Q&A: Masterclass on Starting a Newsletter, Business Failure and Validating Ideas⏐Ep. #124

Welcome to the Kerner office. It's Wednesday and you know what that means. That means it's time for some Q and A. It's been about three weeks since I've done it, but I have a backlog of questions right now and I've curated some pretty good ones. So if you ever want to ask me a question on this show, go to tkopod.com, scroll to the very bottom and you'll see a widget where you can record your voice. You can make it anonymous or not, you can leave your email or not, and I will play your question and answer it. Most likely we're going to go ahead and play this question from Dustin. What's up, Chris?

My name's Dustin. My wife and I, we love listening to your content, man. We've been entrepreneurs for four years. We had a flash in the pan success when we first started, did about a half a million dollars and then our business model just completely vanished almost overnight. And I've tried tons of different business models, digital marketing, AI, E commerce, all kinds of things and have not been able to get anything to work for over two years now. And so it's gotten to the point where we've spent all our money, spent endless amounts of time on it. So many business models have failed. And I'd always, you know, believed the gurus like, you know, everything works, you just have to work it and you only lose if you quit. Well, now we're filing for bankruptcy. My wife left me for a while. It's been really bad. I just had to take a 9 to 5 job just to put food on the table. So, man, I wanted to know if you have any advice for someone like me who like, I believe in the entrepreneurial dream. I want to have that, you know, time, freedom and creativity and flexibility and all that stuff. But I'm just in this position where I feel kind of broken, you know, like, what do I do? How do you recover from that and how do you keep going? And any advice you have would be super appreciated. Thanks, man.

Dustin, I'm sorry to hear about your rough go of it here over the last couple years. I don't get a lot of segments like this, but this stuff happens more often than most people are willing to admit. So thank you for being willing to talk about this. I don't know a lot. I don't know the industries you were in, I don't know what customer acquisition channels you tried. So my info and knowledge is limited here, but I'll do what I can. So the first thought that came to me as I listened to your question is, have you considered buying a business? Buying a business is a great way to skip the line to profitability. Assuming you already have the skills to run a business, you're confident to run a business, you already have the skills. I don't recommend anyone buy a business right off the bat. That is a recipe for a nightmare. And I don't know what your W2 is. Are you managing people? What are your responsibilities? Like, I have no idea. So I'm going to lead with the assumption that you're good at managing people. You know how to do it, you know how to run a business. You built the business to half a million dollars. It failed for whatever reason. I don't know how much cash you have, but I do know that there are a lot more businesses for sale than there are buyers. Or should I say there are a lot more businesses that should be for sale because they're about to fail than there are buyers. If you go look@bizbysale.com, you're looking at maybe 2% of all the businesses out there that could be for sale if someone were to cold contact them and offer to buy their business. I recently read an article about a guy that joined his local Facebook group and just posted, he just said, I'm looking for a business to buy. I don't care what the industry is. This is about the size of business I'm looking for. From a revenue perspective. This is who I am. Here's a picture of my family, here's my background. Would love to talk. That led to about a dozen leads and he ended up buying an awesome business that was mostly seller financed. And you're going to have the easiest time doing that in your own home local market. So I don't know if you've considered that or not, but entrepreneurship and entrepreneurship through acquisition ETA are one in the same. And you're right, a lot of gurus out there, you know, just keep going, just keep trying, just keep grinding. It'll work. And sometimes it doesn't. And they say that businesses never fail. Founders just run out of energy. And I totally feel that there's been many times where I've just run out of energy very deliberately. I've just said to myself, I'm done, I'm done with this. This isn't worth it anymore. Opportunity cost is a very real thing. So I encourage you to consider buying a business. You don't have to spend a lot of money if you have people in your life that love know and trust you that might have a little disposable income. You could raise some capital from them for a down payment seller, finance the rest. Buy a sweaty startup, ugly blue collar business that needs some technology added to it and see if you can at least earn what you're making in your W2 right now. Aside from that, man, you just got to wait it out. Just keep working your W2 and just keep testing things on the nights and weekends. That sounds generic, but it just works. You just got to keep trying things. I would spend an hour a day playing with AI replit, Perplexity Chat, GPT, anything. That is the most asymmetric bet you could take on yourself right now. So that's my advice. Three different things. Consider buying a business by asking around in your local area. Learn AI as much as you can and just keep trying things in the nights and weekends while you have your W2. But don't give up. All right, let's go to Demetrius next.

