- Duration: 46 min
- Platform: meet
- Source: Read.ai 01JY7B1N18DEJJCRMCKEW87C1D (https://app.read.ai/analytics/meetings/01JY7B1N18DEJJCRMCKEW87C1D)
Transcript
[Michael Houck]: Hey, man, how are you? [UNKNOWN_SPEAKER]: Hey, Nathan, how you doing, brother? [Michael Houck]: What’s up? [Michael Houck]: I’m good, dude. [Nathan May]: Where are you in the world right now? Are you Nashville? Are you South Africa? Are you Santa Monica? [Michael Houck]: I just got to Philly from SF at like 1 a.m. Last night. Nice. [UNKNOWN_SPEAKER]: All right. [Nathan May]: You don’t like to stay put. I get the sense. [Michael Houck]: I want to. Right now, I’m trying to find where that spot is going to be. Just devoting six to eight months of figuring it out. I’m closing in on a decision, but I’m not there yet. [Nathan May]: Where are you leaning? [Michael Houck]: Either back to SF or Charleston. Those are my top two right now. [Nathan May]: How much time have you spent in Charleston so far? [Michael Houck]: I was there for about three weeks and then I’m going back on July 1st for like two months. Yeah I like it. [Nathan May]: I lived in Charleston on and off for a year during COVID and I go back three times a year. It’s amazing. It’s good you saw it now because you want the you want to get the sense of the hot muggy tornado season because that’s like that’s the worst it’ll be. It’s always I think always good to do that whenever you choose to live. If you do end up going there just watch Watch Flood Zones. Regardless of your renting or buying. She’ll get like really nice residential streets that when it rains, they’re just, it’s insane. You can’t do anything on that. So that’s one thing to think about. [Michael Houck]: I saw, I walked, I was near MUSC, so I’m like the West side. And I saw a street sign on a corner that was like five feet off the ground. And it was like, here’s how to measure how high the flood is or something like, what the hell is this? [UNKNOWN_SPEAKER]: Exactly, exactly. [Michael Houck]: So yeah, it’ll be fun. We’ll see if it’s a long-term spot or not. Basically, I’m either gonna feel FOMO from not being in SF or I’m gonna be like, oh, it’s so nice to be in a town like this. [Nathan May]: I don’t know, we’ll find out. I like it, man. Well, I’m glad we had a chance to jam. [Michael Houck]: You’re getting back into newsletter ads. [Michael Houck]: Yeah, we’ve been running them for, I wanna say a month and a half now, maybe a little longer than that, maybe two months. And we got away from it because we were just putting all our money into megaphone and the ghost trading agency. And those have done well over the last year. But we’ve seen less repeat sponsors on the newsletter because we have fewer new bodies to send at them. Right. And so we want to solve that problem. And also just get the numbers up. So I’d love to scale this thing up to, you Multiple hundred thousand subscribers in like as short a period of time as possible. The problem is like I mentioned over the email We just don’t have that payback period happening fast enough for me to feel confident doing that right now And so that’s that’s more of a product and maybe funnel problem But that’s that’s the blocker for me right now Yeah, how much um, how much you make per reader per month from spontaneous? [Nathan May]: sponsorships, just from the ad sales? [Michael Houck]: Good question. I mean, it varies. A good month will make like, good month will make like somewhere between 30 and 40k in sponsors. Our best month ever is like 62, 63k in sponsors. And so we have like, we actually just purged some unengaged readers. So we were at 80,000 subscribers. Now we’re down under 70K subscribers. So I guess average per month we’re doing like, let’s call it 15 to 20, maybe up to 25, somewhere in there average. So that’s what, that’s like under half a dollar. [Nathan May]: 20 to 25 cents or something like that in that low end? [Nathan May]: Yeah, something like that. [Nathan May]: Okay, I like that. And how is the, you gave me the cost per lead, I think, of subscribers who are coming from Meta. [Michael Houck]: Yeah, that’s up-to-date numbers. But yeah, when we started doing them again, we were getting like under two, which is obviously, you know, it’s good, not ideal, but it’s serviceable. Last seven days, let’s see, last seven days, we are at, yeah, right around three, right around three bucks. [Nathan May]: Okay. Of readers who come from ads, open rates specifically of those readers? And if you don’t know that, it might be more conversation on like, what are sponsors telling you about the performance of the ads, that kind of stuff? [Michael Houck]: Yeah. So again, performance is tough because we haven’t run ads for like a year, right? And so we’re seeing like the lagging impact of that