060: Reid DeRamus – Marketing Tips From HBO Max’s Former VP of Growth

[00:00:00] Reid:
Learning how valuable it is to create online communities, and creating a connection between people who are part of that audience, but also between the brand and that audience.

All of that is intertwined in a really compelling way. I think that is the driving force behind the creative world.

That’s why I’m super excited about the rise of individuals or small teams of people working on building what are, effectively, media businesses.

[00:00:32] Nathan:
In this episode I talk to Reid DeRamus. He comes from the video streaming world of Hulu, HBO Max, and Crunchy Roll. Now he’s working in the creator space. It’s fascinating the way that he’s taking what he learned from these big streaming products that are going out to massive amounts of consumers, that are also a low dollar amount, $10 a month, $20, $50 a month.

He’s taken what he’s learned, and he’s going into the creator space and helping people with paid newsletters, with courses, and all of that. Really bringing these growth habits and growth techniques into their solo or small team creator businesses.

We spend this episode riffing on business models, the analytics that you should pay attention to as an individual creator, all kinds of things. Branding, positioning, local meetups. It’s a fun episode. I think you’re going to enjoy it.

Reid, welcome to the show.

[00:01:27] Reid:
Thanks for having me.

[00:01:28] Nathan:
Alright. I want to start in two places. First, I want to talk about what Yem is, what you’re working on right now, and how you’re serving newsletter creators. Then we’ll dive in and go back and pick up a little bit of your backstory of coming from the video world, and that business, and large marketing teams. That’ll help people understand even more of the value that you’re bringing to the newsletter creators that you’re working with.

Kicking things off, what are you working on right now?

[00:01:58] Reid:
Our company is called Yem. We provide email automation for newsletters, with tight focus right now on paid newsletters. That revolves around better user onboarding, free to paid upselling emails, and churn prevention emails.

Some of the problems we’re trying to solve is a lot of newsletters are blasting out offers to the entire email base, or not being able to automate some of the emails around payment failures or people who are set to cancel, and just giving them a gentle reminder that their renewal’s coming up. Certainly onboarding, because that first month with the subscriber is a very key period.

It’s really important to establish a relationship, and make sure they understand what they signed up for. That’s really what the core product revolves around today. Most of our customers are on Substack, with a few that are also on Ghost. It’s going pretty well.

It’s not something that’s going to double your subscriber count overnight, but it’s one of those things that’s a really great part of your overall growth strategy, and something that provides a reliable, consistent lift.

And, and especially for our pain newsletters lift in subscription revenue, we’re averaging about a 7% lift in MRR each month. and, yeah, that’s kind of where we’re at right now.

[00:03:26] Nathan:
Nice. Yeah, there will be a lot of fun things to dive into because a lot of creators, when they’re looking at their newsletters, they’re not paying attention to the data and analytics side. Like, you have a whole background, you know, coming from Hulu and then as a VP of growth at HBO max, then right in that whole world where you and I like when we were just talking about growing, you know, whole platforms, things like forecasts, LTV, customer acquisition costs, you know, all of that lifecycle market.

It’s just, it’s all part of the stack, but for most creators, it’s not. So we’ll dive into all of that, you know, for everyone listening in, it’ll be really a conversation about. Like the business of newsletters and those, those metrics and running it like a much bigger company, but let’s to give context for all of that, let’s go back and, I’d love to hear, you know, kind of where we go back to where you started your career or at somewhere in there wherever you want to pick it up either, you know, Hulu or somewhere earlier, how you got into the space.

[00:04:31] Reid:
Let’s start with Hulu because like I am very fond of that experience and those years, but like when I got there, I was barely qualified for like any job at all. And when I got there, streaming video is like pretty early.

[00:04:46] Nathan:
Talking 2012 timeframe, right?

[00:04:48] Reid:
Yeah. My experience with like using Netflix at that point was like in college, trying to stream something on a PlayStation three, and it was like an awful set of movies and the, the video player would like buffer nonstop.

So that’s the state of streaming video back then. And, so, when I got to Hulu barely qualified for any job and, we had just launched Hulu plus, which was our video subscription product at the time. which was also ad supported by the way. I mean, it was like the home run of, of business models.

You had ad revenue and subscription revenue and meaningful on both sides.

[00:05:23] Nathan:
Which was always so weird to me. Like I remember as a consumer bank confused of like paying for Hulu, plus I think as there was a particular show I wanted or

[00:05:33] Reid:
Yes.

[00:05:33] Nathan:
Then also there was still ads and I was like, Hey,

[00:05:37] Reid:
The reason Hulu really got off the ground was because it had next day broadcast television back when that was like the most coveted, I mean, look, nothing against broadcast television today, but like Netflix and Amazon, like all the streamers are now providing most of the high quality shows that people talk about.

But back then it was broadcast TV and, and, we had a relationship with ICOM and some other cable channels that this was like the place. If you didn’t want to buy the cable, bundle, pay TV, bundle. Hulu was a great product for you. And we could run ads on broadcast TV the next day, because it was the only place you could watch that if you didn’t have a DVR or a, these are probably such like old terms that people are not going to

[00:06:21] Nathan:
Well,

[00:06:21] Reid:
Know

[00:06:21] Nathan:
That like we’re, we’re talking nine, 10 years ago and like, yeah, Netflix was the same. Right. And then you think about it, like, no, it wasn’t

[00:06:31] Reid:
It was a DVD. It was mostly a DVD. Sorry.

[00:06:33] Nathan:
Yeah.

[00:06:34] Reid:
They were mailing people,

[00:06:36] Nathan:
Was that 20 14, 20 15? That they split that out? The DVD product?

[00:06:41] Reid:
Quickster was 2012. It was 13. Maybe. I remember it was while we were at Hulu

[00:06:49] Nathan:
Okay

[00:06:50] Reid:
You know, everybody within Hulu was drinking the Kool-Aid. We were like, we’re gonna disrupt pay TV. We’re going to like, you know, kill the cable bundle. And our owners, this is so naive. Or I even, I don’t know, I’m sorry, but our owners were a huge media companies,

[00:07:07] Nathan:
Yeah

[00:07:08] Reid:
Comcast Fox Disney.

And so, we were walking a really tight line between competing against their core products and trying to grow our, our core product, which was. Competing with Netflix. And, when they did that, it was wild. You know, I think they lost like a crazy amount of market value or a market cap when they made that announcement.

And they, they, I think learned a lot because they’ve increased prices multiple times since then. I think they just announced that they’re increasing

[00:07:43] Nathan:
To say going from Yeah. I was going to say, I remember going from $8 and then I paste it like 18 now. And I you’re going to be 20.

[00:07:52] Reid:
Yeah. Yeah. And nobody talks about it. It’s not like crushing their market. If anything, it usually kind of has a nice, you know, a creative effect to their, their share price. But, yeah, that was, it was wild to see that. So anyway,

[00:08:06] Nathan:
Handled Well, he hasn’t handled

[00:08:09] Reid:
Yeah, they hit me who the plastic is.

Nobody thinks that it’s actually going to work. Nobody thinks that people are going to buy video over the internet. And, at the time our marketing budget was like effectively zero we’d have like a super bowl ad that like blew up Alec Baldwin was in it. It was really funny And really well done. and so our marketing budget was zero.