I know you hear this all the time, but I'm exactly like you. I have a million ideas and everybody makes fun of me for it. But sometimes I don't know what to do with them or how to make money from them really is my main issue. I have a newborn son that was just born and I have this great idea in my head. So right now I kind of do a tree delivery service and my idea was to make it like Uber for trees. Right now I'm actually going on upwork and fiverr trying to find somebody that can create something for me that can where I could deliver the trees and make it like an Uber for tree delivery. But my issue is how do I make enough money to still survive the diabra for my family on top of putting money into this idea. And I have tons and tons of ideas, notebooks and ideas that Adam, I can't really do because I don't know how I'm going to make money from the idea. So my question is how do you know if an idea can make money? Where do you find ways to make the money from the idea? But thank you so much for your time. I love your content. I love your emails. I read every single one of them because they're definitely motivating that I know that I'm not alone with all these ideas and all these creative thoughts. So I'm trying to figure out.

Demetrius, love your question. Let's zoom out before we zoom in here. So you've got lots of ideas, notebooks full of ideas. People give you a hard time yada Yada, yada. So I'm thinking back on my life and my experience and I don't remember people giving me a hard time all that much for my ideas. And maybe that's because I'm self conscious about them and I don't share them as much as maybe I should. Or maybe that's because a lot of times my ideas turn into something on paper or on the Internet before I even have a chance to tell anyone but my wife. So the only thing I know about you is this 90 seconds I just heard. But I think if you were to convert some of that time you spend writing down your ideas into a notebook into time spent learning how to validate these ideas before having to launch them using widely available tools. Facebook Ad, Library Card, C A R D, Facebook ads, Landing pages, marketplaces, Facebook Marketplace, Etsy, Facebook groups, using these tools to validate the idea. And when I say validate, I mean like see if you can actually get paying customers, not see if you can get people to tell you it's a good idea. It seems like you've fallen into a trap of ideating and you love the idea of these ideas, but you don't yet know if you love launching these ideas yet. You have to love launching the thing. And if you're truly in love with an idea, then you will find whatever it takes to get that idea off the notebook and onto the Internet to convert that idea into dollars and cents into your bank account. If you think telling people your idea is becoming a hindrance to you because they're giving you a hard time, even if in good fun, don't not tell people your idea because you're afraid they'll steal it. But if their negativity is doing more harm than good, then keep it to yourself. Convert that idea into action, into energy. Now, as for the the Uber for tree delivery idea, if you're already doing tree delivery and it's working, and I assume it's profitable, if I were you, I would spend more time on trying to copy and paste what has already worked to acquire the customers that you already have. Can Uber for tree delivery be a thing? Yes, Uber for anything could be a thing. Because really what we're saying is just if we're Uber ifying something, then it just means we're making it more convenient. And there's always a business to be had for making any product or service more convenient. So I'm sure there's a business there. But you're getting ahead of yourself. To me, this is just like another idea you're adding a second idea onto the idea that you're already working on that is already making you money. I don't know if you can afford to have shiny objects in them right now. Go to your piece of paper, write down all of your customers right alongside them, write down how you acquired all of them, and then right alongside those, generate dozens of ideas of how you can do more of that. I don't know. Are you going through the tree supplier? Are they giving you jobs to deliver to their customers? Or are you going through end customers and grabbing trees from the suppliers? I don't know, but I would certainly try to find more customers first. If you're an idea guy, that's a strength, okay? But take that muscle in your brain, take that skill that you have and use it to generate customer acquisition ideas within the one idea that you're already working on instead of using that muscle to think of entirely new ideas altogether. All right, we're going to go to Anonymous next.

