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Podcast Episode Summary: Startup Stories - Mixergy (#2274 1440: $20+mil / year newsletter)
Episode Overview In this episode of the Mixergy podcast, Andrew Warner interviews Tim Huelskamp, co-founder of 1440, a successful email newsletter that generates over $20 million in annual revenue with more than 4 million subscribers. Huelskamp shares his journey from a failed startup to creating a fact-focused newsletter that caters to intellectually curious readers.
Key Points
Introduction to 1440
- Concept: 1440 is an email newsletter that curates the day’s top news without bias, targeting individuals who seek a broad understanding of various topics.
- Subscribers & Revenue: The newsletter boasts over 4 million subscribers and generates more than $20 million annually, with a profit margin of over $1 million per employee.
Funding and Growth Strategy
- Bootstrapping: The company was founded with minimal outside funding, relying primarily on revenue-based financing ($500,000) which allowed them to gauge unit economics before scaling.
- Revenue Model: The business model focuses on retention and monetizing subscribers through advertising, with a sustainable approach that avoids high-risk venture capital strategies.
Market Positioning
- Broad vs. Niche: 1440 challenges the notion that newsletters must focus on niche markets to succeed. Huelskamp and his co-founder emphasized the need for a comprehensive news source to serve busy professionals.
- Target Audience: The average subscriber is intellectually curious, with a diverse educational background, and the newsletter aims to serve this demographic effectively.
Early Challenges and Learnings
- Previous Venture: Tim discussed his first startup, "When in Rome", which failed due to unfavorable unit economics, highlighting the critical importance of product-market fit and scalable growth.
- Iterating Product: Early feedback from friends and family helped refine the newsletter format, leading to high engagement rates and positive subscriber growth.
Operational Insights
- Content Delivery: The newsletter maintains a text-focused format to streamline information delivery for readers, avoiding unnecessary visual clutter.
- Retention Rates: 1440 boasts a remarkable open rate of 60%, with a retention curve that stabilizes after initial subscriber loss.
Future Directions
- Expansion Plans: Huelskamp revealed plans for a new product that connects readers with curated knowledge on diverse topics, leveraging human curation while utilizing AI for efficiency.
- Focus on Quality: The company prioritizes quality and depth in content, seeking to create a valuable resource for knowledge seekers.
Reflections on Business Strategy
- Simplicity and Focus: The conversation highlighted the importance of maintaining a singular focus to avoid dilution of efforts, which can lead to mediocre outcomes.
- Cultural Impact: Huelskamp emphasized creating a positive workplace culture without layoffs, which supports employee satisfaction and retention.
Closing Thoughts
- Name Meaning: The name "1440" references both the year the printing press was invented and the number of minutes in a day, symbolizing the company’s commitment to delivering knowledge efficiently.
Conclusion Tim Huelskamp's journey with 1440 illustrates the power of a focused business model, strategic growth, and understanding market needs. The episode serves as an insightful exploration of building a successful startup in a competitive landscape, all while staying true to core values of clarity and quality in content delivery.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00Hey there, Freedom Fighters. My name is Andrew Warner. I'm the founder of Mixergy where I interview entrepreneurs about how they built their businesses. Joining me is an entrepreneur who is building an email newsletter company. And to be honest with you, when my partner in Bootstrap Giants, Jesse, told me about 1440 and he kept getting excited about having had them as a client, I said, first of all, the name makes no sense to me. And second, why are you so excited about a newsletter company? This thing has existed forever in newsletters. It feels like since the beginning of the internet. And what he kept saying to me was, this is different.
0:32It's bigger than you realize. It's an example of what a bootstrap giant's company can be. Built sustainably, built in a way that's growing, built with heart and clarity, and not this idea of let's raise a lot of money and try to figure something out and have a small chance at something that would work. And so I looked into 1440 and it's such an interesting business. It's a fast-growing, fact-focused newsletter that curates the day's most important news. And the revenue is really exciting, but mostly the story behind how it's been built, I think, is inspiring for what's possible. And so I invited the founder, Tim Heelskamp, to come on here and talk about how he's doing it.
1:15And Tim, since I'm known for asking people their revenue, I'll start off by asking you, what is the revenue at 1440? First of all, thank you so much for actually awesome being here with you. We do over a million in revenue per employee, and we have 22 employees. Wow. How about this? We don't do 2 million revenue per employee. It's between 1 and 2 million, and we have 22 employees. So I can let the readers do the math. It's huge, and it's profitable from what I understand. Yep, very profitable. Several million dollars is what I think I'd read in Adweek. Yep, very much though. No outside funding.
1:52So we did take a little bit of like revenue-based financing and kind of like debt-like features early on. Actually, if you're a fan of Shark Tank, you know how Mr. Wonderful is always like those royalty deals he talks about? He basically took like an equivalent of that early on. And what it did, it allowed us to, I'll just give you the, it was$500 ,000. And basically at the time, I think we had something like 10 ,000, 20 ,000 subscribers. But we could figure out our unit economics. We could see them already working, right? Like we had retention, we had open rates. You could see it all working.
2:24And we're like, this business is working. Let's pour some fuel in the fire. So yeah, we raised this$500 ,000 round. And the way it was structured was we got$500 ,000 and we paid back starting a year later. So it allowed it to like, you know, the flywheel to spin a little bit. We paid back 5 % of our revenues until the investor got 3X return on their capital. Wow. And then they got like a slight little equity kicker as well in case like for schmuck insurance, like if we are worth hundreds of millions of dollars, they don't like, oh, how did I miss that? And only give them a royalty based financing.
