How 1440 scaled its newsletter to 4 million subscribers

Tim Huelskamp's background in private equity trained him in the science of growth arbitrage.

What’s the true monetary value of a newsletter subscriber? Tim Huelskamp knows the answer to that question. As the co-founder of the 1440 newsletter, he knows how many emails the average subscriber will open, how much money they’ll generate in ad revenue, and what it costs to acquire them.

It’s this ruthless approach to unit economics that allowed 1440 to grow to over 4 million subscribers, all without raising any VC investment. In a recent interview, Huelskamp explained the original idea behind the company, how he and his co-founders generated their first few thousand subscribers, and why 1440 is now expanding beyond the inbox into topic-based explainer content.

Watch our interview over here.

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Transcript

Hey, Tim, thanks for joining us.

1:28

Yeah, Simon, thanks so much for the opportunity. Super honored to be here with you.

1:31

So we're talking about this really cool media company that you co-founded, 1440, and I really want to get into everything that goes into running that. But first, I just want to figure out kind of the insights that you had that led up to the actual launch of that. Your background isn't in media.

1:50

You started out in finance, right?

1:52

That's correct, yeah. So after college, I did investment banking for a few years, and then I worked in a private equity venture capital fund. a big $20 billion publicly traded one for about a decade before 1440. Yeah.

2:02

And so when you were in private equity, like you were kind of almost like part of a team that was working on kind of like the operations side of the portfolio company. Like what were you doing in private equity?

2:15

Yeah. So I actually had two experiences, which is really helpful because they're very different. The first to go around, I was more like late stage venture, early stage growth equity. So it was kind of like investing in future internet and software businesses, like, you know, where the puck's going type stuff. So that for a few years,

2:30

and then transitioned over into our operations team, which is more like workout. So we had a bunch of a couple hundred portfolio companies. And if one of those companies like was moving in the wrong direction, we had this kind of SWAT team of operations professionals that would come in and like stabilize the business and then try to

2:46

increase its EBITDA and like the long term valuation of the company. But it was very like almost like kind of consulting, like hands on, on the ground, turning the business around, which was a totally different learning experience than the venture capital side, but got to learn a ton about how to operate businesses and what makes them

3:02

profitable and how to motivate people and just the basic kind of business 101 stuff.

3:08

Yeah, so it was operating almost like a McKinsey, but you actually, through the private equity company, owned at least part or all of the companies. So you're like, okay, we own you now. We need to get you to profitability. So we're going to send in this team to basically do a management consulting type of

3:27

thing to figure out what is not working so that we can get you working again and back to profitability so you can have a successful exit. That's kind of the gist of it.

3:35

Yeah, exactly. And we would focus on upgrading the management team. Upgrade the management team, they would also bring in experts like marketing expert from procter and gamble that would help the company think about branding and how to take the business to the next level a sales expert they'll do

3:47

the same thing but you know the key thing i learned there which is fascinating was we would go into these companies and then they would have like a lot of times like a dictatorial ceo that like wanted kind of b play c players around him or her um

4:00

and we would come back and like drop our ceo in that was really really uh wonderful and had done this multiple times and You have the same exact employees and you come back six months later and like the company's energized. They're listening to the ideas. It's literally the same 300 people,

4:14

but like they actually have the opportunity to speak their mind and help each other now. And these companies would completely transform. So, yeah, got to do that and see how important leadership and the team is and getting folks to row in the same direction.

4:27

Do you think, like, and this is kind of putting the cart before the horse, but, like, working in that kind of environment, that got you to kind of focus on, like, the unit economics and stuff that would, like, later come in to how you, like, ran 1440, which is a very kind of focused, like,

4:46

this is how much a user is worth, so this is how much we're going to spend to get them. Like, things that, like, media people don't really think about that much. Like, do you think that's where you kind of learn that kind of skill set?

4:56

Oh, yeah. All day long. It actually started when I was in investment banking because I used to do that, you know, till two in the morning, multiple nights a week, just trying to figure out the financial model and how to build a profitable company. So, yeah, started in investment banking. Then, yeah, in private equity,

5:10

that whole thing is, you know, if you're launching into like new cities or new. new projects it's like showing the the unit is profitable like whether that's like a city or um a target market right you have to show that that's profitable and like

5:21

will be in the long term and then they would come to us asking for capital so we had to model that out and say okay this business works and if you give it 50 million dollars they can expand from three cities to 40 cities and then They do 10 million in revenue now,

5:35

but you model that over three years and they'll do, you know, 250 million in revenue and then the company will be worth three to four X what it is today. So, yeah, very much so. I think like, you know, that was beat into our into our brain, just like, you know,

5:48

building that profitable flywheel business model was a huge part of the private equity experience.

5:54

Yeah. And we'll talk about how you did that arbitrage for 1440 in a few moments. How did you end up leaving private equity?

6:03

Yeah, so a larger private equity firm came in and bought us, and they were basically like, you can stick around, but we're not sure what your future is going to look like, or you can take this pretty nice exit package and go figure out what you want to do. And at the time,

6:17

I was in my young 30s and did private equity for about 10 years and sat on some boards and saw a bunch of stuff and was very entrepreneurial up to that point and kind of did some angel investing and messed around with starting companies and

6:30

thought through it and said to myself like you know this is like they're basically paying you to go try to start a company you should probably take them up on that so decided to do uh to do that take them up on it so you kind of viewed the severance

6:42

as startup capital correct yeah it's like my own personal runway to figure the

6:46

thing out essentially yeah and so you eventually team up with this guy named drew how did you know him how did you meet him

6:54

Yeah, actually, it's an awesome story. So Drew is brilliant. He's our chief content officer. He wrote the newsletter, writes the newsletter, writes our new topics page. So my brother-in-law went to the Kennedy School of Government at Harvard. And he loves college football and had a group of buds.

