My Journey Growing a Business in the Midst of A Pandemic

This week cash from the sale of the business I started during the pandemic hit my bank account. I figured it would be a good time to reflect on the things I learned while starting and operating the business. It would also give me an opportunity to teach others these lessons while I reflect on them.

The Idea

In September 2020, I posted on Reddit’s /r/opensource subreddit looking for a weekly newsletter I could subscribe to in order to keep up-to-date on open-source software.

https://www.reddit.com/r/opensource/comments/iofvwr/best_opensource_newsletters/

I wanted to find projects I could contribute to as an engineer. I got 9 upvotes and no responses. At the time, I was writing a weekly round-up of tech news, so I decided to pivot that newsletter to open-source, and thus, Console was born.

https://console.substack.com/p/console-18

As you can see, I’d already sent out 17 emails before pivoting. There is an obvious inflection point in the subscriber graph when I pivoted, and at that point, I knew I was on to something.

If you’re a subscriber to Console, there are a few things you’ll notice about the first email. The first is that there are 10 projects in the email, now there are only 3. Another is that there are no images. A third is how small the interview is. Obviously, I’ve refined the format of the email since sending that first one.

One of the core principles of the email was to keep it highly curated, and information dense. Being a software engineer, I know how annoyed I get with walls of marketing text meant to pacify the SEO gods, and I assumed my readers would be too.

This is lesson number 1: build something for customers that are similar to you. I didn’t realize what an advantage this was until later on.

Marketers couldn’t build what I’d built, because they were marketers and not developers and marketers constituted most of my would-be competition.

Competition

Speaking of competition, a few months after starting the newsletter, a competitor arose, who copied the format and the name of the newsletter.

It annoyed me of course, but, another lesson I learned is that if you do anything that reaches critical mass online, it’s going to get copied. There isn’t anything you can do about that and I wasn’t going to hire lawyers to badger these copycats with cease and desist letters. Also, if you don’t have a moat, your business will be easy to copy. This is one of the reasons I never put money into the business (which my competitors did), and why I sold it. There is little moat in content curation.

The Business Model

When I started the newsletter, I was operating under the Substack subscription business model. The plan was to grow the newsletter to ~5000 subscribers and start charging for premium content. Substack claims that ~10% will convert depending on the content, subscriber base, and price. So, let’s say you charge $10 per month and 10% of your 5000 subscribers convert, that’s $5000 a month in recurring revenue to run a newsletter 🤑🤑🤑

So, I grew the newsletter to 5000 free subscribers, flipped on premium subscriptions, and waited for the money to hit my bank account…

and people lost it.

They were vitriolic. I had a mutiny on my hands. Subscribers started dropping like flies. I started getting replies to my email announcing the subscription.

People were saying that I “was a moron”, “my content wasn’t worth 1 cent let alone $10 a month”, “how dare I”, etc etc. I waited. Surely, these were a vocal minority, and the real subscribers would start subscribing. So I waited…and kept waiting… and the subscriber graph kept dropping, and the hatemail kept coming.

It became clear that this wasn’t going to work. I’d lost over 200 subscribers and didn’t receive a single premium subscriber. So, I back-tracked, sent an apology email (which also got a bunch of hatemail 😅), and I decided I needed to find another way to make money.

Here’s another lesson:

be flexible and don’t stop

I could have given up since my original plan didn’t work. While I didn’t make money, I knew I was providing something that people were passionate about, otherwise, they wouldn’t have replied so angrily to the initial email. It’s often the case in business that you don’t know how your customers want to pay for your service. It is essential that you embrace this uncertainty.

Monetization

With my tail between my legs, I went back to the drawing board. How was I going to make money from this email list?

One day I was on Hacker News and came across an article about ad marketplaces serving newsletters and how this might undermine Substack’s subscription business model.

https://www.businessinsider.com/advertisements-emerge-on-substacks-ad-free-newsletter-ecosystem-2021-1

Well…given this subscription model had failed me, I figured I’d give these ad marketplaces a shot.

And they worked! These marketplaces send advertisers to publishers interested in advertising in newsletters, the publishers bid on these advertising dollars, and the ad platforms take a percentage of the dollars spent. Advertising is still the business model of Console today.

Growth

Hold on a second. How did I manage to grow a list of weekly open-source projects to 5000 subscribers? That seems like a minor detail I’ve left out 😄

The way I grew the newsletter was by cross-posting open-source projects between various social media platforms. If I found a new Rust project on Twitter that hadn’t been posted to /r/rust before, I’d post it to /r/rust and vice versa. If the post did well, I knew it should be included in an email, and I would drop a comment to the newsletter under the post. So, not only was social media curating the email, but it was also contributing to the early growth.