2:56But yeah, it was actually this really cool company. I always forget the name of it. It was out in San Francisco. And they basically realized that there were a lot of companies kind of in no man's land where like they were, they had great unit economics and they were profitable businesses, but they weren't big enough for private equity. but then the venture capitalist looked at them and said, you guys aren't like a decacorn or a unicorn. Like I need 50 X my money. So they're kind of stuck in no man's land. And they came up with this solution, which provided, provided funding to founders. And also for the investors, which was nice.
3:28What's nice about it is, you know, a lot of times with like early stage investing, you either get a donut, like zero or like some return, but like seven to 10 years later with this structure, it actually allowed you to start getting returns earlier. So like a year in they started getting 5 % of our revenues. And it's flexible too, because we wouldn't... It's not like a piece of debt where you have a guaranteed payment. It was based on a percentage of your revenues, which is really nice too. I'll follow up with you to get the name of the company. The thing that I've been discovering in this whole bootstrap world is today, there are other funding options.
4:02Jesse for Unbloat, I forget the name of the company. Oh, it's called Settle. He used Settle to get money based on sales that they were making. And there are all these different ways to have cash without selling equity. And I've been trying to accumulate them, but there's not an easy way to put together a list of all the possibilities. Let me ask you this, though. How big can an email newsletter get? I mean, it's so competitive. It's so mature. And you're not doing a topic like AI with the cutting edge latest thing that's coming out tomorrow or what came out a minute ago. It's more news-based. Why is there a big potential in that?
4:40Yeah. So our whole thesis, and when we started this, we actually got a lot of feedback from a bunch of advisors and said, like, this is not going to work because what they told us was like that whole thing, there are reaches in the niches, right? So like, basically what we heard was you got to go niche. That's the way that media works. What are you guys doing? This doesn't make any sense. We heard that over and over again. But the whole reason we started though, is I was in private equity for a decade before this. My co-founder's a PhD scientist, super brilliant guy out in DC. And we're like, yeah, we hear that.
5:09But like at the same time, you know, he's in the, in the political world, science, political world. I'm in the finance world and we're intellectually curious people. We love learning. We want to know everything across all the different verticals, sports, politics, culture, technology, all these different things, AI. But like, it's so hard for the reader to go to 20 different sources and 30 different sources. And you're also trying to build your career as well. Most people are parents. They don't like time. And like, we felt like to be an intellectually curious person and like have that inch deep mile wide view of a little bit of everything, like no one was really providing that.
5:42And that was our whole thesis is basically that market, like where you get, you, you help everyone with like, you know, as an example, doctors read our product, engineers read our product, lawyers read our product. Doctors are going very deep on the science stuff elsewhere. And they're reading the New England Journal of Medicine and like, you know, our private equity readers are going out Dan Primack and Fortune Termsheet and all these things. But then they come to us for what's going on in Hollywood and what's going on in the science world and what's going on. Essentially, this is what the New York Times used to be about or the local paper.
6:15It's giving, I guess, maybe not the local paper, but the New York Times used to do this. And that's what we used to turn to them for. Give me an understanding of everything that's going on in technology and politics and business. And then if I'm really deep into business, I might read the Wall Street Journal too. And I think that's what you're saying. Yeah, exactly. I think it got over niche-y and then a white space opened up to be like, someone can come in and fill that inch deep, mile wide provider for the intellectually curious people. I'm like, that's who we're filling. So we have four and a half million readers now.
6:46We think it's like over a hundred million people is our total addressable market. A third of them have a graduate degree. They're 50, 50 male, female. They're a third. We also try to be really just state what happened and be like a fact focus source and not do like the opinions and the bias and the left, right thing. We think more and more Americans are getting, are struggling with that, struggling, excuse me, with that as well. So our audience is roughly a third Democrat, a third Republican and a third independent. So you, you look back and you're like, oh wow, we have like the college and grad school educated class of America that's, that are busy professionals that are intellectually curious and love learning and no one's really helping them.
7:26And like, that's who we serve every day. And that's who Drew and I are and were. And we're just basically, we're serving ourselves. And then we like, we launched to 78 friends and family. Like, you know, we weren't sure if people were going to like it or like had our thesis was right. And everyone was telling us this doesn't make any sense. But we just leaned into the gut feeling like, no, but all of our friends are saying the same thing, right? I want to understand this. Let's get into the story. And then at the end, let's do a little bit of analysis of why this worked and what other people can take away from it.
7:54So before we even get into the 78, I'd like to go a step back for a moment here and talk about what was that company called, When in Rome that you launched? This is the business that you had before that didn't work out. What was When in Rome? Correct, yeah. So I was in the private equity role for about a decade, and then I left. We actually got acquired by a larger private equity fund. I was a principal there, so pretty high up for my age, and they basically said, you know, you could stick around, but it's probably not going to end well for you. Like, or here's a pretty cool exit package. If you want to go start something, I'd always been very entrepreneurial and like, you know, did angel investing and was kind of like puttering around with, with ideas on the side.
8:32And at the time, I think I was 32, I'd been on a bunch of boards had been like, you know, seen a lot of cool stuff in finance and building companies and investing in successful businesses. And basically said like, they're literally like the universe is paying you to start a company. If you don't do it now like screw you how much money did you get from the exit package how much money did you get on the exit uh it was like a year and a half of salary basically like of run or sorry it was it was like a year and a half of runway it's like what my calculation was got it meaning with savings and what you'd gotten you could just just from the just from the the package just from the package for my rent and like everything i was i wasn't married i am now i wasn't married i don't have kids i was spending money on rent and beer at the time right and like basically it's like i basically have 18 months from this package to figure this out.
9:19Okay. So you say, I'm going to go and figure this out. You come up with when in Rome, when in Rome is something that I've wished existed. And so I don't know why that didn't work out. That seems like a more innovative product. Here's the thing. I want to go on vacation. I don't want to go and figure out where am I going to go? What am I going to do? Usually what I do is I leave it up to my wife to figure out, which feels unfair, or I leave it up to an assistant to figure out, which also means that I'm not getting anything customized to me. And so you created a tool where I forget what the price was.
