The Exchanges

Q Well, it's great. Obviously you build a product, you eat your own dog food. That by itself is a natural advantage getting into any new startup. You're now building Beehive, which is effectively a marketplace between publishers and advertisers. Anything you'd add to that sort of one line overview?

A Yeah, I actually say that would be like the second line of what we're doing. The first is we are a SaaS platform for publishers, content creators, um, businesses to send email. So anything from MailChimp, Constant Contact, Substack, like those are kind of the competitors. If you are sending email to your audience or to your customers, we are first and foremost a SaaS platform to send emails. What you hit on is actually the second part, which is we are building an ad network on top of the SaaS platform. So As someone who is sending newsletters to their audience, we have advertisers like Netflix, HubSpot, monday.com, Betterment, that are looking to reach these niche audiences of newsletters, and we help connect them so you can send a newsletter with the premium sponsor without having a sales team.

AI assessment note: “I actually say that would be like the second line of what we're doing.”

Q Like what? Like what? What was the biggest expense early on?

A Like, for example, we are built on top of SendGrid, which is like an email engine to actually send and distribute the emails. And to get the attention that we needed from them, we needed like an annual contract with some sort of like volume lock-in, which is like, I don't know, between the 40 and 75,000 dollars up front for the year, of which like my two co-founders were 24, I was 27, like we're not sitting on a ton of money to just be able to pay that. Um, so I, I do think the timing of entrepreneurship is always like fairly interesting where, you know, if we had a successful exit previously and had a bit more capital, Could we have done this bootstrap growing a little bit slower and been able to use existing capital rather than being venture back? It's interesting. Um, but I think it also is worth considering just how competitive of an industry it is and something to be said about not having to overanalyze every expense while we're trying to win market share.

AI assessment note: “built on top of SendGrid... between the 40 and 75,000 dollars up front”

Q And, and I want to get sort of the headlines today. I don't want to bury the lead and then go back and get this sort of origin story of you building the tool. What is the number one metric you're sort of focused on today? Revenue is easy, but is it number of publishers, number of emails sends impressions, something else?

A Yeah. Revenue is easy because it actually means you do so many other things. Right. Right. Like if retention is important to you, but a decrease in revenue will show that you aren't retaining users. Or if a decrease or slowing of revenue shows that you aren't attracting the right users to adopt the platform and converting them. So revenue really is the North star, but layers below that is volume of email because we are building an ad network. So we need billions and billions of impressions, high quality impressions. Um, unique publishers because we want different types of content being sent on the platform from business to politics to sports to home goods, whatever you want to write about. Um, we want like a very diverse ecosystem of different content creators and publishers creating content on the platform. Um, but it, yeah, again, it all ties down to revenue. Uh, slowing revenue means we aren't converting or we're churning, and those are things that we're actively looking to prevent.

AI assessment note: “revenue really is the North star, but layers below that is volume of email”

Q take that down to 25% monetizing. That's 4000. And then if you divide that into the 1.2 million you paid out last month, I mean, these are folks on average making hundreds, right? 320 dollars per month on average, but I guess true or false, Tyler, I imagine you probably have power laws in your user base, right? You have some big newsletters that make the chunk of the revenue.

A Yeah, there's definitely larger news that there's more established, bigger brand name that brands want to work with. And that just by nature of size and reputation or getting more money, whether it's through premium subscriptions, because they have a big name person behind them that can warrant charging 1015, 20 dollars a month for content or community. Um, and then advertisers as well. But I actually think, yes, we have power users. The long tail is actually what's most interesting because previously a lot of people saw A morning brew and Axios, a hustle having a lot of success and it was so cost prohibitive and like such a daunting task to have to scale an audience to be that large, to be able to monetize yourself. And what we've been able to solve with the long tail is like the cold start problem where with boost, you don't need a single subscriber. You can start monetizing day one. You can recommend five other newsletters that are paying you two dollars per lead. You might have 10 subscribers, which is your mom and your siblings. And every subscriber that comes in the door, you can start monetizing two dollars per recommendation. So you're net positive day one. And then the ad network as well. If you're a 500 person subscriber newsletter, Netflix was never looking at you previously to advertise. They didn't know that you existed. But with our marketplace, we can actually pl…

AI assessment note: “Yeah, there's definitely larger news that there's more established, bigger brand name”

Q Okay. And, and does, so active publishers means they sent, let's go down one more step down the funnel of the 20,000. How many of them made at least a dollar last month through the ad network?

A It's a good question. So we have a metric around not just the ad network, but any of, so we have three monetization methods that I outlined. The ad network is one premium subscription. So charging directly your audience a subscription fee and then boost is the other. I believe right now we're at 20 to 25% of active users have monetized in the past 30 days. Our North Star is obviously going much higher than that, but it is a very nascent ad marketplace, as are the rest of our features. We're only two years old. So the fact that most SaaS platforms in the ecosystem are purely a cost. You pay them to send emails. They don't help you grow. They don't help you monetize. We help you grow with our growth suite. We help you monetize with the three ways that I just outlined. So the fact that 20 to 25% of our active users are earning revenue through our platform, I think is an incredibly positive signal. Also, our North Star metric really is how many of our users are earning more revenue than they are paying us, right? Like you might be paying us 99 dollars a month, but you're earning six, 700 dollars a month through the ad network alone. Then we are value additive to your tech stack, which is very unique in the SaaS ecosystem where it's usually just an expense For your business.

AI assessment note: “20 to 25% of active users have monetized in the past 30 days”

Q Tyler, you said last month on your website about 1.2 million paid out to newsletters on Beehive last month, which would have been, what is that, April, May, May of 2024 here. What, what was that exactly a year ago, that same number?

A Much smaller. So the ad network didn't really exist. The ad network was always something that we wanted to build, but you can't build an ad network with a few 100,000 impressions. We had to build a SaaS platform that was really good that attracted newsletters to move over, which brought more email sends impressions and then demand from advertisers. So the ad network a year ago today did not exist. We also have a host network, which is like co-registration being able to, you basically get paid for recommending other newsletters that also didn't exist a year ago. Um, and then premium subscriptions has existed from the beginning, and that's what, when you can charge your audience directly, 10 dollars a month, hundred dollars a year, whatever you want to do there. Um, we actually launched with that feature. Um, so that's probably what you would see on the website a year ago in terms of the volume of revenue we were driving for our users.

AI assessment note: “Much smaller. So the ad network didn't really exist.”