How I Built and Sold a Newsletter for 5 Figures

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How I Built and Sold a Newsletter for 5 Figures

My journey growing a business in the midst of a pandemic

How I Built and Sold a Newsletter for 5 Figures

This week, cash from selling the business I started during the pandemic finally hit my bank account.

So, I figured it would be a good time to reflect on what I learned while starting and operating the business. It would also give me an opportunity to help others learn from (or avoid) these lessons in their own entrepreneurial endeavors.

In September 2020 I posted on Reddit’s /r/opensource subreddit looking for a weekly newsletter I could subscribe to in order to keep up-to-date on open-source software.

I wanted to find projects I could contribute to as an engineer. I got 9 upvotes and no responses. At the time, I was writing a weekly round-up of tech news, so I decided to pivot that newsletter to open-source; thus, Console was born.

I’d already sent out 17 tech-roundup emails before pivoting. There was a very noticeable inflection point in the subscriber graph when I pivoted; at that point, I knew I was on to something.

If you were an early subscriber to Console, you’d notice I’ve refined the email format since sending that first one. There are a few important changes. The first is that there are 10 projects in the email. Now, there are only 3. Another is that there are no images. A third is how small the interview is.

One of the core principles of the email was to keep it highly curated and information dense. Being a software engineer, I know how annoyed I get with walls of marketing text meant to pacify the SEO gods, and I assumed my readers would be too.

This is lesson number 1: build something for customers similar to you. I didn’t realize what an advantage this was until later on.

Marketers couldn’t build what I’d built because they were marketers and not developers, and marketers constituted most of my would-be competition.

Competition

Speaking of competition, a competitor arose a few months after starting the newsletter who copied the format and the name of the newsletter.

Of course, it annoyed me, but another lesson I learned is that if you do anything that reaches critical mass online, it will get copied.

There isn’t anything you can do about that, and I wasn’t going to hire lawyers to badger these copycats with cease and desist letters. Also, if you don’t have a moat, your business will be easy to copy. This is one of the reasons I never put money into the business (which my competitors did), and why I sold it. There is little moat in content curation.

Speaking of competition, a competitor arose a few months after starting the newsletter who copied the format and the name of the newsletter.

Of course, it annoyed me, but another lesson I learned is that if you do anything that reaches critical mass online, it will get copied.

There isn’t anything you can do about that, and I wasn’t going to hire lawyers to badger these copycats with cease and desist letters. Also, if you don’t have a moat, your business will be easy to copy. This is one of the reasons I never put money into the business (which my competitors did), and why I sold it. There is little moat in content curation.

When I started the newsletter, I operated under the Substack subscription business model. The plan was to grow the newsletter to ~5000 subscribers and start charging for premium content.

Substack claims that ~10% will convert depending on the content, subscriber base, and price. So, let’s say you charge $10 per month and 10% of your 5000 subscribers convert; that’s $5000 a month in recurring revenue to run a newsletter. 🤑🤑🤑

So, I grew the newsletter to 5000 free subscribers, flipped on premium subscriptions, and waited for the money to hit my bank account…

and people lost it.

They were vitriolic. I had a mutiny on my hands. Subscribers started dropping like flies. I started getting replies to my email announcing the subscription.

People were saying that I “was a moron”, “my content wasn’t worth 1 cent let alone $10 a month”, “how dare I”, etc. I waited. Surely, these were a vocal minority, and the real subscribers would start subscribing. So I waited… and kept waiting…, and the subscriber graph kept dropping, and the hatemail kept coming.

It became clear that this wasn’t going to work. I’d lost over 200 subscribers and didn’t receive a single premium subscriber. So, I back-tracked, sent an apology email (which also got a bunch of hatemail 😅), and decided I needed to find another way to make money.