7:13

I think it was about eight buds that loved watching football while at the Kennedy School. After they graduated, they continued to have an email chain where they discussed college football. And they continued to add folks to it that also liked college football. That's my big sport. I really, really, really enjoy it.

7:27

So, yeah, there's now a group of 16 of us that are on this email chain that – There's lawyers, politicians, data analysts, business folks, just professors, really smart people from all walks of life. And we talk about college football, but then also politics and culture and all these different things.

7:47

And I actually met Drew through that email chain, which we call The Chain. We haven't trademarked that yet, but we're working on it eventually.

7:55

So how did that transition from emails to conversation? Was it phone conversation? Were you meeting up for coffee? How did you take it to the next level in terms of the friendship?

8:08

Yeah. So I give Drew all the credit here. Like we came up with the concept and we're talking about this mutual pain point we both had, which I can get into a second. And I think Drew was awesome. And he said, like, why don't we just build it? Like, let's just go. Like, don't overthink this.

8:20

Let's try to come up with a draft of this email tomorrow. And we literally came up with it like in a day and tried to ship it. Within that week, which was like,

8:28

were you were you discussing that over email or had that by that point, had you gone to phone calls or in person meetings or like what was how were you guys communicating with each other where you started like kind of brainstorming this idea?

8:39

I think it was a combination of emails and phone calls and the like. Yeah.

8:43

Yeah. But you, had you met in person yet?

8:45

Yeah. Yeah. We'd met in person before. Yeah.

8:46

Okay. Um, and so you, what were like, so what were you talking about these pain points and stuff like that? So like, what were these conversations that you were having about these pain points in media that you, that you eventually thought that you could solve with, with a media startup?

9:03

Absolutely. It's two big ones and we still feel them today. And we think there's a large opportunity into serving these, but Essentially, it's like everything in media by design, not everything, but most things in media by design are very niche or verticalized, right? So you have like sports, culture, technology, politics, all these different verticals.

9:21

And it makes sense, right? Because you deliver to those audiences, they have higher CPMs, they're very engaged audiences. But we kind of felt like for the intellectually curious, busy professional that wants to know a little bit of everything, it was just too much work.

9:33

You had to go to 15 or 20 different newspapers or newsletters or TV shows to learn all that. And we basically said, like, can someone just pull it all together for us and be kind of like the inch deep mile wide provider in a world of the opposite? So that was the first one. Like,

9:46

can someone give us what's going on in the Middle East, the latest company IPO-ing, what CRISPR is, why that matters for society. But then also like fun stuff like fall foliage schedules and Michelin stars and just kind of pull this really interesting thing. intellectually curiosity-driven product for the audience. That was one.

10:07

And then the second one was we felt like many times there's so much got in the way of the learning or of the knowledge. So that might look like opinions in a lot of the news pieces. It might look like bias in a lot of the news pieces.

10:20

It might look at like if you turn on the TV and you watch one of the big networks for the evening news like they just yell at each other for like you actually don't learn that much because they're yelling at each other for

10:30

like 45 minutes to get your blood pressure all riled up so we just said like we're not even learning that much and it's taking all this time can you just can we just strip all that out so is that like one two punch kind of comprehensive then just

10:41

get rid of all the extras to get in the way of the knowledge and um that was what we were going for and we thought you know at the time we got a lot of feedback from We kind of still get this feedback today from some experts that said this won't

10:52

work because it's you need to be niche in media. And like our whole thing all along was like, we hear you and understand that. But we actually think the intellectually curious, busy professional who wants to learn a lot of things is a niche. It's just a massive niche, like, you know, tens of millions of people. So.

11:12

There's only one way to find out. And we went through the minimum viable product process to see if it had any product market fit.

11:20

And had you been observing what was happening with like some other similar newsletters, like The Skim and Morning Brew and stuff like that?

11:26

Very much so, yes. So I think like one of the reasons I was really excited about this model was I saw what they were doing. And I saw that if you can find white space and then deliver for your customer, the business model works really well here. The unit economics are very, very profitable.

11:42

So kind of putting our, you know, PEVC hats on, we were looking at the industry and saying, wow, like, yeah, if we can build this, there's a profitable business model here. And then we think our unique UVP, unique value proposition, the inch deep, mile wide, we think that's a really large total adjustable market.

11:58

So if we can build that, it can eventually become a large business.

12:02

And how did you settle on the name of 1440?

12:05

Yeah. So 1440's year, the printing press was invented when knowledge was exploded to the masses. It's also the number of minutes in a day. So like we try to like those are our two like superpowers. We help you learn and we save you time, like knowledge and efficiency. We were kicking around ideas for a couple quarters.

12:22

I think our name originally was... like streamlined or something like that. I should know this. It was literally like our MVP when we had a couple hundred people. And then, yeah, it was actually Drew who came up with the name. And he always liked the name 1440 because of the knowledge and we wanted to be a

12:40

knowledge company. And then I remember one day I was out for a walk and he texted me. It was in the running for like one of the top four or five names. And he texted me, guess how many minutes are in a day? And I did the math and I was like, holy cow, that's the name.

12:55

Let's do it.

12:56

And so you say you sent this MVP. What year did you send the first one?

13:01

May of 2017.

13:03

And what platform did you use to send it?

13:06

MailChimp.

13:07

Actually, sorry.

13:09

The first one is 78 friends and family just in a Google Doc. Okay.

13:12

And you said it was like 78 people, like just people you knew.

13:17

aunts, uncles, college friends, groomsmen, brothers and sisters, good friends, the guys from the chain that I mentioned earlier, and then similar with Drew, just like our buds. And we just sent it out. We intentionally didn't say much. We said like, we're working on this thing. Can you take a look at it?

13:33

But we didn't want to ask for too much feedback because we wanted to be pretty natural. And then, yeah, just send it out to them. At that time, it was just one in that first week. And internally, the beautiful thing about the newsletter world is there's benchmark data all over the place.