Hello Chris, I'm a big fan of the podcast and the newsletter. Thank you for sharing all this superb content. I work in finance as a salesperson for seven years at the same firm. Since November I've been writing newsletter email focused on global market which goes out to over 30,000 institutional clients. I didn't grow this organically. I simply added all the firm's clients. But since then I've received really, really positive feedback. Many, many emails from clients telling me they love it. Internally. Folks told me clients have told them that they love the product. Never seen such positive feedback since I've been working in finance. So I've been thinking about essentially launching a substack or doing this newsletter on my own. The math works pretty quickly. If I get a thousand subscriber at 30 bucks a month, I'm making $30,000 a month, which would be great. The issue is I have a non compete at my firm so I can't just start this on the side while working there. So that's the crux of the issue. I can't just email the entire list and say I'm starting a substack because the firm would probably sue me. So I love your thoughts on this.

Man, I don't know what to do with this. Let's start. Okay, let me back up. I love newsletters. I love financial newsletters. I am. I literally spent five hours today in my newsletter tweaking Facebook ads, getting my cost per acquisition down, looking at metrics. I love newsletters. I love the newsletter business. So you are on the right track. So let's start there. We're on the same page, so video is cool. But you know what's better? Long form audio via podcast and my newsletter, tkopod.com, go there to subscribe for free to my newsletter. It's one email a week. Very tactical. 1500 words per email. And then go to my audio podcast, three episodes a week. Stuff like this. You're gonna love it. All free. No sleazy sales pitch. Tkopod.com There are two aspects to any newsletter business, the fulfillment and the customer acquisition. And really you could kind of boil down any business to that. But especially in the newsletter it's very, very straightforward. Which is I love, I love binary businesses, right? I talk about this all the time. I love simple businesses. Okay, so you have half of the equation down pat already. The fulfillment. You're already writing it and it's amazing. You have an amazing product. Your customers love it. Check. Awesome. You don't yet know about customer acquisition, but you could probably figure that out. But man, what am I supposed to do here? You told me that you you're under non compete. So I don't know if that means you're not going to try to pull subscribers away from your boss, which is great, or if that means you don't know what to do. I'm going to lead with the assumption that you're not going to try to steal customers away from your current job, but you are seriously considering starting this entirely new fresh and that you won't get in trouble with your non compete because you're not going to steal customers. You're going to find your own customers and maybe in a different financial niche than whatever you're doing right now. So let's lead with that assumption. Okay, so you've got the writing part down. We won't even talk about that. You need to find customers. Okay, here's why I love the newsletter business. Anyone listening to this? You should probably start a newsletter business. And no, I have no newsletter courses to sell you. Here's why I love it. Okay, let me back up. I'm all over the place. My Adderall is worn off, I guess. Why do people love e commerce brands or starting an e commerce business? Because they can be money machines. You put a dollar into the ad machine and it gives you three to five dollars back.

Okay.

