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March 14, 2017, 10 a.m.
Business Models

This email newsletter raised $300K from its (affluent, largely Silicon Valley–based) readers in 55 hours

“One guy put in a hundred grand.”

Launching a general-interest tech and business news site these days seems like kind of a dumb idea — there’s way too much competition. It doesn’t seem that much smarter in email newsletter form — until you learn that The Hustle has grown to 300,000 subscribers in less than a year, is profitable, and just raised over a million dollars from Silicon Valley and an additional $300,000 from readers.

“Wait, really?” is a thing that I said several times in my interview with Sam Parr, founder and CEO of the San Francisco–based The Hustle, as he described to me what sounded very Skimm-like in terms of growth potential and reader loyalty. (The Hustle has a “ambassador” program that gives people rewards in return for referring friends, an idea that theSkimm has also gotten notice for).

In its first few months, The Hustle catered to millennial men and its readers were 80 percent male. But “we purposely wanted to fix that,” Parr said, in part by hiring a female writer, Lindsey Quinn, who writes with Parr and cofounder John Havel. The stories in Monday’s edition of the newsletter covered “hidden underbelly” of Facebook groups, Amazon and eBay’s entry into the advertising market, and newly released statistics on China’s two-child policy. Parr said that now just about 50 to 55 percent of The Hustle’s subscribers readers are male. (The open rate ranges between 40 and 60 percent.)

“Why would we want only 50 percent of the market?” Parr said. Our conversation, slightly condensed for length and clarity, is below.

Laura Hazard Owen: You didn’t start out in media. What’s your background?

Sam Parr: Before this company, I had another company, the world’s first roommate-matching iPhone app. We had a small exit and sold it, and I was trying to think of my next big idea to work on. While I was trying to find my next idea, I hosted an event I called Hustle Con, kind of like a TED Talk but for entrepreneurs. In order to make the event popular, I sent out a ton of email. Users couldn’t buy a ticket — they had to enter in their email, and then I would send them fun stories, and people would purchase. I didn’t expect the event to be as popular as it was, but it ended up selling 360 tickets in six or seven weeks and made tens of thousands of dollars. I was shocked by that.

Around that same time, I had read this stat that the average Fox News viewer was in their mid to late 60s. [In 2015, Fox’s median viewer age was 67 and CNN’s was 58.] I was shocked that these big companies are literally dying. Using the money I made from the conferences, I launched The Hustle. The original idea was to create a Business Insider meets a Vice News type thing, so we launched a blog and did a bunch of crazy stunts and wrote a bunch of wild content that people seemed to enjoy, and ended up getting millions of unique visitors. But we realized that the business of attracting web traffic was kind of dying. It’s just not the same as it was a few years ago, and it was really tough to get and retain traffic and make money off of that. And so last April, we switched. Instead of posting our content as a blog, we went email-only. That’s where we are now.

Owen: What do you know about your subscribers now?

Parr: Our audience is very young and affluent. When it was just me writing, [our readers were] 85 percent men. Now we have a more diverse editorial team and it’s something like 50 to 55 percent men. Nearly everyone is young, in their 20s and 30s, and they live in big cities. Marketers call them HENRYs [High Earners Not Rich Yet]. I call them yuppies, because it’s what I am. They’re young and very affluent and, hopefully, are the future shot-callers of the world. That’s who our audience is.

We’ve done surveys where our audience — obviously they’re biased, but we’re their No. 1 source for business news and information.

Owen: I noticed the newsletter has a thing where you can pop each story out into a web tab. Why is that?

Parr: We’re always testing ways to grow quickly. Until recently, we didn’t have a lot of paid marketing. Having stories that click off isn’t necessarily a way that people will consume, but it’s what they share. Then new readers come to the site and we convert them to subscribers. And so it’s kind of a growth mechanism.

Owen: How big is your team?

Parr: We’re a team of 12, about to grow to 15 or 16 in the next couple months. We have a three-person editorial team and everyone else is focused on building the technology and building the list. [The Hustle said on its SeedInvest page: “Because we’re email first and driven by subscribers, not page views, we’ve been able to thrive with a small team of writers. This allows us to put most of our resources into growth via tech and marketing, and not clickbait-like content designed only to capture attention without delivering substance.”] We do big events as well. We’re profitable just from the advertising in the email, but the events make us a lot more profitable. [Between January and October 2016, The Hustle made $473,675; 81 percent of that came from events and the remaining 19 percent came from advertising.]

Owen: You’re also raising money, including some money from readers.

Parr: We ended up raising a little over a million from institutions, so like normal VCs, but also guys like Tim Ferriss, [Behance founder and VC] Scott Belsky, [Bleacher Report founder] Dave Nemetz, people like that.

Our community — we consider ourselves a community more than a media publication — is very big, they love us a lot, and they always ask to invest. As a little shtick to get them involved, we let them invest. And we ended up raising something like $300,000 in like 40 or 50 hours. It was crazy. I thought that we were gonna get $150,000 over 90 days, but we got that in the first handful of hours.

Owen: What do they get for investing?

Parr: They’re a small shareholder. The average price was like $1,000, and so they own a small piece of the business.

Owen: Wait, really? The average amount that a reader invested was a thousand dollars?

Parr: Slightly more. Well, the smallest amount they could put in was $500. A handful of people put in $10,000, $25,000. One guy put in a hundred grand.

Owen: How many readers was that from, all together?

Parr: I don’t know off the top of my head, because we turned down a lot of people. SeedInvest is the platform we used, and the way it works is that people would submit their bank information and then how much money they wanted to invest and click submit. We had to go through the back end and approve it. A lot of people missed the cut because we were oversubscribed, we took too much money. The number of people we took money from in the end was 150, but the people who actually submitted money was 300.

Owen: You said that the percentage of female readers started off pretty low and it’s gotten a lot more even.

Parr: Originally, when it was just me writing, it was very heavily male. But we purposely wanted to fix that. If a masculine or bro-y tone of voice could be stereotyped, that’s how I originally wrote. But we toned it down.

Owen: Why?

Parr: Well, one, it was the right thing to do. Why would we limit ourselves to just men? And, two, it made better business sense. There’s a lot of women who care about this type of stuff; it’s not just a man thing. Why would we only want 50 percent of the market?

Owen: A lot of stuff online uses the bro-y voice as a way to draw people in, so it’s interesting that you guys ended up moving away from that.

Parr: It was a great way to draw people in. We drew people in fantastically. We wrote some controversial articles early on that rubbed a lot of people the wrong way, but also rubbed a lot of people the right way. That was on purpose. But now, once we got bigger, we’re like, okay, let’s get more gender-neutral, and see if that could help us grow. And it has, in fact.

We’re almost like The Daily Show. Would you say The Daily Show was masculine? I would say no — maybe it drew in more men than women, but it wasn’t masculine or anti-woman content. That’s how we look at it. [In 2015, 15 percent of men and 9 percent of women said they got news from The Daily Show, according to Pew.]

Owen: You mentioned that readers are getting tech and business news from you guys and politics news elsewhere. Have you thought about expanding?

Parr: Not at the moment. We’ll cover topics if they’re related to business, but we’re kind of sticking in our lane for now, because there’s still a lot to be done in this space and we’re still quite small, compared to how big we think we can be.

POSTED     March 14, 2017, 10 a.m.
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