13:48

So you can know if you're doing well and if you have something. So at the time we said, hey, guys, if we don't have a 40 percent open rate and a 5 percent weekly organic growth rate, Like we shouldn't spend our time on this.

14:00

And I think we had a 65% open rate on the first one, which basically is what we have today. And the first one run from 78. By the time we were writing the second one a week later, we had 91, I believe it was people on the list. And then it was 104 the next week.

14:17

So not only were people opening it and giving us positive feedback and giving us ways to improve it, but like they were naturally forwarding it to friends, which was a, which, provided some strong evidence of like really really early product market fit and

14:30

that's like one of the two reasons or those two reasons were why we thought there was something here like let's just let's just keep going and see what else what

14:37

else is here and then the format is relatively simple it's like headline like kind of a short breezy summary of here's the most important stuff and then linking to you know here's some more resources if you want to go deeper on this that's kind of like the general format of it

14:52

Correct. Yep. To use like our business section as an example, you know, we always want we want to provide the value right away, too. So, for instance, like if this doesn't make any sense right now, but Pinterest recently, Reddit recently IPO and I forget their valuation, but like in our article on Reddit, we would say, you know,

15:08

Reddit. IPOs at 39 a share, valuing the company at $12 billion, you know, shares up 22% day one of trading. And like, you know, if you're a real Reddit enthusiast or real IPO enthusiast, you can go click the link and read the five minute article.

15:24

But if not, you kind of got most of the information that's really helpful. So we try to like deliver the value and like the knowledge insights like really efficiently within the newsletter so people can just take all the knowledge in and then choose their own adventure.

15:37

and so how did you kind of divide divide and conquer the actual labor in those early days was it was were you both writing it was someone responsible for writing and the other for like marketing like what was the what was kind of the the

15:50

division of labor yeah it was all hands on deck but drew did a majority of the writing so almost all the writing i did the business section because My background in private equity, I'm really passionate about that too. And then we have an et cetera section, which is basically like fall foliage schedules,

16:04

the best Airbnbs in the world, really fun information. So that was a team effort. I did a lot of that, finding those things. And we just kind of put it all together in a document and then just iterated on it over and over.

16:19

And it's daily now, but it was weekly back then.

16:22

Yeah, I think it was weekly for the first maybe quarter as we iterated on it. And then we went to twice a week and then three times a week and four times a week. Drew was still at his job while this was all happening.

16:34

he was waking up at four in the morning while he had a daughter that was two years old somehow talk about grit, which is one of our principles, like to get these things off the ground. Like he was literally doing that for, I believe 18 months while he had, um, while he still had his, his job on,

16:49

on Capitol Hill. So like, you know, talk about grit and like belief in what you're doing. Um, I don't think a lot of people would have, would have got through that. Uh, we talk about that every time we get together and how grateful, grateful we are for that work. Um,

17:02

So we just kind of grinded through it and kept on begging for feedback and saying, how can we make this thing better? And how can we delight you, dear reader, every day?

17:14

And so when you look at like the early growth, like your first 1000 subscribers, how did you get those first 1000 subscribers?

17:21

Yeah, so when we were really small, and we had no capital to reinvest, it was a lot of the word of mouth people forwarding it. And then it was also at that time, we did a lot of cross promos. So we would like go with others, like similar size newsletters.

17:34

And hey, if you talk about us, we'll talk about you. So that was like the two big strategies that we did early on.

17:41

And so eventually, like that was, you know, eventually you get into paid marketing, but I think you didn't really do that until you started generating money in advertising, right?

17:51

We started to a little before just because so like I kind of served as our angel investor and I wanted to prove out that we could acquire subscribers at scale. So we started to invest a little bit of money into paid social. I think it was all Facebook at the time. Yeah,

18:06

we started to experiment that because like this model and even today it's still pretty true. it's really just three things well it's i always say it's like hiring the smartest people in the world to do those three things but those three things are deliver a

18:18

world-class newsletter every day right that delights the user with our 60 open rate it's can you monetize can you sell ads against the audience and then can you grow the list right so we have that little flywheel business model that just does that

18:31

over and over again but we thought about it like you know kind of putting our vcp hats on and said if this thing's going to scale we need to de-risk those three items so like can we Can we deliver every day and retain the users? Because this whole business model breaks down if you don't retain the users.

18:47

Can we monetize and can we grow the list? So actually, if you flip those two, we focused first on... obviously like the product, then it was growth, just proving we could start to get subscribers and then monetization. And then we had those three, it started going up, going faster.

19:04

So you had to invest some money early on to get the flywheel spinning. Then once it got big enough to get advertising, then you could start then taking that advertising and reinvesting into it. And then it would, it would become like a true flywheel, but then,

19:17

Something had to start the flywheel from spinning in the first place because it wasn't going to be completely organic. So like you said that you were spinning it on Facebook to start with. Like was it just like a sign up for this newsletter? Like just very succinct like explaining like what the value was and stuff like that?

19:35

Exactly. Yep. Like all those ads you see on Facebook today, very similar to that. Our unique value prop and sign up today. 100% free. Unsubscribe anytime. Yeah. And yeah, we were getting, back then I think we were spending way less money, but I think we were getting subs for like a dollar, something like that.

19:51

So we just kept on iterating on that and learning how to acquire customers.

19:55

And so at what size were you like, okay, we're big enough, like we need to start going for advertising?

20:03

I believe we waited until we had 50,000 subscribers and then we started doing deals then.

20:09

Yeah. How long did that take roughly?

20:11

I should know this. Call it a year and a half, 18 months, something like that.

20:17

So then how did that shift to like, so you've kind of worked on the business side and Drew's been on kind of the editorial side. Is that kind of like a rough? So like, did you like, you were sort of already focused on that, but like, did, was it then at that point,

20:29

did you just go fully into business modes? Like, and just like the market, just working on finding advertisers yourself or like, how did you start finding these advertisers? Yeah.

