213 - From Amazon PM to $1M Newsletter Business in 9 Months with Nic Conley

0:00Dude, this is so crazy to me. This is like a freaking cheat code. You don't have to make anything up. You can literally just go and see what the best are doing and copy it. It's nuts. If I like actually wanted to start a newsletter and make money as fast as possible, I would start content market fit, right? If nobody at all would subscribe to this organically, you probably don't want to bury money into it. Local newsletters are a fun hobby business. I think they're probably one of the lowest leveraged newsletters you can start. And let me tell you why. So I would 100 % stay away from local newsletters.

0:34Narrative violation.

0:38All right, Nick Connolly, I'm stoked to have you because you are the avatar that people look at and say, man, I want to be that guy. You were working at Amazon as a product manager, probably making really good money. I'm just going to say a couple hundred thousand dollars a year. you leave Amazon and within nine months you sell a million dollars worth of ad sponsorships. You've got multiple revenue streams. The journey has just been sort of crazy. You've got a newsletter with over 22 ,000 subscribers. You've got YouTube channel with over 10 ,000 subscribers. So you're, you're making money a bunch of different ways.

1:10What were you doing before you jumped in full-time entrepreneurship? You're working at Amazon, right? Yeah. So I would say like, you know, I've always been into entrepreneurship stuff growing up. I was guy that, you know, I grew up in Massachusetts outside of Boston. So I was knocking on all my neighbor's doors and, you know, I'd come back after a snow day with like$300 in cash in my pocket, then graduated like flipping Jordans, right? I was the, you know, 16 years old in high school. We'd camp out all night outside Foot Locker and, and buy up as many pairs of Jordans as we could and then flip those on eBay.

1:40So like I always had sort of that background. After school, I just got into, into sales, a few different more like startup companies. So I feel like I cut my teeth there and then went to Amazon where, you know, very much the opposite. I was still on a small team, but you're at a small team at, you know, a company with a million employees and very different scene. Yeah. How long were you there? I was there for, I think, just about three years. Oh, that's a good amount of time. Yeah. Yeah, yeah, totally. How much were you making at Amazon in your last year? It was high six figures. Well, high one six figures.

2:17How do I say that? correctly? Yeah. Like 200 grants? Yeah, just under like close to 200. Yeah, yeah, I would say that. Okay. You're obviously a hustler. I think there's different types of entrepreneurs. Hustlers are one type that I've identified, which is like, you're always just scheming, right? Like, can I buy something for five bucks and sell it for six? And oh, man, how do I how do I make a little more money? When you were at Amazon? Did you have side hustles? Were you like constantly launching different things to see what was going to work? Oh, yeah. Yeah. A hundred percent. The thing that comes to mind is I started getting into newsletters actually when I was at Amazon.

2:53I think, you know, just listening to, you know, Sean Puri and Sam Parr talk about The Hustle and other newsletters, that originally got me interested in newsletters. I started writing on Substack probably like four or five years ago. Yeah, like around the time I was in Amazon. And I had read this article from Tyler Dank at the time about how Morning Brew grew like 30 % of their subscribers through referral programs. Now there's an issue is because Substack, one, they had no API access, so you couldn't build external tools to use a referral program and they didn't have one themselves. So I was like, oh, I should build a referral tool for Substack and everyone would want to use it.

3:33So I met my co-founder engineer on Reddit. He was an engineer at Google at the time and uh we built it and it was not successful we sold it for like six grand but you know it uh it got my my toes dipped in the water and also technically my first acquisition right yeah that so for people who are listening you probably know what newsletters are but i'm just gonna like high level overview anybody who is who has a business or who has an audience they're dependent on these platforms to reach customers or potential end users. And so if you've got a lot of followers on YouTube or you've got a lot of customers, you're reliant on the algorithm that those platforms generate in order to reach people.

4:21So one change in the algorithm and all of a sudden you're not able to reach them. The reason that newsletters are so popular is because it removes that friction. If I have someone's email, I can go to them directly. And I don't need to rely on Google to decide whether or not my post was good enough. So these have become more and more popular for people who are trying to go directly to end users. Newsletters are growing like crazy. Tyler Dank started a company called Beehive. I think they just reached$30 million ARR. I think that's like where they are. Probably a nine figure valuation. And it's only becoming more and more popular because ad dollars are shifting from traditional legacy media to these niche media plays where they can actually put dollars to work and get the return out that they want.

