He Sends 2.5 BILLION Emails Per Month | Nathan Barry

0:00All right, Marketing School listeners, this is a 20 to 30 minute segment of a full interview I've done with an amazing founder, entrepreneur, creative, visionary, visionary, visionary, visionary, you're going to get a ton of marketing, you're going to 30 to 30 to 30 for 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 to 30 So Nathan, for those that don't know you, who are you and why should people listen to you? Yeah, so I am a software designer turned content creator turned software founder. So I got my start early on in web design, then brought that into designing iOS apps.

0:50So I got to design an app for the iPad the day the iPad was released, which was tons of fun. Pulled that into creating content. So I wrote an ebook about that, did really well. That got me into the creator space. And then eventually started ConvertKit, which is email marketing for creators. And so, yeah, today, I guess for some quick bragging numbers, we send two and a half billion emails every month. So I send more emails than all my friends combined. And then we're about 40 million in revenue, 43 right now, and have a team of 80. And so we run the email list for basically all the biggest creators, especially in the author and podcasting space.

1:31So whether that's James Clear or Huberman or Tim Ferriss or Susan Cain, Brian Holiday, all of them use ConvertKit. Yeah, my podcast co host uses your your uses ConvertKit as well. Yeah, yeah. He's been with us for a long time. I think probably since 2016, maybe he's got a good chunk of emails on your on your platform. Yeah. See, last year 2023, you guys did 41 or so. Oh, we're at a 40. Run rate, run rate, got it. And this year, what's the goal? uh the goal is to get to 65. got it wow okay i was looking at your um your annual review the goal on there was 53 so 65 why the revision uh i guess i think about it in two different ways 53 is the the actual like probably what we're setting internal targets on uh-huh um and then 65 is like there's a couple things that if they hit are going to like um 53 is the is the reasonable like, yeah, this is what you should set goals and targets around 65 is my internal milestone.

2:31Got it. Love it. Um, so a couple of things I'm going to jump around here. We're at a founder's retreat right now. You actually flew in and I think that's fascinating because that's one of the things it seems like you're excited about right now. Um, so tell us a story about how, like really I'm interested from an entrepreneur standpoint, like what got you into it and what have you learned in life and business as it ties to flying? Yeah. About getting a pilot's license. Um, so I grew up in Idaho and there's a lot of back country flying and, uh, actually got an opportunity. There's a group called mission aviation fellowship that flies small planes all over the world.

3:05So like after the earthquake in Haiti, you know, uh, they're some of the first to get like logistics set up and all of that, because it turns out having planes and helicopters is really good for, for that. So their world headquarters is in Boise, uh, which is kind of fun because they train on all these back country airstrips. And so in usually in 2008, uh, I got to go with them, uh, some friends who are flight instructors there, um, like flying around Lesotho in South Africa, you know, and all these crazy back country strips where they like put it on the hillside so they can land uphill in a shorter distance and take off downhill in a shorter distance.

3:40um and so i was just i've always thought flying is super cool and so uh yeah this last year i pulled the trigger on like starting training and um don't quite have my license yet yeah i'm i've met all the requirements but there's a wait with the faa to to take the test so hopefully another couple weeks got it um what does it feel like when you're up in the the air like does it feel like really meditative like what are you what's going on there at first you know you're like running through, you know, systems and checklists, right? And so it's very, very process driven, which I think is interesting.