20:38

Yeah, so we had a third co-founder named Pierre who did all of our sales. He was actually at another newsletter called Finimize, which got acquired a couple years ago for a hundred and something million bucks. So he was there and we brought him aboard to help with the sales.

20:53

So I kind of did the CEO-ing stuff and then growth was very integral in the growth side of the house. And then Pierre was sales and Drew was product.

21:06

And who were like – or what kind of advertisers were coming on early on?

21:10

Yeah, it was like the – oh, man. Hold on. I can pull it up. Who was our first advertiser? It was all – I should know this. It was kind of like the CPA type deals to get on the board there. God. Dollar Shave Club, those type of companies.

21:29

So kind of like what you think of as early podcast advertising? Correct. Because these were all savvy direct-to-consumer companies that were really good at their own form of arbitrage, of figuring out what it costs to acquire a consumer. So that's why they made very early bets on podcasting and newsletters and stuff like that.

21:53

So those were your advertisers as well.

21:56

Yep, correct. So like Harry's Razors, yep, those type of brands.

22:02

Casper Mattress. Exactly. Meal Delivery, all that kind of – all those classic podcast advertisers from yesteryear. Exactly. So you start selling those. So then talk to me about how that then like once you had revenue coming through the door and the Morning Brew guys are known for doing this, the Hustle guys too –

22:24

is like what was the and this goes into your unique economics like learnings when you were in private equity and finance and stuff like that what did you do in terms of like figuring out like okay this is what a new subscriber costs to acquire this

22:39

is how much they can generate over time so i can spend xyz like you don't have to go through the exact formula but like what how did you kind of like devise this formula for this for acquiring um acquiring new subscribers and and figuring out like how much

22:56

value they have basically yeah i'm let's go through the exact formula i'm happy to go do all the numbers but yeah okay so the way we thought about it was this business model as we said earlier it's it's um it's all about retention right if

23:06

you're not retaining your users like you're gonna go into business and like i think a lot of folks that are starting off and i try to give this um This feedback to them, like, you know, a lot of folks, I think a lot of folks try to monetize and grow too early when they haven't really

23:21

nailed product market fit yet. So I meet a lot of entrepreneurs that are starting newsletters and they have like a 25% open rate. And the open rate is essentially a quality metric for our space. So if you have an open rate in the 20s,

23:33

that means you need to work on your product a little bit more before you take it out to market and really invest in it. So if you have a 20-something percent open rate, it just means people aren't really loving your product. And then they're probably going to unsubscribe pretty quickly.

23:49

And they probably aren't going to be around long enough for the math to work. So how this math works... Well, first of all, let me go back. So... The way we're targeting it is generally speaking in the VC world, if you can get like a three to one lifetime value to cost per acquisition ratio,

24:07

that's what unit economics is. Lifetime value, how much money am I going to make off this customer forever?

24:12

So it costs $1 to get them three and they're going to generate $3 over the course of them being subscribed to the newsletter.

24:19

Correct. Yeah. And ours are, ours are different. Ours are much higher than that. But, but yeah, that three to one, generally speaking, that in the VC world is like, if you can get there, people will give you money because it means like you can scale the business profitably.

24:34

So that's always been, that was like a, something we learned in VCP. If you like notice people talk about unit economics, you usually see that three to one number. So that was always our goal was like, we want to be at least three to one or higher than To break down our model,

24:46

the way it works today is, and it was very similar back then, although our prices were lower back then as we were scaling up. But so we send 25 emails a month right now because we take off Sundays, although we're about to send that in a couple of weeks.

24:59

So 25 emails a month, we have north of a 60% open rate. So the average person is opening 15 emails a month. And then if you break down the CPM, it's about a nickel and open. So every time someone stays on our list, we're making kind of like 70 cents, 75 cents per user per month.

25:17

Now, those are the folks that you retain too. So You have to worry about the cohorts and making sure they're staying around forever. But once you get one of those subscribers, pretty soon, if you're acquiring a user for, say, $3 on Facebook, in four months, you've made it all back. And then in months five, six, and seven,

25:32

you can use that contribution margin or essentially profit before all the other expenses to just reinvest back into the company. So we kind of had that all, maybe not figured out, but I think we had about a year or so of data, of retention data, and we saw that

25:48

had north of a 50 percent long-term retention rate so even though it was very early we could say to ourselves like okay we're retaining folks and like they're already profitable so we can like we have some confidence here that we can throw some more um gas on the fire and make this thing go faster

26:05

And so what channels did you see were most effective? Like you started out with Facebook. Like what were some of the other things you experimented with and what channels were overpriced and what channels did you say like, wow, this ROI is amazing?

26:19

Yeah. So we started early and we almost did nothing else but Facebook just because we wanted to focus on One channel, like generally speaking, we like to focus on things and not do too many things. It also allowed us to like really learn how like the Facebook algorithm worked and

26:34

how to create ads and like get really good at it, which I do recommend when you're small, like doing one, maybe two, but just really learning the platform so that you can optimize it and see some pretty good gains there. As we got bigger, we diversified. It's not smart to have all your eggs in one basket.

26:51

We've tested almost everything today. We still use Google. We've tested Pinterest, Quora. Other newsletters are wonderful. We buy traffic from Live Intent, which is a Google ad network for newsletters. The Beehive platform, we've tested all the other ones as well. What's fascinating, one insight we've seen is a newsletter subscriber, sorry,

27:17

subscriber from another newsletter is usually about two to three times better quality. Like, so like they're opening two to three times higher, they're clicking more, they're engaging more, which kind of makes sense, right? People that already like newsletters are going to like newsletters more than maybe a random person on Instagram. But what is also wild is like,

27:34

there's kind of like a market equilibrium you see where essentially the newsletter subscriber might be like two and a half times as good, but it's also about two and a half times the price. So you can get a Facebook subscriber for call it two bucks, a newsletter subscriber for four or five,

27:49

and you're actually getting twice the users off of Facebook and Instagram meta, but half of them are sticking around as long. So you're just constantly playing that game to see how do we just maximize ROI on each individual.

