My $41M SaaS Started As A Side Hustle | Nathan Barry

It's really important to have a goal outside of work. You know, like, oh, we have our revenue goals, conversion rate from this to that. And it's like, okay, but what are you doing outside of work? I am a software designer turned content creator turned software founder. So we run the email list for basically all the biggest creators. 2.5 billion emails every month, $40 million in revenue. Over the last 10 years, I've built ConvertKit to being worth over $300 million. We live on a farm. I spend plenty of time with my kids.

We're at a founders retreat right now. You actually flew in.

I've always thought flying is super cool.

So how much does it cost So Nathan, for those that don't know you, who are you and why should people listen to you?

Yeah, so I am a software designer turned content creator turned software founder. So I got my start early on in web design, then brought that into designing iOS apps. So I got to design an app for the iPad the day the iPad was released, which was tons of fun. Pulled that into creating content. So I wrote an ebook about that, did really well. That got me into the creator space, and then eventually started ConvertKit, which is email marketing for creators. And so, yeah, today, I guess for some quick bragging numbers, we send 2.5 billion emails every month. So I send more emails than all my friends combined.

Mm-hmm.

And then we're about $40 million in revenue, $43 right now, and have a team of 80. And so we run the email list for basically all the biggest creators, especially in the author and podcasting space. So whether that's James Clear or Huberman or Tim Ferriss or Susan Cain, Ryan Holiday, all of them use ConvertKit.

Yeah, my podcast co-host uses your— uses ConvertKit as well.

Yeah.

Yeah.

He's been with us for a long time. I think probably since 2016, maybe.

He's got a good chunk of emails on your—

Oh yeah.

On your platform. Yeah. So last year, 2023, you guys did 41 or so.

Oh, we're at a 40 run rate.

Run rate.

Got it.

Got it. And then this year, what's the goal?

The goal is to get to 65.

Got it. Wow. Okay. I was looking at your, your annual review, the goal on there was 53. So 65, why the revision?

I guess I think about it in 2 different ways. 53 is the, the actual, like, probably what we're setting internal targets on. And then 65 is like, there's a couple things that if they hit, are going to like— 53 is the reasonable, like, yeah, this is what you should set goals and targets around. 65 is my internal milestone.

Got it. Love it. So a couple things, I'm going to jump around here. We're at a founders retreat right now. You actually flew in. And I think that's fascinating because that's one of the things it seems like you're excited about right now. So tell us a story about how, like, really, I'm interested from an entrepreneur standpoint, like, What got you into it and what have you learned in life and business as it ties to flying?

Yeah, about getting a pilot's license. So I grew up in Idaho and there's a lot of backcountry flying and actually got an opportunity. There's a group called Mission Aviation Fellowship that flies small planes all over the world. So like after the earthquake in Haiti, you know, they're some of the first to get like logistics set up and all of that because it turns out having planes and helicopters is really good for For that. So their world headquarters is in Boise, uh, which is kind of fun cuz they train on all these backcountry airstrips. And so in, years ago in 2008, uh, I got to go with them, uh, some friends who were flight instructors there, um, like flying around Lesotho and South Africa, you know, and all these crazy backcountry strips where they like put it on a hillside so they can land uphill in a shorter distance and then take off downhill.

Interesting.

In a shorter distance. Um, and so I've just, I've always thought flying is, is super cool. And so. Uh, yeah, this last year I pulled the trigger on like starting training and, um, don't quite have my license yet.

Yeah.

Uh, I'm, I've met all the requirements, but there's a wait with the FAA to, to take the test. So hopefully another couple weeks.

Got it. Um, what, what does it feel like when you're up in the, the air? Like, does it feel like really meditative? Like what are you, what's going on there?

At first, you know, you're like running through, you know, systems and checklists, right? And so it's very, very process driven. Which I think is interesting. As an entrepreneur, you can end up being either very creative, like, oh, I just work on whatever inspires me and, you know, all of this, or you're like, here are the exact processes. And so I think flying has been interesting of like really refining the systems and processes and checklists so that then you can be like, oh, I want to go anywhere. So I think right when you first— You know, when I go taxi down the runway, take off and everything, it's like 100% The exact same process every time, the exact checklist. But there's usually a moment that hits as you like exit the airport traffic pattern and go flying where you're like, wait a second, I'm 3,000 feet in the air going 150 miles an hour, like in a plane by myself.

Yeah, you feel a little naked almost. Maybe naked's not the right word.

No, I think it's just exhilarating where you're like, wait a second, I can do this. And you're like, it was like, uh, I did it the other day, or I guess a month ago. I needed to meet a certain number of solo cross-country flight hours. And so I was like, okay, I did the flight that I planned. I was like, I need a little more time. I'm like, oh, I'm just gonna fly up this way and like follow this river.

Yeah.

You know, and like flying along the Idaho-Oregon border. And then you're like, oh, let me go over here. And things that take hours to drive, you like fly that distance in 20 minutes.

Yeah.

You know, and you're like, oh, let me go up and over these mountains.

So do you— okay, like you're flying for hours, like where do you pee?

So my plane is small. For anyone who knows planes, I have a Cirrus. And so you would need to land to go to the bathroom. It's basically the size of a small car.

Okay.

So it's 2 seats up front and 3 seats in the back.

So you're like peeing before and then you're flying for like maybe an hour or 2, 3 hours maybe?

Yeah. Yeah. The longest flight I've ever done is I did Santa Monica to Boise, which took 3.5 hours.

Okay.

And that's like 650, 700 miles.

Okay. Is the goal for you to be able to just fly your family anywhere eventually? Is that the move? Yeah.

Yep. And then it can also be pretty efficient for work.

Yeah.

But so part of it's just the love of it. Like, I think it's really important to have a goal outside of work, you know, like, oh, we have our revenue goals and we're trying to, you know, trying to bring this conversion rate from this to that. And it's like, okay, but what are you doing outside of work?

Right.

And so I always like having, you know, a physical goal of some kind that I'm working on, whether it's like Learning to play volleyball better or something like that, um, or like a 5K time, and then having something that's like much more intellectual as a pursuit. And so, uh, I think flying will be that for—

It sounds like it brings you— so you really refine your systems and your processes, you're going through checklists, right? Because you have to, or else you're gonna get in trouble, right?

Yep.

And then there's a huge element of focus too.