5:03Now, you, what you're saying is you saw this opportunity in the newsletter space to help other newsletter operators grow through a referral program. So you built this tool. Obviously, the tool flopped. But out of that, the thesis of newsletters stuck for you. You're like, no, I need to stay in the newsletter game. Yeah, I was just like, you know, something about newsletters I was like addicted to. I was like, oh, this is like the most straightforward path I've ever seen in like a business, right? And now getting into it, it's not straightforward. But the three steps to making money with a newsletter is essentially just you grow an audience.

5:37So you have an email list that advertisers are interested in reaching. You send them good content so they open that email. And then you sell ad space to advertisers that want to reach that list. Right? So it's like, oh, I can understand that. Anybody can understand that. I can explain that to my mom, right? It's pretty simple. Executing that, I would say, is a different story. but like the concept in itself is very simple. High level, I would say there's like four different types of newsletters. There are geographic newsletters. So it's like local newsletters become super popular right now. In many ways, think of it as like what the old newspaper was.

6:15So like the want ads or the classifieds or what people would advertise, it's kind of replacing the newsletters. There's local newsletters, super hot. There were, I would say, demographic-based newsletters. So it's like newsletters for men or newsletters for women or dads in their 30s or whatever else, like hobby, demographic, specific newsletters. And then there are brand related newsletters, like personal brand, people who have audiences, maybe that people are following them for specific reasons. And then there's, in my opinion, business newsletters where it's like, oh, I'm a business, I should keep my customers warm.

6:44And so I'll create a newsletter. Those are the four broad categories that I think of newsletters. Did I miss anything? No, I think that's pretty solid. Yeah, I think you could take those and put them in in different categories if you wanted to, but like overall, you could definitely classify pretty much every newsletter into those four. Local newsletters have been super hot. Everyone's like, Oh, I could start an local newsletter and make a ton of money. And I've had a couple of guys who'd come on here and that have started local newsletters and they're doing great. Talk about the economics of newsletters really quickly before we get into, I guess, the specifics.

7:14What, why do people like them? Like, how do you make money? Yeah, totally. So the, the way that most newsletters basically grow an audience or or build their asset, right? So you could look at a newsletter in that like, the whole entire asset of the business is that list of people that are looking for your content or that you can send advertisements to essentially, right? So the way that a lot of people, most large newsletters will grow their email lists is through paid acquisition, right? So this is setting up Facebook ads, paying$1 to$3 for someone to click on that and then subscribe to your newsletter.

7:50And then you have that audience that's expecting that newsletter from you, then you can go to advertisers and based on a CPM rate, right? So CPMs are anywhere from, you know, call it$10 all the way up to, you know, I've seen hundreds of dollars per CPM, which is essentially the cost per mil or cost per thousand. And this is done on opens, right? So let's say you have 20 ,000 people on your list, you have a 50 % open rate. So really, you only have 10 ,000 readers each time, right? So you're not selling that CPM based on 20 ,000, you're selling it based on 10. So you just take that 10 ,000. So that would just be 10 times the CPM rate, call it 10 times$10 CPM, you get$100 to sell that ad, right?

8:33B2B is going to be much higher than that. I've seen like 100 to 500 CPM, your consumer or maybe local, we can talk about local later, but your consumer is probably going be closer to like that$20 range. So that's how most newsletters make money. You also have like paid subscriptions, right? So if it's really high quality content, people want to subscribe for, call it$5 to$50 a month to read that content. That's another way of doing it. Or you build a business on the back of it, right? So let's say you run an agency for marketing, you get marketers to sign up and you sell them a service on the backend or whatever product you sell to them.

9:11so video is cool but i have what scientists call a face for radio and so it's even cooler is long-form audio via my podcast and my newsletter nickonomicspod.com go there for free subscribe to my newsletter it's one email per week super tactical and then go to my audio podcast i do three to five episodes a week depending on how curious i am and it's stuff like this it's all free no sleazy sales pitches nickonomicspod.com yeah the only other thing i'd say is affiliate or you have an affiliate agreement where somebody sells through you and for everyone that they click and buy, you get a certain percentage for.

9:42Okay. So you looked at this and you're like, dude, newsletters are freaking cool. I'm going to start a newsletter. What did you start? The very first one I actually started was a personal newsletter. It was called three ideas on Sunday. I essentially just sent out business ideas that I had. I don't really talk about that one ever, but that was the actual original one. I started writing on Substack. The first one that I started as like a legitimate business is called the follow-up. I still write it to this day. It actually went out a couple hours ago for today's email. And the follow-up is all about B2B sales.