28:04

What about influencer marketing? Like I know the Daily Upside saw a lot of success of working with like TikTokers and YouTubers and stuff like that to like basically recommend signing up for the like, especially finance TikTokers say, hey, this is a great finance newsletter that I love.

28:20

You know, a finance TikToker would recommend it and they would see like a huge rush at signups. Did you experiment with influencer marketing at all?

28:27

Yeah, we tested it multiple times. We've tested it. We're still doing some of it today, but it hasn't become like a big, big channel for us.

28:35

um yeah yeah um is that big is it also just because it's too bespoke like you'd rather just like buy it's easier for you to like use a google adwords and facebook dashboard and really track all your clicks and stuff versus having a bunch of

28:50

random tiktokers use a some kind of code or something like that or like what's the

28:54

what's your kind of thinking there yeah i mean it's way less work to just give all your money to mark zuckerberg and google um But also for us, it's more effective too. So it's a combination of those two. So if it was more effective to spend on Influencer,

29:06

we would shift all of our budget over there or more of our budget there. It's just we haven't found a better unit economics return over there than the scaled platforms.

29:17

So when did you start hiring staff and what kind of staff did you prioritize hiring in the beginning?

29:23

Yeah, so we basically had less than five people for the first... let's see, three or four years. And then we started hiring... we had part-time people. So we had like a part-time copy editor who she's wonderful names, Ashley. She's now full-time with us and writes as well,

29:42

but was doing it a couple hours a day just cause you know, we didn't have any capital to, to, to, to, to invest in, in, in growing the team. Um, and then we started to deepen our bench on the sales side of the house, hire a incredible chief growth officer, um, named Erica. And then, um, More writers.

30:04

So it was kind of like, you know, we had three, three, four people running the whole business and it was how do you get people behind them so you can actually like, you know, build more of a team. Yeah, that's kind of how we thought about it.

30:16

And then so you're at 50,000 when you started monetizing. I think you're somewhere around 4 million or something like that today. As you were growing, what did that growth unlock in terms of the types of advertisers you could work with? Was it always direct response advertisers or once you reached a certain level,

30:36

did it then unlock brand advertisers? How did your business start changing in terms of the types of ads you were selling and stuff like that as you got bigger?

30:45

Yeah, so a couple inflection points here. So first, when you're really small and you have tens of thousands of subscribers, you just have to do whatever you can to monetize. So a lot of times that means... Actually, I think Beehive does a great job of this for similarly sized newsletter, tens of thousands of newsletters.

31:03

They do the CPC model for the brands and they put that together for you to make it really easy. If they were around back then, we would have used the Beehive model all day. But yeah, I think we did a lot of like CPC, CPA deals. You kind of have to prove yourself to the advertisers early on,

31:17

but then once you get past a certain scale and you have a consistent, um, uh, track record of delivering for them, then they'll book you over and over again. So we actually saw that quite a bit where we may have started as a CPA, CPC deal when we had 50,000 subscribers.

31:34

And some of those clients actually still exist today, but they're buying CPM or big deals with us. But we proved to them that we could deliver to them. At the end of the day, we said this earlier, but it is so easy to just literally give all your money to zuckerberg and google and

31:50

any of these skilled platforms so you have to deliver for the clients otherwise like they'll just they'll move on right so like we know that every day and we think about it and we think like how can we be optimizing like obviously we have to have

32:00

you have to it all starts with having a wonderful team that builds a wonderful product that people want to open but then you have to think about like how are we creating these ads so that they're like enticing the links are in the right place to drive more clicks and traffic.

32:13

So we're constantly thinking about that as well. But I think it was kind of like, you kind of have to do the CPA, CPC, whatever you can to get revenue at the early stages. As you get bigger, those turn into CPM deals, which we saw kind of once we got into the couple hundred thousand range.

32:30

It's also interesting, once you get to a certain size, because a lot of these brands have very large budgets, you might look good for them, but they're kind of like, hey you have 50 000 subscribers i would love to do this but it's just not worth my

32:44

time because i might only get you know eight subscribers sorry eight customers from this and i need to put you know a couple hundred thousand dollars a week to work sorry yeah per week to work excuse me and i just i can't do these little deals i

32:58

need like scale so as you get bigger it actually for those customers that are seeking scale it helps um Was kind of the next inflection point. And then the latest one we're working on is, yeah, now we're going, we've been working on this for a while and we're starting to see it where we're

33:11

going from just kind of direct response, ROI driven advertisers up into the Fortune 50 and the big brands who want to get in front of our audience because of who our audience is.

33:22

Do you think newsletters are still too much judged by clicks? Advertisers only perceive many of them as how many clicks can you drive when obviously by showing up in a newsletter on a regular basis, it's creating brand awareness and someone might use you six to 12 months from now, not because they clicked on this one ad,

33:45

but they just saw it. over and over again. Like, is that like a frustration at all for you? Like, I know you are selling on CPM levels now and no longer cost per click, but I wonder how much that's like something that you struggle with as like a newsletter entrepreneur. Yeah.

34:01

Yeah, we definitely struggle with it. I think everyone that has like a million subscribers or more struggles with this. And like, there's actually, we're talking a lot about in the industry, how do we get that message out? I know I'm a newsletter guy and I take that for what it's worth,

34:15

but we see it because we're not only selling the ads, we're buying ads as well. Like we invest over a million dollars on all these different platforms. And as I said earlier, newsletters are the best place to do it. If we could only do one channel, we would do all the newsletters all day long, but it's just,

34:30

it just, they don't scale as well as like Facebook and Instagram, especially when you have like one person on your growth team, like we do. The one thing I will say though is, you know, if you're a banner ad on Instagram or a banner ad on Instagram,

34:45

display ad on a website you really don't get that much real estate to tell your story what's really beautiful about the newsletters is people are like in learning mode like they open those things like when i open your email i'm like learning deeply about the media space and i'm like for 10 minutes i'm reading that and i'm

35:00

very entrenched so when i see an ad i'm actually my mind is receptive to learning new things and i we do see that if you look at the data on when we're buying and selling when folks come from the newsletter industry when they're in that knowledge seeking mode The click-through rates are way higher.