Oh yeah, I like things that you can't think about something else. Where if I'm playing a volleyball game, I'm not thinking at all about like the customer that we won or lost or whatever, you know, like you're totally in that. And flying is the same thing where you are 100% focused on the activity that you're doing. Um, and I think that's really important to have those things.

Last bit on this. So, so how much does it cost you? How many hours you have to put in to get your license?

Probably the minimum with the FAA is you need at least 40 hours. Most people don't do it in that. They like 60 to 80 is much more common. I'd budget about $20,000. For some actual numbers with my plane, I spend about $100,000 a year because it's a million-dollar plane. And so that includes the finance cost, the insurance. Like as a low-time pilot, the insurance is super expensive, you know, instructors, fuel, everything.

Is your goal to eventually get your own Gulfstream and fly it yourself?

Not that level of plane. That's a level— like, a jet requires another level of training. I think probably a bigger turboprop. There's some that are pressurized, can fly to a higher altitude, fly faster. But I do love private aviation. But there's a point where if you get a bigger plane, just hire pilots.

Right.

You know, I have a couple friends who have like a Citation Mustang or something like that, and maybe have their license, but they always fly with a professional pilot.

Yeah. At that point, I mean, you're spending like millions a year.

Yeah, and actually the pilot ends up being a relatively inexpensive part of that compared to it. The other thing is people think like, oh, I'm going to go to these business meetings, and then I'm going to go jump in the plane and fly home. And there's a lot of thought that goes into every cross-country flight and then a lot of focus. And so I noticed this when flying back. We did the podcast tour and I had my instructor bring my plane down to LA and we flew out of Santa Monica. And I was thinking about that, like I was in a meeting right up until I went to the airport as normal. Like I packed these things totally full. And I was thinking about, oh, if I didn't have another pilot with me, I would need to really stop, fully transition into flying, and then think about planning the flight. And you're looking at the weather, where are you going to encounter icing, any of those things? And so, because it's an entirely different mindset.

Context switching is difficult. Yeah.

And it just requires real thought to do that. So I think that probably what I'll keep doing, even as I have my license, and use this plane I have now or another plane for work is use a professional pilot as well, because that added safety. And then also, you could do something where you could roll up to the airport, and they could have the plane ready to go, and you could get more of that efficiency.

So are you paying that pilot a day rate or something? How does that work?

Yeah, so basically, generally, the day rate for a Cirrus is about $800 a day.

OK, that's not bad.

Yeah.

Yeah, for your sanity and your safety, it's worth it.

Yeah. And then they can also teach and instruct, right? There's always so much more to learn. And so there's everything that I know how to do. Like, I will do that, get us all going. Here's my flight plan. And they'll say, like, that's awesome. Hey, I would tweak this one thing. You'd be totally safe with what you're doing, but here's another level. Or like, the next thing is getting your instrument rating. And so I can't do instrument approaches now because I don't have that rating, but they can. And they can start teaching me towards that. Next thing. So it combines the travel of getting somewhere with learning the next skill.

Got it. And how long do you think— how many lessons do you think it took you to pick it up? I think for tennis, for me, it took like 20 to start to get the rhythm. That's a good question.

I flew a lot last year. I mean, I also switched from a basic training plane to a high-performance plane, and that took a long time. I mean, I flew 100 hours last year. So that's 50 to 60 flights. And you got comfortable way before then. But yeah, it takes quite a bit. It's also interesting. There's some things I feel like I'm a total natural at, and that was not necessarily one of them, where I was like, OK. Like, to figure out how to land the plane super smoothly every time.

Put this machine into the air. By the way, let me ask you this. So do you think the flight simulations that you did were— equal to like real life? Do they feel the same or not really?

What do you mean that simulation?

So I just like, I remember playing video games growing up. Like there's the ones where you like sit in a plane and like, you know, fly around and it moves around, right? Did you sit in like a flight simulator?

I didn't for this training.

Okay.

You know, other than like playing similar games as a kid. Yeah. There's lots of times, you know, there's lots of simulators that are available that are like full motion.

Yeah.

And it can be a lot cheaper to train in that. You can also recreate the same scenario a bunch of times and without the delay. So I think that's good. But there's nothing that changes getting in a high-performance plane and when you add the throttle, you need to control the rudders even to keep it on the runway. You think, oh, it wants to go straight by default. No, it doesn't.

Actually doing it.

It wants— you have to add a huge amount of right rudder to just keep it going straight down the runway. I think that's a lot different than a basic simulator.

Yeah, makes sense. Again, you got to actually do it. This actually ties in what you brought up, the podcast tours that you were going on. So can you talk about the podcast that you're doing right now, and then why you decided to embark on this journey?

Yeah, so back in, I guess, 2020, I wrote an essay called The Billion Dollar Creator. And the point of the essay is that most people— well, first, an audience is the most important thing. one of the most powerful things in the world. You know, the amount of leverage that you get from having an audience is just insane. Um, and so we get to people who are like, oh, I'm a content creator, and I make a quarter million dollars a year. And now you and I would be like, yep, that makes sense. You know, maybe 10 years ago, we'd be like, that's possible? Or 15 years ago. But now we're like, naturally. Why not? We each know more than 100 people personally who fit that criteria. But now there's this next level of people building an audience and saying, like, wait a second, if I have all this attention, what's the highest ROI place I could point that? And so an example would be Mark Sisson. He's a blogger. He had a paleo recipe and lifestyle blog called Mark's Daily Apple. So in 2013 to 2015, he's growing this blog, gets to 100,000 email subscribers, which that was a very big list. back then. And he's making $1 to $2 million a year, combination of advertising, sponsorships, his own products, affiliate revenue, like pretty traditional playbook. And what happened is people were saying, like, hey, I love this recipe for the paleo diet-friendly salad dressing, but can I just buy it from you?

Mm-hmm.

And so he ends up taking this this audience that he has, and goes out, and he starts with an avocado oil mayonnaise, and then expands to other things. And he starts a company called Primal Kitchen. And if you think about— we do internet businesses. We often don't have to outlay a lot of cash. There's no expiration dates on—

Inventory, yeah.

There's no inventory expiration dates on our product. Like, a physical products business, especially a food product, is hard. But with his audience, he's able to, you know, basically kickstart it and get significant reach early on. And then he's able to do things like, you know, let's say he's trying to get distribution in Whole Foods, then he can be talking to the buyers there and say like, hey, let's do this. And they're like, oh, maybe it's a good product, maybe not. Like, we'll test it in one store. No problem. I'd love to test. Hey, by the way, which store? Right? And they're like, oh, we're going to do it in this one store in Austin. He's like, cool, great. I'll check in a couple weeks and see how it goes. And then he goes privately to his email list, right, and says, you know, get me all the subscribers within 50 miles of this one location in Austin, and then he can email them, like, guys, great news. Primal Kitchen products, they're now in this store in Whole Foods. Will you do me a huge favor and go there and buy it?

