you actually want to drill for it now and spend the money on tanks.
Venezuela is a special case because they also are not currently able to drill for oil at all. And, so there’s, there’s another way the model breaks down, but I thought it was an interesting model to explore because it’s. It’s useful directionally. And it’s actually a really elegant approach for thinking about the question of depleting a finite resource, and it’s always wrong.
It never actually describes reality, but the, the gap between the model and reality is actually instructive. And I think that’s, that’s one of my meta themes is that there are all these interesting theoretical models or interesting analogies that are imperfect, but the ways that they’re imperfect actually tell interesting about the world.
Yeah, that makes sense. So then, so you’re doing all of this research and finding those, those trends. what does it look like when you’re actually sitting down to write? Is that, are you dedicating, you know, an hour, three hours, five hours a day to writing what’s what’s
I don’t keep great I, I will spend a lot of my day reading, reading books, reading news articles, reading sec filings and academic papers and things. And then at some point I realized that I should actually start writing. And so I started writing, but I kinda zone out and I’m always surprised when I look at the clock, when I’m done writing the newsletter with how late it’s gotten.
So, it, it is a couple hours of writing, but. I think some of it is like trying to get in the zone and that’s just, struggle with distraction and then eventually to start writing. And that just happens pretty smoothly until I’m too tired to go on.
Yeah, it sounds like you’re, I mean, you’re doing the research and reading until the article becomes really clear what you want to write becomes clear. And then, then it’s the transition to getting into a focused mode to write that.
I used to, before I was writing all the time, I did have a backlog of ideas and I slowly worked through the backlog. And for a while, I was at the point where I never knew what I was going to write next. at this point I do sort of have a backlog, but it’s more like, So I would have this list of just here are things I want to write about.
And then periodically I’d write about one of them off the list. And what naturally happens is you write about the stuff that you can actually get done. And then you don’t read about the stuff that’s going to take you. So, the list just keeps getting more ambitious on average because it’s always like more and more research is required or you’ve got to somehow find this dataset and do the statistical model, or like, I had a conversation with a commenter who was asking, he was talking about how, There was this big trend towards business articles about, what American can learn from Japan in the seventies and especially eighties.
so it looks like Japan is nber one. Like what, what are they doing differently? Why are these companies just, just annihilating the U S auto industry? What can we learn from them? But there haven’t been a lot of books like that about China, even though a lot of the, a lot of Chinese companies are competing really effectively.
And, in, in cases like conser internet, they, they seem to be well ahead of the U S companies. And, so we were, what, what ended up coming up was the question of in the 1930s and forties, were people writing these like management secrets of Joseph Stalin pieces on like, how can we compete with Russia there?
They had, they were this agrarian nation, and now they’re making all this steel and mining all this coal. So, I, I Googled around, I actually couldn’t find anything good on that, but I realized that you could actually write something interesting about just. What was Soviet economic policy like, because the country did industrialize at that absolutely enormous han cost, but they did industrialize, it didn’t hit first world status, but, well, I guess they were second world by that, that taxonomy.
But anyway, they, they were a lot richer, afterwards, and then they went through this long stagnation and decline. So I think learning about what. What the Soviets did. And then what was wrong with it is, is something pretty fun. But the sources that I looked into are pretty extensive. So there’s going to be a lot of reading.
That’s gonna be one of the, the very low ROI posts where it’s like, I’m going to read three books and write a thousand words in smary, but I’ll probably learn a lot in Bali. Find some useful lessons that can apply somewhere else.
It’ll turn into more than one post over the next period of time. It may not be a series back to back, but over the course of a year or two, you’ll pull in trends from that kind of thing. so there’s a huge amount of work that goes into all of this, obviously in the end, the, the effort you think there’s, do you think it matters for say the economics of your business, right.
To be publishing five times a week versus say two.
I’m sure it matters. I think there’s, there’s definitely room to, to adjust the publishing frequency and there’s actually room to adjust the schedule. Like when one of the things I pay really close attention to is why people unsubscribe and there’s a field that there’s a form they can fill out so they can tell me.
And they often do. one of the common things people say is there’s too much for them to read. And especially that it’s too hard to work through the back catalog. If they haven’t been reading it for awhile. And I think that is, that is not really about too much content total. It’s about email being a really good form factor for sending high value content that someone’s gonna read that day.
But it’s, it’s really tough to work through an archive of email newsletters. That’s in your inbox, you might have to do some kind of special search, or you might just be scrolling through your inbox. So you’re getting this random assortment of here’s you know, an invite to a zoom meetup that I didn’t go to.