35:17

The conversion rates are way higher because like you actually have them in that knowledge mode. So we're trying to figure out, I think as an industry, how to tell that story better to all the Fortune 50 brands. Because I do believe one day, hopefully sooner rather than later,

35:31

the bigger brands are going to realize this and then start to come down into newsletters just like they have in podcasts and realize like, oh, wow, it's incredible audiences down here. They're deeply learning. They're deeply, yeah, deeply learning. And we can actually like communicate to them in unique ways, which is, but yeah, it's a little frustrating,

35:52

but I think we're working through it as an industry.

35:54

And you're only doing native ads in the newsletter. Like it's not like you're not doing banners or anything like that. Correct. Only native ads. Yeah. Are you, is your team writing those? Like, are you consulting on the copy or are they, are they feeding the copy to you? Like what's the dynamic there?

36:08

Yeah. A little bit of both. So sometimes the client says like, please run this copy and don't change it. It's our tried and true copy. A lot of times we'll say like, Hey, can we tweak these couple of words? We want, we know our audience better. Some, some brands say like, here's some bullet points.

36:21

Can you please write it for us? So obviously we want to work with, with them however best we can to, deliver for them. So it all kind of depends. But however, we can be most helpful to driving performance for them.

36:33

And like, is your sales team, are they working directly with brands? Are they now, they're now like, like honed in on all the like Madison Avenue advertising agencies and stuff like that? Like what's the, how do you, how do you sell at that level of scale?

36:48

Yeah. So up until about two years ago, it was purely just like directly with the companies. And now we are doing the Madison Avenue. Yeah. I've taken a lot of trips to New York lately.

37:00

And there's no, I mean, I know there are some programmatic ad solutions, but it's all by, is it mostly just by hand that you guys are doing this stuff? Correct. Yes. Yeah. Okay, cool.

37:11

So real quick, the reason we do that is because it delivers like orders of magnitude, better performance that like, it's not like we're doing it right to like be lazy or we have nothing better to do. It's like, you know, if we put a CPM, like a live intent ad. We love them as a buyer.

37:26

But if we put live intent ads in our newsletter, it would drive about one tenth the engagement that our ads drive. So we want to like deliver for the customer. So we're trying – we do the bespoke model. But it also – like you sacrifice a little bit of scale there, right?

37:40

Because you have to – you got to do the work.

37:43

Yeah, and I think – I don't think that's what you guys are doing lazy. I think the other option is lazy is going the programmatic way. Like I'm sure you – as a reader of my newsletter, you know is like I think programmatic ruins everything it touches and like – It drives down the efficacy of advertising.

37:59

Once podcasts went from host-read ads to programmatic ads, the ROI of those ads went down, and it created a worse user experience. I think it's great that you guys are doing pure native ads, and I think more media companies should be focused more on that.

38:17

So let's talk about two different things that I think are related based on looking at it. The YouTube channel and 1440 topics. Which of those two things came first?

38:30

They're all kind of the same thing.

38:31

Yeah. So they launched kind of simultaneously. Correct.

38:34

Yes.

38:34

Yeah. Okay. So let's talk about what topics, which I think you would say is kind of the next expansion for 1440. This is how you 10X your business or whatever. So when did you launch topics and tell me kind of what's the overview of what it is?

38:50

Yep. So we launched it in October, but we've been working on it for like multiple years. Yeah. The thesis here is this. Okay, so we have 4.1 million readers. A third of them have a graduate degree. They're very smart. They're across the United States. They're across all political parties. They love learning.

39:05

And what they tell us over and over again is they hear things in our newsletter like the gut microbiome, CRISPR, the Fed, inflation, Burning Man, all these things that they want to learn about. And they feel like when they try to go learn about them, they have a terrible experience. So what does that mean?

39:22

They might go to a search engine and they'll like search like, you know, what is Burning Man? And they get like that SEO layer, the internet clickbait that actually doesn't help you that much. Or they might go to like YouTube or sorry, a social network and look for a video. And there's really good videos out there.

39:37

There's also like crazy stuff out there. You have to sift through them all. You're spending like a half an hour looking, trying to learn. And our readers keep telling us, I'm very frustrated. I want to learn what these things are, but everyone makes it so hard for me. Can you help me?

39:49

So that was what we always had as our North Star. And then what we saw from curating information for the last six years is we come across these incredible pieces of journalism that are created. MIT has a 101 on CRISPR that's 12 minutes long that if you don't know what CRISPR is, it is perfect for you. But

40:08

no one can find it, right? It's like on MIT's website. It's on the 38th page of Google and we can't, no one can put those together. So like what we're trying to do here at its core is be the connective tissue where you have the intellectually curious knowledge seeker on one side and you have all

40:22

this wonderful content that already exists on the other side and we're like putting it all together. So when we originally started it, it was actually like the concept we kind of said was Pinterest for knowledge so like let's just go get all these wonderful resources

40:35

that exist that we see organize them and allow people to learn and explore these resources like instead of like on Pinterest looking at a you know a picture of a loft now or cupcakes now it's like oh I want to learn about crisper here's the best articles and resources on it so we started that process and

40:52

we took it to market and did like the mvp and and um we heard the feedback we heard was this is helpful but i don't even understand i don't i don't even know if i understand what crisper is and 1440 you guys are so good at breaking things down

41:05

and helping me learn can you give me the resources and also help me learn simultaneously So our new product, the 1440 Topics, we currently have like 150 of them. It's essentially that. So you can go to these sites. We have a business and finance vertical. We just hired Phoebe Bain from the industry to do that.