Mmm.

Right? And so they do that, everybody sends out that email, maybe 2 emails, and then you can talk to the buyer a couple weeks later and go, hey, by the way, uh, How'd that test go? And the buyer is like, it went incredible. You'll never believe this, but we sold out. Mark could be like, no way.

No way.

That's amazing. People must love this. And that's the power of an audience, because then they're like, hey, let's run it. We're going to run it in these 5 stores. He's like, awesome. Yeah, let's see how it goes. By the way, which stores? And he can go and do that. And it's like, wow, people in Boise love it just as much. And it's like, well, yeah, because you sent an email to your audience. to get them to do that. And so the short version of the story is Primal Kitchen sold after 2 years to Kraft Foods for $200 million.

Wow.

And so if you think about, like, the value created from an audience, um, you know, if you're making $1 to $2 million a year selling digital products, all of that, then that is an amazing income off of an audience. You're, you know, making more than a doctor. But then what Mark ended up doing, by redirecting that audience's attention to something that had, like, long-term enterprise value, then he basically made 100 years' worth of value in 2 years. And then the other side thing is he didn't pay ordinary income on it. He paid long-term capital gains. And so he kept twice as much.

So I'm assuming he originally was selling, like, digital products, courses, ebooks, things like that, right? And he was doing, like, one day a week. $2 million, and then he probably got it to, I don't know, call it $30, $40 or so, and then sold it for like 5x.

Yeah, yeah, I don't know the specific revenue numbers.

Yeah.

But basically, you watch that playbook over and over again of— you know, if you look at the Kardashians, uh, the— you know, at least a few years ago, the wealthiest of the Kardashians was, um, Kylie Jenner. She was not the one who was the most famous. You know, everyone else was like a sponsored Instagram post for $1 million, that sort of thing. But she was the first one of the family to say, oh, I'm going to create a brand, right, in Kylie Cosmetics.

Or maybe that was her mom.

Yeah, it was probably all engineered behind the scenes. But, um, you know, you look at that, and you realize, like, oh, the value comes from taking the audience and pointing it at a product that— I mean, there's really 3 rules to it that I talk about. Um, the first is you gotta build more than a personal brand. Right. Again and again, you see content creators get stuck on a personal brand, and they have to build a product that's more than that. The second is you have to sell products rather than attention.

Mm-hmm.

And then the third is that you need to have a product that is either recurring, like, you know, software, something like that, or a repeat purchase. And basically, when you look at all of these examples, all 3 of those are always true. And so, just like telling these stories, I was was realizing, like, most creators don't get this. They have the most valuable thing in the world, which is attention, and they're pointing that attention at something that is great for short-term cash flow, but doesn't build enterprise value.

It's greater for the people that are sponsoring.

Correct, right? Just take Ryan Reynolds, for example. He realizes, wait a second, you're paying me $1 million to do a commercial, so this has to be worth more than $1 million to you, right? How much more? $1.2? $2 million?

$4 million?

I don't know. Let's find out, right? And so he goes and buys into Aviation Gin and Mint Mobile, and says, like, all right, I'm going to buy in, in a huge stake, and then I'm going to— I'm now in charge of advertising. I now basically get paid in equity value for my commercials rather than cash. Aviation Gin exited for $600 million, Mint Mobile for $1.2 billion.

You know, the funny story about that one is, um, one of the Mint Mobile founders was in my EO forum back in the day when I was an EO, and, um, Ryan ended up having more equity than him.

I believe that.

It's crazy how that works out, but continue.

Yeah, but just looking at that, like, you're seeing it over and over again. We can talk about celebrities, we can talk about individual bloggers like Mark Sisson, but the principles are the same, right? Like, in building ConvertKit, that is my billion-dollar creator playbook, right? Where I can sell digital products, courses, I know how to build that to $1 million a year. Right? But over the last 10 years, I've built ConvertKit to being worth over $300 million, because it's something that has long-term enterprise value. It's more than a personal brand. We're selling products rather than attention, and we have recurring revenue built in.

Right.

And so that's something that's— you know, will last for decades.

Yeah. We talk a lot about this on the Marketing School podcast. It's just like, I used to hate agencies as a business. I was like, it's not scalable. It's just a lot of people, blah, blah, blah. It's like every business is people, right? But it just makes sense naturally for both of us, because we talk about marketing all the time, that we just drive it to like a high LTV service in the back end, right? And you just hire amazing people that have been there, done that, and you scale it. Because some of the biggest companies in the world are services businesses, right?

I was the same way, where I thought agencies were a terrible business, you know? And I would resist that for the longest time. Like, no, no, no, we sell software. We don't do—

Yeah.

You know, like, for one high—

We're tech.

Yeah, yeah, yeah. I'm a Silicon Valley guy, you know? And turns out, agencies, when run by the right people, in the right way, with the right lead gen, can be amazing businesses. We did that. I have a newsletter growth agency with Sahil Bloom called Paperboy that we launched. We hired a great operator and brought him in as a co-founder, Shane.

Yeah.

And, you know, we basically realized, you know, we have this— Incredible deal flow for people who want to grow their newsletters. And I think we're 11 months in, and we're at $750,000 a year run rate.

Yep.

You know, and it's just like, oh. And you have these amazing outcomes. People are saying, like, oh, you know, I took my newsletter growth from— you know, it was like 2% monthly growth, and now it's 10% monthly growth.

Right.

And it created this whole outcome for me. And I'm like, this is good.

Yeah, well, I want to come back to that in a second. There's this whole, like, you know, almost creator-led agencies, and then there's creator operators, and they're just pure creators, right? But then one thing that you talked about was monetization for creators. So what is the best way for creators to monetize in today's day and age?