9:46It was like$29. I saw it on the internet archive. Real human beings will create a tour for me, a package. Andrew flies to this place. He does this experience. The whole thing is taken care of. That feels like a decent price. If I'm going to spend$3 ,000 on a vacation,$29 makes a lot of sense. My one issue with that is where's the continuous revenue in that? And maybe you were thinking I could get booking fees, but I get the idea. Why didn't it work out? Yeah. So yeah, I wish I would have found you a couple of years ago. You can remember we're customers. Yeah, no, you said exactly. So basically the big thing, the reason why it didn't work out and the big learning there for me personally was, so when I was in the private equity world, we did late stage venture.
10:30And what I didn't realize at the time was most of these companies coming to us already had 50 million in revenue and they had figured out the unit economics of their businesses. And then we were just giving them money to pour gas on the fire and like grow faster. What I didn't realize at the time was, I always say startups are three things at their core. It's the search for product market fit, right? Everyone focuses on that as you should, because as Marc Andreessen says, if you don't get that, nothing else matters. And it's so true. And I think a lot of founders don't always focus on the right things there, but that's a different story.
10:58The second one, which is what we hit at when in Rome is basically the search for repeatable, profitable, scalable growth. Like they call it product channel fit as well. Can someone give you a dollar and can you turn that into$3? And generally speaking, if you have unit economics, your lifetime value over your cost per acquisition of three to one, people will give you money. Venture capitalist will give you money to scale the business, which is the third part, scale. So it's product market fit, do you have profitable unit economics? And if you have those two, you can scale the business into a big thing.
11:30And what I learned very quickly was, well, one, it was awesome. It was a great learning experience. I learned how to build a company and like how to build a product and like work with developers and that whole thing. But then very quickly, we learned to your point, it was$29. We were splitting the commission with the local concierge. These were guys like, you know, guys and girls at like the Ritz in Seattle and like they were wonderful. They knew their suit. You mean like literally a concierge at the Ritz in Seattle? Literally the best, some of the best concierges in the world, right? Okay. So you're splitting the money with them.
11:59Say it again? So you're splitting the money with them. That's a problem. them. And then we're paying the Stripe fees and all that. So I think we made$12 in revenue for a company. And then to your point, maybe people go on vacation once a year, right? A lot of people would use the thing one time and then not come back. So our lifetime value was 12 bucks maybe for a salesperson or someone on the road all the time, more a higher frequency. But the lifetime value is called$12 on average, or maybe a little higher, 50 bucks. And the acquisition cost was couple hundred just what what i learned so quickly was you know there were you know if you think about you said a three thousand dollar trip or a five thousand dollar trip like so many people want that customer so like if you type in you know what things to do in seattle hertz wants that customer marriott wants that customer right all these local businesses want so they have and they have much higher margins the hotel guys are making a couple hundred dollars in margin and we're making 12 so like the unit economics were upside down and like we would acquire customers on google and facebook like 200 bucks so the thing i learned there was a blessing in disguise it's very painful but uh the blessing there was we had to go down every marketing channel to see if it would scale and none of them worked so basically ppc seo the uh referral i was i would go to like um door to hand-to-hand combat at hotel that they didn't have a concierge like let's be your white label.
13:24We literally did every, there's like 25 ways to grow a company, essentially marketing. We tried every one of them. None of them worked. And Peter Thiel always talks about this, going back to my three things. So like we had product market fit, people were using it. We had a couple thousand dollars in revenue a month, or maybe it was a thousand. Like people were using the product and really liking it. But then we ran into this buzzsaw and the unit economics where it was like, we're paying$200 to acquire a customer that's worth$12 to us. And it's like, that doesn't work. And like, you know, after I went through it, I read more about it and I was like, yeah, you know, he's right.
13:58Like a lot of these companies, if you look at them, most companies have like one or two really strong growth channels. And like, that's really it, how they get very big. And most company, a lot of these startups, like they'll get through the product market fit stage and they don't find this. They don't find the unit economics. They go into business, right? So that's what happened is I basically, I walked into that buzzsaw and was like, oh my gosh, this is i just we can't scale this thing it's not going to make it so we basically at the time i was like hey you know i was a year into it or nine months into i'm like this isn't you know respectfully it's not worth my not my time the smart move was like we're like we just we shut it down because it wasn't going to make it meanwhile in email newsletters the economics are the opposite tim i graduated from college i still somewhere in here have my business plan for an email newsletter company, which I did start.
14:48It grew bigger than even the business plan. So it's one of those situations where the business plan had a hockey stick, but the hockey stick was even bigger. And what I loved about it was if you put it out on a spreadsheet, it makes so much sense. I assumed I would pay 10 cents per email subscriber. It turns out it might've been closer to a buck or so, or maybe even more, but you still make money on that subscriber every day. You will have like in 1440, you'll have a weight loss ad, which I clicked over into, or you'll have a finance thing and you're making money on those subscribers every day because you get to keep coming back to them.
15:22And the economics are fantastic. When I talked with Sam Parr of The Hustle, I said, where did you come up with the idea? He said, I was listening to Mixergy interviews. You had interviewed all these people in newsletter spaces over the years. And he said, I see the math here. All I have to do is copy this and bring it into the business world with my taste. Where did you get your idea, Tim? Yeah. Well, it's funny you say that because actually a lot of it was from Sam. Like I watched him and I've seen him on YouTube videos and was talking about the business model. And I was like, man, this hustle was already established at the time.
15:53Yeah. So when we launched the hustles around for maybe like a year and a half before then, uh, skim was around to morning brew. It just started, I believe. I think we launched very similar time to Axios. So it was kind of like before Axios or right around Axios. But yeah, we were looking at, at the hustle and like, wow, like to your point, Andrew, I had just come from business that had literally upside down needed economics. I was like, wow, these newsletters, if you can find white space and delight a user and know what you're doing and to your point, it's all about retention and having them come back to you.