now, and it’s probably going to be a couple months before that changes, even if we are throwing budget into it. But when I look at folks who’ve joined from our ads in the last two months, or let’s say here’s a segment for last 30 days. Click rate is 6.3%. Open rate is 40. But we’ve had some deliverability issues that I’m in the process of fixing, which is why we’ve purged so many people. So I think that we’re just showing up in spam more than we normally have. Our normal open rate before we started having this issue was 60%. And so I would anticipate that we can get this cohort back up around there maybe a little bit lower like 50 to 55. [Nathan May]: Yeah okay that makes sense that’s um that’s good so yeah the question behind the question is like I want to make sure the quality of readers is high it’s coming in because for most for many newsletters that that’s that’s the issue actually it’s not a CPL problem it’s actually a reader quality problem. Yeah I I’m fairly confident that we could get you below $3 like that $2 range. We’ve done it with Tyler and Tyler obviously is extremely high overlap in terms of the ICP. We share subscribers back and forth. [Michael Houck]: We get a bunch of subscribers who sign up for him who then use Beehive Boosts and come to us and all that stuff. I actually have a segment of those and the engagement metrics are quite good. So very similar ICP for us to work with. [Nathan May]: I’m just curious, how come you’re not on the phone with McGarry about this? [Michael Houck]: Well, you reached out and you seem excited. And so I know, you know, I could send him a Slack DM right now. We were working together before and we had good results. No, don’t do that. Hey, you’re making me think about it, man. [Nathan May]: I wasn’t thinking about it before. [Michael Houck]: No, but I figured let’s just see, you know, we haven’t worked together on this kind of stuff before. So, I know Matt does good work and I would work with him easily again, but yeah, you know, just why not? [Nathan May]: I like it. Cool. I’ll give you a quick tail there on, I mean, do you have context on us kind of like broadly other than like, Hey, I know you, right. [Michael Houck]: But I don’t have, I feel like before you work on something different now you’re like doing this. So I’m just, give me some background and context on this venture. [Nathan May]: Yeah. So I started this company on 20th of last year. And I worked with media companies before, it was more the traditional you know, hodgepodge media companies when I was at BCG and I saw them kind of interested in newsletter stuff. But I actually, I had a newsletter and then I started reading mass stuff and I guess I saw a couple issues I think in the newsletter space. So like most newsletter and media companies, everybody runs these like, learn how to do XYZ in five minutes a day ads. Like that’s like 80% of the hooks that you see, which is like an issue in and of itself. Like there’s no like, hey, well there’s actually like 10 types of readers who read us and maybe we would have better performance if like e-com or every other niche, we actually did ads that were specific to like their problems, like that individual ICP. So that’s like one opportunity. So that’s interesting. The second one nobody in this industry seems to think about the quality of readers or LTV. There’s this huge addiction to cost per lead. And we work with newsletters who’ve come from the other agencies where the, at no fault of the agency, because it’s just like everybody kind of learned from like the hustle or the early morning brew days. And back then you had a huge LTV and you were getting subscribers for so cheap, you could, there’s a lot you could not measure and it would still be fine. But we’ve seen some of those agencies like ruin the sponsorship programs of some of the AI newsletters and some of the other folks who we’ve kind of helped get back into gear. And so that for me was like, oh, cool. People already do this. I just think we could just do it better by doing some of the things I told you. So different creative strategy, like more specific, but then also you’ll see when we do some reporting together, we measure like the click-through rate, the overwrite, unsubscribe rate of readers based on which ad they come from is you will see, if you look at like Rowan and like the rundown, you will see like five to seven X differences in the highest quality readers versus the lowest quality readers. And the difference in cost per lead might be 10 to 20%. So tight band of cost, extremely wide band of LTV. And that’s really important, right? You won’t put your money obviously in like the- Obviously worth paying more. [UNKNOWN_SPEAKER]: Yeah, exactly. [Nathan May]: Yeah. Yeah. So that’s helped us unlock a lot of stuff. Almost