It depends on what your goals are. I would say if the goal is short-term cash flow, which is a great goal because that enables so many things, then I think digital products are still the absolute best way to go because you can have— you can end up with a really high revenue per subscriber, especially if you have a product ladder, you know, where maybe initially someone's buying an ebook from you or something. You're just getting in the habit of, hey, I made a purchase and that was really good. You know, I spent $30 and I felt like I got hundreds of dollars worth of value. Like I should keep spending with this person. And then as you get into the courses, you know, now you can sell a course for $300 to $3,000. And the margins on that are just so, so good. I think that's fantastic. People are doing really well with advertising right now, especially if you have a newsletter that's really engaged. If people, you know, if you have a more stale list, people aren't that excited about your content, then advertising doesn't work as well. But the hyper-engaged lists, fast-growing, do well. So those are probably the big ones. But I always encourage people, once you have cash flow figured out, if you think in these ways— I always think in terms of, how do I— like, what's the highest ROI?

Return on leverage, yeah.

Yeah. Then you have to direct it towards a real business. That could be an agency. I would make sure it's an agency that has recurring revenue.

Mm-hmm.

None of this one-off project nonsense. Like, I won't touch a business unless it's at least repeat purchases, but ideally recurring revenue. Um, you know, so an agency, a products company. Um, uh, there's this woman named Suzy Bullock who— she is a, a barbecue blog called Hey Grill Hey. And she got to the point about $2 million, $2.5 million a year in revenue.

Yeah.

You know, all the traditional stuff that you'd expect, right? Affiliate deals, sponsorships, her own products. But now she's launched her own line of barbecue sauces, and she's gotten distribution. She's following the exact same playbook that Mark Sisson did.

Yeah.

And I'm like, there we go. That's a business. that in 5 years, she'll sell for $100 million. And so I think that balance of short-term cash flow and also building long-term equity, it means you don't have to do the startup grind of, like, eat ramen for 5 years.

Right.

It's like, wait, I can live a great life off of my million-dollar-a-year content business, and— You know, grow this business at the same time that has real enterprise value.

Yeah, you can use it as a launchpad to build something that, to your point, has enterprise value. And, uh, yesterday, before we started the morning workout, we were just talking about how, sure, you know, you raise VC, like, you can talk about that big exit, but why don't you just build something where you can have an exit every single year, where you're doing $10, $20, $30 million in profit, and then that's your exit every single year, right?

Most people won't ever get a creator business to that level of profit. And so I think if— yeah, it's just not common. So if someone is truly targeting, like, hey, I want to retire with $25— I want to retire young with $25 to $50 million in the bank, it's going to have to come from building a product business of some kind and exiting it.

Yeah, and then just letting it compound over time.

Yeah.

And then you're there. OK.

There are— you would know better than I would, like, on the agency side, right? There's obviously a lot of agencies —that do cash flow, you know, $5 million, $25 million a year. Um, but that's probably more the exception than the rule.

Yeah, those are few and far between, but they do exist.

Yeah, they do exist.

Um, okay, so what do you— I mean, you know, there's a lot more people, especially in the last 12 months, have been talking about, hey, like, you should all create a newsletter, you should all create a newsletter, right? We talked about how, yeah, it's probably not— sure, short term you can try to monetize through Through ads or sponsorships, whatever it is exactly, digital products. Where do you think newsletters are going in the near future? Because you got ConvertKit, you see a lot of data, and maybe you can share some interesting data too.

Yeah, so I mean, just the whole industry is accelerating a lot right now. We're recording this in February 2024, and so we just closed out January, and that was our best month ever for new, like, verified creators who set up accounts. We had 32,000. new accounts sign up. And so that beats out, you know, the crazy spike when the COVID lockdown started, right?

Yeah.

You know, all of those things. And I think it's not just us, like the whole industry is taking off like crazy because people just understand that whatever you want in life, an audience is going to have to help you get there. Like we used the pilot example earlier and Uh, if you want to become an airline pilot, which right now an airline pilot is something that pays very, very well because there's this big shortage.

How much?

Uh, say like originally starting as an airline pilot used to be like $40 grand a year for like bare bones. Yeah, now that's $95,000. And like people who cap out as an airline pilot, you know, are making $400,000 to $700,000 a year.

And that's if you're like what?

That's if you're like a captain of a Wide-body plane for Delta, right? You might make $700,000.

An A350 or something?

Yeah, any of those big planes. So there's this big rush of people getting into the airlines. But there's a crazy thing with it that most people think you can't hack at all. And that's that you need 1,500 hours flying an airplane to even be eligible to get what's called an airline transport pilot rating. So it's even— to get that— Bottom of the barrel job at, like, the little dinky regional airline, flying the smallest commercial airliner, you need 1,500 hours.

Aren't they changing that with the— I just read some stuff around, hey, like, DEI around it, and then, like, they're kind of adjusting the requirements.

They might, but it's still gonna stay super, super high. So most people get through that time by instructing. Right, like most flight instructors are trying to go from, say, 300 to 400 hours that they picked up to get their commercial ratings and their flight instructor ratings and all of that up to 1,500, and that might take them 3 years. So this friend named Trent who decided at 53 years old that he wanted to be an airline pilot, he'd built an e-commerce business, had a good exit on that, built an agency, cash flowed that for a while. He's like, you know, I've always wanted to do this. I'm going to go for it. But there's a mandatory retirement age as a pilot of 65 years old.

OK.

So he's like, as he's thinking about it, there's an actual window that's shrinking. 53, he's only got 12 years. And it takes minimum 3 and a half years from like— or 3 years for most people— I want to be a pilot to I'm even eligible to get hired by an airline to get that 1,500 hours. And so what he ended up doing is deciding that he's going to go to flight school. And cram as much as— like, he makes his full-time job, crams as much as possible into 90 days. So he becomes all the way from, you know, uh, getting started flying to, uh, getting all of his, like, flight instructor ratings in 90 days, which is crazy. But if you focus on it and fly multiple times a day and study like crazy, you can absolutely do it. Um, and then now he's going out to instruct. But what he did differently is he started a YouTube channel. Around this. And so today, instead of like working for a flight school, getting paid $20 an hour, while the flight school's making $70, you know, he now has a steady stream of all of his own clients.

It's his own rates.

Yeah, he sets his own rates, he's an independent contractor, he's got 20,000 subscribers on YouTube. He has so many opportunities, he has way more students coming in than he could possibly take, so he's referring out to other flight schools, getting paid like a $3,000 bonus every time he refers, so he's making more money Referring students to other flight schools than he actually makes from it.

Oh, that's crazy.

Yeah, and so he can fly way more than anyone else. He can like he's doing interviews with like the recruiter at SkyWest Airlines, right? A regional airline. He's in these conversations because of his audience. Yeah, and so the audience is just going to shortcut his path in a pretty insane way.