Here’s an Amazon receipt. here is an essay and then here’s another Amazon receipt and another essay. It’s just a weird change in context. So. one of the things I’ve been thinking very hard about is switching some of the things I write to a longer delivery cadence, I’m basically working on a book and then having the giving the subscribers access to that book and probably doing four posts a week instead of five and spending one day a week.
Working just on the book. probably a good trade. It’s going to be the same level of output, but, I think the final product is going to be something you can actually binge-conse easily. And I think writing, writing for, habitual snackers and writing for bingers is useful because different people have very different approaches to consing information.
I do too. Like I, I will have, have times where I’m going back and forth between a lot of different things and reading. Reading little bits of information here and there when I have time and then periods where I’m just going to sit somewhere for
with a book
Right. I think that’s really interesting. Kind of what you’re getting at is what’s the highest leverage, application of your writing. And so if you’re, if you’re looking to reach new people and this is probably why people like Tyler Cowen have done really well, right? There’s a lot of that is going into another book, you know, or Seth Godin, right.
We’re into the 22nd book or something, right. That he’s put out because he’s realized it’s the same writing that goes into the newsletter or the blog, or, you know, this idea is just flushed out in longer form, but it’s higher leverage and that it’s going to reach more people. And so, you know, if you keep a hundred percent of your writing for the newsletter, that’s going to have one amount of leverage, which is actually pretty significant leverage, which is why we’re all here talking about newsletters because they have great leverage and they’re amazing.
but if you peel some of that off and say, okay, but this is going into. A book that, you know, then you can reach so many more like CNBC is not going to necessarily have you on to talk about the newsletter. But if the book comes out, then they’re like happy to have you on, because that is a format of, you know, authors going on TV tours to promote their book is a well-known thing.
And so that would get you a level of exposure that the newsletter wouldn’t.
Yep. Yeah, that’s exactly right. That you, you can, you can package content in different sizes, but it’s, in some ways there is just a mental difference between what you’re doing when you write. An essay versus a tweet versus a book that with an essay, you can have this more unstructured approach where you’re, you’re watching stories go by and you’re just grabbing something that looks good and turning it into, a quick story or a not so quick story.
But then with the book you actually want to come up with, you have to find that idea that’s actually worth a books or the material. And then there’s a lot of research. So, I am working on a book with a friend and, there’s. It’s like, I’m working on one chapter and stack of books is about this high that we’re going to convert into a chapter in a book and it’s going to be great.
Cause there’s going to be a lot that I’m gonna learn. And it’s a, it’s a fun topic. The chapter has a fun time. So I’m, I’m excited about it, but that, that is a really different process because. And part of what you’re doing is, it’s like the newsletter process of there are these themes to talk about and you find different iterations on the theme.
So they’re always reading a story through a bunch of different lenses and trying to see if there’s, if there’s some broader trend that this story speaks to or contradicts, but with, with a book, you actually have to select a theme. In advance. And so you have to be, you have to display some definite optimism that there is actually enough material there.
And then once, once you’re committed, once you’re actually doing it, I think there are a lot of people who’ve written like 5% of a book. I think that’s like a Rite of passage. If you, if you write for a living or even write for fun, but I don’t know how many people have gotten through two thirds of a book and just given up, I think it’s more likely that you’d like write two-thirds of a book and then.
You know, something, some catastrophe happens and that’s why you don’t finish it, or whether it’s your, her drivers yourself. at some point it just has moment that you’re going to get it done.
Yeah. Yep. That totally makes sense. Well, as we start to wrap up, I’d love to hear some of the metrics that you track in your newsletter. Like what, what do you pay attention to? And maybe in the early days, what was the thing where you’re like the nber that you got to and you said, Oh, this is going to work.
This is a real thing, you know, I don’t know, a couple months. And what did success look like? And then now what do you track.
Yeah. What I started at $15 a month. I raised the price to $20 a month and there was this whole roll dr roll. So a lot of people signed up, so this huge increase in subscribers and then midnight came around and I just hung out next to my computer for awhile.
And then I got a confirmation that someone had paid $20 a month. And I was like, okay, people will do it. They won’t feel ripped off if they missed it, they think it’s worth it at 20. And I’m very happy with that. So. That was one that’s, that’s a data point, not, you know, not, not an actual metric, but, the main thing I look at is just the nber of paid opens for the newsletter, because that to me is the most forward looking metric because for someone to stop reading it or for someone to unsubscribe, they probably have to stop reading it first.
And so what I should care about is are people who are paying for this in the habit of reading it basically every day. And that’s, that’s a high bar. That’s a, that’s a nber that has gone up over time. Open rates. In my experience so far, they have tended to trend down very slowly over time, just because, among other things, the first couple of dozen people you will get are probably people who know you.
