💼 So you want to start a newsletter... (Business Feature #10)

🧠 Top of Mind Technology

• While wood is a wonderful building material, its impreciseness can cause distortion in final products and structures. While most view this ability to distort as a defect, this architect is looking to leverage it, as he believes predicting how wood will distort in a given structure will allow for a more predictable and efficient use of the material.

• If your significant other is keeping you up at night with their snoring, you may be in luck. There is a product in development called Motion Pillow that helps reduce snoring by rotating the individual’s head to open their airway more for better breathing.

• Music could save lives if this recent research study out of Switzerland turns into a medical device. Scientists were successful in directing floating objects around an aquatic obstacle course using only soundwaves. The applications of this technology could be seen especially in the medical field, where it could allow for precision when implanting internal devices along with less invasive surgeries.

🍪 Business Bites

• Despite the inflation of the past few years and Americans carrying $1.13 trillion in credit card debt, many consumers are still willing to spend on to spend on travel and entertainment, a trend that experts are calling “funflation”

• Rumors of Penn National Gaming being acquired by Boyd Gaming could have major implications across the gambling industry. Penn recently partnered with ESPN to form ESPN BET, a sportsbook that carries the brand of the nation’s largest sports broadcasting service. Boyd also has an ownership stake in the U.S sportsbook market leader FanDuel, further complicating the situation.

• EV maker Rivian had a big week, starting with an announcement of a $5 billion investment from Volkswagen. On Thursday, the company hosted its investor day where they shared further details about their upcoming models.

🤔What It Is

Beehiiv aims to make starting, growing, and monetizing an email newsletter easy

💸The Business

Beehiiv is an email newsletter infrastructure company. Newsletters exploded onto the scene as potentially lucrative business opportunities in 2020 when Morning Brew sold to Business Insider for $75 million.  Since then, newsletters such as The Hustle and Milk Road have also sold for millions, further validating that newsletters can be big businesses. Newsletters can also be extremely profitable, and it was reported that Morning Brew had an estimated profit of $20 million at the time they sold.

With all of these big wins, copycats emerged, and thousands of newsletters were started in attempts to capture the same magic as their predecessors. There was one problem however – there was not a company that provided the infrastructure to build and grow a newsletter from scratch. Beehiiv solved that problem.

Beehiiv’s founders were early employees of Morning Brew and wanted to build a company that provided the infrastructure and tools to let any newsletter become as big as Morning Brew. When the founders were at Morning Brew, they had to develop the features themselves. Some of the key features that have transitioned to part of Beehiiv’s features list today include:

• Custom email templates and websites

• Growth Features (Boosts, Referral Program, Recommendations)

• The Ad Network – anyone can make ad revenue!

🧑‍💻The Model

Beehiiv has a tiered pricing model that is very flexible:

They have perhaps the best free plan available in the industry, where you can have up to 2,500 subscribers with unlimited email sends and customizations. On the Scale and Max plans, you can leverage the Beehiiv Ad Network and easily pay for your plan via ad revenue.

The Beehiiv model is enticing because you are paying for a service that can directly pay you back much more than you pay for it.

Don’t believe us? Let’s illustrate it through an example:

Newsletter A

Number of Subscribers: 1000

Number of Editions per Month: 12 (~3/week)

Click-Through-Rate (What % of subs click on your ads): 2% (Which is the industry average)

Average Payment Per Click from Ad Network Advertisers: $1.50

The Math:

100 subscribers * 2% click through rate *  $1.50/click * 12 editions = $360/month

💰Revenue Streams (Expected)

• Monthly Newsletter Owner Payments – Refer back to the pricing guide from earlier in our letter. Beehiiv also offers an enterprise pricing plan for anyone with over 100k subscribers

• Advertising Revenue – We assume that Beehiiv is getting paid to distribute ads throughout their network of newsletters. For instance, if we at The Idea Journal were to get paid $1.50 for each ad click, it would make sense if Beehiiv would get ~$0.50 or some amount of money for each click since they directed the advertisers to us.

🔻Potential Expenses (Expected)

• Technology/Infrastructure – Building the infrastructure Beehiiv has made for one newsletter would be expensive, but the costs to maintain the infrastructure for hundreds and thousands of newsletters is tremendous.

• Advertising – Beehiiv is spending heavy on YouTube ads in particular.

😎 Customer Appeal

• Anyone can monetize their newsletter at an affordable price (and perhaps you can be profitable right away!)

• We have talked about the Ad Network, but two other features that are appealing to customers include:

  • Boosts – You can pay other newsletters to get you new subscribers AND you can get paid to get subscribers for other newsletters.

  • Referral Program – You can entice your readers to get their friends and colleagues to subscribe to your newsletter via custom rewards for each milestone of new subscribers they bring in.

Quick Ad Break…

Ok so if we have convinced you that starting a newsletter is a great idea, awesome! You can sign-up for Beehiiv using this link.

And by the way, if you sign-up using our link above, you’ll get a 30-day trial + 20% OFF for 3 months.

Back to our regular scheduled programming…

👍The Good Stuff

• Customization – The website customization offered on Beehiiv is impressive. Check out The Daily Bite and Andys Newsletter for examples of what you could create.

• Scalability and Growth Features -  Boosts, the Referral Program, and Recommendations

• Ad Network – Being able to generate revenue on your newsletter from Day 1 even with <100 subscribers is incredibly valuable (and you don’t have to take the time to find advertisers).

👎The Risks

• Competition – We mentioned before that there were not many companies doing what Beehiiv does before they started. Well, now there are many competitors in the space, many of whom have a lot of funding behind them including Substack, Mailchimp, ConvertKit, and even startups like Buttondown and Ghost.

• Sustenance of Readers – Newsletters have been endearing to people over the past few years, but at what point does the market become overcrowded and then newsletters become less popular? That will limit Beehiiv’s upside for growth.

🧠 The Op Ed

Beehiiv is a great platform that we would highly recommend to anyone looking to start a newsletter. The ability to monetize from Day 1 even with a small subscriber base is their big draw in our opinion.

They have raised north of $45 million across multiple funding rounds from VC firms, so it will be interesting to see if they will be able to become a company with a greater than $100 million valuation, which we assume the VC funds are looking for at a minimum.

📚For the Road

• 11 Ways Newsletters make Money

• Learn more about a recent email tech development - AMP