doubled the click-through rate of the rundown, doubled the click-through rate of the neuron, they got acquired, their acquirers were able to immediately raise prices on the sponsorships. The points guy, now on like the regeneration portfolio, they’re having months where they’ll spend almost as much as like $1440 in some of these really, really big media brands. So like, the first like six months of last year were just kind of like, cool, I know this stuff is different, but is it like, is it the right different? And like the last year has been like, okay cool, we know it works, we just need like more people to like, know about us. That's been my work. [Michael Houck]: Yeah and look I mean I first of all I'm happy to obviously get you in front of more people assuming this is successful like I've seen your praises all day long. I think the way you're speaking about it makes a lot of sense to me. It's intuitive to me. I don't I'm not in the let's get our CPA down as low as possible and call it a day like I want people who are going to click on our sponsors who are going to care about our sponsors and also who are going going to use our products. Because for me, we've had steady sponsorship revenue for two years now, maybe a little bit over two years, from February of 20, what was it, 23. So we have that coming in. Obviously, it'd be great to raise that. But I actually think our prices are already, we price high, and then we give discounts proactively. So my preference is finding people who are going to be interested in our products and services. That's how I think we're going to make the money back quickest, or at least relative to where we're making money today, which will unlock more investment for me. So that's top of mind for me, finding the right people who are going to care about the things that we offer, basically. [Nathan May]: I guess if you looked at the pie of your portfolio businesses, because the sponsorship stuff, I guess it's low revenue, but it's actually probably very high margin. Bound, there's not a lot of people that need to be on it, whereas more of the gross rating is other stuff. It's larger top line, but you've got people, you've got ops in that. Is it roughly 50-50 when you actually look at profit contribution, these two businesses? [Michael Houck]: No. So let's see, if we break it down. So sponsorships, let's say we're making somewhere in that average. Let's use 20K just to keep it simple, right? 20K average a month. I pay 2,500 to a sponsorships guy, and then I give him 15% commission on anything he brings in. And we work with some agencies who send us inbound, too. So just all the stuff he brings in, he gets 15%. So yeah, margin there, what is that? That puts us around 75%, 70%, 75%, somewhere around there. And then for ghostwriting, we actually keep the margin pretty high. Our writers really like working for us, so they give us good rates. So we make a 50% margin on the ghostwriting agency. And the top line is much higher. The top line is over, it's over a million dollar business a year top line. So we make more from that, I'd say substantially at this point. And when you include Megaphone, the creator network platform, which we've kind of combined into one business at this point, that's much, much bigger in total. Yeah, that makes sense. [Nathan May]: That's cool. It's behind the service now, right? So you'll write the post and then also it will do better because you're helping amplify it. [Michael Houck]: Correct. For the amplification too. And there's like lead gen capability we're adding, you know, there's a whole bunch of stuff like email collection, things like that. [Nathan May]: Oh, I like it. Yeah, I think the big things here, I mean, I think that like, looking at the over the click rate of readers to come from meta should be indicative that you're getting the right ICP. But there's other things we may want to try, like in like month two, month three, it's like a lot of newsletters that are very B2B, you know, if you go look at work week or like industry dive or even tired to some extent. Like there's actually, you may have a version of this actually, there's a form that will sit right after sign up, right? You're just trying to qualify who that reader is and make sure you're getting in the right person. It's also going to be really important as you know to like, I don't know how much nurture you're doing now for like the higher ticket services. If you're like you know, are you putting people in the oven and it's kind of like a slow cook or are you like microwaving with valuable content? [Michael Houck]: A little bit of this, a little bit of that. Probably should do a little bit more of either or both. But basically, when people sign up, we send them immediately to a page that shows them. We