Another lesson I learned here is that growth is a constant challenge. This strategy worked for quite a few months, but eventually, you exhaust those channels. This is actually where the interview idea came about. A developer is more likely to share the email with people if they’re highlighted in it. We’d use this affinity that the developer had for us to ask that they put a link to the interview in their Github repo, which started to drive more growth over time and also increased the SEO of the newsletter.

There are countless growth hacks that I learned while running the newsletter. More than anything, this taught me how important these growth hacks are to a business.

These growth hacks are the real company secrets of indie hacker businesses, not the product or the idea.

But, you don’t know that the growth strategy is the secret sauce, because no one wants to give those secrets out, so they talk about the product or the idea instead.

Hiring

I spent time looking for various people to do various things for the newsletter so it could become a “4-hour workweek” business for me. I worked at Amazon at the beginning of the newsletter, and at Robinhood now, so I didn’t have as much time to devote to the newsletter as I would have liked.

I was looking to bring on salespeople to land more advertisers for a commission as a side hustle. I “hired” 5 of these “salespeople” and they either didn’t do anything or tried and failed to land any new advertisers.

Then, one day I tweeted about working on an Arbitrum strategy for yEarn and it went viral when one of the core yEarn devs, banteg, re-tweeted it.

https://twitter.com/sjkelleyjr/status/1481383992813240320

A bunch of people DM’d me about various stuff, but one of them was a computer science student in India named Sai.

https://twitter.com/ph4ni

After clicking through to the newsletter from my Twitter account Sai sent me a “Console Improvement Proposal”. Sai had written down a bunch of stuff I’d either tried already or was planning to try. So, I asked him if he wanted to work on the newsletter with me. We agreed on an hourly rate and he started learning how Console worked from the inside. For both of us, it was important that he learn and start his own newsletter, and the money was less important.

Although, of course, money doesn’t hurt. Sai managed to land more advertisements than the “salespeople” and he was paid commissions on these. Not only did Sai manage to land advertisers, but he also started to curate the newsletter, reach out to his own interviewees, and eventually had an idea for his own newsletter called FOSS Weekly.

https://fossweekly.beehiiv.com/

Selling

I put the newsletter up for sale sometime at the end of 2021. I wasn’t interested in selling at the time but wanted to see what I could get for it. Console ended up in a newsletter on one of the start-up marketplaces and I got inbound from interested parties as a consequence of this.

The act of selling a business was an interesting experience. It’s almost like one of those Sanky diagrams people post of their job hunt.

I had >30 people reach out to buy the business, 5 were actually serious, 2 sent deal paperwork, and I signed 1 of them. One of the offers that fell through led me to invest in the seed round of the business that was originally interested in acquiring Console.

That’s another interesting lesson from this adventure. A lot of doors open and connections are made from operating a business that you never would have made being an employee somewhere else.

Conclusion

What other things did I learn? A lot of these learnings contributed to my decision to sell the newsletter.

The first is that I don’t like being a marketer and I prefer to be a developer. I like coding. For a while, I thought I would be interested in a developer advocate position. In fact, I’d done this as a consultant in the past. This experience made me realize that I wouldn’t be happy doing something like that full-time.

The second thing I learned is in order for a business to succeed, it has to be operated for a long time. I ran Console for almost 2 years before selling it. You have to be passionate about the business otherwise you’ll quit when it gets too difficult or too monotonous.

A third thing is to make sure that your customers have money and are willing to spend it. Part of the reason the subscription business model didn’t work for Console is open-source enthusiasts can be opposed to paying for things.

One of the things I learned from all the interviews with the developers, and it pains me to say this being a developer myself, is that software itself isn’t that valuable. Good software is a necessary pre-condition, but it isn’t sufficient on its own to build a valuable business.

But, the most important thing I learned is to keep the doors open. You don’t know where your wins are going to come from before you start. I thought subscription would be the business model and it turned out to be ads. I didn’t expect to use ad marketplaces to generate revenue when I started, or even after the subscription idea bombed. If I wasn’t running a newsletter when I saw the ad marketplace article linked above I would have clicked through it and thought “hmm, that’s interesting…next article”. The same thing applies to hiring Sai. At that point, I’d stopped looking for someone to hire given the prior sales hire failures. It was a happy accident that banteg re-tweeted my tweet causing Sai to click through to the newsletter. These wins fall into your lap if you stick around long enough, and business success is often a matter of stringing enough of these wins together for long enough that they compound on one another.

If you want more hot takes on the tech industry, investment insight, or crypto alpha, or smart contract security, follow me on Twitter 👇

https://twitter.com/sjkelleyjr

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