Nobody thought it was going to work and there was no playbook for like how to invest in digital marketing, you know, Facebook and Google had like very primitive ad products at the time. And we were kind of making up stuff as we went in terms of like reporting back up to the board. These are like senior execs and big media companies.

And we’re saying, Hey, we’re gonna carve out this much marketing budget. We’re going to spend it on these channels. And this is what a good customer acquisition cost is. And this is what a good lifetime value is. I remember we had, like an enormous conversation around churn rate versus cohort based retention rates.

They kept like looking at our turn rate and comparing it to their pay TV bundle when they were like a super established traditional media business with super long-term commitments, like multiple year agreements. and their turn rate was soup. Their monthly term, super low. We were at the opposite end.

We were like massively high growth. our absolute volume was super low. and so, and no commitment you could cancel anytime. That was part of like the huge value prop that we have, that all the streaming companies were pushing early on. And so our term rate monthly turn rate was really high.

And so we had to learn ourselves like this is not the best metric to look at. We need to look at retention rates, like how, what percentage of people that are paying us, make it to the second billing cycle, third billing cycle, fourth billing cycle. That was the backbone of LTV. And that’s what we, you know, we ended up talking about like earn back periods and CLV to, CLV to CAC ratios. And, there was just nothing, on the internet about like what to do, like how to, how to like grow a subscription media business. So we had to learn and, incredible like, experience our budget went from like zero to a hundred million within like a couple years. And subscribers went from like a million, roughly a million when we got there to like 500.

By the time we left and ultimately what happened, this super fascinating story. I hope somebody like writes a book about it, but basically I think we had, we were growing really quickly. And again, you know, we’re walking that tightrope between, comp being competitive with the pay TV bundle and trying to like grow.

And ultimately I think the, you know, exact started coming in from Disney and Fox and bigger companies and our leadership team kind of cycled out and went to different places. And you had kind of like the, I had gotten there late for this like cohort of people at Hulu, but you have people who’ve been there for like five years since the start of the company who started cycling out.

And that’s when, I ended up going to crunchy roll. so during this period of like cycling out, the company was up for sale. And, Guggenheim made a bid. DirecTV made a bid and importantly at And, T and turn group made a bid. And, the turning group is like a media. It’s a well-known media investment firm now, but back then it had just kind of started and, through their due diligence, we kind of got to know the team there and that deal falls through.

And that’s when, like exact from the big media companies start coming in, we kept in touch with the attorney group a couple months, go by, they reach out and say, Hey, we, we acquired the fourth. We made a majority investment in the fourth biggest streaming service. And I was like, holy shit. Like that’s amazing.

It has to be like something that I’m familiar with and they couldn’t really tell us. They said it’s kinda niche. eventually they announced that they had made a majority investment in crunchy roll, which is a, intimate streaming platform. And at the time it was the fourth biggest behind

[00:12:16] Nathan:
But not

[00:12:16] Reid:
Hulu.

[00:12:18] Nathan:
But not like if you’re not in that world, it doesn’t have the same name recognition to any extent that the other.

[00:12:25] Reid:
It was, it was a really fascinating experience going from like a broad market product, like Hulu, very niche, passionate group, like so I get to crunch. so what ended up happening a group of us from Hulu ended up going in and working at Crunchyroll and kind of building out the growth function there and then included like business, like finance and, that, that kind of stuff, but also analytics, marketing, and distribution, and a little bit of product.

Cause there wasn’t any product team at the time the company was, you know, maybe 35 people and it was split between like, community and brand. So people who really cared about control and really were a huge anime. And then the other half were like engineers and those were also huge enemy offense. So we get there on the first day, we’re eating lunch, getting to know people and they’re like, Hey, what’s your favorite animated show?

And we were like, never really seen any anime. And that was like a, whoa, how’d you get a job here.

[00:13:27] Nathan:
Yeah

[00:13:27] Reid:
So huge learning curve. And we, we tried to apply everything that we did at Hulu to CrunchyRoll We quickly realized that, you can’t, you can’t do that. Like there’s things that are different about a small passionate niche community and a, big general like media company.

So that was a big theme of being at CrunchyRoll just learning like how, Valuable it is to like create these like online communities and it, and creating a connection between people who are part of that audience, but also between the brand and that audience.

And all of that’s intertwined in a really compelling way. I think that is like the driving force behind the creator world.

That’s why I’m super excited about like the rise of, of individually operated or small team, a small teams of people working on building what are effectively media businesses.

[00:14:24] Nathan:
Yeah, there’s a lot to dive into there.

Maybe before we dive into the creative side of it, what, what was the path from crunchy roll? You know, there was an acquisition there and then going into HBO, max.

[00:14:35] Reid:
So that was a bit of an internal move. ATNT went on like a pretty big media buying spree.

[00:14:45] Nathan:
Yup.

[00:14:45] Reid:
Bought direct TV and then they bought Warner media. Which was an enormous company, $90 billion deal, I think. and when they did that, they also, bought out Otter media, which was like the investment vehicle that they set up with the attorney group.

And, you know, they have Fullscreen in there and they also had, print your role, hello, sunshine, which is like a production company, and a few other like assets. So we ended up becoming part of at and T through that deal. And I was always like a huge fan of HBO. And so I was like really hoping to like, start working on anything HBO related after the deal went through.

[00:15:25] Nathan:
Yeah

[00:15:25] Reid:
Man, I mean, it’s like, so the way Warner media was run in the past was three distinct companies and enormous competence, Turner, Warner, brothers, and HBO, and they all do pretty different things and are really good at what they do. And, so the deal goes through. I ended up, getting the opportunity to go join, like an early team, basically like, a team that was created to work on and launch HBO, max.

And, I was lucky that Andy Forssell who is now like the GM of HBO, max got kind of picked to get this thing launched. And so we’d had a relationship with him through, you know, Otter media. And, so I went over there and just like, tried to tell him all the stuff that we have learned about our experience and help get HBO max into market.

And, we had learned a lot because we’d done something similar where we tried to use crunchy roll to launch a new product that was like a bundle of niche streaming services, including control, and Funimation both anime services, but also, you know, we had like a, a Nick, a Nickelodeon channel from back home in there.

So, and it was called verb. The RV, which is still alive today. but we were basically trying to, combine more, value, like bundle up streaming niche streaming services and using crunchy rolls and anchor to build a, a more compelling media product around that. and that’s effectively what HBO max is, you know, it’s like taking the best from Warner brothers the best from Turner and the best from HBO bringing it all together.

And so, but there’s a lot of nuances with doing that. And so that’s, I just tried to like help out from a growth and standpoint.

[00:17:11] Nathan:
What was one of the biggest lessons you learned in that process? Right. Cause HBO, max is a huge product and it was a very high profile launch

[00:17:18] Reid:
Yeah,

[00:17:19] Nathan:
All of that.

[00:17:20] Reid:
So the one thing going into it was like, I was unsure of what it would feel like being in a big company. Crunchyroll was like 35 people when I got there and got up to, you know, 500 or so by the time I left, But Warner

[00:17:35] Nathan:
Yeah

[00:17:36] Reid:
Was like tens of thousands of people.

