In this extensive conversation between Brett and Tyler, the two delve into the world of newsletters and their platform, Beehive. They discuss the significance of newsletters as a versatile medium for content distribution and monetization, emphasizing the direct connection they provide to loyal audiences. Tyler sheds light on Beehive's customer-centric philosophy, showcasing their commitment to adaptability and willingness to develop tools tailored to users' needs. Throughout the conversation, they touch on recent successes, such as the popularity of customizable landing pages, hinting at an exciting launch of more website customization features. Overall, the dialogue offers valuable insights into the world of newsletters and Beehive's user-focused approach.
SaaS Growth Tactics Tyler Denk Used to Get to 500k MRR in 18 Months
Beehive's Financial Success: Beehive has been operating for around 19 to 20 months and is currently making about $500,000 in revenue for the month. Depending on market valuations and various factors, it's estimated to be a business worth between $50 million to $100 million.
Unique Approach and User-Centric Focus: Beehive is praised for its unique approach in the market, with no real competition. Tyler Denk credits their success to a strong user-centric focus, which was influenced by his experience at Morning Brew.
Tyler's Background: Tyler Denk worked at Morning Brew, a successful newsletter company, where he was the second employee and played a key role in building the company from 50,000 subscribers to over three and a half million subscribers before its acquisition.
From Internal Tools to Entrepreneurship: Tyler initially built internal tools similar to Beehive for Morning Brew and later saw the opportunity to turn it into a separate business entity.
Entrepreneurship Ambitions: Tyler always had a passion for startups and technology, and it was his dream to start his own company.
Taking Risks and Learning by Doing: Tyler emphasized that he often took on projects and challenges he had no prior knowledge of but was determined to figure them out. He believes that putting oneself in challenging situations and not giving up is key to personal and professional growth.
Transition to Google: Tyler briefly worked at Google, where he gained valuable experience in structured product development processes and documentation, which he later applied to Beehive.
Google's Product Development Process: Tyler described Google's product development process, which includes extensive documentation, product requirement documents (PRDs), technical scoping documents, and multiple levels of sign-offs before building a feature or product.
Applying Google's Process to Beehive: Tyler acknowledged the value of learning from the best and brought elements of Google's process to Beehive, adapting it to their needs and scale.
Balancing Efficiency and Quality: Tyler mentioned the challenge of balancing efficiency and product quality, acknowledging that sometimes a quick and functional solution is more important than striving for absolute optimization.
Diverse Knowledge and Creativity: Tyler's unconventional learning path allowed him to have a diverse knowledge base and the ability to be creative in problem-solving, adapting to different situations, and balancing the needs of users and engineers.
Beehiiv: Tyler expresses his enthusiasm for Beehiiv and its potential for podcasters. They discuss the value of Beehiiv in simplifying the process of creating and scaling newsletters and securing sponsors.
Challenges of Newsletter Business: Tyler highlights the challenges faced by newsletter creators, including the cumbersome process of using various tools and platforms to manage newsletters, blogs, and email lists.
Morning Brew's Approach: Tyler mentions his experience working at Morning Brew and the success they had in building a streamlined ecosystem for email newsletters. They integrated website content, newsletters, and premium subscriptions into one platform.
Beehiiv's Value Proposition: Brett and Tyler discuss Beehiiv's go-to-market strategy, emphasizing that Beehiiv can do everything existing solutions can do. It offers features like landing page building, email collection, newsletter creation, premium subscriptions, and a referral program.
Lifestyle Business vs. Venture-backed Startup: Tyler explains the difference between a lifestyle business and a venture-backed startup. A lifestyle business aims to maintain a steady income and quality of life, whereas a venture-backed startup seeks rapid growth, often at the expense of work-life balance.
Building Beehiiv: Tyler reveals that he and his team started building Beehiiv while he was still employed at Google. They worked on it during nights and weekends, with the MVP and prototype taking shape over time.
Seed Funding: Tyler shares that they raised $2.6 million in a seed round after about 10 months of development. He credits early adopters and his network for generating interest.
Unit Economics of Newsletters: Tyler explains that newsletters have excellent unit economics because the effort and cost required to send to 10 people or 10 million people are relatively similar.
Lifestyle Business Appeal: Tyler expresses admiration for lifestyle businesses where individuals or small teams can make a comfortable income without the constant pressure to scale and grow.