16:24There's a big business in here. And so we got a lot of inspiration from Sam and the Morning Brew guys and the Skim team. So what's wild is it actually came from you. There's a theme there. If you study all the founders through history, they all borrow ideas from each other. So I think you saw the same thing here. But yeah, I looked at that and I was like, wow, like, you know, Sam's business, I think he was making, making back. I don't remember the exact numbers. I think he was making back the return on investment, like in three or four months. Right. Like you saw how his business was working and then he was fueling it, fueling the flywheel.
16:58So I saw that I had my own, Drew and I, my co-founder had our own pain as like, again, intellectually curious, busy professionals. And then we looked at the white space and we're like, the big opportunity is actually up here. Right. So again, we love the hustle. They taught us so much, but there's something, I'm swagging this number, but there's something like, I don't know, six to 8 million kind of like finance tech bro enthusiasts in America, right? Like there's something like that. The skim does millennial female. So the 20 to 35 females, that's 30 million or 20 million. So there's all these little pockets if you think about like a white space, right?
17:34But then we kept them like, who's this? Who's the one up here that covers everything? And no one does that. and that's why we launched it so like we were very calculated like we weren't sure if it was going to work but we did go in being like the unit economics on these businesses are incredible if you can build them and delight the customer and we're not going niche we're going like the opposite when everyone's going niche we want to go as big as possible and like as most of the vcs teach you like one of the biggest mistakes you you want one of the biggest benefits of like a big market is you can make a lot of mistakes there and still have like such a big market so yeah we think there's 100 million people plus that's our TAM, total adjustable market.
18:10And we think like we're just kind of get it going and we already have four and a half million of them. Okay. And so you said the first thing you did was you emailed 78 of your friends and this was you seeing, does the format work? I remember that Sean, who created the crypto newsletter, the Milk Road, which I freaking loved. He did something similar and I think he might've even sent it to them in a Google Doc to get feedback, but I don't remember. What's the way that you got feedback and what did they tell you? Yeah. So we just, we were using MailChimp at the time. I think it was, I think it's free up to 10 ,000 people or something like that.
18:47Yeah. Yeah. So it was free. And I give Drew a lot of credit here. So we had like a thesis for what the product should have looked like. And Drew was so awesome. And he's not from like the startup world. He's a scientist, which is a different type of startup. I think they're all about experimentation. And he was like, let's just write it and ship it out tomorrow. And it was like, yes. Right. So you like got us going and we, if you, I should pull it up, but if I can find it quickly, but if you look at the original email, it's probably design. It's a little different, but 85 % of the same thing that we have today.
19:18Right. So it's a very similar, like we knew what we wanted as frustrated consumers that weren't, you know, we're going for the inch deep mile wide news. And it's pretty, I mean, there's been some iterations to it, but it's pretty close when you look at like the actual job to be done in the product that we're delivering in the newsletter. So yeah. And then like, we just shipped it out to 78 friends and family. Literally it was like my groomsmen, my uncles, like our friends from high school. Um, and then we basically said like, Hey, we're working on this pro. I think we sent like a day before we said, we have this thesis for this project.
19:53We're working on this email. I'm going to send it to you tomorrow. Act like nothing. Just, just check it out and let me know what you think. Cause we didn't want to like people to overthink it and they checked it out and they, so we got some feedback. Why is this? What, that doesn't make any sense. Right. We took it, iterated on the next send. So we're doing that once a week, but even while we were doing it only once a week, we could see the, the, the product market fit, like early signs of product market fit, because we always said two things because there's so much benchmark data in this space.
20:21Like literally you can see everyone's open rates and click rates and growth rates. So we said, Hey guys, if, if we don't have a 40 % open rate in a 5 % weekly organic growth rate. So people like it and then forward it. Like we shouldn't spend time on this project. I just, you know, at the time I was like, I just got burned on another one that took a year of my life. Like we're not going to do that here. Like if it's not there, but we had like a 60 something percent open rate, which we still have today. We've always had a north of 60 % open rate. And then our 78, by the time we sent out the next one, the next week had 91 subscribers.
20:52So we didn't ask anything, but people were like, check this out. Right. And we're like, wow, that's really good signal. I remember saying that to Drew. I'm like, there's something cool in there. Like, keep going. And then the next week we had, I think it was 104. And then it was 122 or something like that. And then we just kept on taking all the feedback and iterating on it and just going, going, going. We spent the first two or three quarters just doing nothing but that. Do you remember some of the early feedback that you got? Yeah. So, okay. We actually still get, not crap for this, but our newsletter is all words.
21:25Okay. and most people look at it, a lot of experts look at it and they say, not going to work. There's no pictures. Where's the pictures? I think on the web version you have iStock photos, but like I'm looking at today's email, draft day arrives. That seems like something that's juicy and meant for a photo. YouTube turns 20. It feels like there's some photo that you could include. Yeah. So keep going with that. Agreed. However, when you talk to the users and actually ask them what they're looking for, If you break down what we do really well, we curate 50 links across the internet. What's going on in the Middle East, the latest company IPO-ing, the NFL drafts tonight, fall foliage schedules, Michelin stars, the best Airbnbs in the world.
22:10There's so much knowledge in our newsletter. But what we wanted and what our users want is basically they don't want all this stuff to get in the way of the knowledge. They want a menu of information. and quickly scan it and be like, I want to learn about that. Don't care. Don't care. I'm going to learn about that. Right. So what we find is actually like, I still see this all the time. And again, like if it's a, if it's a, um, an art newsletter, like, of course you have to have a piece of pictures of art, but actually open a lot of newsletters and it's like, like this picture is in the way, like, I'm just trying to read.