Direct to consumer business. You start a Shopify store. You get some fancy pictures and videos taken. You put some ad creative up you A, B, C, D. Test everything on Meta ad manager. You test it across Instagram and Facebook until finally you realize, okay, we're selling a $75 widget and we're spending $8 on average to acquire a customer. Our gross margins are 70%. Our cost to fulfill is $10. And so at the end of the day, after paying all of our overhead, we are putting in $1 and getting back 12. Now that's, that'd be pretty extreme. So let's say we're putting in $1 to get back seven. And then when you get word of mouth involved and then you get the reorder rate involved, that putting in $1 to get 7 could turn into 17. Right? That's what, that's how brands like Allbirds, Casper Figs, Peloton Purple Mattresses, Athletic greens, on and on and on. All of these E commerce brands, as sexy and complex as they look on the surface, it's really just Facebook ads and Shopify. That's it. That's the secret. You gotta have a good product. But even that you can make up for with good ad copy and creative and design. So if you could take a good product like athletic greens or something, an amazing creative and good fulfillment, good customer service, you can build a billion dollar brand on Shopify. Billion with a B on a Shopify site that it costs $29 a month to start. That's why people love the e commerce business. And that's probably a business I know better than anything else, but that's a freaking hard business because fulfilling the product is really, really hard. Growth is really hard. I talked about this a week or two ago on my how to build a $10 million business episode about LCD cycle. If you grow 20% a month and you have a 20% margin, then you're never cash flow positive. Profitable. Yes, Cash flow positive. No. E commerce businesses are freaking hard. Despite the fact that they look really binary on the surface. Very straightforward and simple on the surface. Like I love, they are hard businesses. Okay, take the good things about an E commerce business, remove the bad things and you've got a newsletter business. It's binary, it's straightforward. But you don't need a warehouse, you don't need a third party logistics partner. You don't need to file disputes with ups. You don't have products going bad, products getting lost, products getting broken. You don't have people getting mad. No one gets mad in the newsletter business. And you can drive all of it with paid ads. It is a beautiful, beautiful thing. So this is very recent on my brain, so this segment will be longer than average because I'm excited and If I'm talking about something in an excited way, then you get excited. So it's a win, win all around. Oh, you guys are going to love this. Okay, so there's a magical word called co reg. Co registration. Okay? And what that means is I can drive traffic to my newsletter signup page. After I get a subscriber, a pop up will appear saying, hey, you like the Kerner office newsletter? Do you also like X, Y or Z newsletter? The boxes will automatically be checked and they can click subscribe to all five of them, three to five of them. They can uncheck the boxes, they can close the pop up. But it is a beautiful way to get three to five more subscribers for partner newsletters after you've already secured the bag for yourself.

Okay.