[00:17:37] Nathan:
Yeah.

[00:17:39] Reid:
And the other thing is like the HBO max team was created, and this was during, this was right after COVID kind of started.

And so you had pretty obvious signs of like downward pressure on theatrical, businesses and cable was also getting hurt a little bit with at least initially with ad spin, kind of drying up a little bit because nobody knew what was going to happen. And so everybody was jockeying for like to kind of join the HBO team.

And it was just really, it was a great learning experience to see all of that kind of play out from within the company. but like, you know, beyond the personal aspect of it, it was kind of getting back to like that broad market, like your, like the marketing budgets are much bigger. The media assets are much hugely.

And generally, you know, trying to, you’re trying to that product is squarely trying to compete with Netflix. Like it’s trying to get as many subscribers across the globe as possible. And that just wasn’t, you know, we took a

Brief exit from that kind of world. So, it was kind of back to the grind of, you know, building a

[00:18:51] Nathan:
Right

[00:18:52] Reid:
Global subscription business.

[00:18:53] Nathan:
Right. Okay. And so then going from there, to, you know, effectively running growth and then building and growth products for creators is a, there’s a lot of overlap, but on the surface, it’s a very different, a very different world. What made you make the jump into like helping all these creators grow their paid newsletters?

[00:19:14] Reid:
So back in like 2016, I’d come across patrons. And I saw some of my favorite creators on there, as like the top earners. So like Tim urban wait, but why he had like a very profound impact on how I thought. And I just think I love his writing. And, he was up there, the green brothers, a bunch of like, creators on YouTube that I was a big fan of that are like edgy, creative.

So green brothers MinutePhysics minute earth. and, and some others. And it just struck me like, these individuals or small teams of creators probably have the same questions or opportunities that we’re trying to capture, with or solve within the streaming companies. And wouldn’t it be cool if you could build like a growth team for each individual creator or small team, knowing that they may not have the resources to like build out like a big growth engine that most of these consumer companies or media companies have, So like bringing the data-driven growth engine of like a Netflix or a Disney to a YouTube creator, or like the New York times to a newsletter publisher. And, so, 2020, was like a huge year for the creator world where, Patriot, teachable, only fans sub stack, I’m sure convert,

[00:20:34] Nathan:
Yeah.

[00:20:35] Reid:
Of these platforms are just exploding. And, I, for the. first time saw clear examples of creators hitting exit velocity And, needing bros support.

[00:20:43] Nathan:
Um

[00:20:44] Reid:
And, so I felt like, this was a good time to make a run at the idea. and the first step was it’s a super ambiguous idea, right? Like building let’s build a growth engine for creatives. and execution is always like way harder than, you know, any idea. So we reached out to Anthony Pompe Liano to be our first customer and, helped shape the. and, you know, the pitch was like, Hey, let us come in and run growth for you.

At the time he had like, kind of the usual suspects of of distribution with Twitter, YouTube podcasts, but also he had like newer creative products around, the cohort based class, job board, a rolling fund, and a paid newsletter. and, you know, eventually I remember my pitch was like, like, Hey man, let you know, let us come in and run growth.

Like we, we got some good learning. ALC I’ll spend money out of my pocket on like growth, like for advertising or whatever, to, to help. and he was like dude, that’s totally not necessary. So, so he ended up letting us like kind of run growth. we gravitated towards the pump letter as like kind of focus and cause it felt familiar to crunch, roll and Hulu, which are freemium subscription businesses.

And that’s basically what his newsletter was a paid newsletter. And we did like a bunch of different tests and experiments, and a bunch of analytics. You know, we built like a, a forecast model, a customer lifetime value model and came up with like a good customer acquisition goal. we started running ads on Facebook and like driving that towards that cackle.

And, we did cross promotion. We did like user personas, like user research to develop personas, figure out like who his audiences and how to really double down there, but also what are opportunities to expand beyond that. and, we also did like a bunch of email automation and that’s ultimately what set the pathway towards him.

[00:22:41] Nathan:
Yeah. So can you sit something really interesting before we hit record? you talked about like palms business in particular, you know, with this whole suite of products, which a lot of creators are in that position of, they have, maybe some sponsor revenue, maybe they have a book that’s bringing in, you know, some amount of money every time it sells. they might have a membership, they have a pay news, like just a whole range of things. So there’s some ads since revenue coming in and all of this. you said something interesting about the Disney model versus the Netflix model. can you explain what you mean by that? And then just what you’re seeing in the, like,

In creative business models?

[00:23:19] Reid:
So there’s, there’s been a few, creators that, we’ve talked to that? have like alluded to the Disney business model And they have that map

[00:23:28] Nathan:
Yes

[00:23:28] Reid:
One of

[00:23:29] Nathan:
Exactly. generalist

[00:23:30] Reid:
Has done it the best

[00:23:31] Nathan:
Mario from the generalist, like surprise that one downs.

[00:23:34] Reid:
He’s done it. It, his is like, extraordinarily detailed, David Prowse another one who’s kind of done it. there’s also people who like mentioned flywheels, like PAC has talked about that. And, all of that is like squarely Disney’s, like strong strength. They’ve like basically acquired these big media properties and they just run it through their IP, monetization, flywheel,

[00:23:56] Nathan:
He doesn’t understand that flywheel, like break it down a little bit, maybe with one of their recent acquisitions, recent being, I guess the last 20 years.

[00:24:04] Reid:
Yeah. So Marvel star wars and Pixar. Those are the three big ones. And, so you know, they’ll save star wars, which is like IP, Mecca, I don’t know.

[00:24:15] Nathan:
Yeah.

[00:24:16] Reid:
Yeah So, they, they do star wars. They incorporate that into their theme parks. They make a ton of merch around it. They do a ton of different shows and movies around it.

So, you know, more. And, these worlds have infinite story possibilities because it’s rooted in the characters. And so they really just like, you know, hammer that out and are able to monetize it because they’ve learned now to do that with Disney that’s, that’s

[00:24:44] Nathan:
Okay

[00:24:44] Reid:
Like back to like 1950s, when that image was made by a Walt Disney, he basically saw like how these like different revenue streams and consumer touchpoints all kind of fed on each other and were intertwined in a way that like created an incredibly valuable collection of products.

And they, they all help each other. And I think that’s really fascinating. Netflix on the other hand has been like adamantly anti ads. They, they are just now starting to monetize via like games and, merchandise, but it took them a while to do it. Like they made a lot of TV shows, originals, their own productions that they could’ve done it earlier.

But it took something like stranger things for them to really start leaning

[00:25:32] Nathan:
Right. Whereas, so Disney is all about having this bit of IP rights, starting with Mickey mouse and then, you know, but going through to everything else, it could be toy story. you know, buzz, buzz light year from toy story or whatever there’s IP that you can use in absolutely everything, right? It goes through the whole ecosystem, flywheel, whatever you want to talk about.

And it’s centered in stories that creates these great characters and they can use Netflix. You would also say is centered in stories, whether it’s stranger things or any of their other originals, but you’re right. That these, these characters don’t. Come out like the there’s the umbrella, you know, they’re trying to get you more content so that your Netflix subscription is worth more so that you keep paying for here.