22:44Why is that my way? And that's what our readers told us is like, we, so we had a bunch of pictures in there And they like, the pictures don't help me put knowledge efficiently in my brain. Get rid of them. So we actually took pictures out. So a lot of people look at it and like, you guys are lazy and you're not like adding photos. It's like, no, it's like we actually had them in there. We did the work and actually understood what our customer wanted and then took them out accordingly. And like a lot of people, we still get, if you respond to any email, they still come to me. I read every email I received.
23:15And a lot of people love us about that. We do get one every once in a while where from younger people, like how do you not have pictures in this thing? But most people, like I love how it's like boom, boom, boom, boom, boom, you know, knowledge, knowledge, knowledge, knowledge. I get to choose my own adventure. That's what I'm looking for. Thank you so much for cleaning it up for me. You know what? I had a different assumption in my head. When I looked at it, I said they probably can't get copyright clearance for it. And for everything else, and you could at this point, you're big enough to. I figured maybe it was an early day thing.
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23:43um at what point did you start hiring people to edit the stories i mean it's you're not you're not sending out reporters into the field but you do need somebody to summarize it properly and this was before ai you launched what 2017 if i remember 2017 yeah yeah uh so drew and i basically started it. And then we hired a, uh, like a biz dev salesperson, probably a year in. Um, and then if you break down our business model, it's three things. It's write a wonderful newsletter every day, which as we said, I have a 65 % open rate, delight the reader, know exactly what they want. We sell ads to the, to the, um, because we have this audience of, you know, a third of them have a graduate degree.
24:27They like to be healthy, wealthy, and wise. So they love learning about finance products, better for you wellness products. They like, they have a lot of money to spend. So they're like learning about new products. So we sell ads to our partners and then we take a majority of our revenue and we reinvest it back into growth. So we've been doing that over and over again for six years. When we started, we were adding 2000 subscribers. Now we're adding 300 ,000 a month. So our, from, from zero to one, those three things, that's all we focused on. And basically Drew was writing the thing. I was doing our business section and helping out a little bit, but he was writing most of it.
25:02We had a co-founder doing the business and the selling. And then I was doing the growth and like the CEO stuff basically. So that was just that over and over again. And we did that until we got up to, so Sony is now our editor in chief. She's amazing. She's from, she was from Bloomberg previously, brilliant news writer. um so we hired her four years ago i want to say so she was like one of our early hires which allowed us to writing it for four years so drew was so the first year and a half maybe two years no year and a half drew talk about grit like i every offsite we have as a company i mentioned this drew had a full-time job and was waking up at four in the morning to finish our newsletter and ship it out before he went to his work in D.C.
25:56And you talk about grit and believing in your vision and mission. Homeboy, I should say homeboy, but he was doing that for a lot. He believed in our vision and most people would not have kept going. Are you kidding me? Getting up at four in the morning to ship a newsletter to 500 people? Who would do that? Why not hire somebody earlier? Writers are not that expensive. We had no money. We had no money. We're going to hire with. How long did it take you to reach the first 100 ,000 in revenue? In revenue? Roughly. We didn't monetize until we were like a year and a half. So for a year, why not? What?
26:34Why not? Because we had 500 subscribers for the first quarter. Whoa, wait. And then we had 2 ,000 subscribers. So you were in the below 10 ,000 for over a year? We got to, I got to check the numbers, but it was the first quarter or two, we were doing nothing but just iterating on the product and understanding what the user wanted. That was the first two quarters. Then it was, okay, we have something here. We have evidence of product market fit, huge retention rates. People like our product, they're forwarding it. Now, how do we disprove, going back to our three models, how do we de-risk that can we grow the thing?
27:08So then I started dribbling capital in as our angel investor with Facebook ads to prove that we could go from whatever it was, 2 ,500 subscribers to like 20 ,000 subscribers. So we did that work. And basically, we're getting to your point subs for like a dollar or whatever it was back then. Now it's like 253 bucks, but back then it was a dollar. And it was like, okay, can we acquire them? Are we retaining them? Same thing. So we proved that out. And then once we had the retention proved out and the growth proved out, then we tried to prove out monetization. It's just when we brought on our third co-founder to do that work.
27:40But we were trying to... Drew, one is a brilliant writer, he likes what he does and yeah we like also like we didn't want to give it to someone we couldn't afford sony at the time um so we didn't want to like outsource it to some excuse my friend shitty writer that was going to ruin our product experience so basically drew kept on going he still writes for us today he doesn't do the daily as much but he's writing all of our our a lot of our content he loves that so we just leaned into those three things instead like focus on the product, prove we can grow it, prove we can monetize it, and then let that flywheel spin as much as possible.
28:17That's so shocking that that's where it was. Speaking of ads, you figured out ads yourself in the beginning? Because I know ads from talking to Jesse are huge for you. On the acquisition side or the sales side? Sorry, buying ads for acquisition. So we were doing it very early on by ourselves. And then we quickly realized we needed agency to help us. And then that's when we partnered with agencies. Okay. All right. I could have sworn that I saw, here it is. I saw that you're adding now 300 ,000 new subscribers a month and retaining about 150 ,000. Is that a good number? I'm trying to get a sense of what the economics look like.
29:00It's actually a great number. We've been trying to get that, what's your long-term retention rate on newsletter subscribers, numbers from a lot of people. It's not widely shared, but from what we've heard, it's one of the top, if not the top in the industry. So the way we see that is it's actually really cool. You can see it in our retention curves. So about 20, 15 % of people, we don't do double opt-in. So sometimes it's bad emails. Sometimes you don't get through. So about 15 % of the emails never open. And then from 85 to 50, you see some loss over about a quarter. So people are feeling us out.