Monetizing Newsletters: Tyler discusses how newsletters offer a range of monetization options, making them an attractive endeavor for solo creators and hobbyists.
Newsletters offer an opportunity to make money, even if you're not aiming to earn thousands of dollars. For instance, if you're an expert in a particular field like sports and have a following, there are numerous advantages, such as networking and career opportunities.
Newsletters are an excellent tool for business owners to connect with their customers, build an email list, and increase sales. They can be highly profitable, as exemplified by the sale of the Sporting Brew newsletter for $75 million.
Starting a newsletter is accessible and can be done for free on platforms like Beehive. You can monetize your newsletter right away.
Many people underestimate the potential earnings from newsletters. Even with a relatively small subscriber base (e.g., 10,000 readers), you can generate substantial monthly income if your content is valuable and of high quality.
Content creators can repurpose their existing material, such as videos or interviews, into newsletter format with the help of AI tools or ghostwriters. This creates more touchpoints for engaging with the audience.
Building an email list is crucial because it provides a direct line to your audience. Unlike social media platforms, where algorithms can affect visibility, email lists give you control and access to your subscribers.
The importance of owning your audience's data and having data portability cannot be overstated. Email lists allow you to maintain contact with your audience even if you face issues on other platforms like YouTube or TikTok.
Email marketing is a valuable tool for creators, businesses, and individuals, providing a means to reach and engage with their audience effectively.
Beehive is a platform for creating newsletters, and its unique domain format, such as "beehive.ai/yournewsletter," helps users promote their newsletters.
Beehive started with a waitlist of 500 people and leveraged strategic investors with large followings to become early adopters. This helped them gain traction.
Beehive focused on quickly shipping product updates and features to address user needs and stand out in a competitive market.
Beehive's strategy included regularly posting product updates on various social platforms like Twitter, LinkedIn, and others, combining product education with marketing.
The company maintained a balance between listening to customer feedback and staying data-driven when making decisions about product features, even when facing complaints.
Building credibility through consistent delivery and the promise of addressing user needs helped Beehive grow its user base.
The co-founders of Beehive, Ben and Jake, were chosen for their technical expertise, with both being software engineers. Brett Malinowski complemented their skills with marketing and content expertise.
The co-founders initially worked on Beehive as a side project while employed elsewhere, de-risking the venture until they secured funding and could dedicate themselves fully to the company.
The key points of this conversation are:
Organic Growth: The initial growth of the company was largely organic, with no significant marketing spend in the first 12 months. The main drivers of growth were links, the website, and the newsletter.
Narrative Building: The company focused on building narratives to establish credibility and trust among users. This included leveraging the reputation of Morning Brew, the team behind the software, and emphasizing a commitment to continuous product improvement.
Product-Led Growth: A major part of the growth strategy was product-led growth. The company aimed to continuously ship features that improved user experiences, thereby retaining existing users and attracting new ones.
Milestone Sharing: Users organically started sharing their milestones on social media, particularly on Twitter, with a noticeable pink chart. This created a sense of community and showcased the success of users on the platform.
User Acquisitions: The conversation mentioned several examples of newsletters launched on the platform that were later acquired for significant sums of money, demonstrating the platform's value and the potential for success in the newsletter economy.
Expansion Strategy: There was a discussion about the potential for deploying similar strategies on other platforms like TikTok, YouTube, and Instagram, as well as exploring global markets to tap into a broader user base.
Multilingual Support: The company's support for various languages and regions was highlighted as a positive feature.
Referral Program: The referral program was effective in driving growth, with users benefiting from referrals and the company benefiting from increased sign-ups.
Content Creation: Content creation and sharing were crucial in building the narrative and community around the platform.
Global Market Potential: The conversation touched on the potential for growth beyond the American market, recognizing that there could be significant opportunities globally.
Overall, the conversation highlights the company's successful growth strategies, focusing on both product improvement and the power of community and narratives in driving organic growth and user engagement.
Referral Program: Beehive has a referral program that incentivizes users to share newsletters with others. Users receive referral credits when someone signs up through their unique link. These credits can be redeemed for rewards like coffee mugs, PDFs, or other digital products.
