The Exchanges

Q of the year, we had like a 100,000 subscribers. I had this strategy where I was writing these crazy blog posts. And getting like 500,000 to a million people a month coming to our website. And that's how we grew. And I think of the 400 K, I think a 100,000. Was advertising revenue, and I think it was four of us at the time. Where, where were you guys?

A So that's, that's amazing, because in 2016, we did our first ad deal. Uh, it was a watch brand called Emla Hart, I believe. It was about a 3000 dollar deal for, for three, we used to call them exposures. We were so naive, we called them ad exposures. Uh, it was three of us. We had a writer who, Ironically, we poached someone from BI. I, I think I'm not kidding. I think he made it like seven days. Like he barely made it at the company. He quit because we wanted him to work more than a nine to five. But you know, we did 25,000 that year. You did 400,000. We were three of us that I was still in college.

AI assessment note: “we did 25,000 that year. You did 400,000. We were three of us”

Q have done that. I thought, and in fact, I tried to raise way more money, but no one invested, which ended up being a blessing because I made a lot of money because I owned the majority of the company, but, uh, that's what I would do differently. So if you're listening to this, I, if I were starting today, I would not raise funding at all. Would you agree?

A I think raising funding is all about your business needs, right? I certainly wouldn't have raised more money than we did, but we did need the 750,000 dollars. I actually, I actually, uh, specifically remember this is now fast forwarding to 20 17. It was December like 2720 17. And I didn't realize that payroll goes out early if it's, if it's New Year's Eve, because they don't do payroll and holidays. And I had a check in my hand that was going to make payroll. And I had to sprint to JP Morgan because they were going to close at five o'clock. It was like four 55. And, you know, when people say you were, you were close to missing payroll, I was literally two minutes away from missing payroll. So we didn't need every penny from a cashflow perspective, because obviously media companies, uh, the accounts receivable on them, you know, you might, you might need. 3060, 90, or a 120 days just to get paid. So we didn't need the money, but yeah, for a media venture, I don't think you should raise, you should raise as little as humanly possible.

AI assessment note: “I think raising funding is all about your business needs, right?”

Q anymore. What do you think people doing? Now newsletters are really popular, so I remember when Substack started, I thought it was the dumbest idea ever. I chose not to invest in Beehive. I thought that was a silly idea. I was wrong about both of those things. What do you think that the people starting now are getting wrong and where's the opportunity in your opinion in this space?

A I think the number one thing that people get wrong is they view this arbitrage that we had in 2017 and they think it exists today. They think the same economics exist today because they read a blog post that Tyler Dank wrote in 2018. The value of a subscriber is significantly less than it was when we started because there are so many newsletters out there. Uh, and people forget that the most important thing, it goes back to what did we do in 2018? We printed the newsletter out every day and we were not maniacal over the content. Every person out there I see now on, on beehive, not at the 99% like, oh, here's an untapped market. Let me write like C plus or B minus content and let me use all these growth hacks and I'm going to get to a million subscribers and I'm going to sell all these ads. And I think they get to half a million or a million subscribers that they can and their ads don't sell for 50,000 dollars. They sell for 3000 dollars. And the economics don't work because there's not enough engagement because the content's not good enough. And so just people aren't focusing on the content. It's all about the content. That'd be like selling a SAS product and the, the, the code not being buried or the product not, not working that well. Like you have to focus on the content first, everything else follows.

AI assessment note: “I think the number one thing that people get wrong is they view this arbitrage”

Q Explain this model. Do they own the place or they're just going and like doing a pop-up bingo night at some place?

A No, I think they go all, it's actually really smart, right? Because what they do is, I believe they go for pretty off nights for certain places, right? So, you know, so nights were a club or whatever, wherever they had these wouldn't be that popular, but they still bring that environment, right? So they still use a lot of the infrastructure that these, these venues have and they bring, it seems like the whole show, the confetti showers, the performers, everything. And what I think is interesting is they keep you there with the bingo, right? So there's a, there's a shuffle boarding place in Brooklyn, right? They keep you there because you play shuffleboard for, you know, hours and hours and you're just buying drinks and that that's like the, the shtick, that's the hook to get you in. And this is the same thing, game of bingo. I'm sure they have performers mid game. They keep you there for seven hours. You just buy a bunch of drinks. So I thought this one was awesome.

AI assessment note: “they go for pretty off nights for certain places, right?”

Q Yeah, he loves smoking meats. And you're, you're into this. I know that for a minute, Austin, you were talking about how you're like, I want to partner with creators because I, because like once you can attach with some of these folks, you just, you kill it. Is that what you would do?

A I mean, for, for this, yeah, I think that is still, uh, It's very popular these days to partner with creators. I still think that's the future. I still think we're, we're scratching the surface. You know, there's beastables and prime and everyone talks about those and it's definitely been played out in terms of talking about, but I still think ultimately you're going to walk into a liquor store. You're going to walk into target and every brand is going to have a face and association because why wouldn't it, right? If there's a brand that could have nobody attached to it or a brand that could have someone attached to it, Why wouldn't that brand have the built in distribution of you guys or someone, you know, more widely well known or, or just someone like, I just don't see how that doesn't play out. And so, you know, it's, it's been done with the biggest creators. I think the real opportunities in the niches.

AI assessment note: “I mean, for, for this, yeah, I think that is still”

Q Did you get fraud vibes when you were there or were you also tricked?

A I mean, I was totally enamored because the perception at the Albany, like there was a, uh, we took a cab to Albany. And the guy's like, oh, you're going to, uh, you know, like the opening, that's where, that's where FTX is headquartered. Like, oh yeah, we're like, we're going to see Sam. And everyone's like, oh my God. Everyone's like, yo, one of the security guards said, you know, here, You know, you think the celebrities are famous? The famous people, they want to meet Sam. Sam doesn't want to meet the people, they want to go meet Sam. Like, this guy, he just had this aura around him. Everyone wanted to meet him. Now, in hindsight, I feel like a complete moron, because there were so many red flags. Every, you know, the whole effective altruism thing, he, he parody, you guys know about that?

AI assessment note: “I mean, I was totally enamored”