4:12As an entrepreneur, you can end up being either very creative, like, oh, I just work on whatever inspires me and you know, all of this, or you're like, here are the exact processes. And so I think flying has been interesting of like really refining the systems and processes and checklists so that then you can be like, oh, I want to go anywhere. So I think right when you first, you know, when I go taxi down the runway and take off and everything it's like 100 the exact same process every time the exact checklist there's usually a moment that hits as you like exit the airport traffic pattern and go flying where you're like wait a second i'm 3 000 feet in the air going 150 miles an hour yeah like in a plane by myself yeah like you feel a little naked guy almost maybe it's not the right word no i think it's just exhilarating you're like wait a second i can do this and you're like it was like uh i did the other day or i guess a month ago i needed to meet a certain number of solo cross-country flight hours and so i was like okay i did the flight that i planned i was like i need a little more time yeah i'm like i'm just gonna fly up this way and like follow this river yeah you know and uh like flying along the idaho oregon border and then you're like oh let me go over here and things would take hours to drive you like fly that distance in 20 minutes yeah you know and you're like oh let me go up and over these mountains so do you okay like you're flying for hours like where you pee uh so my plane is small my uh for anyone who knows planes i have a cirrus um and uh so you would you would need to land to go to the bathroom it's basically the size of a of a small car okay it's two seats up front and three seats in the back so you're like peeing before and then you're flying for like an hour or two three hours maybe yeah yeah the longest flight i've ever done is i did santa monica to boise um which took three and a half hours okay and that's like 650 700 miles okay is the goal for you to be able to just fly your family anywhere eventually is that yeah yeah yep and then uh it can also be pretty efficient for work yeah um but so part of it's just the love of it like i think it's really important to have a goal outside of work you know like oh we have our revenue goals and we're trying to you know i'm trying to bring this conversion rate from this to that and it's like okay but what are you doing outside of work right and so i always like having um you know a physical goal of some kind that i'm working on whether it's like learning to play volleyball better or something like that um or like a 5k time and then having something that's like much more intellectual as a pursuit and so uh i think flying will be that for it sounds like it brings you so you really refine your systems and your processes you're going through checklists right because you have to or so you're going to get in trouble right yeah and then there's a huge element of focus too.

6:49Oh yeah. I like things that you can't think about something else, right? If I'm playing a volleyball game, I'm not thinking at all about like the customer that we won or lost or whatever, you know, like you're totally in that. And flying is the same thing where you are a hundred percent focused on the activity that you're doing. Um, and I think that's really important to have those things. Last bit on this. So, so how much does it cost you? How many hours you have to put in to get your license? Probably the minimum with the FAA is you need at least 40 hours. Most people don't do it in that they like 60 to 80 is much more common.

7:26Um, I'd budget about 20 grand for some actual numbers with my plane. Uh, I spend about a hundred thousand dollars a year cause it's a million dollar plane. And, uh, so that includes the finance cost, the insurance like as a low time pilot the insurance is super expensive you know instructors fuel everything um is your goal that you eventually get like your own Gulfstream and fly it yourself not that level of plane that's a love like a jet requires another level of training um I think probably a bigger turboprop uh there's some that are like pressurized can fly to a higher altitude, fly faster.

8:03But I do love private aviation. But there's a point where if you get a bigger plane, just hire pilots. I have a couple of friends who have a Citation Mustang or something like that and maybe have their license, but they always fly with a professional pilot. At that point, you're spending millions a year. Yeah. And actually, the pilot ends up being a relatively inexpensive part of that compared to it. Um, the other thing is people think like, Oh, I'm going to go to these business meetings and then I'm going to go, you know, jump in the plane and fly home. And there's a lot of thought that goes into every cross country flight and then a lot of focus.

8:42And so I noticed this when flying back, we did the podcast tour and I had my instructor bring my plane down to LA and we flew out of Santa Monica and I was thinking about that like I was in a meeting you know right up until I went to the airport as normal like I packed these things totally full and I was thinking about like oh if I didn't have another pilot with me like I would need to really stop fully transitioned into flying and then think about like planning the flight and you're looking at the weather where you never encounter icing any of those things and so like because it's an entirely different mindset context switching is yeah yeah and it just requires like real thought to do that so I think that probably what I'll keep doing is even as I have my license and use you know this plan I have now or another plane for work is use a professional pilot as well because that added safety and then and then also you could do something where you could like roll up to the airport and they could have the plane ready to go yeah and you can get more of that efficiency so are you paying that pilot like a day rate or something How does that work?

9:47Yeah. So basically, um, the generally the day rate for a serious is about 800 bucks a day. Okay. That's not bad. Yeah. Yeah. Yeah. For your sanity and your safety, it's worth it. Yeah. And then they can also teach and instruct, right? There's always so much more to learn. And so there's everything that I know how to do. Like I will do that, that get us all going. Here's my flight plan. Yeah. And they'll say like, that's awesome. Hey, I would tweak this one thing. You'd be totally safe with what you're doing. Yeah. But here's another level. Yeah. Or like the next thing is getting your instrument rating.