You pay the new price for it, but they don’t do anything around merge, video games, theme, parks, all of that.

[00:26:25] Reid:
Before I think we recorded, we were talking about the price increase and, you know, it’s getting up to 20 bucks and at some point you hit the maximum threshold and you can’t raise subscription prices anymore. You have to introduce new revenue streams to keep growth going. And I think there’s still a lot, like, do you look at like the P the cost of pay TV and you look at like Netflix, Amazon, and these other, subscription products.

There’s still a room, I think, to increase price.

[00:26:53] Nathan:
This

[00:26:54] Reid:
But at some point you’re going to run out. You have to introduce new revenue streams. So there was, like an interesting saying from within like Netflix, where they said they were trying to become HBO before HBO could become them. meaning this was when they were like before they started making their own shows, because it was a tech company.

You know, Netflix at its heart probably still is a tech company like having been part of crunch, roll forever and having a small team. engineering and in product in trying to reach the threshold that Netflix, was, was reaching in terms of like video player and, payments, everything under the hood.

It was incredibly difficult. And I think they still are like way ahead of the curve from a technical standpoint. but they’re, they’re definitely a media company they’re making global hit shows. so I do think they are like, certainly moving in the direction of Disney and HBO and both of them are moving in the direction and Netflix, you know, they all have their own streaming services.

Now they used to like try to outsource the, technical development, but now all of that’s part of the accompany. So,

[00:28:01] Nathan:
So bringing this back to the, the business models that you see with different creators. if we’re saying like we’re taking Pompe and putting him solidly in that, that Disney business model where he’s got, you know, wide range of products and ecosystem, that’s feeding itself, who’s an example of a creator that comes to mind in the Netflix model where they’re maybe doing the all-in-one like a single price.

It’s easier to understand what you’re buying from them. Yeah. It comes to mind.

[00:28:30] Reid:
You know, it’s a good question. There’s definitely some of our customers that, only monetize via on their newsletter.

Um and so like, one of them is, does, investigative journalism.

[00:28:47] Nathan:
No

[00:28:47] Reid:
He’s definitely not doing advertising because I think that kind of undercuts his mission.

[00:28:53] Nathan:
Yes

[00:28:53] Reid:
He’s not really, I mean, he could probably watch like t-shirts and people would wear them, but it’s a little of a weird set up there. So, but I’m, it’s like more and more rare because I think it’s becoming easier to launch these new revenue streams. Now I do think like you gotta, you know, in, in the conversation with Mario, he mentioned like, everything you do has downside. If you launch a new revenue stream, it’s extra effort, You’ve got to do so consciously and with awareness.

[00:29:24] Nathan:
There was a conversation that I had with, Nathan Baschez and Dan shipper who run every, so newsletter. bundle And this is when they were super early on. It was just, I think there were two newsletters, divinations and super organizers. And maybe they were about to bring in a third one, but it was super early.

And they were talking about, you know, how we keep expanding by adding on more newsletters to the bundle. And then that grows the whole thing. and I think subscribers, they were like maybe one newsletter had 15,000, the other had 10,000 subscribers. And I remember talking to them and I kind of came up with an analogy of like, do you want to build a strip mall or a skyscraper?

One’s not better than the other necessarily. Right. We’re we’re in creating, seeing, I don’t know where you go with the analogy, we’re increasing square footage of real estate that we can rent out and all of but it’s, do you want to have all these different products or do you want to pour it all into a single thing and scale it up where all the effort goes into that?

And I think it’s just an important thing for creators to decide which one they want, because, you can exactly what you’re saying. You can either easily add revenue by adding in these other channels or, you can like that’s the upside and the downside is that you can distract yourself and you can avoid the total growth.

So yeah. What do you, what do you think on, on that model?

[00:30:45] Reid:
For every, I think it’s, what you’re saying is really interesting from a programming strategy standpoint, not only from a product or revenue stream standpoint, so for every, you know, they’ve been adding new writers

[00:30:59] Nathan:
Yes

[00:31:00] Reid:
It’s like, it’s interesting to think through, they could be the definitive home for like productivity.

[00:31:06] Nathan:
Yeah

[00:31:06] Reid:
So like what I think that, I think that stands newsletter super organizers, and you can just hire a bunch of people who write about productivity and it’s like, literally, don’t, it’s like the best service for that question. Or you could add writers that write about other things, but kind of fit the tone and vibe of the every brand.

And that is like more of an audio audience expansion tactic than it is like really going for like the a hundred percent market share of products. So I think as a creator, you probably want to think through like, am I going to try to be the definitive source on a very specific topic? Or am I going to try to like expand audience and keep it a little, I don’t want to say surface level, but, less there’s a trade off, you know, like you, you can’t, if you’re not focusing on one specific question, you’re not gonna be able to cover it in the depth that you could have,

[00:32:04] Nathan:
Yeah. Yeah. When I think it’s also realizing how high the ceiling is, you know, in some of these spaces, right? Like a lot of newcomers to the newsletter space, you would grow a newsletter to 5,010, even 25,000 subscribers. And it feels really big and it’s amazing, right? Because if you think of a room of, or like twenty-five thousand people, you know, that’s a small college stadium, you know, like and and so that’s insane, but then also you look at the big newsletters on the biggest ones out there.

So the James clears and Tim Ferriss and Gretchen Rubin’s of the world and all of those, those are all million subscriber plus newsletters, you know? And so you realize like, Do I want to expand the footprint or do I want to stay narrow? And like the, the ceiling is actually incredibly high.

Yeah

[00:32:52] Reid:
I’d like to ask you a question. So, you know, you know, Tim Ferris I’ve Reid a bunch of his books. If he were starting today, do you think he would still publish the books or do you think he would just distribute the content over newsletters and have it be more fluid and like bi-directional then maybe after releasing it via the newsletters?

At some point he releases like a Kindle

[00:33:17] Nathan:
Yeah. So I think it’s a super interesting thing and all you and I can do is speculate on it. You know, we need to get tempted to say for sure, but there’s something that happens when these, even these really large newsletters or podcasts. Right. But maybe not the absolute biggest of like the Joe Rogan’s, but you go people, you might listen to every episode.

I realize they’re still incredibly niche, you know, in the broader thing, I always make the joke, like there’s internet famous and then there’s actual famous, know, like if you go in the exact right circle, I can be internet famous, but no one’s going to ever recognize me. Like, I’ve had one time I was walking into, the Delta lounge at JFK and someone was like, Nathan Barry, you know, it turns out they were going to the same comments that I was like, we were about to be on the same flight, you know, like, and right.

That’s internet famous in a specific niche and Tim Ferris, James clear, and all these there’s still just, just right. Internet famous versus, I dunno, Arnold Schwartzenegger right. Being an actual famous. so going to the question about what Tim has done is I think. I don’t know, which is better to come first, but to get to the level of fame that I think Tim has, you need the book, you have to have something right.

Books start to bridge this gap from internet famous, to actual famous. when James was building James clear, was building his newsletter. He focused so much grow the newsletter, grow the writing right on that. But then it was when the book atomic habits came out, that that really catapulted him and the newsletter became this, backbone for it.