41:22

She's been on the team for six months now, launched in October. But every week we cover things like venture capital, IPOs, Warren Buffett, Bitcoin, and not like... Not to the private equity individual like they, you know, they read Dan Primack and all the, you know, fortune term sheet because like they're just reading that news every day.

41:41

This is more for the doctors and the nurses and the lawyers that don't really understand venture capital and want to know about it, but no one's ever taken the time to explain it to them. Yeah. Yeah, it's kind of like, you know, we're working on how to say it succinctly and we need some help on that.

42:19

I wish I had it ready for this podcast. But yeah, we kind of say it's like if Wikipedia and Reddit had a baby, but like a brand safe baby that wasn't like, you know, there's no vitriol and misinformation and like UGC. There's incredible benefits. Actually, you've got me thinking about this,

42:34

your awesome work about YouTube and how they open up YouTube and all the UGC networks, how massively they can grow. You have the benefit there of you set up a platform the right way. As you've taught me, 55% goes to the creator and 45% goes to YouTube.

42:52

You set up the platform the right way and now you have an onslaught of content because you don't have to create the content. That's why they're more valuable than Netflix. The problem there is there's a bunch of crazy stuff and there's a bunch of terrible content, right?

43:05

So like, how do you figure out how do you go through it? So what we're trying to do is essentially get the best parts of UGC, which is the upvoting, like the finding the gems that like graze to the top. Also, like if you're learning about, again, like let's say venture capital.

43:21

There's like these really cool things you might see or learn that are in those UGC platforms that you're not going to see on like a Wikipedia, which is just kind of like a – Wikipedia is wonderful and I use it all the time, but it's just like a descriptor of the history of things.

43:36

All the links on there are just in support of that description. They're not sending you to – like if you want to learn about the James Webb Space Telescope, they're not sending you to like the best images of all time or like a 101 on why James Webb was –

43:52

why it's named that right so like we just feel like it's taking parts of the ugc knowledge experience like i.e reddit parts of wikipedia but then also making it not only brand safe for advertisers but just like what people love about 1440 is they read their email every morning and they know there's nothing like trying to get

44:09

them to think a certain way or vote a certain way or or you know sway their opinion, which is like, here's the facts. Here's what happened. Make your own decision. And we're trying to do that same thing in a knowledge platform where like every time you go to our site and there's 40 articles on the CRISPR page,

44:28

everything on there is worthy of your time and a wonderful resource. So it might be the best podcasts, the three or four best podcasts, the best videos, the best primers from MIT, et cetera. But everything in there is like worthy of your time and all that scrolling and like looking for all this information just disappears.

44:45

And I think when we spoke a few months ago even, It seemed like the topics page was mainly like you were having writers write these topics versus now it's like highly produced kind of like explainer embedded YouTube videos. Am I detecting that there was like maybe a shift in strategy where you thought like

45:07

we need to invest in like these videos versus writing?

45:11

No, we're taking the same information and just copying it out of the medium essentially.

45:16

But you're also, like, illustrating it and adding imagery and stuff like that.

45:20

Correct. Yep, exactly.

45:22

So what's the thinking there? Is that, like, a lot of people would rather watch a explainer than read a long explainer?

45:28

Yeah, I think it's – we're just trying to meet the consumer where they are. I think, like, historically we've only had a newsletter and now we're expanding into other mediums. So, like, we're doing the website experience, which we've never really had, and testing – testing video, which we're like seeing some really good early signs of success there.

45:46

Eventually we'll do like podcasts as well. So we're working on those and kind of think of like a 30 to 40 minute primer on like, what is CRISPR? If you have no idea what it is or what is Burning Man or what is, what are super bugs? So it's, it's the same thing.

45:58

We're trying to basically do the work kind of one time and like really understand a topic and like find all the best resources and then push it out to the audience in different mediums.

46:07

And so the idea is to, or how do you staff the topics right now?

46:12

Yeah, so we have Phoebe runs our business and finance section. And then Teddy, who's our content developer, who's been with us for a couple of years now, is kind of in like overseas things and is responsible for like launching new verticals. But the way we're thinking, we're still trying to figure this out,

46:29

but the way we think about it is almost like how Equity research analysts like cover industries like at Goldman Sachs. We think like that's going to be the model. So like we'll have eventually we have to figure this all out still, but we'll have like a business and finance vertical, a science, a tech, a history, medicine,

46:49

all these different things. And they'll kind of be like a curator editor that's constantly learning about those topics and then is producing the content.

46:57

So is it like there's a freelance writer, let's say that you want to have a topic page on private equity explaining what private equity is. Is that finance, that person who you hired, is she assigning that to a freelancer? Or how are you prioritizing the writing of each of these articles?

47:14

Yeah, it's nuanced depending on the one, but we're either finding someone who knows the space really well, we're talking to experts in the space. Sometimes it's internal, sometimes it's... contractors, but we're still trying to figure out how that all works.

47:31

And then the idea is that you're driving synergies between a newsletter and this because if you're writing about something that's related to a topic page, you can drop the link into the newsletter and then you're driving some percentage of those 4 million readers of the newsletter into this additional product that 1440 made correct

47:50

exactly and and delight the user right that's the thing like they're frustrated they want to learn about it and they know that they trust us to help them learn about it efficiently and they know if they go try to do it themselves it's going to

48:01

be like they're going to be punching punching themselves in the face so like it's just we're just helping them do that next step

48:08

And then that's the user side, but from the business side, is it just vastly expanding your advertising inventory and the number of eyeballs on your stuff that you can monetize with advertising?

48:19

Correct. It opens up on-site advertising, which we actually have our first partner launching in February, which we're really excited about. Can't say who it is, but super excited about it. And they're also sponsoring the... We send a weekly newsletter as well. So it's like the content of the week goes via newsletter. So we launched...