10:15And so, you know, as I can't do instrument approaches now because I don't have that rating. Yeah. But they can and they can start teaching me towards that next thing. So it combines like the travel of getting somewhere with, you know, learning the next skill. Got it. And how long do you think, how many lessons do you think it took you to pick it up? Like I think for tennis for me, it took like 20 to like start to like get the rhythm. That's a good question. I flew a lot last year. I mean, I also switched from a basic training plane to a high-performance plane. That took a long time. I mean, I flew 100 hours last year.

10:50So, you know, that's 50 to 60 flights. And you got comfortable way before then. But, yeah, it takes quite a bit. It's also interesting. There's some things I feel like I'm a total natural at, and that was not necessarily one of them. where I was like, okay. Like to figure out how to land the plane super smoothly every time. Put this machine into the air. By the way, let me ask you this. So do you think the flight simulations that you did were equal to real life? Do they feel the same or not really? What do you mean on simulation? So I just like, I remember playing video games growing up. There's the ones where you'd sit in a plane and fly around and it moves around, right?

11:28Did you sit in a flight simulator thing? I didn't for this training. Okay. You know, other than like playing similar games as a kid. Yeah. There's lots of times, you know, there's lots of simulators that are available that are like full motion. Yeah. And it can be a lot cheaper to train in that. You can also like recreate the same scenario a bunch of times and without the delay. So I think that's good. But there's nothing that changes like getting in a, you know, a high performance plane. And, you know, when you add the throttle, like you need to control the rudders, even to keep it on the runway.

12:01like you think oh it wants to go straight by default no it doesn't actually doing it once you know like yeah you have to add a huge amount of right rudder to just keep it going straight down the runway and so i i think that's a lot different than a basic simulator yeah makes sense again you gotta you gotta actually do it um this actually ties in what you brought up the podcast tours that you were going on so can you talk can you talk about the the podcast that you're doing right now and then why you decided to embark on this journey yeah so uh back in In, I guess 2020, I wrote an essay called The Billion Dollar Creator.

12:31And the point of the essay is that most people, well, first, an audience is the most, like, one of the most powerful things in the world. You know, the amount of leverage that you get from having an audience is just insane. And so we get to people who are like, oh, I'm a content creator, and I make a quarter million dollars a year. And now you and I would be like, yep, that makes sense. You know, maybe 10 years ago, we'd be like, that's possible, or 15 years ago. but now we're like naturally why why not we we each know more than a hundred people personally who fit that criteria but now there's this next level of people building an audience and saying like wait a second if i have all this attention what's the highest roi place i could point that and so an example would be uh mark sisson he's a a blogger he had a paleo recipe and like lifestyle blog called Mark's Daily Apple.

13:24So in like 2013 to 2015, you know, he's growing this blog, gets to 100 ,000 email subscribers, which that was a very big list back then. And he's making one to$2 million a year combination of advertising, you know, sponsorships, his own products, affiliate revenue, like pretty traditional playbook. And what happened is, you know, people were saying like hey i love this recipe for the like the paleo diet friendly salad dressing but like can i just buy it from you you know and so he ends up taking this this audience that he has and goes out and he starts with an avocado oil mayonnaise and then expands to other things and he starts a company called primal kitchen and you know if you think about like we do internet businesses we often don't have to outlay a lot of cash there's no like exploration there's no inventory expiration dates on our product, you know, like a, a physical products business, especially, you know, a food product is, is hard, but with his audience, he's able to, to, you know, basically kickstart it and get significant reach early on.

14:31And then he's able to do things like, you know, let's say he's trying to get distribution in whole foods. Then he can be talking to the buyers there and say like, Hey, let's do this. And they're like, Oh, maybe it's a good product. Maybe not like we'll test it in one store. No problem. I'd love the test hey by the way which store right now like oh we're gonna do it in this one store in austin she's like cool great i'll check in a couple weeks and see how it goes and then he goes privately do his email list right and says you know give me all the subscribers within 50 miles of this one location in austin and they can email them like guys great news primal kitchen products they're now in this store on whole foods we do me a huge favor and go there and buy it right and And so they do that.