Cross Promotion Network: Inspired by the success of cross-promotions at Morning Brew, Beehive has implemented a recommendation network. Users can find newsletters that align with their content category, size, and audience overlap. They can then recommend these newsletters to their subscribers, and reciprocation can lead to significant growth for both parties.
Network Effects: The recommendation network fosters network effects when multiple newsletters collaborate within a "pod." These newsletters can go viral on social media platforms like LinkedIn or Twitter, gaining more subscribers and exposure for all the newsletters in the pod.
Trust and Credibility: Building trust with readers is crucial. People are more likely to subscribe to recommended newsletters if they have already followed the recommending user on platforms like Twitter or LinkedIn, as they trust their content recommendations.
Product Expertise: Beehive's approach is tailored specifically to newsletters, leveraging the founders' experience from Morning Brew. This niche focus allows Beehive to understand the unique needs of newsletter creators and grow effectively in that space.
Trial and Error: The success of Beehive's growth strategies is attributed to the founders' trial and error experiences at Morning Brew. They learned what worked best in terms of cross-promotion and referral programs and are now implementing these strategies in their own product.
Cross-Promotion Concerns: The discussion begins with concerns about newsletter saturation due to cross-promotion. If readers subscribe to multiple newsletters within the same niche, they might become overwhelmed and eventually drop some of them. The worry is that cross-promotion might inadvertently send subscribers to competitors.
Counterargument: Tyler Denk counters this concern by emphasizing the importance of strategic cross-promotion. Cross-promotion works best when newsletters have a similar audience but not necessarily the same content. It's about targeting unique readers who might be interested in related but distinct topics.
Audience Diversity: There's recognition that while there might be saturation within a niche, the internet is vast, and there are numerous unique content categories and audience segments. This diversity offsets concerns about diminishing the value of newsletters due to saturation.
Newsletter Revenue Models: The conversation touches on various revenue models for newsletters, including:
Paid Subscriptions: Substack-style paid subscriptions are discussed, where readers pay a monthly fee for premium content. The viability of this model depends on the quality and uniqueness of the content.
Advertising: The potential for advertising in newsletters is highlighted as an attractive revenue source. It's noted that many solo creators find dealing with sponsors to be challenging and time-consuming, but advertising platforms like Beehive aim to simplify the process.
Beehive's Role: Beehive is seen as a platform that could streamline newsletter advertising, making it more accessible for creators and helping them monetize their newsletters without the complexities of finding and managing sponsors.
The Future of Newsletter Monetization: The conversation concludes with the idea that the newsletter landscape is evolving, and creators are experimenting with different revenue models. While paid subscriptions and sponsorships have been common, there's an increasing focus on advertising as a sustainable revenue source.
Newsletter Saturation and Cross-Promotion: The conversation starts with the idea that cross-promotion between newsletters has been an effective strategy. However, there's concern about saturating readers' inboxes with too many newsletters, potentially leading to churn if subscribers feel overwhelmed.
Value of Cross-Promotion: They discuss the value of cross-promotion, highlighting that it depends on the specific newsletters involved. Cross-promotion should ideally target different audiences rather than direct competitors.
Easy Growth and Lowering Newsletter Value: They touch upon the idea that it's become easier to grow newsletters quickly with tools like Beehive, but there's a concern that this might lower the average value of newsletters as retention rates could be lower.
Newsletter Valuation: Brett asks about the criteria for valuing newsletters, particularly Morning Brew's $75 million valuation. Tyler explains that valuation depends on factors like revenue, growth trajectory, and the strategic fit for the acquirer.
Monetization Strategies: They discuss various monetization strategies for newsletters, including advertising, paid communities, and premium content subscriptions. The conversation emphasizes that newsletters can evolve beyond just delivering content.
Challenges in Selling Newsletter Ads: Tyler talks about the challenges advertisers face when trying to advertise in newsletters, such as finding the right newsletters, trusting their data, and the risk of saturation.
Beehive's Innovative Solution: Tyler introduces Beehive's solution, which aims to create an ad network for newsletters. This network would provide a platform for advertisers to easily target engaged audiences across various newsletters, solving pain points for both advertisers and newsletter creators.
Data Collection and Targeting: They discuss the importance of collecting data about newsletter subscribers and how Beehive's platform can help advertisers target specific demographics and interests.