But like the book is what was in a new format that the broader world understands. And so, for example, like atomic habits last year was the most popular book on Amazon.

Like number one, all categories, most popular book sold on Amazon and a newsletter can’t have that reach, at least not yet. Right. It’s not giftable in the same way.

And so I think you need that thing, the newsletter, or sorry, the book, the TV show something, if you want to break through, into like popular culture. And so I think for our working to that did that for 10.

[00:35:38] Reid:
I’m just wondering, like if 10 years, 20 years in the future, like if things are more fluid and like, if somebody who’s in high school today, they’re growing up with the internet and in a very different way than probably you were IDed

[00:35:52] Nathan:
Yup

[00:35:52] Reid:
They even Reid books. And I know this is like a multi-sensory, you know, people are like, books are done, but, I don’t know.

Yeah, because we’ve worked with some people who are publishing a book or have alReidy published a book. And they’re trying to figure out the dynamic between the two. I think about this with music as well. I know, I know you have a bunch of musicians on convert kit. there’s some that I follow on sub stack now that we’re working with, but I’m just curious how.

Like using it, Jeff Tweedy and, perfume genius are two that I, that I follow. And they’re doing really interesting stuff with like releasing music to their paid subscribers or lyrics and like getting comments. They have open thReids where they communicate with their audience. It’s all like really fascinating.

And I think, I’m just curious how the relationship between, you know, old more, more legacy products and like some of these newer

[00:36:51] Nathan:
Two I have two thoughts on that one.

Legacy products come full circle, right? Cause we’re both, we’re on a show talking about newsletters and we spend all our time on newsletters individually. We’re are at some point again, we’ll be, I don’t know a legacy product. Right. You know, the amount of time that people spent saying email is dead, as email has just grown like crazy, you know, like I love that graph that someone has where it’s just like emails, growth over time.

And then all the like New York times, 2012, you know, blah, blah, blah, w wall street journal, all these saying like email is dead. Like all the headlines all the way along is it just keeps, keeps growing. So things come in and out of popularity. in like the precedence, what I think is interesting about what you’re saying about the artists is, what things they’re doing, like what is there to expand the fan base and what’s there to go deeper with the fan base.

Right? And so this is actually a problem that I’m curious for your take on cause paid newsletters. Often habit of Paid newsletters are all about monetizing and going deeper with the fanbase And they can be like, the paid newsletter by itself is often really bad for expanding the fan base because things are behind a paywall.

So creators have to be very, very intentional about that. So I think, you know, paid products for the most part are going to go deeper with the existing fan base. A lot of newsletters couldn’t do that because newsletters don’t have a discovery engine. whereas something like a book, a song, all of that can be a lot better for expanding the fan base.

Right. For example, if I’m trying today, I’m trying to go on, I don’t know, pick a TV show, good morning America, something like that. Right. I want to go on there. They’re going to be like tech founder has a newsletter and a podcast…Like no, but you know, if it’s like, oh, new book coming out, James clear, whoever.

They have a new book coming out. And there were like, I come out with a book, the future of the creator economy and all of this, it’s now in a format that they understand and they’re like, oh, we have authors on our show. We don’t have newsletter creators on, but at some point we will. Right. But the book puts it into a format that they expect and understand.

And so then they’re like, oh great. He slots into the predefined thing. So I think it’s about knowing something is for connecting deeper with the audience or expanding the audience. And then how can you package your material in a way that whatever your group you’re trying to break into, expects it in that format?

I don’t know. What do you think? I just, I just, speculated a whole,

[00:39:33] Reid:
First I would say like, pay-TV good morning. America probably has the same demo is like book people who Reid books a lot. So that would probably be a Good. fit, but I’m really fascinated, like 20, 30 years down the road. I mean, that’s

[00:39:46] Nathan:
Yeah. We talking about how different 10 years ago was with Hulu, you know, 30 years in the future.

[00:39:52] Reid:
So, I think you you hit on an interesting decision, super important decision around if you’re going to do a paid newsletter, where do you draw the line in the sand between what paying members get and free subscribers? get I think the number one thing I would say is, there’s no universal right answer, which is a total cop out.

So I’ll, I’ll describe more stuff, but, I would also say don’t push too much value behind the paywall early. We see people who, you know, launch a paywall when they have like, you know, a hundred subscribers on a hundred email list

Yes building a creator product or becoming a creator is very much like trying to start a company I think, or start a startup.

And in that early phase, don’t think about growth or monetization. You are value-hacking You know, you are trying to deliver value to a very specific audience and you have to get to a point where you’ve established that and you can’t like, really shouldn’t be thinking about, you know, referral programs or, what your price of your subscription will be, before then So I think that is one of the things we see very, very common.

Um and then in terms of like, let’s say you’re, further along, you have 5,000, 10,000 email lists, hundreds of paid subscribers. You’re, you’re really like testing, feeling out where to put the paywall, what to put behind what to put in front, how to spend your time really like that’s this is what sits behind that question.

And there, I think there is like no right answer. You have to go into it with an open mind and flexibility and kind of like test and like listen to your customers. and, and gradually, like draw the line. We see, like one of our, I think our customer with the most paying subscribers has no distinction between free and paid.

You get the same experience, how he frames the subscription is look at what your contribution is supporting. And it works incredibly well for him ‘

[00:42:03] Nathan:
Cause then nothing is hidden behind the, like, there’s not his best content. That’s restricted to paid users only. And so it’s not, like it’s still able to spReid, it can be shared widely on the web and all of that.

Yeah, really interesting.

[00:42:19] Reid:
He gets the best of both worlds right now. Cause like he’s getting massive audience growth because everything is out in the open, but he’s also monetizing it very well. I think his job is really hard and he has to have an impact for, to drive the subscription growth. Cause there’s no like hidden insights or, that kind of stuff.

So.

[00:42:39] Nathan:
Are we talking about Pompe in this case? There’s someone

[00:42:41] Reid:
No, no. So pump is, he, he does one free newsletter a week for behind the paywall. He writes a letter every day, which I think is remarkable. All right. And after that, he does a live two hour YouTube show Daily. It’s insane. I don’t, I haven’t seen anybody like kind of match that type of output.

[00:43:05] Nathan:
Right

[00:43:06] Reid:
But, he’s more towards the other end of the spectrum.

I think the best perfect example of somebody on like, towards the other end is Lenny, who is kind of like when you said the who’s running a Netflix style media business, he came up, but he also does like a cohort class. So you kind of got roll them out, but he pats an enormous amount of value in his paid subscription.

And, you know, he has like deals in there. He has a very vibrant slack community. I’m sure like most listeners are probably well aware of it, but like. that is a big trend that we’re seeing, you know, Mario just announced like the community, the stuff he’s doing with his community and we’re seeing more and more people shift, subscription value behind the community aspect of it.

And it’s really about like, for like helping connect people, like think about like a conference or, some of the value that comes out of like networking and stuff like that. but being able to do it within slack and discord and these other community, channels. and then of course, Lenny has a bunch of content behind the paywall.

