How we grew our newsletter to $30.000/month - Part 1

Hey friends!

I want to share my story and insights from building a side-project. I could have achieved the same results in two years. Why? It took us over four years to get from $0 to $6k and then one year to go from there to $30k/ month. And it's all my fault...

Since we started

💸 $30.000 revenue / month
📊 Around $18.000 profit / month
📧 105.000 email subscribers
👩‍💻 1 Full time employee + 3 Part time Freelancers
✍️ Over 2.500 happy authors who work with us

Let's divide that into 4 parts:

1. Idea
2. Launch / Execution
3. Growth
4. Next steps and why we rejected $1.5M VC money 👿

💡Our Idea

In 2015 I told my friend a story about "App of the Day". In 2014 I wanted to promote an app for a client of mine, so the sales team of “App of the Day” answered pretty quickly and told me it would be €15,000 for ONE DAY!!!

With over a million users you would get around 60k downloads over the following two to three days, which would catapult you to the top of the charts. Additionally, you would get organic downloads too. So the cost per app download would be €0.25 - reasonable even six years ago.

Our napkin calculation led us to the enlightenment that they could do between $500k - $1 million per month, depending on how many apps they promote.

🤔 Our thoughts:

First thought: Let's clone them. The first excuse, hmm but how do we achieve 1 million downloads in a short period of time?

Second thought: How can we steal their idea but use it for another market or vertical?

Learning: If you are looking for new ideas, spend some time searching Crunchbase, Indiehackers or StarterStory, etc. to see which companies earn money. And see whether you could do it for another vertical. Examples that we all know are Uber for X, Airbnb for X, etc. - but the same logic applies to smaller companies as well.

Idea: "App of the Day" for the ebook market aka. “Book of the day": How can we grow users? -> Ahh we are going to figure this out later...

So what's our business now?

It started with the app and now it has shifted to a newsletter where we highlight ebook deals daily in the German-speaking market and its called Buchdeals.de

🚀 Launch/ Execution

This I am going to do as bullet points just so you see exactly why we could have done this better and faster.

2015:

• After procrastinating for six months - we finally developed the app for iOS and Android with Phonegap and just launched it without any expectations.
• A couple of months later we invested around $1k into Facebook ads and pushed the app into the charts in the book category. Luckily we put some effort into App Store optimization and I think again it was luck that we stayed in the iOS top charts for the book category.
• End of 2015 we find out about bookbub.com -> Similar service, focusing just on newsletters.
• Accidentally😀 earned money through Amazon Affiliate, after adding an affiliate link to our books.

2016:

• Launched a website with the newsletter service
• Decided to add a popup in the app to grow the email list -> worked pretty well. More on growth tactics in Part 2.
• The first authors are booking deals.

2017:

• We noticed that Bookbub must do millions with the prices they are charging and the number of deals they are promoting.
• Talking about the potential, but at the same time finding excuses on why it would not scale in Germany.

2018:

Revenue has been steadily increasing
Costs are around $1000:

• $600 - Part-time freelancer adding books and customer service
• $400 - Tools.

End of 2018 realizing that the project grew to almost $6k without us doing much -> Finally realizing it could be a big(ish) opportunity.

2019:

• April 2019 - Starting working full-time on Buchdeals.

2020:

• June 2020 - Reaching a milestone of $30,000 revenue/ month.

Learning 1: If you somehow see an opportunity, go for it and don’t try to split yourself into different projects. We could have achieved the $30,000 much earlier and saved two to three years if we had stopped making excuses.

Learning 2: Even if you have a small project, it doesn’t mean it will stay small if you work on it. At $2-3k we kind of said okay, that’s a small project, it’s not worth the time for two people. Only after it grew organically and confirmed our initial assumptions were we confident and bullish. => Be bullish from the get-go.

📈Growth

This is going to be Part 2 and Part 3:

• Part 2: How did we grow to over 100,000 Readers?
• Part 3: X Steps we took to grow to $30,000/ month and to build retention of over 70% MoM.
  

💸 Next Steps

So, at the end of 2019, we decided to approach VCs to get some money. It took us eight months to get to a state where we signed the Term Sheet and were ready to go. But after an intense session with my cofounder, we decided to bootstrap and take a small loan from our bank instead.

Here is our pitch deck which helped us to convince the VCs. It is not perfect by any means, but it still worked. Obviously the projections had to be over the top to convince the VCs.
Buchdeals Pitch

Why did we decide to proceed without investors? I have worked with investors before and if you do - you need to understand the following:

• If you take investors’ money -> you must scale, like a lot in two years - from 150k annually to at least 2 million annually. And then to $5 million and to $10 million and much more.
• If you are running out of money -> go raise more money which dilutes your shares more and more.
• Even if you have the majority of the company -> you sign a bunch of rules about what you are allowed and not allowed to do.
• You cannot pay out dividends to yourself or investors -> since they just care about growth and exit.

These questions helped us to decide:

• What is it really that we want over the next five years?
• What makes us happy in the company?
• Do we 150% believe that we can scale this company to $10 million and more?
• Is there a potential to lose our nice lifestyle business if we realize that we cannot scale?

All that led us to the decision to not take the deal.

Four months later, we could not have been happier. We scaled a bit and noticed that scaling to $10 million definitely would not happen so we had made the right decision.

So what are our top next priorities on the road to $1 million?

1. Put more effort into organic reach and work on SEO

• This should help us to increase email subscribers -> raise prices a bit and reach $40k - $45k which we think might be kind of a maximum, until we grow further and be interesting for big publishers.

2. Launch in Spain and France:

• Take the playbook and do it faster this time around in France and Spain
• Maybe buy a competitor in one of those countries and apply our playbook
• Our Goal: End of 2022: At least $20k - $25k in each of those countries AKA we are going to reach our overall goal of $1 million.

In Part 2, I am going to talk about how exactly we achieved 100,000 readers. So if you made it until here, stay tuned… :)