29:36Some people read it and they're like, not for me. And they unsubscribe right away. So we will take some like two or three months. But you see the curves flattening and then they hit about 50 percent. And then like they're pretty flat in perpetuity. So it's something like even our cards from like 2018, something like 40 percent of them are still around. So there's a little degradation. Like you have spam issues. You have people like changing jobs. So like people fall off. But yeah, you get like the first quarter and it levels out. So yeah, that's a wonderful number. And the way that we think about that is on the revenue side with our partners, now that we're scaled, we make about a nickel every time someone opens our email.
30:15If you break down the CPM. For each person. Each person opens an email, we make a nickel. Now we have to deliver for the customer, the advertiser, and they're looking for returns, whether that's signing up for a credit card or a mortgage or a new vitamin or whatever the product is. The moon seems like a big one. Yeah, that was in today's. But yeah, so basically we pay a nickel every time someone opens the email. Again, we have to deliver for them. But so you start doing that math and it's like, okay, we send 25 emails a month. We have a 65 % daily open rate. So call it 15, the average person that opens 15 emails a month.
30:56We make a nickel every time they do it. So they call it 70 cents a month a user. we're acquiring user for like two or three bucks depending on the channel and then half of them go away but so it's like you know about five to six month payback period and then after that it's just all revenue that we can just reinvest back into growth and you start stacking those on top of each other and that's where you go from again like two thousand a month to now we have three hundred thousand a month because we're spending over about a million bucks a month on growth from our flywheel model. You know, Jason Calacanis was trying to create a newsletter.
31:30You know, I forget what it was called, but he was trying to create - Inside.com. What is it? Inside.com. Right. And the thing that he was doing was he was the opposite of you. You want to go broad, he wanted to go niche, as niche as possible. And then he would even have people vote on what the next newsletter was. It seems like one of the things that you had done was by going broad, you could reduce your costs per acquisition. And then by mastering by mastering ads, you could get really good at bringing people in consistently. I don't know that he ever did advertising especially well, but he definitely was not going into that into that broad market.
32:05He wanted as niche as possible. Yeah. Yeah. It was brilliant that their strategy and launching it. I thought it was so so smart to your point. They had wait lists. And then once they got over. Right. 10 ,000 or 25 ,000, they would start building those. Yeah. I'm not in their boardroom and I don't want to want to speculate, but I have some ideas on. Yeah. You know what? One of my favorite parts of going to business classes in college was the Harvard business case, because it forced you, even though you couldn't make the decision for the CEO who you were like reading the case study on, it forced you to think about it to then, you know, strengthen your thought muscles.
32:42What would you say as someone who's in the space without any inside information? What do you think about this space, about the way that they're doing it or the way that they did it? It looks like now it's a coming soon page. Analyze the business without having any deep insight. I think the strategy was brilliant, which doesn't surprise me. He's like one of the best angel investors of all time and like very forward thinking dude. I think the problem was product quality. So if you look at it, like I think they hired writers and they paid them hourly. and I don't think there's love in the product.
33:20I think that was one of the big challenges. We talk about this every day. You mentioned the beginning of the call. People have so many places to get news and information that you have to pour your heart and soul and put your love into the product. We do that every day at 1440. It's one of the reasons we only have... We're working on another product now that's going like we're swinging for the fences, but it's one of the reasons we've been very disciplined and focused and said we are not doing 50 products because when you start doing that, you get mediocre, mediocrity, excuse me. So we just have the one product, our whole team's thinking about every day, our whole team's looking for awesome resources to add to it for tomorrow's newsletter to delight our reader.
33:59And again, I'm not in their boardroom, but from what I saw from the outside, I think it was, you know, it was a paying people like an hourly rate. And a lot of the, I think a lot of the writers that were doing it were kind of like part-time people. They didn't really care very much about it. They were just kind of shipping the thing. and I think that's why their open rates were relatively low. I could be wrong, but that was my take from the outside. But I think the model was brilliant to your point. It's like, yeah, it's the opposite of us. It's like there's all these niches. So like go create these little niches, you add them up and then you get like a very scaled company.
34:31But I just don't think there was enough love in the product, I think. Okay, I get that. And they were pretty spread out. Now, Jason's a killer editor and a great writer. And I can't imagine - If he was writing what it would have crushed, right? But like, I think he - Did he hire the right people? That's my question. That would have been interesting, actually, if he would have just done a startup-only newsletter where he had a lot of deep insights where he can write it or have somebody he knows write it daily and he can edit it. All right, I'm with you on that. Let's then shift to just analysis of the business and why it worked.
35:10I have a couple of notes here. Number one is old ideas. I think Cody Sanchez is killing it online right now, talking about how you can buy boring businesses and a few people like that. But a lot of them are talking about how do you buy a laundromat? I think Cody Sanchez literally owns a laundromat somewhere here in Austin, I think. Well, you're taking old business ideas that are online and have the ability to scale much bigger than in-person businesses. That seems like one of the big takeaways for me. I'm looking at your face And I don't know if that feels as exciting to you as some of the other takeaways that you have.
35:45I think, yeah, I think that's it. That's who, yeah, like we, you know, digital businesses can scale like near infinitely. And these TAMs are massive, right? And I think that's one of the reasons we like our business model. We don't have to go pick up quarters and clean up the laundry mats, right? We just have to deliver a wonderful product in bits and ship it out to people every day. And yeah, there's a lot of advantages to that model. But I don't see a lot of versions of this that a lot of online businesses that will work forever and are as easy to launch. Like you just started with a MailChimp email.