He does one free newsletter a month, and I think he does two a week paid, with one of those being a summary of all the stuff that’s going on within slack, which is incredibly important because this community has grown to thousands. Several thousand members and the ability to like sign the nugget of insight or like the thing that really matters becomes incredibly hard.

So he’s just like packaged that as a, as a big

[00:44:40] Nathan:
I think he’s a really good example of the Netflix model, in this. And as you said, right, he has a cohort-based course. He has some other things, so it’s not like completely pure of a single product, but for the most part, the subscription is the, well, I don’t know, revenue driver like say it’s 80% of 90% of effort revenue, all of that.

And then he’s building flywheels within that. Right? So that the community is a big thing you’re getting, but it’s not a separate add on. It’s just, this is the price. And then also one of the emails is to drive people back to the community, because the hardest thing, when you launch community is keeping it engaged and active and going.

And so having that. You know, closing the loop and then also, you know, is Thursday email or whatever it is. Like he’s not having to come up with original content because the community.is driving that. So there’s a nice, a nice flywheel there. So I’ll say like I think Lennon works well as the Netflix model.

But then you can also add in, you know, a cohort based course, if you want to, as you

[00:45:46] Reid:
Yes. I was going to say like the cohort based course probably doesn’t exist without the newsletter,

[00:45:51] Nathan:
That’s

[00:45:52] Reid:
Not vice versa. the other thing that’s kind of interesting about many, and we’re seeing this with more of our customers, they’re kind of like shifting the learning and development budget from like, not-so-great products towards incredibly valuable, content or community.

And I think it’s a no brainer. Lynnie subscription is $15 a month. And I’m remember like all this stuff we were doing on you to me and like books, buying books, as part of like learning and development, that was probably hundreds of bucks per employee, and not great products. This is like a no brainer.

And I think that’s an enormous growth opportunity for creators, if they can figure out like how to encourage their customers to expense this through work. and that, that works also with, you know, one of the ideas that we talked about with Pompe was like, we should reach out to like Goldman Sachs and say, Hey, we’ll give you like a group subscription.

Because we know like you’re trying to get into crypto and figure out what was going on. This is, awhile ago I’m sure they’re, you know, caught up now, but, I think there’s a lot there with trying to figure out like how to make this like a easier purchase decision for your customers. And if you can, if you can bend it towards like professional value, then that’s a big budget unlock

[00:47:12] Nathan:
Yeah, I’m just thinking about the creators who do that. Well, there’s a line that I used to always say, I’m like, you want to teach a skill that makes money to people who have money, right? So if we’re teaching, well using Lenny as the example, using teaching product management, to people who are actively using that in their career, and they’re working in tech and they’re making a good salary, like we’re good, you know, it’s good to make some money to people who have money.

If you’re teaching knitting to teenagers, like not such a good market, you know, it’s going to be a little challenging to monetize and you get the in between, right? If you, if you’re teaching career skills to college students, right. Skill that makes lots of money like negotiation, all of that college students, probably not that eager to pay for it.

Not a lot, you know, you need to find the parents or the career or whatever. Um exactly.

And so like the skill that makes money, people have money is really good. And I like the twist that you have on it of, and get it so they can pay with the company credit cards. Are there things like any creators that you’ve seen make that shift where maybe they started teaching you a skill that they wanted to, and then they were able to package it better.

So it was more appealing to, you know, someone buying with a company card.

[00:48:28] Reid:
I haven’t seen you Reidy, like shift their programming strategy. I think a lot of people are shifting more value to

The community aspect as a, as a way of saying like, Hey, we’re going to help you connect with people who can help you do your job better. some other examples of people who I think are in this camp are just engaged with technically.

Writes about stuff that helps people with their jobs. Sarah from fem street, I think is another one. and I, you know, I could think of some more, you know, want to spend time on it. But, I, but now I haven’t really seen anybody say like, oh, you know what, I’m going to like kind of pivot towards a new

[00:49:07] Nathan:
Yeah, I wonder I’m going to keep my out, cause I’m wondering, who’s done that over time. another angle on this, I’m curious from all the creators that you followed in watching the space, what are some of your favorite monetization methods? Let’s say I have a 20,000 subscribers on a

Newsletter. They’re pretty engaged. how would you go about advising that creator on pay newsletter, job board course rolling fund, sponsors, you know, like it just goes on and on of what you could, what you could do, how would you encourage them to think about monetization?

[00:49:42] Reid:
Honestly, like sponsorships are the easiest place to start. If you’re committed to doing this over a long period of time, I would recommend paid subscriptions, but know that if you’re establishing an ongoing relationship, you know, and you shouldn’t take that lightly, it’s basically, basically you’re signing up to produce the the newsletter frequently in perpetuity.

Now we are seeing people who like take PTO and stuff. Like one of, one of our customers, did the continental divide trail, which is a six-month backpacking trip and basically paused subscriptions and flipped them right back on and it’s, you know, back to normal. But, I think in general, it’s a big commitment to launch paid subscriptions.

I would not really think about a community until you’re really Reidy to take that on. I think that’ll take a lot of time, Merch I would, unless you’re like Barstool. if you, if you have a polarizing media company, merch could be good, but otherwise I would kind of steer clear. I think events, if we can get back to in-person stuff are really special, you know, one thing that I absolutely loved about wait, but why is he did this Wait but Hi event, global event, which were local meetups.

So I think what he did, this is, this was a while back. So, I’m not sure if I’m going to remember correctly. He has some great blog posts on it. He like sent out a survey to his audience, which are spReid across the world, like virtually every country. And he said, like he had, he asked questions to get to know the audience better.

And then, he organized local meetups and I’m not sure if it was Tim it might’ve been somebody else because I think it was an enormous amount of work, organized local meetups across the world in mostly like urban areas That to me is really special. When you cross the chasm between virtual relationships to in-person relationships.

I think that’s, that’s kind of magical.

So I’d love, you know, get past COVID. I would love to see more of that happen and I’m sure that would present like a lot of of monetization opportunities

[00:51:54] Nathan:
I think we’re seeing that, you know, with podcasts, I think of, Sam Parr and Sean Perry with the, my first million podcasts, they’re like starting to do some meetups and more community tech stuff. And that that’s big. I know for convert gate, it was huge when we did, we did a whole campaign of meetups and I think we have had 25, 20, maybe over the course of a year.

Like community led, but like backed and promoted by us. and some are 10 people with somewhere 50 people, you know, a big range. And then we rolled that into starting an unconference and being able to say like, Hey, you met people in person now. There’s like the four people from Austin who are going to come into the conference and then, you know, 12 people who alReidy know each other and whatever other city, actually Tim urban is our, keynote.

For our conference, this next year. So crossed crossed that it all happens, but

[00:52:50] Reid:
Yeah. Hopefully

[00:52:51] Nathan:
Exactly Um yes, exactly. I, going back to the monetization question, I think it’s, it’s a good problem to have, because once you have the audience, there’s so many opportunities you could, you know, attention is what all the brands want, you know? And so once you have the audience, you have that, but it’s really important to find something that maps to the way you want to spend your time.

Right? Like I’ve seen a bunch of people start out, you know, a paid newsletter and then get six, 10 weeks into it and go, oh, I don’t want a job again. I don’t want. You know, I don’t want to like, have to send this out every Tuesday at 10:00 AM, because I’ve got 10,000 people or five, like who, who paid for it, but then there’s other people.