Co registration is kind of like an infinite money glitch with some caveats which I will explain in great detail. So partner newsletters will pay you between 1 and $10 per subscriber. So let's say you have five partner newsletters each willing to pay you $3 per subscriber. That's $15. Let's say if you spend $2 on Facebook ads to acquire a customer, that $2 customer is worth $6 to you because you know they're going to stick around for 12 months. You know what your CPM, your cost per mil is to advertise to them. So you're getting a 3x ROAS return on ad spend. You're turning $2 into 6 with Facebook ads. Are you with me so far into the money machine, just like we talked about with Shopify stores. Okay, so you triple your money. But then with co reg. Co registration, let's just say in a perfect world, that person says, I am hungry right now. I'm eager to learn. I'm going to learn from Chris Kerner on the Kerner office. But I also want to learn about stock tips. I. I want to learn about better copywriting. I want to learn how to sell things on Amazon. Oh, and look, Chris is recommending five newsletters. And with one click, I can subscribe to all of them. And 2025 can be my year of learning. Let's do this. Okay, so now assuming, here's one of the caveats. Assuming that that subscriber opens and clicks over the next two to three weeks as many times as that newsletter partner requires. Assuming that happens, which, that's a big assumption, assuming the subscriber does those requisite things for all five partners, you will make $3 times five newsletter partners equals $15 for that one subscriber, that's worth $6 to you. So we're talking 6 plus 15. So you're getting $21 for the $2 that you spent on Facebook ads. So you're turning $2 into $21 return on ad spend. Okay, now that almost never happens. That almost never happens. Here's what's going to happen. They're probably going to opt into 1.92 of those five. That's what my average is, 1.92. And of those 1.92, they may never click on either of those newsletter partners. They may never open either of them. But realistically, you can expect to make between $0.50 and $1.50 extra for that newsletter subscriber. So let's just say it's a dollar. If you spend $2 to acquire them, then your cost per acquisition, your CPA gets cut in half. So now instead of a 3x ROAS return on ad spend from 2 to $6, you have a 6x ROAS because your effective cost per acquisition is only $1 instead of 2. Because it was offset. By referring that email out to the partner newsletters, you double your return on investment. Okay, and guess what? The newsletter business was an amazing business before Coredge ever existed. And it's been around for about two, three, four years now. I just started doing this in earnest a couple months ago and I revamped my strategy a week ago and this is a six figure line of profit for me. Not revenue, but profit. And you know, passive income doesn't exist, but this is pretty dang close. Now here are the other caveats. Number one, there is a theory, and I will know with more testing, but so far it's not true. For me. There is a theory that if you share your email with three to five other newsletters, they will be less likely to open or click on yours because they're, they're going to split their attention four to five other ways. But you could argue they're most loyal to you because you're the reason they joined in the first place and those other guys were an afterthought. That's one caveat is if you're on the revenue generation side of this marketplace, your subscribers might be less loyal, less likely to open, less likely to click, more likely to unsubscribe. If you're on the other side of this marketplace and you're giving money to partner newsletters to grow your newsletter, then it almost certainly means that those subscribers you acquire from partner newsletters are not going to be as loyal because they had lower intent. They didn't click on your Facebook ad, they clicked on Chris Kerner's Facebook ad. The only thing they know about you is the one sentence they read right before they click the green button. And they might not have even read it. They might not even know who you are when they see your welcome email. So I prefer co registration on the revenue side of it because my theory, and so far it's backed by data, is that they're going to be loyal to me but not very loyal to the partners that I sell the email to. But I will soon be testing the other side of this and paying partners one to $3 for their emails and I will be measuring them very, very closely. And you only pay. That's the good part, is if you're on the cost center side of this, if you're paying for partner subscribers, you only pay if the subscriber does X, Y or Z before a certain date. And if they don't, then you get to keep that subscriber for free. Okay, so I can say they need to click on two emails in the first three weeks or I'm not paying for them and that person will not get paid for three weeks and they only will get paid if they clicked it twice and did not unsubscribe over that time frame. Now on day 22, if they unsubscribe, then I'm out money anyway. So Coredge alone makes the newsletter business a great business, but it's just like the e commerce business in that you just have to dial in your ads and here's exactly what you're gonna do. You're Gonna take a 5 to 15 second video of your call to action. Some sort of a lead magnet. You're in finance, so maybe stock picks, I don't know what you're doing. And you're gonna take five to 10 of those five to 15 second videos. You're gonna have five descriptions, five headlines and five body text and you're gonna ABC test all 15 of those different pieces of text plus the five to 10 different pieces of creative. Maybe some pictures, maybe some screenshots of your Apple Notes app. Those work really well. Maybe some videos. And then you're going to push all that into the meta algorithm and you're going to say use Advantage plus audience. In other words, I'm not going to tell you who to show this to or where to show it. I trust your algorithm. You're a $2 trillion company. Do your thing. And then you're going to watch what Your CPA is your cost per acquisition. It's going to start high, 5, 6, 7, $8 and then it's going to come down over time as the algorithm learns. And then on the newsletter side of it in your platform you're going to measure very closely how much they're opening or clicking. My open rates are about 55% very consistently I keep my list clean, I delete people if they're not opening enough and my click through rates are 4 to 7% depending on the email and that stays pretty consistent as well. And I've added 30,000 subscribers this month. It's been my best month ever and I'm having a lot of fun. So I didn't plan for this to be primarily about newsletters, but I get really fired up about this. Newsletters are amazing. Okay, newsletters are amazing. And I will say I'm using Sparkloop for my co registration. Highly recommended. And I use Beehive for my newsletter platform and I've used a zillion newsletter platforms in the past. All of them and Beehive is the best. And yes I do have an affiliate link for both Sparkloop and Beehive that hopefully Muhammad do not publish this episode until you put those in the description because you will get a discount if you use them and I will get a little kickback and I genuinely use and love them. So how about that? It's a win win. Never tried substack, never used Convertkit, but I've basically used most of the others and Beehive is the bomb. So long story short to the caller, I highly recommend you start a newsletter. You have the fulfillment figured out. Honestly, that's the hardest part because Facebook can do the other hard part for you. The customer acquisition and the financial niche is pretty much the most profitable newsletter niche you could be in. I don't have any paid newsletter, so you're talking about a thousand at $30 a month. I've never tried to convert my free newsletter to paid. I don't know what that could look like. I definitely recommend you starting with free and then trying to convert 1 to 2% of those to paid over time time once they learn to love and trust you. All right, that's it for today. We'll do more Q and A here soon on the Kerner office. Please share with a friend. Love you guys. See you next time.