48:38

back in October and we started advertising the business and finance newsletter. I think it was October 15th in advance of the October 31st launch. And we already have 150,000 email subscribers. So again, like these are folks that are like, I like learning about business.

48:52

I'm not a private equity person, but I just like, no one ever helps me really understand it. Like now, like today they learned about startups and last week they learned about Warren Buffett and the week before they learned about how an IPO works. So, right. So like, these aren't necessarily,

49:03

it's not like finance people that are signing up for those things. It's like, generalist, intellectually curious people that want to learn about finance. And like, we think that's the underserved audience. And what's also interesting is like, if we have 30 of these one day or 20 or who knows how many,

49:19

What we're seeing so far is like people were signing – when we were split testing these, a couple people would sign up for like the main one, the business one, the space one, and the health one. And then this guy would just do health and space and this guy would do finance, right?

49:34

So we think there's a world where if we figure out how to do them right and delight the customer – People could sign up for six or seven of these or two of them or 10 of them. They're a learning tool that helps them learn about 10 new topic areas now.

49:50

So if I understand you correctly, with each new topic vertical that you launch, you're also launching a daily 1440 newsletter that's just specific on that topic?

49:59

It's weekly.

49:59

Weekly. So it's like... if you sign up for the finance one, it's basically sort of like the daily upside or morning brew or something like that. That's like, just like it's doing the 1440 thing where it's just curating news or what's in the newsletter.

50:13

Yeah. So it's, it's the differences instead of daily news, it's the foundational evergreen knowledge layer of the internet. So like, that's what we do on the site as well on the topics page. So instead of, you know, Today's Thursday, the 16th. Here's the companies that did earnings and had IPOs. It's today we explored Warren Buffett.

50:33

And let us tell you what we learned about Warren Buffett and how much cash they have and how much he's given to his philanthropic ventures and when he started investing and why it's named Berkshire Hathaway and why they call him the Oracle of Omaha. So it's more like, again, like that foundational niche.

50:52

layer of knowledge that we think that we think that's the white space that no one's really serving. It's like everyone hears these things all the time, but no one really helps them understand those different topics.

51:03

And how much of the traffic is to the topics are coming from 1440 newsletters versus like now starting to get an organic like SEO search engine traffic and stuff like that? Is it still mainly coming from 1440?

51:17

Yeah, majority comes from 1440. And for our like financial models we're just assuming it all comes from 1440 because just given what we're seeing about seo and how difficult that's that's becoming um we always want to have like a direct relationship with the customer and kind of control the

51:30

traffic so to speak so we're just assuming like we only get it it's not gonna be the case hopefully but we're just assuming we only get it from our existing audience we have to make our our math work assuming that and then if we get more it's upside right

51:43

So you're not looking to like eventually start carving out market share from like Reddit or Wikipedia or some of these other kind of go to explainer or sites that people turn to when they're asking questions?

51:56

No, hopefully they come. Yeah, hopefully we get that traffic. I'm just saying from a we're not relying on it to build our business.

52:02

And would you kind of view the topics as your like form of diversification outside of the inbox?

52:07

Yeah, I think that's fair. Yeah.

52:09

Yeah. And I think like every one of these companies that like Morning Brew, The Hustle, like they always like kind of find the inbox to be somewhat limiting from a growth. Like you can really only arbitrage to so big before advertisers want video inventory. They want web inventory and stuff like that.

52:28

And you kind of like if you want to continue growing, you have to start offering them other things. Would you say that's accurate?

52:35

Yeah. Not entirely. I think the reason we're doing that, so up until we launched this, we've only had one product, which is like the main 1440 newsletter. I think we just, we like to only do things that we can deliver the best in the world at and where we

52:54

think there's like a big opportunity and it like really helps the readers. So that's why we're focusing on it. And then I think while, when we do that and deliver for the reader, You have their attention, like you generate attention, excuse me, their attention.

53:12

And then, you know, the right partner wants to get in front of that attention. And that's how we monetize it. But I think we're just really trying to figure out how to, like, we think it's a big problem. Like people want to learn about all these different things. Like I have this frustration multiple times a week myself.

53:28

Like I've tried to learn about something and it's like, God, I'm spending 20 minutes looking at YouTube videos. And then I use I use all the tools, which are wonderful, too. It's kind of helpful on Google. I'm just I have the same pain point. So it's like, how do we make it easy for like the world?

53:42

And then, you know, generally speaking, if you can delight the customer, like the revenues follow. So that's kind of how I think about it.

53:49

How big is your total staff today?

53:51

We have 19 employees.

53:52

And then I guess my final question is, do you ever want to become or operate a traditional media company? Could you ever see in your finance vertical writing a business week type long feature story about a hedge fund manager or anything like that? Or do you want to be more kind of curational explainer?

54:17

That's what you want to stick to.

54:19

Yeah, I think jury's out, but I think there's already maybe not hundreds, but dozens of those articles on the internet that have been written by incredibly brilliant journalists, and they're not being found. So just in terms of having the biggest impact for the knowledge economy, we think that's the big problem is that

54:42

The work is already being done. It's terrific, but it's buried. So we think our big value add is essentially being like the, as I said, like the connective tissue that has the knowledge seeker find the knowledge. But it doesn't mean we're like, you know, maybe we'll go into that. We'll see.

54:58

But the big pain point for the consumer is the connective tissue. So that's why we're focusing on that to start.

55:04

Okay, Tim, those were all the questions I have for you. Where can people find you online? Okay.

55:08

Yeah, so I'm at just, I always try to do this at the end of the podcast. I'm at Tim at join1440.com. If I can be helpful in any way or, you know, early founder has any help. There are folks that are really, really awesome to me getting going.

55:21

Yeah, just feel free to shoot me an email and I'm happy to help in any way.

55:25

Awesome. Well, that was a lot of fun.

55:26

Thanks for joining me. Thank you so much, Simon, for the opportunity. Appreciate it.