I think it burned Hobart. Who’s, who writes the diff as best as I can tell from interviewing him and just being a subscriber, like he’s just like deep research, multiple times a week. Easy done. No problem. You know? And so like making for him, it’s a great business model. Whereas for someone else it might not be,

[00:54:02] Reid:
Can be a hobby, you know, like it’s, if you’re, if you want to do a newsletter as a hobby, it should totally be free and you might not even want to really monetize it.

[00:54:10] Nathan:
Right.

[00:54:12] Reid:
But yeah, like if you’re doing a paid subscription, like the diff it’s

[00:54:18] Nathan:
You have a community question that just came to mind.

What do you think about, newsletters or brands under a personal name versus a broader. Brand, especially as it relates to community, right. Going to the Tim urban meetup is interesting, kind of weird going to the weight, but why are the weight behind meet up? Totally makes sense. What do you think? How would you advise a creator on, on that question?

[00:54:46] Reid:
I would, I think the brand almost always works better. so the first wave of, of like creators that I really liked Wait But why with Tim urban Stratechery Ben Thompson? Brain Pickings Maria Popova I believe.

[00:55:03] Nathan:
Yeah

[00:55:03] Reid:
They end, Farnam street.

[00:55:06] Nathan:
Shane parish.

[00:55:07] Reid:
Yes. they all had brands and it was usually, they were just running it themselves.

Well maybe they have one person helping out as well. like I know, Tim, works with Andrew. but like the content was mostly being created by one person and they, still published it through a brand name. I think that allows for, a little bit of like, long-term flexibility with what you can do with it. like if a Farnum, if like Ben Thompson wanted to bring on like start a podcast with somebody else, it, he doesn’t have to change the name. you know, it could be like the Stratechery podcast with this person And that person. so I think it gives you a little more optionality further out that said, I do think what’s special about the creator world is like the direct relationship between the audience and the person behind it.

[00:56:02] Nathan:
Um

[00:56:02] Reid:
And that’s like, one thing that we see is the health metrics Like those retention rates that we were talking about earlier, those are way better in the creator world than the streaming video world,

[00:56:14] Nathan:
Yes

[00:56:14] Reid:
Because people feel like they have a, like a they’re paying somebody directly. and that kind of relationship leads to like higher open rates, higher conversion from free to paid and, higher retention rates.

So the customer lifetime value for the creator businesses are way higher than some of the general media companies.

[00:56:39] Nathan:
Um

[00:56:40] Reid:
Difference is the scale. Like obviously you’re the absolute volume of subscribers you’re going to get is going to be much lower, but the per, subscriber economics are, much much much much higher

[00:56:52] Nathan:
Yeah, so I mean, some of the question is how do you get the brand loyalty, and the flexibility and all that from a brand with also the personal connection. And the initial easy, early, not easy, nothing in the creative world is easy. maybe simple, early growth from like building an audience as just you and especially cause one advantage of building audience under your name is as your interests change, it’s easier to bring your audience with you.

I’m thinking about that with these different creators. and we talked about Lenny a lot, you

[00:57:30] Reid:
Yeah,

[00:57:31] Nathan:
Newsletter.

[00:57:32] Reid:
The letter Lenny’s newsletter. I think Mario, the generalist and packing not boring are great counter examples of that. And it just like, you can do a little bit more like a not boring meetup is really compelling. The Pompe letter

[00:57:49] Nathan:
Right? Yeah

[00:57:51] Reid:
Know, it’s like

[00:57:51] Nathan:
Yeah. You have, I think it’s the individual, right? If Tim Ferriss wants to host a meet up, or pop wants to host a meet up, they’ve reached this level of. stardom fame that like, they will attack those people. Right. But if you and I want to host a meet up, we probably can. Right. But the Nathan and Reed meetup, like doesn’t have the same ring to it because we’re, it’s not the same level of fame.

So I think the brand allows you to have the meetup and all of that earlier, right? A generalist, the generalist meetup, or the not boring meetup. You can do that a lot earlier. Not say you can do it with the level, with a personal brand and you just have to have a bigger audience. And so I think people like Paki and Mario Shane Parrish are walking this line really well, having a brand and then their face and name is right behind it.

They’re not hiding in the background. Like when I think the general, I say always think Mario not boring. I think of Paki instantly. I’m not like, oh yeah, that’s an interesting media brand. You know? It’s like, no, I think of Paki ran away.

[00:59:01] Reid:
I think if you have a brand as well, I think it shifts it a little more towards the audience being able to interact with each other versus being more to interact with the creator and only the creative. Like I’m pumped at this thing in, New York where he did a pizza Bitcoin pizza giveaway thing. And I think a lot of people went to talk to pump, not to talk to each other.

If like Paki did a, like a web three meetup. I think a lot of people would go and definitely want to talk to Patty, but maybe a one

[00:59:33] Nathan:
Right Yep I

Right? Yep. I like that. Okay. Another question I’ve been thinking about, and then I realized it was probably start to wrap up since this is good. We’ve talked for a long time. as we talked about creative business models. An opportunity for confusion, especially as people go into a lot of like a big range of products you can easily have, you know, not just three or four products, but w we see creators who have 10, 12, 14 distinct products out there.

I wonder what you think about that. And then also, since you’ve worked at HBO, I was wondering about like HBO go versus HBO max. And I remember being a, like a consumer at that time and being really confused. And I’m sure it made sense internally, but I wonder if there’s any overlap between, like the confusion of the products that you’re selling, you know, in the streaming world, from also in the creative world.

[01:00:26] Reid:
So I can’t, I don’t know if there’s much overlap there. And HBO is a very unique situation where you had HBO go HBO. Now, HBO, HBO, through your pay TV bundle, go, you buy it from Comcast and you use go as like your DVR streaming platform now was their DTC launch initially. And then max was DTC and Warner brothers and Turner and all that stuff massively complicated.

Like if you’re trying to launch a brand, this is not the environment you want to do it in, you know? And so we fought through massive user confusion early on. HBO go’s been deprecated HBO now I think has turned into HBO max, like the app, so chipping away at it, but it was a huge problem early on. Okay. So, multiple business streams. You’re just going to create each new revenue stream for its overhead for you. Both time commitment. How do you like improve it? Maintain it over time. so it’s, you’re time is zero sum. You have to make a sacrifice at some point to say, like, if I’m going to launch a podcast, I’m not gonna be able to spend as much time on just the newsletter.

And so you just have to end, you’re not gonna, it’s rare to unlock a revenue stream. That’s bigger than your kind of core one at the moment. And the other thing to think about, like at, at Hulu and crunchy roll, there was a little bit of internal friction between teams that worked on the free product advertising base and the paid product.

‘cause like you, you can, all of the value you’re putting into the world, you have to decide where it sits. And so there’s a bit of a zero-sum nature between, you know, the paid product and the free product.

[01:02:14] Nathan:
Yeah

[01:02:14] Reid:
And that created like some weird internal dynamics. And so, you know, if you’re not, if you don’t have like a huge team of people working on these two separate products, it’s just going on in your head, you may end up having like tough choices to make around.