10:13So we looked at like the hustle, the morning brews. There's tons of newsletters about marketing or finance or general business. There just wasn't a ton on B2B sales, which was my background. So I started that as a twice weekly newsletter every Tuesday and Thursday. And I've been operating that for about the last two and a half years. We just crossed over about 22 ,000 subscribers. And - Jeez, that's awesome. Recently this year, it joined the HubSpot newsletter network. So essentially, they're our biggest advertising partner. What are your CPMs on a newsletter like that? So 22 ,000 subs. What's your open rate CPMs?

10:50I'm curious. Open rate's right around 55%. Click rate depends a lot on the advertiser. Yeah, we can talk about ads as well because I've seen behind the scenes of a lot of them and what works well for advertising and newsletters and what doesn't. Talk about that. Okay. So what works well and what doesn't? A lot of companies when they buy newsletter ads, they're just like, awesome. We're just going to write some cool copies, send them to our landing page and they can book a demo from there. That's never going to get as good of a click-through rate as a resource. So it all comes back to the offer.

11:22So when someone offers a lead magnet, and if you want examples of this, find any HubSpot ad in a newsletter. It's never going to be, hey, do you want to check out our hubspot crm it has like all this intelligence it's always going to be do you want to download these top 100 jatcha vt prompts or these top 50 cold email templates they then get the the email from there and they can remarket to them later that's always going to like i'd go as far to say like two to five x the performance as just like a general sort of what you consider so that's interesting so from the because from the ad buyer's perspective hubspot in this example or me let's say I wanted to grow my podcast and I'm going to go find someone who has a similar audience to me and oh I'm going to go to their newsletter you would think oh it's going to 22 ,000 people open rates 50 plus percent click-through rate's going to be x cool as long as I have something that's like quippy or eye grabbing they're going to click through and they're going to subscribe because there's overlap there but really it's about the lead magnet it's like why does the offer matter so much more than just the copy it's just it's always about the offer right whether you're sending a cold email or anything like that.

12:30This is why like, you know, when cold emailers originally found out like there, you probably still get cold emails like this, like, hey, can I send you a two minute video that I made of you or made for you custom like that works way better than like, hey, are you available for like a 15 minute call, right? It always comes back to the offer. So I said lead magnets and resource downloads, but it could also be like, you know, the follow up readers get, you know, 500 free credits. If you sign up through this link, the audience just wants to feel like, you know, there's an offer there. There's a reason that I should click on this.

13:00They're not just trying to sell me something. I kind of have this theory that I've been working on for a while where I think that everything's built on trust. Anybody who's listened to that is like, really? Everything's built on trust. But hear me, hear me out, hear me out. Any purchasing decision, any switch, listening to this podcast, right? If you want somebody to do something, they have to trust you. They have to say like, oh, I'm going to listen to Nick because he knows how to grow a newsletter as evidenced by X, Y, and Z. Or I'm going to listen to me, Nick, because he's bought and sold businesses as evidenced by X, Y, and Z.

13:34So in my mind, you need that level of trust before somebody will make a purchasing decision. That's why there are these metrics where it's like you have to have seven touches with somebody before you close a sale because they need to get to know you and get a feel for you and trust you before they spend their dollars. And I wonder if the lead magnets, and again, I'm sorry, people who are listening are like, uh, duh, no doy. But it's like the lead magnets are kind of a cheat code to building trust. Because if I create a lead magnet, that's really valuable. It's, Hey, here's a, here's a template for valuing any business.

14:05And I gave it for free. Immediately someone takes that, they use it and they're like, Oh, this works. Nick must know what he's talking about. I'm going to go click through, right? Or if you create a lead magnet of like, here are the top 10 newsletters that you should do in your industry. And like, I click that I'm read through and I'm like, Oh, Nick Connolly knows what he's talking about when it comes to newsletters. Trust is automatically built. Therefore, there's a higher likelihood of a purchasing decision being made in your favor. And again, does the first time I've like really vocalized it like that, but I, does that make sense?