And is his audience his YouTube channel? Is it just like talking about his journey?

He's talking about his journey, lessons learned, and then he teaches on it as well. He's like, OK, here's how to do an instrument approach. Here's how to use—

Basically, it's how to become a pilot.

How to become a pilot. And so he has 20,000 pilots or people who dream of being a pilot following him. And he has his niche carved out, right? Because most people going this path are like 20 years old and all that. And here he is at 53. You have people who are suddenly like, ah. Maybe I want to do that. Like, why not?

Yeah.

And so the crazy thing that's going to happen is not only is having this audience going to shortcut his path to the airlines, like, probably cut it in half, I think, and he'll make a bunch more money along the way.

Yeah.

But once he gets there, his audience is going to be worth way more than the airline job, which is kind of crazy.

Yeah.

And so I think going back to what you're asking about newsletters, The reason that this, this surge is happening, you know, and it's not a one-off surge, it's like building over the last 10 years steadily, is that people are realizing that basically whatever I want in life is easier if I have an audience because I'll make more money, I'll have way more opportunities, I'll have all these connections. And so as people will learn that, then more and more people go after it.

And you mentioned earlier, how do How do people transition from personal brand to going— how do they go beyond that, basically? Because a personal brand, sometimes it's difficult to sell as well.

Yeah. Let me think of a few different examples on this. First, there's nothing wrong with building a personal brand. And actually, it's probably an easier way to start as a creator, especially if your interests are changing. So when I started out, my entire online audience was about design. design, specifically designing iOS applications. I haven't designed an iPhone app in many, many years, right? Like, I evolved. Like, I then became obsessed with marketing, really, and learning those skills. And because I had built it all under Nathan Barry rather than iOS design, whatever, then basically my audience could just transition with me. as I went on to other things. So I really recommend keeping the personal brand, or like, there's nothing wrong with starting it.

Yeah.

But know that if you want to exit or build some of the enterprise value, you're going to have to do that. Sahil Bloom's a good example where, you know, sahilbloom.com, right? It's very much a personal brand. People know his name. He's building up, you know, a massive email list for his book launch. Uh, he's doing very, very well with that. But what he has going on behind the scenes is that he's built up all of these creator-focused agencies that are all independent. So he uses his personal brand, which doesn't really have enterprise value in the same way.

Yeah.

Um, and he's driving that attention to agencies like Paperboy. Uh, he has one that he's partnered with, um, Cody Sanchez and Sam Parr on called called Viral Cuts, right? And that's, you know, so he's just pointing all of that attention there, and he could cash flow really well off those businesses. Uh, he said they're now at $10 million a year in run rate combined, um, in— I think the oldest one is 14 months old at this point.

Yeah.

Um, and so basically he can, like, direct some of the attention from the personal brand to these other things. I think that's probably the way to do it, is start with a personal brand and then Once you've demonstrated that you can create really consistently, that you know how to build an audience, and you've got that minimum cash flow— maybe it's $100,000 a year, maybe it's $250,000 a year— then you can start to say, let's build up another business that has more enterprise value.

You know, I've been debating with other creators. So I did talk about this with Sahil on the podcast. I was like, my argument is a lot of these creator-led agencies are going to go bust. And I think we'll need to see it play out for the next, I don't know, 2, 3 years. And my reasoning for that is 'cause if you're a Sahil or Ali Abdaal or anybody, like, you push it, there's gonna be a huge influx. It's like a PR bump in the beginning. But then you have the challenge of having to have really good service.

Correct.

Right, and it's like, how well do you retain these people? So we won't know for a while, but Sahil's like, yeah, you know, most of them are probably gonna fail. What's your take on it?

Well, I think it's important to realize that as a creator, you know, a creator that agency, or whatever else, right? If, let's say, we're selling a barbecue sauce, any of these products, you really only solve one problem by coming in as a creator with an audience, and that's customer acquisition cost, right? It's a huge advantage, right? 2 businesses equal in every way, the one who has a lower CAC is going to crush the other.

Right.

But let's say they're not equal in every way. Let's say the one with lower CAC is actually terrible at Like, still delivering value, yeah, fulfillment, you know, a year later, right? Their supply chain's a disaster, whatever. All the other business fundamentals are still the same. You really just have that one advantage of great leads and deal flow. And so I think if you end up in a situation where, as creators, you could think that you're the most important thing, you're like, I have this audience, and everything I touch turns to gold, you know?

Everyone thinks that in the beginning.

Everybody thinks that. And if you undervalue, you know, customer service, fulfillment, the product, right?

Yeah.

Then you're going to have these short-term spikes that die out.

Yeah.

And so, yeah, I think many will fail, just in the same way I think many creator product businesses will fail. And it will all be for the same reason. And that is that they didn't actually get the fundamentals of the business down.

Exactly.

Of customer service, the product you're delivering. I think that's some of the brilliance of what Sahil's done, is his rule is, like, he will never start the business until he can find the operator who's going to run it. And so in a bunch of his businesses, he's got Hunter Hammonds running, you know, the actual operations. Hunter's done it a lot. In Paperboy, we have Shane, and You know, there's all these things I'm watching Shane implement, and I'm like, OK, you have done this a lot before. You are at least as good at business operations and fulfillment as I am at attention and deal flow. And so that's a match made in heaven.

Got it. And you know, let me ask you this. What percentage of the time do you spend creating content versus operating your business? What's the breakdown? And I'll tell you where I'm going with this once you answer.

Yeah, I'm probably 90% business operations, uh, and 10% content creation.

Boom. Okay. So exactly. I, one thing we talk about on, on Marketing School is, is the concept of creators versus creator operators and creator operators spend 80 to 90% of their time on the business, 10 to 20% time on content. For creators, it's, it's completely reversed. Maybe it's like 95%. And so it's, it's really, If whatever you put your time into, whatever you put your focus into, that's what's grow— that's what will grow. And I think if creators want to win at the end of the day, and I don't know how you feel about this, but they're gonna have to understand business operations a little bit, otherwise they're gonna lose their shirt.

Yeah, and you have to build a team and flywheels around what you're doing. Like, you know, if you're trying to build a creator audience and like a substantial business behind it, you can't be like refreshing the stats on your YouTube video and be like, oh, what's the watch time like this? You're like, no, no, you, you build a system once, you make sure you have the right people in place and all of that, and then you have a weekly or a monthly metrics check-in, you know? And like, that's so different than most creators who are like creating content based on what inspires the most in that moment. engaging nonstop in the replies or comments, firing off a quick— like living on Twitter, for example.