Like, what do I push to my free audience and my help, my advertisers first, what do I push to my paid subscribers and make sure that I retain them and continue to deliver enough value to like, know,

[01:02:43] Nathan:
Yeah, I think like almost drawing a Venn diagram of how, how does this product feed the other products? Like how does it make it better? How, how does it fit within my time? You know, like if I’m going to do pull a pump and say like, okay, I’m now going to do a two hour daily video feed, then it’s like, okay.

Where in the rest of my ecosystem is that content coming from? So when I sit down to turn on the camera, I alReidy know what I’m talking about because it’s fed from something else or it’s like, no, this is totally off on its own. I’m going to have to create all this new content. and that’s going to be totally a pain.

[01:03:19] Reid:
That’s a good way of thinking about it. Cause like, you know, palms doing the daily newsletter by forming that and putting that together, he’s probably getting ideas and stuff to talk about on the show. So I think if they are helping each other, there’s degrees of how zero-sum it is, I guess like if there’s overlap and preparation and like putting stuff together, for the two types of content, then that’s better than like

I’m doing this and this radically different thing

[01:03:46] Nathan:
Yeah, for sure. okay. The last thing I want to touch on briefly is metrics we’re coming in to help a creator’s business.

Let’s say they’re, they’re earning a full-time living off of it. You know, it’s at that

Point, I don’t know what it is. Maybe the 80,000 to $200,000 a year kind of range. What are the first metrics that you want to, either have them show you or you to like dig in and calculate for you to understand kind of the health of their business, what opportunities they have in front of them. And then how to think about growth.

[01:04:17] Reid:
If I were just like valuing the health of your business, I would look at, your total email list. Let’s start there, the growth rate of it. like our, how at what velocity are you bringing new people on? That’s really important. and then if you’re a paid newsletter, what’s your paid subscriber as a percent of, your total email.

We see some pretty wide ranges there. If you’re below, usually God, I mean, it’s so hard to make like universal statements here, if you’re, but if you’re below 5%, I think you might have some room to inch that up. We see it go all the way up to 20%, which I think is like really, really high,

[01:05:00] Nathan:
That’s crazy.

[01:05:01] Reid:
Crazy high. but so I wouldn’t, I think five to 10%, which is like a very common range that I think is quoted.

That’s a good range. We see a lot of people in that range. The other thing to think about though is, our clue, like if you have a really low cost subscription, you’re going to be able to like, get more subscribers, you know, like that’s usually that’s, the higher price point you have, the harder it is to, you know, get a ton of people as paid subscribers, relative to your total email list.

So those, those are kind of like the upfront things to look at. And then, like I think the most. Confused going back to what we were talking about earlier, the most confused thing about like evaluating the health of a business, like a media business as term, and over focusing on monthly churn rate, which is, just quickly cancels as a percentage of your like average, total subscriber paying subscriber base.

That’s gonna like fluctuate for a lot of different reasons that are not that meaningful to whether you are actually getting better at having paying subscribers stick around for a longer duration of years of their subscription. So look at it based on cohorts, like group them into the first month that somebody pays and then look at what share of that initial group pay you in month.

Two, pay you in month three, and it shouldn’t be like an exponential curve, not linear, you know, like the likelihood that somebody cancels in month 12 is extremely low. And the likelihood that somebody cancels in month one is actually pretty high. and so it should, it’s not linear, it’s exponential. so what we, what we see there, if you, if you have a bunch of, monthly subscribers, a good, like, I guess baseline is like 80% retained in the month to 70% retained into month three, 63% and

[01:06:59] Nathan:
That off Like taper that off so that, you know, like whatever that, that number in month 11 should be pretty similar to the number of months 12.

[01:07:09] Reid:
Exactly. Yeah.

[01:07:10] Nathan:
Yes

[01:07:11] Reid:
If you have annual subscriptions, we’re seeing about 60 to 70% renew into the second year, and we’re seeing a lot more people with annual subscription. It’s like, most of the streaming services are entirely and, you know, Spotify, I think is mostly if not all monthly. So this like shift in focus towards annual subscriptions is, is really interesting.

And, certainly great from a cashflow perspective for the Korean.

[01:07:35] Nathan:
Right

[01:07:36] Reid:
And it kind of locks people in to that first year and allows you to improve the product for an extended period of time before the renewal. So we see roughly 60 to 70%, renew into year two. The engagement metrics are super interesting as well.

And that is kind of platform dependent, you know, in terms of open rates, all the email metrics, like, you know, I look at with like a pretty decent amount of scrutiny because like there’s so much going on there. and they’re, you know, opening an email is not really that. Valuable. it’s not really a great sign of somebody actually engaging or, or Reiding the email.

But what we, what we do kind of track or like different engagement cohorts. So like what share of your email lists or not opening emails at all? What share are opening like, you know, 10%, what share 20 to 50? And then the most important thing that we look at is like your a hundred percent open rate club.

Who’s opening every single email you send, those are like your evangelists and advocates. and if you have a high share of people, opening a hundred percent of your emails,

[01:08:43] Nathan:
Yeah, yeah, that’s good. Identifying those people and then even finding special things to make them feel even more special, you know, giving them more content, giving them early access to something. all of that’s really good.

[01:08:56] Reid:
Yeah, just one last thing. I think ConvertKit does an amazing job of keeping the email list engaged. If somebody goes cold, don’t mind removing them, or at least push the option to unsubscribe. I remember I saw James clear on Twitter where he said his annual email growth went from a big number to a little bit bigger number, and then a huge year over year decline.

People were like, “What happened?” And he was like, “Oh, I removed a hundred thousand people from my email list that weren’t opening the emails.” I think people were like, “That’s a serious move.” I think that’s really smart.

Then I heard you mention a newsletter creator that was like, “I’m going to only have 10,000 people as part of my email list,” and you open it to remain a part of it. I think that’s a really great idea.

Don’t be scared to manage your email list and remove people if they’re not engaged.

[01:09:53] Nathan:
I think it’s such an important thing. It helps your deliverability. It means you’re only paying attention to your engaged fans. Open rate is getting more challenging as a metric because of Apple’s changes and all of that. There’s all these creators who are talking about their open rates going up, and I’m like, everyone’s open rate is going up.

We send a billion emails a month. It’s inching up about one percent per month. If you focus on your engaged subscribers, that metric, then it’s not painful to cut people out, because it’s like, look, they weren’t an engaged subscriber anyway.

So, where should people go to find out more about Yem, and read your writing on a creative business models, and monetization, and everything else?

[01:10:50] Reid:
Yeah. So, JoinYem.com is the site. Yem is Y E M. We have a newsletter. We’re trying to share insights and stuff, both from a company-building perspective, but also what we’re learning with some of the emails that we’re sending. That’s a good place to follow us.

I have a Twitter account. It’s @ReidTandy, T A N D Y. I’m not great at using Twitter, but I’m trying to figure it out. If you want to watch me try to embarrass myself, you can follow me there.

[01:11:23] Nathan:
Sounds good.

Thanks so much for coming on, and I’m excited to follow more of your stuff.

[01:11:30] Reid:
Thank you for having me. It’s been a blast.