How to turn a $50k investment into a $2.5mln newsletter - with a detailed financial model
Calculate your path to success
This post is a very pragmatic piece on how to build and scale a big daily newsletter. I included a financial model that you can copy and play around with. It’s focussed more on the framework and numbers and less on the operations and creative part of running a newsletter.
After building and selling Duuce, the first marketplace for buying and selling newsletters, and buying-growing-selling The Slice (now both owned by Scott Oldford’s Wisdom Group), I had the plan of building a big newsletter. The goal was to grow it quickly - 100k subs, making 60k per month, and pushing to one million ARR after 12 months.
The reason I haven't done it, is that I haven't started it yet. To punish myself for procrastinating, I will just share the idea and financial model publicly. If you're inspired to build one, hit me up.
Okay, the idea.
Daily curated newsletter.
Business model.
Advertising.
Growth.
Paid media (mainly social media ads).
Funding.
Initial $50k.
After 2 months, reinvest sponsorship revenue into growth, creating a flywheel of revenue, paid growth, revenue, paid growth.
Financials:
Cost for acquiring a subscriber: $2.
Ad revenue per subscriber per month: $0.65 ($0.033 per sending day).
Annual Value Subscriber: $8.
*All subject to assumptions, of course.
Newsletter Topic:
Pick a topic and angle where daily news makes sense. There has to be enough content on a daily basis: updates, breaking news, and background stories.
Topics: Sports, Tech, Business, Gossip, Local.
Pick an angle, that's your creativity.
I had a sports idea and a local business idea, both with a competitive angle.
Team:
Founder does sales, partnerships, growth.
2 writers.
1 part-time social media /operations.
Writers:
Look for people with:
Deep interest and expertise, opinion about the topic.
Bravado, write in their own voice.
Detail-oriented.
Consistency, showing up every day (writing 250 daily newsletters per year).
Growth mindset (focus on 100k subs).
Tech:
Beehiiv premium subscription.
Curation tools like Stoopinbox and Feedly.
How to Start:
Build your email list as big as possible organically.
Ask friends and family to join.
Ask friends and family for referrals.
Post on LinkedIn and Facebook.
Send your landing page to your Gmail/Hotmail address book.
Share in your WhatsApp and Telegram groups.
Acquire (option):
Buy a small newsletter from Duuce. Look for non-revenue-generating, high open rate newsletters. Try to pay approximately $1 per sub.
With the $50k investment, you can roughly get between 15k - 25k subscribers.
While investing in marketing, also keep your eye open for any newsletters that are put for sale to grow your subscriber base.
I've put all this in a financial model, focusing on:
Growth.
Subscribers.
Revenue.
Sponsorships.
Costs.
Marketing.
Team.
Tech.
Notes:
Revenue comes in after 2 months and will be at 50%. You have to set up sponsorships, and that takes time.
Break-even after month 3.
$60k profit in month 12.
The founder does sponsorships (only team of writers).
4 months of incremental marketing investments before the flywheel fully kicks in.
The founder doesn't take revenue out of the business, so needs to self-fund lifestyle.
To-Do:
Get an investment of $50k (or self-fund). You can try and get just cash or do a strategic investment like Daily Upside did with Motley Fool and get investment in the form of media distribution. It serves the same purpose (subscriber growth) but could get you quicker to your goal because you are targeting a similar audience doing a similar thing (media consumption). Strategic investments could be media companies, big podcasts, influencers, but also fashion, tech, sports brands with a big following.
Go find a writer. Maybe a friend, former colleague, or someone from the internet (Twitter, marketplaces, Reddit, FB groups).
Set up Beehiiv (landing page, template, etc.).
Build your list of content sources you'll use for curation.
Subscribe to newsletters with a Stoopinbox account.
Add blogs and news sites to Feedly.
Write a vision; it makes it easier to communicate what you want and expect to your team.
What is the tone of voice?
Similar to what brand?
What type of articles are picked?
Type of writing?
Audience - personas.
You have approximately 200 subs to start with. Send out 2 weeks of newsletters, actively manage lists (unsubscribe non-opens). Get this small list as healthy as possible (focus on open rate and click rate). Ask for feedback, call friends and readers. Once you're happy with iterations, start with marketing.
Writing to 0 people is not fun, and growth is fuel. Try to get subs as soon as possible and keep them coming (through paid marketing).
Now that's done, the grind, creative work, and headwinds are awaiting.
The 12 month goal is probably too rosy, and it will likely take longer. So be prepared to write at least 500 newsletters before the business starts feeling substantial. That is a long commitment.
Growth and revenue will help with your energy, also find a topic you're interested in, that will serve you as well.
That's it.
The beauty of a newsletter business is that it's easy to set up, low in costs, easy to distribute, has a simple business model, and is perfect for paid growth. The downside is the huge competition, newsletter fatigue, long (daily) commitment to something that might not be super exciting to operate.
But it’s doable, that's for sure.
Thanks for reading! If you want to discuss starting or growing a big newsletter, hit me up. I'm always interested to talk details.