don't collect enough information about them. We send them immediately to a page that shows them our case study slash membership offer, and they have the option to buy that right there. Then they also go into an email sequence. One, they get an instant welcome email. After that, they get a few emails on, like, the different things that we do. So they'll get the ghost writing email, they'll get an email from one of our partners where we get, you know, a CPL back from them, they get an email about the case study library again further on, right. So it's like, we do a little bit. And then in the actual newsletter, we have a footer that sort of features everything in there too. So pretty standard stuff, there's probably more we could be doing to pressure cook them to your point. [Michael Houck]: But yeah, we're not we're not doing anything more Um, I would, and how is that converting right now? [Nathan May]: And, you know, do you have a ballpark sense of like, Oh, it's the, you know, it's the nurture emails that are doing it versus like the footer and the newsletter, like that kind of stuff. [Michael Houck]: No, we don't do a good job of tracking attribution at all. Uh, that's something I've, I've sort of always let fall below the priority line. So no, we do a terrible job of that. Um, as far as how it's converting. Yeah. I mean, poor We get a couple of ghostwriting clients coming in every month, probably from this, and I talk to them on calls, and they say, oh, I read your newsletter, and whatever. So anecdotally, I know that's true. But in terms of the case study offer, which is the quicker payback period, more, OK, we get $195 per one, so we need it to happen for one out of this many subscribers. That’s not happening anywhere near at the rate that it would need to be. [Nathan May]: Yeah, that makes sense. Yeah I mean I would recommend doing one of two things. So I would for your nurture like within that first like let’s call it 21 days commit to really pushing something like push one thing and really push it right because that’s gonna be when somebody is the most likely to convert. And that could be on the case studies, it could be on like the higher ticket offer and like more of like a book a call thing. But like you’re gonna want to work the lead, I think a bit. And like even as a good example, so I have a newsletter and it’s this kind of like cute, kitschy thing. It’s very small, it’s like only 2,500 people, but it’s invite only. So it’s all these seven, eight, nine figure newsletter operators, the hustle people, the morning brew, all this stuff. And I get very little inbound from the footers of my stuff. But out in uh and like that extremely easy book call from that or like we just had we’re doing an event with beehive uh next week and we’re rolling that into like an accelerator and I I invited a bunch of people for my newsletter uh big media companies like a private two private sessions within that accelerator and we have everybody we have forbes we have fortune condi nas dot dash meredith the hustle morning brew axios uh work week new york times wall street journal financial times there’s like 50 of like the largest media companies are joining because They all read the newsletter. Nobody signed up to the public thing I’m doing on Wednesday. But when I just asked, when I just emailed them and asked, because it’s a high ticket, right? It’s account-based marketing kind of stuff. It all worked. And so the value of sending those emails is very high. [Michael Houck]: So we’ve done a little bit of that before. So we used to, I don’t know why we stopped this actually, but we used to do a one-on-one Like very casual, not even branded, not even through Beehive or anything like that. We put them in like a sales forge, right? And we have a sequence set up in there, spin tax it, put a list of, you know, um, 10,000 people who subscribe to the newsletter and have like 10 different inboxes that are emailing them all from like me. Right. But it’s like different email addresses. Um, I don’t know if that is maybe worse or whatever, but we did get leads that way. And we, we signed clients that way. They weren’t, I’d say they weren’t always the highest quality clients, but some of them were decent. So that can work for us too. We probably should get back to doing that. [Nathan May]: Yeah. Yeah. Try something. I recommend it. Cool. Well, why don’t we do this? I think we talked pricing. I think we’re happy to match Grow Letter or whatever you guys were doing before. I’m also a big fan of Date Before Mary. So we would do a pilot, right? Like a 12-episode pilot. If you wanted to continue. How do you feel about that? I feel good about it. [Michael Houck]: And I’d love to do it with you. And I want to do it with you. I think I like the way that you’re