Right.

You can't do any of that because none of this scales otherwise, right? And so that's actually probably an area that I've struggled is going down some of these creator avenues and doing it based off my own energy and momentum. and like trying to start a couple things. Like, um, one example would be building my following on Twitter. Uh, in 2022, I made that a big focus, and I went from 30,000 followers to 100,000 in the year, which is the goal. And then in 2023, I really let that flywheel stall out, and I focused on the next thing without— you know, like, I should have gone from 100,000 to 200,000 in 2023, and instead I went from 100,000 to 125,000.

Yeah.

Because as I focused on the next thing, I didn't have the right systems and operations in place that I should have.

Got it. I want to talk about flywheels in a second, but first, I guess, how did you go from 30K to 100K on Twitter in a year?

Yeah, I mean, a couple different things. First, deliberately write content, so figure out your schedule. My goal— and this is really a lot coached by Sahil, because he was just like, your content is really good and your follower count sucks, you know? And I'm like, oh, it's fine. He's like, no, there's this like massive disparity between these 2 things, you know, and you should be offended by it, you know, that like you're putting out this level of content and no one's reading it. I was like, well, not no one. He's like, no one's reading it, you know?

Yeah.

Um, and so a couple things, you know, first put out a new— for the first 12 weeks of the year, I wrote a new thread every single You know, what stories can I tell? Reworked a bunch of my old blog posts.

So it's like one epic piece per week.

One epic piece per week, and then a couple of shorter pieces. Um, a second thing is really focusing on that engagement, right? Like, I don't know if people don't want to talk about this publicly or what, or like engagement pod has a negative term. Yeah, but like imagine You're in the Marvel Universe, like, and you're all trying to, like, solve some problem.

Beat Thanos.

Beat Thanos, right? Like, you don't wanna do that solo.

Yeah.

You know, and so, like, pull together your squad of Avengers who are all trying to do the same thing.

Yep.

And when you post on Twitter, text that friend group, you know, and then everyone goes and writes a meaningful comment on it, right? That is what the algorithm is looking for, is engagement. It works on Twitter, it works on LinkedIn, et cetera. And you all grow together. And so having that group is really, really important. And I think for a while I was like, no, it's just the quality of the content that wins. And it's like, it's the quality of the content and the quality of the marketing.

Whatever the game is.

Whatever the game is, learn how to play it and play it well, right? You may not like my way of winning Settlers of Catan, but like, It works, you know, like it's the same thing.

Yeah.

Um, so that's the next thing. Uh, another thing is reposting content. I had this idea that, you know, everything should be original, and so the first hurdle I had to get over is like, you know, taking the essays I've written on my blog over the previous 10 years and rewriting them as threads. And the second one is like, wait a second, this is actually one that I learned from Nick Huber, is, uh, you can post the same thing I'm like, exact same thing over again.

Yeah.

And so what I ended up doing— Sahil showed me the spreadsheet, and I've used it ever since. Basically, all my best threads, how they perform, when they were last reposted, and then a date suggesting when it should be next reposted.

Yeah.

And I actually got to the point where I had 12 great threads that I was really, really proud of. Actually, probably ended up being 16.

Yeah.

And I just reposted them again and again on the same schedule, every 4 to 6 months.

Do you also repackage your best hits, too? Like, rewrite it slightly?

Yeah, you know, I'm trying to tell stories that only I can tell, right? So I'm not like, 4 mental models for whatever, you know? Or, like, for a while, people would just scrape Wikipedia, find a weird story, rewrite it as a thread, and that would work. My whole thing is, like, I'm going to tell the story of the time that Spotify offered to buy us, and why we turned it down, you know? Or, like, here's ConvertKit's compensation model, right? Write that from Wikipedia.

Yeah.

Um, and so in that case, like, I wrote one about, you know, how I use direct sales to grow ConvertKit from $2K in MRR to $100K in MRR, uh, in a year. And when I repost that, I'll switch up the hook, right? There's 5 different ways I could write that hook. Sometimes I'll use a graph of the ridiculous hockey stick, sometimes I won't. Um, let's see what works.

Yeah, so you might delete sometimes and repost with a new hook. You Yeah, because Twitter is very unforgiving— forgiving, I should say. They're very forgiving.

Yeah, and sometimes people will be like, I feel like I've read this before. And it's like, well, if you've been following me, yeah.

Yeah, but most people haven't.

Yeah, and other times people reply, and it's like, oh, man, I read this the last time that you posted, and it was good then, but this time, it, like, really hit me, and I'm actually implementing this change right now.

Yeah, you'll catch people at different times. People need a reminder sometimes. It just— people are busy, right? So the Spotify deal, I guess, what— are you able to share what they offered?

Yeah, we didn't get all the way to, you know, like a formal offer, but we were talking in the $200 million range.

OK. So why did you turn down the Spotify $200 million offer?

Yeah, I've optimized for the journey over the destination, and I think a lot of the best entrepreneurs do that. What happens in traditional startups is people optimize for the destination, and you have to put up with a lot, right? Like, building companies is often miserable. I think, as a whole, it's a wonderfully rewarding experience. But let's say that we're like, OK, we're going to build this startup together, and we're going to sell it in 4 years, and then we'll get our $100 million exit. And you and I are co-founders. Let's say, over time, we grow to hate each other, or things that are super annoying.

Yeah.

Just gotta grit our teeth and we'll get through it because, you know, we've got this exit coming. You can't guarantee when that exit is coming, right? Also, like, let's say that 4 years turns into 8, and you, you know, you hate 4 years or 8 years of your life.

Yeah.

You know, you end up looking like that— the photo of Obama, like, contrasted with the day he goes into office and the day he goes out. And it's like, just the caption, like, friends don't let friends become president, you know, because he just kind of looks like he's Yeah, you know, he's had a rough 50 years.

Yeah, yeah.

And so that's like optimizing for the destination, where you'll put up with a lot. You know, that director of sales that is really hard to work with, but like, ah, they're good at their job, you know, you put up with that. If you're optimizing for the journey instead, then you're like, look, nope, I'm not, I'm not going to show up to work every day for a year and, and hate this, right? You know, I want to make the changes. And often those changes result in a better company.

Yeah. Go ahead, go ahead.