Here’s another lesson: be flexible and don’t stop

I could have given up when my original plan didn’t work. But, while I didn’t make money, I knew I was providing something people were passionate about. Otherwise, they wouldn’t have replied so angrily to the initial email. It’s often the case in business that you don’t know how your customers want to pay for your service. You must embrace this uncertainty.

Monetization

With my tail between my legs, I returned to the drawing board.

How was I going to make money from this email list?

One day I was on Hacker News and came across an article about ad marketplaces serving newsletters and how this might undermine Substack’s subscription business model.

Given this subscription model had failed me, I figured I’d give these ad marketplaces a shot.

And they worked! These marketplaces send advertisers to publishers interested in advertising in newsletters, the publishers bid on these advertising dollars, and the ad platforms take a percentage of the dollars spent. Advertising is still the business model of Console today.

Growth

Hold on a second. How did I manage to grow a list of weekly open-source projects to 5000 subscribers? That seems like a minor detail I’ve left out.

I grew the newsletter by cross-posting open-source projects between various social media platforms. For example, if I found a new Rust project on Twitter that hadn’t been posted to /r/rust before, I’d post it to /r/rust and vice versa. If the post did well, I knew I should include it in an email, and I would drop a comment to the newsletter under the post. So, not only was social media curating the email, but it was also contributing to the early growth.

Another lesson I learned here: growth is a constant challenge. This strategy worked for quite a few months, but eventually, you exhaust those channels. This is where the interview idea came about. A developer is more likely to share the email with people if they’re highlighted in it. We’d use this affinity that the developer had for us to ask that they put a link to the interview in their Github repo, which started to drive more growth over time and increased the newsletter’s SEO.

There are countless growth hacks that I learned while running the newsletter. But, more than anything, this taught me how important these growth hacks are to a business.

These growth hacks are the real company secrets of indie hacker businesses, not the product or the idea.

But, you don’t know that the growth strategy is the secret sauce because no one wants to give those secrets out, so they talk about the product or the idea instead.

I spent time looking for various people to do various things for the newsletter so it could become a “4-hour workweek” business for me. I worked at Amazon at the beginning of the newsletter, and I’m now at Robinhood, so I didn’t have as much time to devote to the newsletter as I would have liked.

I was looking to bring on salespeople to land more advertisers for a commission as a side hustle. I “hired” 5 of these “salespeople,” and they either didn’t do anything or tried and failed to land any new advertisers.

Then, one day I tweeted about working on an Arbitrum strategy for yEarn, and it went viral when one of the core yEarn devs, banteg, re-tweeted it.

A bunch of people DM’d me about various stuff, but one of them was a computer science student in India named Sai.

After clicking through to the newsletter from my Twitter account, Sai sent me a “Console Improvement Proposal”. Sai had written down a bunch of stuff I’d either tried already or was planning to try. So, I asked him if he wanted to work on the newsletter with me. We agreed on an hourly rate, and he started learning how Console worked from the inside. For both of us, it was important that he learn and start his own newsletter, and the money was less important.

Although, of course, money doesn’t hurt. Sai managed to land more advertisements than the “salespeople,” and he was paid commissions on these. Not only did Sai manage to land advertisers, but he also started to curate the newsletter, reach out to his own interviewees, and eventually had an idea for his own newsletter, FOSS Weekly.

I put the newsletter up for sale sometime at the end of 2021. I wasn’t interested in selling at the time but wanted to see what I could get for it. Console ended up in a newsletter on one of the start-up marketplaces and I got inbound from interested parties as a consequence of this.

The act of selling a business was an interesting experience. It’s almost like one of those Sanky diagrams people post of their job hunt.

I had >30 people reach out to buy the business, 5 were serious, 2 sent deal paperwork, and I signed 1 of them. One of the offers that fell through led me to invest in the seed round of the business that was originally interested in acquiring Console.

That’s another interesting lesson from this adventure. Many doors open, and connections are made from operating a business you would never have made while being an employee.

Go to Publisher:

Entrepreneur's Handbook – Medium


Author: Jackson Kelley