15:15He sends out that email, maybe two emails. And then you can talk to the buyer a couple weeks later and go, hey, by the way, how did that test go? And the buyer is like, it went incredible. Like, you'll never believe this, but we sold out. Mark could be like, no. No way. That's amazing. People must love this. And that's the power of an audience because then they're like, hey, let's run it. We're going to run it in these five stores. He's like, awesome. Yeah, let's see how it goes. By the way, which stores? You can go and do that. And it's like, wow, people in Boise love it just as much. It's like, well, yeah, because you sent an email to your audience to get them to do that.

15:51And so the short version of the story is Primal Kitchen sold after two years to Kraft Foods for$200 million. Wow. And so if you think about the value created from an audience, if you're making$1 to$2 million a year selling digital products, all of that, then that is an amazing income off of an audience. You're making more than a doctor. But then what Mark ended up doing by redirecting that audience's attention to something that had long-term enterprise value, then he basically made 100 years worth of value in two years. And then the other side thing is he didn't pay ordinary income on it. He paid long-term capital gains.

16:33And so he kept twice as much. So I'm assuming he originally, when he was selling like, um, you know, digital products, things like that. Right. Um, and he was doing like one to 2 million and then he probably got it to, I don't know, call it 30, 40 or so. And then sold it for like five X. Yeah. Yeah. I don't know the specific revenue numbers, but basically you watch that playbook over and over again of, you know, if you look at the Kardashians, uh, the, you know, at least a few years ago, the wealthiest of the Kardashians was, um, Kylie Jenner. She was not the one who was the most famous, you know, everyone else was like a sponsored Instagram post for a million dollars, that sort of thing.

17:11But she was the first one of the family to say, Oh, I'm going to create a brand right. And Kylie cosmetics, or maybe that was his mom, her mom. Yeah. It was probably all engineered behind the scenes. But, um, you know, you look at that and you realize like, Oh, the, the value comes from taking the audience and pointing it at a product that, I mean, there's really three rules to it that I talk about. The first is you gotta build more than a personal brand. Again and again, you see content creators get stuck on a personal brand and they have to build a product that's more than that. The second is you have to sell products rather than attention.

17:47And then the third is that you need to have a product that is either recurring, like software, something like that, or a repeat purchase. And basically when you look at all of these examples, all three of those are always true. And so just like telling the stories, I was realizing like most creators don't get this. They have the most valuable thing in the world, which is attention. And they're pointing that attention at something that is great for short-term cashflow, but doesn't build enterprise value. It's greater for the people that are sponsoring. Correct, right? Just take Ryan Reynolds, for example.

18:19He realizes, wait a second, you're paying me a million dollars to do a commercial. So this has to be worth more than a million dollars to you, right? how much more 1.2 2 million 4 million i don't know let's find out right and so he goes and buys into aviation gin and mint mobile and says like all right i'm gonna buy in a huge stake and then i'm gonna i'm now in charge of advertising yeah i now basically get paid an equity value for my commercials rather than than cash aviation gin exited for 600 million mint mobile for 1.2 billion The funny story about that one is one of the Mint Mobile founders was in my EO form back in the day when I was in EO.

18:58And Ryan ended up having more equity than him. I believe that. It's crazy how that works out. But continue. Yeah. But just looking at that, like you're seeing it over and over again. We can talk about celebrities. We can talk about individual bloggers like Mark Sisson. But the principles are the same. Right. Like in building ConvertKit, that is my billion dollar creator playbook. Right. Where I can sell digital products, courses. I know how to build that to a million dollars a year. Right. But over the last 10 years, I've built ConvertKit to being worth over 300 million because it's something that has long term enterprise value.