Newsletter Ad Agencies: Tyler mentions the potential for new agencies to emerge, focusing on running ads for newsletters on Beehive's network, creating a new avenue for entrepreneurs to explore.
Phased Approach: They discuss Beehive's phased approach to building the platform, starting with core functionality, a referral program, and gradually expanding to include advanced features like automated ad opportunities.
Building a New Business Ecosystem: The conversation highlights how Beehive has led to the development of businesses and agencies that leverage Beehive's ecosystem to offer services to newsletter creators.
Overwhelming Feature Set: They acknowledge that Beehive's rapid development of features can be overwhelming for new users, and there's a plan to create a comprehensive resource for users to navigate the platform effectively.
Newsletter Growth Agency Opportunity: The conversation begins with the idea that there's a significant opportunity for businesses specializing in newsletter growth. They discuss the various components involved in newsletter growth, including setting up accounts, customizing newsletter templates, website design, and overall growth strategy.
Partnership with Gary: Tyler mentions a partnership with someone named Gary who specializes in growth and ads, particularly for content creators like BiketheMilkRoad. This partnership highlights the potential for collaboration in the newsletter industry.
Specialization in Verticals: They discuss the agency opportunity to specialize in various verticals within newsletter growth. This specialization can include customizing newsletters and websites, driving growth, and designing effective strategies tailored to specific niches.
Working with YouTubers: Brett and Tyler emphasize the potential for newsletter agencies to work with YouTubers. Agencies can offer to set up newsletters, predict audience growth, and help YouTubers monetize their newsletters through sponsorships and advertising.
Ghostwriting Services: Ghostwriting services are seen as a valuable resource for content creators who excel in video but lack writing skills. Agencies can provide ghostwriting services to create compelling newsletter content and help YouTubers diversify their income streams.
Cross-Pollination of Audiences: The conversation highlights the value of cross-pollination between YouTube channels and newsletters. By promoting their YouTube channels within newsletters and vice versa, creators can expand their audience and potentially monetize their content more effectively.
Newsletter Ecosystem Growth: Tyler emphasizes that as newsletters grow and become more successful, they may attract readers who aren't part of the creator's original YouTube ecosystem. This creates opportunities for broader reach and monetization.
Elevating Newsletter Monetization: They discuss how the combination of newsletters and YouTube channels can lead to substantial revenue growth for content creators. Agencies can help optimize this process, making it a lucrative opportunity.
Excitement for Newsletter Agencies: The conversation concludes with enthusiasm for the newsletter agency concept. They highlight the untapped potential of this growing industry and its capacity to generate substantial income for both creators and agencies.
Remote Work: Beehiiv operates as a fully remote company, which allows them to hire talent from around the world. They have employees in various countries, including the Netherlands, India, Canada, Mexico, and Colombia, making it a globally distributed team.
Transparency and Communication: Transparent communication is a core aspect of Beehiiv's operation. The company's leadership ensures that everyone is on the same page regarding what's working well, what needs improvement, and the vision for the company's future. This transparency helps align the team's efforts.
Remote Work Tools: Beehiiv uses several tools to facilitate remote work. These include Slack for communication, Google Meet for meetings, Linear for project management (primarily for engineering-related tasks), and Asana for non-engineering projects.
Customer Support: Beehiiv uses Zendesk for customer support. This allows them to manage customer emails effectively, prioritize support tickets, and ensure a consistent customer support experience.
Tech Stack: Beehiiv's primary tech stack includes Ruby on Rails for web development, GitHub for code repositories, and Linear for engineering project management. Ruby on Rails is a coding language and framework that forms the basis of their website.
Customer Feedback: Beehiiv encourages customers to provide feedback through various channels, including Twitter, DMs, and email. They value user input as a source of customer discovery and sometimes adjust their roadmap based on user feedback.
Ownership Mentality: Beehiiv promotes an ownership mentality among its employees. Team members are expected to take initiative, own their tasks, and deliver results autonomously. This approach allows individuals to excel and contribute positively to the company's success.
Balance in Receptiveness to Feedback: While Beehiiv values feedback, they strike a balance by having a clear roadmap and set of priorities. They allocate some flexibility to incorporate valuable feedback that may arise but maintain focus on their core objectives.
Overall, Beehiiv's operations emphasize remote work, transparent communication, the use of various software tools, and an ownership mindset among team members to build and grow their platform successfully.