And in some cases like there are some newsletters where if I’ve read it on someone’s blog and then I get the newsletter and I realize it’s the same thing. I will still click on it because I don’t want their open rate to go down just because I’m too big a fan. It’s just, it feels like some combination of like this, the minim.
The minim effective dose of friendship and some level of professional courtesy. So, when, when you have. Thousands and thousands of people in the free list. obviously most of them are not your friends. a lot of them become friends, but, a lot of them, it’s just one more, one more newsletter they get.
so over time, those open rates do tend to trend down, but I do pay close attention to that. And especially, I just want to make sure that I don’t get in this trap of writing for a subset of the audience and having people who don’t open it for a while. So. I will periodically spot check subscribers, see if anyone has just stopped clicking for awhile.
And if I know that they, someone who works in FinTech, they signed up because I read about a firm, they stopped clicking for a while. I’ll look back and see, did I, did I just stopped writing about FinTech because it’s something I write about, but maybe not something that I write about in a given month. So I, in that case might go back and try to figure out what, what I should bp up in the priority queue.
All their stuff. I pay attention to. I, I pay pretty close attention to the churn rate as well. And, Stripe has really a really nice interface for looking at that. So I, I tried to calculate it manually and then realize Stripe has done it for me. Great.
What’s the, if you don’t mind sharing, what’s the churn rate, like a monthly turn on your newsletter.
Monthly churn right now Okay annual cohort is very different, but a lot of them find out almost a year ago. So we’ll see if they’re still happy with me.
But, yeah, and it’s like it’s higher in the first month. It’s lower.
After that, the older cohorts are totally misleading for the same friendship reason. Like my mom’s probably not going to unsubscribe from my newsletter. So I don’t, I don’t pay attention to my very oldest cohort, but the newer ones, it’s, it’s pretty consistent that like, the retention rate is like 92% after the first month.
And then, retention look better month about after that.
Yeah, I think that’s really good. So many content businesses from more of the internet marketing world, you know, when they do a paid membership or something like that, they’re going after recurring revenue because they see SAS companies do it. And then. You know, then they run into monthly turn rates of 10, 15% or more.
and so it’s, it’s really exciting to see as paid newsletters have taken off that obviously you have to deliver a lot of value consistently, but we are seeing those churn nbers, you know, tend to be like in the lower single digits rather than, you know, what the really salesy, you know, internet marketing community had before of the really high trend nbers.
Yeah, and it it’s, it’s definitely going to vary from newsletter to newsletter. Like I could imagine someone, if someone is writing a newsletter, that’s really topic Specific and they are, they’re just, they have a narrow beat and they’re going to relentlessly cover that. Then I would expect their churn rates to look really, good over time Cause a lot of the readers are reading this as part of their job. Whereas if you touch on a lot of different topics, you might actually expect to have a higher churn rate just because you might write something about one narrow thing that is good enough that someone is like, I have to read everything this person writes and then they find out that’s actually not what you write about most of the time.
And I try, I guess, T There is always this instinct. every time I get an unsubscribe, I’m like I could have saved this person from unsubscribing. Like I, if only they had called first, I could have explained what I’m doing and why it’s good for
I have another
post in the queue. That’s just about to come for them.
But then a lot of people subscribe for somewhat random reasons. sometimes people subscribe for a somewhat-random reason and then they just turn out to really like the content like there. Since I try to write about things that have these weird parallels. Like I use a lot of finance metaphors to talk about tech companies and use a lot of tech-company metaphors to talk about finance.
because of that in a lot of cases, it’s, it’s close enough to between the two fields that someone from tech might say that this is the only finance newsletter they read. And then someone in finance might say, this is the only tech newsletter. They read Substack categorizes it as a technology newsletter, but it’s.
It’s more of a generalist newsletter, although there is also a very good newsletter called The generalist.
Yep. So I’m going to have to have a Mario in the show cause he’s, he’s, fantastic. And he’s seen a lot of really good growth. I was just thinking about it cause I come at it from the technology space, you know, running a software company, but I enjoy reading it cause my, my brother’s a chartered financial analyst and you know, and so I’m always like, Oh, he would love this, you know, it’s that sort of thing of like, now I understand what he was talking about at, you know, don’t know, Thanksgiving last year or something like that.
well, I think, that is plenty for us to cover today. Thanks for, thanks for joining me. Where should people go to subscribe to the newsletter? I follow you on Twitter, all of that stuff.
Wonderful You can find me on Twitter, just search my name, @ByrneHobart, B-Y-R-N-E.
Well, thanks for joining me and I hope everyone subscribes and, yeah, we’ll talk soon.