talking about thinking about LTV versus CPL. That’s the framing that I would want to use as well. And I think when we were working with Matt, I love Matt. And I love his team and everything. But all the focus, I mean, this was a year plus ago. So maybe he’s changed his philosophy. But back then, I was like, let’s get that CPA down as low as we possibly can. That was the metric that we looked at. That was what we, you know, our week was entirely based on that, right? [Nathan May]: I just talked to two companies in the last three hours who are going to come to us from Grow Letter. [UNKNOWN_SPEAKER]: They still do that. [Michael Houck]: Well, I don’t want to do that now. So I’ve learned my lesson. But so yeah, what I’ll do with you, I think what’s going to get me over the hump from, hey, I’d love to do this to let me sign a contract and pay you the first month retainer and let’s like take a shot at this is like how, like obviously I can send out email campaigns to people about our ghost trading offer and things like that. But like, I don’t know, like what are you seeing other people either in our space or just in general doing to get that quick payback period, like a low end front end type offer that’s converting right now? Because when you think about early state founders, you know, it’s a, it’s a tough audience, tough market to monetize with that kind of stuff because every dollar for them goes into their business, right? It’s not like they’re working some big cushy tech job salary and has some money to spend on a something, something. So I’m just curious, like we could, we could try workshops, we could try other info products. What are you seeing working with your other clients that maybe we can try? And then if that works, okay, let’s go all in. [Nathan May]: Yeah, I would say, um, what, what kind of mood are you in with respect to the product? Like, are you, I mean, to me, it sounds like you grow the ghostwriting business? Do you want to spend time spinning up new products, webinars, things like that on this side? [Michael Houck]: I want whatever is going to have the biggest impact on our business and be the most reliable. In my head, the easiest way to predict how much I can spend on growth is having a low-ticket front-end offer that converts at some conversion rate that I can say, okay, this is $100, this is $50, this is $200, whatever. And therefore, I know I need this amount of people. The same math I was doing earlier, right? That's in my head where it goes. If we raise the price, like our standard offer for ghostwriting is 4k, right? And we have cheaper packages too, but that's a standard offer. And so if I'm saying, oh, I need one out of every 2000 people, but they stay for a couple months. So I really only need one out of every like 10,000 or something like that, that becomes a lot harder to forecast out how much I can allocate towards. Super lumpy, yeah. [Nathan May]: Maybe one month you have five sales calls, the next month you have zero. It's this up and down thing, yeah. Right, exactly. [Michael Houck]: So that's why my head bias is... But if that's the wrong mindset, there's a way to make it work and we can say, hey, let's optimize people who are going to be interested in ghostwriting and go that way, then okay, a thousand percent, I'm here for it. [Nathan May]: Yeah, I think It's, it's always trickier when like the, so your newsletter is, um, is, is semi congruent with, with the, uh, ghostwriting offer, right? Like, I mean, in, in, in theory, like all, all founders should be building some type of audience. Most founders should be building some type of audience. Right. But it's not as direct as like, uh, you know, cool. This is for startup founders who are raising VC and he, you know, here's 500 pitch decks, right. For 999 online grace VC, or like, we're going to go out of pitch deck creation service for you. We're going to create your deck. It's not asking, we weren't there. And so because of that, right, it's kind of like how, gosh, what's a good example of this? Like, there's tons of offers, like business opportunity offers, where like, you're taking a big TAM and you actually have to show them why they should care about like the mechanism in the first place. Like why is copywriting versus e-commerce, whatever the five other things, right? I think you're going to need nurturing like you or your team are gonna need to write out and nurture, that is that. It's to like be extremely in-depth, just give, I can send you flows as well from people, Danny Bustamante, Dickie Bush, Nicholas Cole, Jesse Boudreau, folks like that. When you're giving that out, you just see what it looks like, But it's gonna have to be around content, founder content, why that's important. And I would use that to work people down to the