Oh, so just thinking about, like, what means I can show up and do this and enjoy it for a long time? Dan Martell talks about how the biggest risk to every business is the founder burning out or losing interest, you know? And so, like, you have to be selfish and optimize for what makes you want to keep showing up, right? The Mailchimp guys exited for— $12 billion after working on the business for 21 years. And so the first rule of compounding is don't interrupt it prematurely.

Right.

Right? And so I'm like, OK, I'm 11 years into this business.

10 more.

What has to be true for me to love working on this business for another 10 years? And so, yeah, I think, like, a $200 million exit would be remarkable. But I'd just go and start another company.

Yeah, you'd probably go back and do somewhat something similar.

I would. I have so many ideas for this company. Yeah, but I'm like, no. And the other thing is, because I've optimized for the journey, I haven't like starved myself and my family along the way. Yeah, right. Like, we've taken good distributions. We've, um, like retired our parents, you know, all of— like, we live on a farm that I thoroughly enjoy. Like, I spend plenty of time with my kids. You know, it's just— everyone wants to go black or white, and there's just a whole lot of, like, really lovely gray in the middle.

It's whatever works for you at the end of the day.

Yeah.

Yeah. Um, and you're pretty transparent about your— I mean, literally, your financials are available on Baremetrics, right? So how— why be so transparent about your financials? What's the benefit?

Yeah, so back in— 2012. I was reading Hacker News at the time, so news.ycombinator.com, and these 2 posts came out about design ebooks that were released. There's 2 guys, Sasha Grief and Jared Drysdale.

Hmm.

And they didn't know each other at all, pure chance. They both happened to release ebooks about design on the exact same day, and they both had posts on Hacker News about it. And it was kind of funny, like, oh, that's, that's different. They had very different pricing models. Uh, Sasha had like his pre-launch pricing and he said, it was a very short book. Uh, and he said, you know, for $3 you can buy the ebook or for $6 you can get the ebook and the, uh, like Photoshop lessons that came with it. And Jared, uh, his prices were, he had $29 for the ebook. I think they were both— 29 was going to 39, and the 3 and 6 was going to 6 and 12, something like that. And that was interesting. People commented on it. But Jason Cohen, the founder of WP Engine, said, that's funny. Both of you come on my blog and write guest posts explaining why your business is better, or like, why your model is better than the other person's.

Mm-hmm.

And so they did. They both wrote these posts. And they included the numbers in it. And so Sasha made, I think it was $6,000 in the first 48 hours from after launch, uh, and Jared made $8,000. And so they're talking about which is better. But what stood out to me is here were 2 people who were just like me. They were designers, they had very small audiences. Like, it felt super achievable, and they had actual numbers.

Yeah.

And I saw that and went, I could do that. It was very different from like, around that time, the Basecamp guys. I think they'd released their ebook, Getting Real, and it was like, how we made $400,000 self-publishing, you know? And it was like, step 1, have an audience of 100,000 people. You know, it was like—

Yeah.

And they didn't actually say that, but that's how I read it. And it's like, that works for you, but there's nothing relatable about it for me. But Sasha and Jared, that was super relatable. And so I had this idea for an ebook and I realized like, oh, I, I could make money off of this. And so 6 months later, I, uh, released my book, um, called, um, The App Design Handbook to an audience of just 800 people on a Mailchimp email list. And I ended up making $12,000 in the first day. It made $20,000 by the end of the first week. And I realized like how impactful that was —to read real numbers from real people that were relatable.

Mm-hmm.

And so basically, I've been transparent about numbers ever since then. It's like one way to pay it forward. Same thing, like, when I was negotiating the salary for my first job. I had no idea what to do. I had no idea what a good salary was. And so having a family friend say, OK, here's what you should be asking for. Here's how you should do it, right? Like, those conversations about money are so important.

Got it. OK. That makes a lot of sense. And let's move over to the flywheels portion. So what are creator flywheels? And maybe it's helpful to define flywheels in the first place.

So a flywheel— well, let me tell you about the first time I came across a flywheel. Actually, when we went— that trip where I went flying in South Africa and Lesotho was the first time I encountered a flywheel. So it's 2008. I'm at an orphanage in Lesotho. And we're in the capital city of Maseru, and we drilled a well there for the orphanage, and the electricity was not super consistent, so we didn't want to put an electric pump on it, because you don't want it, when the power goes out, to no longer have water.

Mm-hmm.

And so, if you think about a hand pump, or like a non-electric pump on a well, it'd be like a hand pump with a long handle sticking out, and, you know, you'd be pumping it up and down. And there's a direct correlation between the effort that you put in and the, uh, you know, the impact, the results that, that you get back. And as soon as you stop pumping, you immediately stop getting results. But the flip side is also true where as soon as you start pumping, you pretty much get results early. And that's not what we put on the Swell. Instead, we put this large metal wheel that sits up on top and Instead of this linear up and down motion, it has a circular continuous motion, and because it's heavy, it's really hard to get going. When we started to pump it, my friend Luke and I are on each side of it, and there's a handle on it, right, and you're leaning into it and bracing and trying to really pump it hard, and it's slow to get going, but because of the continuous motion, it gets going faster and faster and faster. And so now there's a disconnect, right? We have leverage. There's a disconnect between the effort that we're putting in and the impact that we're getting out. I always like to point out that leverage can— leverage is not good or bad. It just is.

Yeah.

You know? And so, like, some people are like, oh, yeah, leverage is good. And it's like, well—

It's just an amplifier.

It's just an amplifier for whatever is happening, right? And so the same sort of mechanics that mean that we get great results, right? It's the weight of the wheel that is what gives us this accelerating momentum. But it's also the weight of the wheel early that makes it so hard to get going. And so with this flywheel, once you really get it going, then you can get some amazing results. So I've defined 3 laws of a flywheel as it applies to related business. And then the first is that the process, like every step flows smoothly into the next, right? We close that loop when we're going around. Second is that it should get easier with every rotation. And then third, it should produce more with every rotation. And so if we want to reference Sahil Bloom, we talked about him earlier, you know, bringing this from like a metaphor in the physical world into the business world. He has this flywheel for growing his newsletter that just absolutely crushes. And it's because he's not jumping around doing the hand pump version, where today he's like, I'm going to grow on Twitter today, and now I'm going to focus on Facebook ads next, all over the place. He just does the same things over and over again.

Twitter.