14:34I think it's spot on. Like, I think the, like the perfect example of this is like Alex Hormozy probably arguably has like the most trust of any business influencer on the internet right now. So whenever he tries to go sell something like his book, it's just like a blowout event and like everyone's buying it, right? Because like he's built up so much trust with his audience that just like, you know, when you see his videos, you automatically know like this guy's going to give me a ton of value and not ask for anything in return right now. Sorry, I'm thinking of it from the advertiser's perspective now and, you know, business owners who are trying to figure out how to grow their business and they're doing pay-per-click and they're doing SEO.

15:09That one shift in your mindset, hey, what's a lead magnet that you could provide for people i would test that i think it might translate to more sales if you're doing pay-per-click on on facebook and it's like here's my offer versus here's my offer with a lead magnet the lead magnet offer has to outperform that i would assume so anyways i just think that's a really interesting perspective to think from for you and in your newsletter so as you bring on sponsors do you tell them that are you like hey it's actually gonna work a lot better if you have a lead magnet. Yep, absolutely. Basically, I'll be like, hey, look, you can run whatever you want, right?

15:46You're buying the ad placement, as long as like, I've, you know, pre qualified them. And I'm like, hey, I like their brand, I'm fine with them running in the newsletter. It's like, hey, look, you can run whatever you want. Sometimes they have like a big launch coming up. And they're like, yeah, we need to use this ad placement, right? Because it all comes back to like, there's someone on the marketing team buying that because they have a specific goal that they're like, you know, gold out that they have to go back to the CEO and say, this is why we're making this purchase. But it's like, hey, look, if you just want to like deliver the most clicks and most leads possible, like this is what you should do.

16:16Now, if you don't want to do that, if you just want to drive traffic and show that you got traffic to a landing page about your new launch, that's totally fine as well. But like, if this is the metric, here's what you should do. How are you growing your newsletter? So right now, I actually just shut off Facebook ads like yesterday. So I've used Facebook ads traditionally to grow a lot of it so i'm getting anywhere from like a dollar fifty to two dollars per per subscriber and when you do that a dollar fifty to two dollars per subscriber are you including a lead magnet or no no no that's uh that's just like a an iphone notes app or like an app screenshot right if you go to actually newsletter ads.co it's a website that i built it's just like a i think i built it on card it's just like links to to the facebook ads library but if you want to see like all of the ads that a big newsletter is running right now to grab subscribers and basically just want inspiration just go there click on any newsletter that you look up to or maybe is in your niche and then scroll to the bottom to find the ad they've been running for the longest and that's how you're going to find out like what's really working right if they've been running for six months i've got it up yeah i've got it up so we've got the hustle on here we've got CRV daily so he'll bloom Tim Ferriss let's go Cody Sanchez I want to see what Cody Sanchez is doing so I click on Cody Sanchez and I'm oh these are all the Facebook ads that she has been running in order to get subscribers to her newsletter yep and these how did you yeah yeah I mean I essentially just uh opened up card put a landing page and then it's just links to to um you know the Facebook ads library so you could search any other newsletter So you can see like in the search tab right there, it says Cody Sanchez, any newsletter you want to look at, like you go to TLDR, Morning Brew, you know, you can find any newsletter you want.

18:06That's what you should use as inspiration, right? So it's like, you don't have to reinvent the wheel, nor should you. You should just see what's working. Go back as far as you can find out the ad they've been running for a year because it's still crushing and use something similar to that. Broadly speaking, I can come here and I can just look at what ads are working for them. This is freaking awesome. Yeah. Yeah. I mean, it's like the best place to start, right? It's like, don't take a guess. Just no. And like, when you first get started, you don't have to worry about like making a video like that.

18:37I would just get started with like just image ads. That's basically what's worked for me. Like sometimes the videos take a long time to produce. And like if it flops, it feels like a waste of time. So like, you know, just get started running. these a lot of newsletters use these so it's basically just like take a b-roll video of like a skyline and then put text over it right so it shows up this is hauck's this is hauck's newsletter i don't know i don't know who they are they're called founding journey yep so it's all about like startups and raising money and things like that and this is one ad that they've been running since March 8th, 2024.

19:14So a year and a half-ish. And if I... At my last startup, we raised$15 million, including a series edit from A16Z. I created a free pitch deck template crafted to help founders clearly present their startup values to investors. Click below to download for free. That was my voiceover. But it's against the New York skyline. It looks great. That's interesting. Yeah, so for something like that, if I'm starting a newsletter, that's a very low lift. I don't think that is not high quality. It's literally like 16 seconds. Hey, I don't know if you remember this, but when we started this podcast, we entered into a social contract.