19:32It's more than a personal brand. We're selling products rather than attention. And we have recurring revenue built in. Right. And so that's something that's, you know, will last for decades. Yeah. We talk a lot about this on the Marking School podcast. It's just like I used to hate agencies. It's not scalable. It's just a lot of people, blah, blah, blah. It's like every business is people, right? But it just makes sense naturally for both of us because we talk about marketing all the time that we just drive it to like a high LTV service in the backend, right? And you just hire amazing people that have been there, done that, and you scale it because some of the biggest companies in the world are services businesses.

20:06Right. I was the same way where I thought agencies were a terrible business, you know? And I would resist that for the longest time. Like, no, no, no, we sell software. We don't do. You know, like from a high - We're in tech. Yeah, yeah, yeah. I'm a Silicon Valley guy. Yeah, yeah, yeah. When I first started my business, the overwhelm was real. I didn't have the tools to help me scale. If only I had Shopify from the start to handle all the behind the scenes work. Shopify is the platform behind millions of businesses globally from huge names like Mattel and Gymshark to the smallest brands just getting started.

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22:58And I think we're 11 months in and we're at$750 ,000 a year run rate. you know and it's just like oh and you have these amazing outcomes people are saying like oh you know i took my newsletter growth from you know it's like two percent monthly growth and now it's ten percent monthly growth right and it created this whole outcome for me and i'm like this is good yeah well i want to come back to that in a second there's this whole like you know um almost creator-led agencies and then there's creator operators and they're just pure creators right but then one thing that you talked about was um monetization for creators so what is the best way for creators to monetize in today's day and age it depends on what your goals are i would say if the goal is short-term cash flow which is a great goal because that enables so many things then i think digital products are still the absolute best way to go because you can have you can end up with a really high revenue per subscriber especially if you have a product ladder where maybe initially someone's buying an ebook from you or something, you're just getting in the habit of, hey, I made a purchase and that was really good.

24:11I spent 30 bucks and I felt like I got hundreds of dollars worth of value. I should keep spending with this person. And then as you get into the courses, now you can sell a course for 300 to$3 ,000. And the margins on that are just so, so good. I think that's fantastic. People are doing really well with advertising right now. Um, especially if you have a newsletter that's really engaged, uh, if people, you know, if you have a more stale list, uh, people aren't that excited about your content, then advertising doesn't work as well, but the, the hyper engaged list is fast growing, um, do well. So those are probably the big ones, but I always encourage people once it, once you have cashflow figured out, if you think in this ways, I always think in terms of how do what's the highest ROI?

25:03Return on leverage. Yeah. Then you have to direct it towards a real business. That could be an agency. I would make sure it's an agency that has recurring revenue. None of this one-off project nonsense. I won't touch a business unless it's at least repeat purchases, but ideally recurring revenue. So an agency, a products company, there's this woman named Susie Bullock. She has a barbecue blog called Hey Grill Hey. And she got to the point about$2 million,$2.5 million a year in revenue. All the traditional stuff that you'd expect, right? Affiliate deals, sponsorships, her own products. But now she's launched her own line of barbecue sauces, and she's gotten distribution.

25:54She's following the exact same playbook that Mark Sisson did. And I'm like, there we go. That's a business? that in five years she'll sell for$100 million. And so I think that balance of short-term cash flow and also building long-term equity, it means you don't have to do the startup grind of like eat ramen for five years. It's like, wait, I can live a great life off of my million-dollar-a-year content business and grow this business at the same time that has real enterprise value. Yeah, you can use it as a launch pad to build something that, to your point, has enterprise value. And yesterday, before we started the morning workout, we were just talking about how, sure, you raise VC, you can talk about that big exit, but why don't you just build something where you can have an exit every single year, where you're doing$10,$20,$30 million in profit, and then that's your exit every single year, right?

26:48Most people won't ever get a creator business to that level of profit. and so i think if yeah it's just not it's not common so if someone is truly targeting like hey i want to retire with 25 i want to retire young with 25 to 50 million dollars in the bank it's going to have to come from um building a product business in some kind and exiting it yeah and then just letting it compound over time yeah and then you're there okay there are you would know matter that i would like on the agency side right there's obviously a lot of agencies that do cash flow So, you know, 5 million,$25 million a year.

27:26But that's probably more the exception than the rule. Yeah, those are few and far between, but they do exist. Yeah. They do exist.