36:14I wouldn't be surprised if Sam also used MailChimp in the beginning and others did too. If I'm thinking about CRMs, we might all need CRMs and maybe you need a personal CRM and a CRM for car dealerships and so on, but they're definitely not that easy to create and they get more and more competitive. And so it gets harder. I can't think of another online company or type of company that has the same economics as newsletters that you can keep coming back to and have it be easy. Can you? Not easy, but still. Have it still make sense. great question um i have to think about but i agree and that's when we studied this space before we got into it that's one of the reasons we really liked it right so we weren't sure if the product was going to work in the white space and the you know the the anti-niche positioning but i looked at it like a vc with my old private equity vc hat on i was like man if you can if you deliver these things are beautiful businesses so yeah we knew that coming in the only thing i might take that's similar is agencies i will be interviewing if i want to i can interview agency owners for the rest of my life who are doing tens of millions in revenue um but you know the work that they do keeps changing so i might five years from now interview someone who started in an ai agency back in 2025 and i'll go how did you do it and we'll we'll get the whole story.
37:41All right. So that's one. I think the downside there is you're always singing for your supper, right? Like you're always like, there's a renewal. Someone's always coming for you. I think like the long-term, the lifetime value, a lot of those customers is pretty low. So with us, it's like, I mean, we have the same challenges, but it's like, if you deliver for your customer every day, like they look for you in the inbox and you create a habit with them. And then again, that's why we have some of our readers from 2018 that still, Well, four each time of them are still with us. Okay. The other one is the focus on one.
38:11What a dramatic focus. I really did assume that I hadn't discovered some other 1440 newsletter. And as I was skimming around and talking to ChatGPT, I couldn't find another one. I think on your homepage, it looks like there are different topics and it gives me the impression that there are a lot, but it's still from what I'm hearing from you to this day, just one newsletter. So it was until about a couple of months ago. And now we have a new product we're going after. But yeah, to answer kind of the spirit of your question, yeah, we looked at other, like launching, like, you know, Drew's a scientist.
38:41We could launch a science newsletter tomorrow. We could have done that four years ago. Yeah, we always did the math on it. It's like, okay, because our TAM is so big, again, I know I keep doing that, but it's like, it's such a big TAM. It's like, we have the advantage that a lot of the hustle and those guys, like they hit their, they got to 2 million, which is like what, 30 % of that market. And then they kind of hit a ceiling and they didn't grow anymore. more so they had to go outward with us we had the advantage of like because we're going into this massive tan like we could just keep going so we were like you know we'd look at should we launch a sports newsletter a science newsletter and you start doing the math on it and you're like okay so maybe you get to a couple hundred thousand subscribers you have to add an editor a seller a marketer you like rebuild your company and basically with 10 of the revenue and it's like okay so maybe that thing does a couple hundred thousand dollars in EBITDA in year three it's like, who cares?
39:32I hate to say that, but he's like, why are we thinking about this? It doesn't matter. Like, why don't we take all that energy and focus it on something bigger? When I was in private equity, one of my favorite stories is we had a candy company called Neko. You know, those Neko wafers that have like the, I love you hearts on them. Okay. No, but I'm looking at sweethearts they're called. Okay. They have a little, you know, the, the little, like, I love you hearts. They taste like chalk. We own that company. And we were interviewing new CEOs and we interviewed everyone from Hershey's and Mars and all these wonderful companies.
40:02And I remember we had something like 40 SKUs and most of the SKUs did under a million in revenue. And we were always fighting to try to get a little bit more. And I remember the eventual CEO who was very senior at Mars came and he's like, what the F are you guys doing? He's like, why do you have 40 skewed? And he's like, you know how we think about this at Mars? or he's like, so you have Reese's that does 600 million in revenue. I'm totally making up these numbers or something like that. And you have Bita Honey that does 10 million of revenue. Which one do you want to grow 20 % next year? Get rid of Bita Honey.
40:36And that's why those brands, they sell off those little brands to private equity because we don't want to deal with that. Like, why is that? It's just taking away our focus. So I just think a lot of companies, I learned that in private equity firsthand, they just, they focus on too many things that aren't that big, like don't have a big upside. And it's like, why? why not only does it like it makes your organization more difficult you have to hire all these people like it just i just don't get it it's like so our whole thing is like do one thing we're we're now doing another thing i can get into a second but do one thing do it really well keep it simple less is more the power of saying no focus focus focus and when you do that like magic happens i think and i think a lot of companies and we've seen this in our industry too like in the newsletter industry a lot of these companies like launched all these products they didn't work they fire 50 people and they lay off another 100 people and it's like like i think they like did they i don't know that was going to happen like did you not see that so we just basically we're not going to do that here we like we're going to focus on what we're good at and have like discipline and say no and then also like you know at the end of the day this is all about like it's a people game and it's a talent game and like we haven't we've lost one employee in four years and it was a good a good exit on both sides.
41:48But like, I want to be able to hire the best people in the world and like pay them very well. And everyone has equity in our company and like want them to be happy and like doing awesome work. And if you're laying people off all the time, like if you're the best person in the world at growth, are you going to want to come to a company that lays its employees off every, every year? Like, no, like you're afraid of that. So we've never done a layoff. Layoffs are not in our vocabulary. We do like a million in revenue per employee. And like, we want to keep the thing lean and mean and control our own destiny.
42:16And I think that's one of the beautiful things about bootstrapping is if you do it the right way, the key thing here that not a lot of people talk about is you control your own destiny. We have a board and they're wonderful and they're really helpful, but we can do whatever the hell we want. It's such a powerful move. Like most companies, if they want to do like a little bit of a thing or try something new, you got to go to your board and like, no, get out of here. That's not what you raise money on. With us, we can like do whatever we want. It's such a cool advantage to have. What's a cool thing that you think an investor wouldn't let you do?