19:53I would spend time, energy, and money producing this podcast, interviewing these individuals and giving you insights into how to build, buy, start, grow your business. And you would like subscribe and leave me five-star review. Now, out of that, we both get to talk to really cool people and hear really cool insights. We both get a ton of value, but I just want to help you keep your word. So would you do me a favor? Will you go leave a five-star review for me on Apple or Spotify? It would really help. And if you want, even share this with a friend. Yeah. And you can also reverse engineer that to say, okay, he's been running that for a year, it's working really well.

20:29And he's using a lead magnet there, right? So he's not saying sign up to my newsletter. He's saying, I created this free template, download it here. And when you download is subscribe you to the to the newsletter automatically so yeah this is so crazy to me this is like a freaking cheat code you can go and see not only what ads they're running but by virtue of the fact their ads been running for a long time you're like oh that's the best one i'm gonna go reverse engineer it you don't like you don't have to make anything up you can literally just go and see what the best are doing and copy it it's nuts 100 yep oh my gosh okay if you were into newsletters again, what would you do?

21:04You go to 26-year-old, 27-year-old Nick Conley. He's like, I want to get into newsletters. I want to do a local newsletter because I know I'm going to make a lot of money in local. I've heard all that on the podcast. What would you say to local Nick? Or not local Nick. What would you say to 26, 27-year-old Nick? So I would 100 % stay away from local newsletters. I say that as someone that owns a newsletter. just scratched yeah narrative violation i just lost all my friends on twitter yep

21:37i think local newsletters are a fun hobby business i don't think i think they're probably one of the lowest leveraged newsletters you can start and let me tell you why when you try to go sell an ad to like the local real estate shop or to the local pizza shop or landscaping company like that is playing business on hard mode when you send like a$15 ,000 invoice like a b2b company and like it's just a line item for them that like a rounding error that is a much easier sale to to actually like make real money on now the local newsletters are much more approachable right because it's like oh I can I can run Facebook ads to people just in my town it's actually really cheap to acquire subscribers.

22:18I think our average subscriber CPA is like 22 cents for the local newsletter, which is awesome. We built a list like 10 ,000 right away. But having conversations with these local businesses where it's like, hey, it's going to cost you 500 bucks a month or like$500 a month. Are you kidding me? That's like our entire marketing budget. It's like, those are the worst type of customers, in my opinion, to work with. So if I was restarting, I would stay away from local newsletters. Now, if that's like a hobby project you want to work on or like experiment with, I think that's totally fine. But if you expect that you're going to make like a million dollars or have like a million dollar exit for from a local newsletter, like, I think you should probably look somewhere else.

23:02So I'm gonna say it a different way. It's not that you would stay away from local newsletters. It's that you would stay away from low ticket advertisers. For the most part, local newsletters are going to be lower ticket. b2b sales are going to be higher tickets so is that probably a fairer characterization i think it's low leverage like and i think the way to look at this is like there's one newsletter one local newsletter that i know of owned by like 6 a.m city and i think they do just crack seven figures a year and that's the like largest local newsletter that i know of to me like if that is the pinnacle of what you can get to that doesn't seem like a very high leverage business now like I could go on and build a list of like 10 B2B newsletters that are making over seven figures on like crazy margins right now.

23:50And arguably they probably work less hard, right? Like that's what I mean. But you know now how much they make, right? But if you're just starting out and you're like, I want to pick a newsletter, how would I even find out what I could make, right? Like there's a saying in tech where it's like, what's my TAM? What's my total adjustable market? How big could my business be? How would you even go about identifying that? Obviously, you've gotten to B2B, but how do you find out the CPMs that are average in those industries? How do you find out what an advertiser is going to pay? Where do you go? Yeah, I think you could look at other media channels and who's already advertising.

24:27The issue with local is a lot of those people, local businesses, maybe they've advertised on a billboard or bought Google ads before. They've never done it in a newsletter. right? So like, look where companies are already spending money in newsletters. That's the easiest sponsor you're ever gonna you're ever gonna sell is when you reach out to him and say, Hey, I noticed that you're you're, you know, running ads in this newsletter, we have a similar audience. I agree. How do I do that, though? Like, I like I don't, how would I find out a company's running ads or not? You got to look in those newsletters.