call. The stuff you have on the front end right now, It's, what is it? It's like a 200 bucks, 300 bucks. [Michael Houck]: It's 200 bucks. It's a case study library. I've interviewed a hundred founders about their fundraisers and here they're sharing their secrets of how they raise money from these investors. And you also get access to like a telegram group with other founders and some other perks from software companies and things like that. [Nathan May]: If, um, if a thousand people come into the newsletter or a hundred or whatever, just some round number, how many people buy that? [UNKNOWN_SPEAKER]: Like a few, like a handful. [Michael Houck]: Uh, Less than 1%. [Michael Houck]: Yeah, less than 1% for sure. [UNKNOWN_SPEAKER]: Yeah. [Nathan May]: Yeah. So I think it's hard to sell something that is like hundreds of dollars to cold traffic unless it's like some done-for-you service or something. So I'll show you, let's see, I'll just show you something I did for a while. This will share. There we go. So I used to invest in real estate out in Ohio, which is where I'm from I had a real estate newsletter. The tale there on this is I offered a product on the front end that was a bunch of different stuff. It was for real estate investors in Ohio. So I gave you my framework for finding deals, and sourcing things, and financing. I have a model I used to analyze. Properties, I have, you know, my rehab guides, the actual SKUs I use, you know, when I was like rehabbing stuff, you know, or some other thing, a bunch of stuff. And it's like, holy crap, all this stuff, and it's 20 bucks. Each thing individually here is certainly worth at least $20, I think. And so this had, I think, it had a two and a half percent conversion rate. So what is it? Let’s just calculate ARPU. So against $20. So I made roughly $0.50 per subscriber. And I didn’t do a ton of optimization. I didn’t do a ton of emails or anything like that. So maybe that could have been $0.70. Maybe it could have been $0.80. And I think with SparkLube, SparkLube was like another $0.30, $0.40. So I think I was acquiring subscribers. Yeah, exactly. SparkLube could be all over the place. SparkLube also, as you scale, becomes less efficient very quickly. But anyway, It was a nice subsidy on subscribers, and I think this 20 bucks, even 30 bucks, even Jessie Poojie’s stuff, we did it at $50, was really value-packed. That's impulse. Those are impulse purchase prices. I would- Too high for impulse purchase, basically, is what you're saying. Yeah. You and I have a lot of money. I don't know if I'm going to pay somebody $200 if I haven’t met them before. Sell me on something, you know, for even just 200 bucks. [Nathan May]: That’s fair. [Nathan May]: Yeah, that’s how I think about it. I wish I had a more technical answer than like, Oh, what if you just took the price and put a smaller number? But I do think I do think the impulse stuff is useful. [Michael Houck]: I mean, look, we can we can try it. I’m not opposed to like, if we if we make a better return by like, if the conversion significantly goes up by reducing the price, I’m here for it. We can experiment with that and see. Let’s try it. We’ll try it for three weeks and then see. Yeah. Yeah. Okay. All right. Let me go through some of that, make a plan this weekend, and then I’ll follow up with you on Monday and can see when we want to jump in. Because I do want to do this, whether it’s immediate or whether it’s in a couple of weeks after we’ve sort of run the test like this, I’ll let you know. But I do want to scale this because we need more leads in the ecosystem. And I do think that doing it with you is probably the right bet for us to make. So I’m sold. I just need to get our ducks in a row, basically. Yeah, that works. [Nathan May]: Why don’t we do this? I’ll send you our typical SLA. I’ll send you a couple of those case studies from the rundown and those votes. And if we chatted like two weeks from now at the same time, would that work for you? Let me put that on. [Michael Houck]: Let me look. Two weeks from now. What is that? That’s two weeks from now. July 4th. Let’s do Monday the 7th. How about that? Monday the 7th. Yeah, let’s do that. [Nathan May]: I’ll send an invite over your way. Yeah, I can do any time except 2 to 3 p.m. [Michael Houck]: Eastern that day. 2 to 3 Eastern. [Nathan May]: Okay, let’s do 3.30 Eastern if that works. [Nathan May]: That’s perfect. Let’s do it. Cool, awesome. You’ll get invite, SLA, case studies, anything else I can send you that would be useful? [Michael Houck]: Um, no, I have the recording. So I’ll go through my notes and stuff. And if anything else comes up, I’ll shoot you a note. Awesome. [Nathan May]: All right. Well, we’ll chat in two weeks. [UNKNOWN_SPEAKER]: Good to meet, man. We’re going to chat.