42:44So what's a cool thing that you think an investor wouldn't let you do? No, I'm saying we don't have that problem. I know, but do you have an idea that's so wacky that an investor wouldn't let you do it? So, I mean, so not wacky, but like our product that we're launching right now, our new one, which again, one of our principles is swing for the fences. So again, like we don't want to launch like a little newsletter that can do a million in revenue. If we're going to spend our time on something, let's go big. So our new product that we've launched, it's basically, so, okay, what we hear from our readers over and over again is they see things in the news every day, like the gut microbiome, CRISPR, inflation, Burning Man, the city of Chicago, right?
43:24They want to learn about these things and they have this huge pain. It's not too dissimilar from the pain Drew and I had when we started this, which is they go in a search engine, they look for what is Burning Man and they get this SEO clickbait junk layer of the internet that doesn't teach them anything. so they might go to a social network looking for a video there's good stuff on there there's also crazy russian propaganda on there you don't know what to believe it's a a doctor with three kids just wants to know what the hell burning man is like literally that's all like i just i hear about all the time i want to spend a few minutes learning about it why is this so hard so we hear that over and over again from our readers and then on the flip side because we're i would argue with our opener at the best curator in the world we're constantly seeing all these wonderful resources So for instance, like if you want to learn about CRISPR, MIT has this 12 minute one-on-one video.
44:12That's the single best place that you can learn about CRISPR, but no one can find it. It's on the 80th page of Google and it's buried deep on the internet. So what we're trying to build is this like, originally we called it Pinterest for knowledge and that's not totally fair, but now we kind of say it's like if Reddit, Wikipedia, and Pinterest had a baby for knowledge. And what we're trying to do is basically all these terrific resources that are buried so deep on the internet. We're trying to bring those into one place and just connect the intellectually curious person with all the best resources in the world so that they can efficiently learn about these topics.
44:45And then what we do so well is we not only curate it, but we explain it to you. So like, here's a couple hundred words summary on what Burning Man is and what the 10 core principles are and what black, the city looks like. And some awesome videos of like walking through the playa and all these things, right? There's all this wonderful content, but like people bang their heads against their wall, the wall, trying to find them. So we're trying to bring it together and create like the best place in the world. When you want to learn about a topic is on our website. So that's what we're doing. But like, you know, if we, so if we nail that, which we, we will, it's going to take time.
45:23It's like, that's, that's a big company. It's like a Reddit or a Pinterest or Wikipedia. So like, we want to be saying like, if we're going to do another product. It shouldn't be a$500 ,000 revenue product. If you're going to take a swing, if you're a focused company, if you're taking a swing, it better be a big swing. So we've been patient in studying this for a long time. And that's what we're going after. But we're using it with our own profits and we're investing with our own money. And that's the huge thing. I can see that this would be an issue for an investor because what you're really doing is - They're like, bro, what are you doing?
45:54Get back to operating the business. You're creating a human curated search engine where the responses are all, that explains why when I go to creator economy on your site, I see a background on it, history, social impacts, future of it. I see references that you use. And then on the right, a newsletter. I assume that was for SEO purposes so that people read the best thing that you can create on it. And then it links, then there's a box to get them to sign up to the newsletter. That's not what it's about. It's not your SEO play. we're building this ecosystem it's called topics we might change the name shortly but yeah this reddit meets wikipedia of our job to be done that we want to serve is anytime you want to learn about a topic it's the best place in the world to do that we know that ai is coming we know that everyone asks that question to get ahead of it like but one of the things that we've learned is and you know i use perplexity every day it's it's amazing it's replaced google for me and we all use chat between all these different sources but even then like if you want to learn about venture capital right?
46:52You type in what is venture capital? It gives you an answer. And then you do that. And, and, and we feel like it, it lacks the, like the human serendipity of like, Hey, here's venture capital. Here's some of the key themes. Here's how carried interest works. Here's what the Midas list is. Here's Mark Andreessen. Here's all these like big, here's the arguably was invented in the whaling industry, venture capital or queen Isabella and 14 in the 14th century from Spain, right? All these awesome resources that like, if you don't know what to ask a Q &A search engine, you're not going to come across them.
47:28So we're trying to actually be like proactive, which is what we're really good at as a company and being like, okay, someone went down this knowledge, the rabbit hole. They learned about venture capital or Burning Man for 30 hours and they came back and they're like, this is what I learned. Here's some of the key insights. And podcasts, data visualizations, articles, where if you want to go down the rabbit hole as well, they're all right there for you and they're all world-class and they're all fact-checked by a human. So you do not waste any time in your knowledge journey at 1440, where on all the other sites, you're just like, why am I sifting through shitty videos?
48:05It's a risky, bold bet. I mean, you really are going the opposite of where everything else is going, where everything else is going towards AI content. You are going towards human content. where it might be about the community coming in and pitching in and adding information like the reddit example or pinterest example you're saying no we're going to have a real editor come in and do this correct yeah so we're using the human editors are using ai tools to be more efficient at their job but yeah at the end of the day it's it's human curing we think there's like a lot of beauty of that right like because there's human serendipity like when you go down the rabbit hole It's like, wait, why does this thing keep coming up?
48:46And what is this in connecting the dots? Like the human mind's amazing and AI is coming for everything. But we think there's like a real beauty in like, yeah, leaning into the humans. And that's what we're, yeah, that's what we're working on next. All right. I'll close it out with something I probably should have opened up with. The reason the company is called 1440 is? It's the year the printing press was invented when knowledge was exploded to the masses. So we're a knowledge company and we're trying to lean into that. it's also the number of minutes in a day. So that's our whole thing is like knowledge and time, knowledge efficiently.
49:18That's where our name comes from. All right, right on. Thanks so much, Tim. Yeah, thanks so much for the opportunity. Appreciate it, Andrew, so much. Hope to see you in person. Bye. Thank you.
From the publisher
Tim Huelskamp is the co-founder of 1440, the fact-focused daily newsletter. Tim and his team are building 1440 into a trusted source for intellectually curious readers who want an inch-deep, mile-wide view of the world.
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