Well, Twitter is one part of it, but I guess to walk through the flywheel, he's got— new subscribers is the main entry point in the flywheel. And then he drives those subscribers from— Primarily Twitter, Instagram, and LinkedIn, right? And so those come in. Once they opt in to his newsletter, right, a lead magnet, you know, a guide to planning your year, right? Same tactics that have worked for the last 10 years. People are always like, what's the secret in list growth today? I'm like, actually, the same secret that it was 10 years ago.

People always want a good bribe.

Yeah, like lots of free value, lots more value that's in trade for an email address. Right? Followed with lots more value on the newsletter. So once someone subscribes, then they go into— like, the next step is our Creator Network. And that's where he's partnered with other creators. So on that subscription, it pops up and says, hey, thanks so much for subscribing. Why don't you also check out James Clear, Tim Ferriss, Ryan Holiday? And they can say no thanks, or they can opt in, right? It's actually— if anyone's been in marketing for a long time, it's co-registration.

Yep.

Right? But it's very targeted co-registration. It's not like some random product tied to like a college essay admission thing, you know, or like— in the old days, co-registration was very random. And now this is like as targeted as you can get. So that's an amplifier, right? Every 1 subscriber that comes in basically turns into 1.5?

Mm-hmm.

Because of the automated cross-promo that happens there. Then the next step is— He sends his newsletter twice a week, and he has a, like, a smaller flywheel in the production of the newsletter and how that works, but this is sort of the bigger level. So he sends the newsletter twice a week, sends out great content that has sponsorships in it, right? He has decided that the driver for his flywheel is sponsorship revenue. And so, um, because he sends twice a week, that's more impressions, um, and those sponsors, you know, he makes a good amount of money from that. And then he takes all of that money, 100% of it, and dumps it into advertising to grow the newsletter. And he splits that between Meta ads and then SparkLoop paid recommendations, basically 50/50 between—

That's a good chunk for SparkLoop, yeah.

Yeah. Splits it between those 2 sides, between paying big tech and paying individual creators. So if you go around the flywheel and apply those laws, like the— our last step there of advertising is a loop closer because advertising drives new subscribers. So the more new subscribers you have, the more they get amplified through Creator Network, the larger the list is for sponsorships, which means the more money you can pour into advertising, and around you go. So a couple key things here. First, he has only one goal for his flywheel. And I will argue with anyone that if you want a flywheel to spin fast, you can only have one goal. And most people are like, I got 3 goals, right? I'm trying to spend less time on this, I'm trying to grow the audience, oh, definitely trying to make more money. And if Sahil was doing that, this— it would spin slowly. But he's like, I only care about subscriber growth. And it's like, cool, you can now dump every penny back into reinvestment. Um, the next thing to notice is that It produces way more over time. So an early rotation— say if we take a cadence, a monthly cadence to the flywheel— an early rotation might kick off 5,000 subscribers, right? Small newsletter, small sponsorship dollars, not that much to reinvest. But now, a year later, after this flywheel's been running, it's kicking off 50,000 to 60,000 subscribers a month.

Wow.

Because He's making over $50,000, $60,000 a month in sponsorships, reinvesting all of that back in. The organic growth is bigger. There's all of this. And he's just stayed focused on running the same flywheel over and over again. People are like, what about this crazy growth tactic? And he's like, no, no, no. Can I fit it into my flywheel? No? All right, get it out of here. And so he grew the newsletter from— we really started running this flywheel when he was about 130,000 subscribers. And in 14 months, he's at 700,000.

Wow, that's a lot.

And that's a very big audience. And he has that goal, 1 million subscribers by the time the book comes out, because he knows that then that will cascade from there.

Instant bestseller.

Instant bestseller, and then the number of opportunities that come up from there. And then you end up— someone like James Clear is just— because his book sells so insanely well, his newsletter grows like crazy. And because his newsletter is so big, his book sells so well.

And for both these guys, the other thing is their idea TAM, their total addressable market, is huge, right? Because Atomic Habits is for everyone. Sahil is very cult personal growth motivation.

Yeah.

Yeah.

But you could implement this in— you know, like, we could have— be teaching people how to do enterprise sales, right? Or some other, like, small niche, and you could implement it on a smaller—

Have you read— there's like a really thin Jim Collins book on like— it's just all about the— because you know how he talks about flywheels.

Turning the Flywheel.

Yeah, yeah. It just shows you pictures of all these different flywheels. Have you read that one?

Yeah, so what he does, first in Good to Great, and then also in his second one, Turning the Flywheel, is he talks about flywheels at the highest level, right? Like, this is Amazon's flywheel of how lower prices leads to more sales, which leads to economies of scale, which leads to lower prices, and so on from there. And he's got, you know, probably 8 to 10 examples of what I would consider, like, very high-altitude flywheels. And I read that, you know, years ago, and was intrigued by the idea. You know, there's all these notes from— that I have from, like, 2016, 2017. OK, what's Convercus Flywheel? How do we, you know, operate it better? And that was a helpful concept then. But I think he really missed— well, no, I would say he talked about it at the right altitude for his audience. But what's missing from that entire conversation is that flywheels can be implemented at every level. So if we use Sahil as an example again, the one I described is like his mid-altitude flywheel, his 10,000-foot flywheel. I don't know. He has a bunch of very detailed niche flywheels, probably one for his Twitter growth specifically. There's another flywheel that's just all about how do you produce 2 great newsletters every week, right? You could have these very small-scale flywheels. Then the mid-grade one, which is grow the audience as big as possible. But then there's a much bigger flywheel, which is actually about growing the agencies, right? Because the audience is just a means to an end for other things.

That's the real revenue.

The more the audience grows, it kicks off in these key areas to the agencies, the agency scale, right? And he can— it's totally fine for Sahil to dump all of his newsletter revenue back into growth. He doesn't care about making any money from that, right? Because the actual money is made over here. And so that's what I'm trying to do now in the Flywheels conversation, as I'm like building all this curriculum and defining the 3 laws and all that and giving all of these examples. is to show people, like, OK, flywheels can be implemented at every single level in your business. And then when I do it, like, with my team, I go in, and I need to train someone else to do this. This is part of why I'm creating all the curriculum—

Right.

—so that I don't have to be the one doing it. But I'll go to, like, our social media team, and, like, look at what they're doing, and then map out, OK, all right, now I have a good— like, explain it all to me. I understand what you're doing. Here's the hand pump version. And then I just go into— I use FigJam on my iPad and I sketch out like, okay, I don't know if this is the correct flywheel, but here's a flywheel version of it that has this, you know, every step flows smoothly into the next. It gets easier with time. It produces more. And that's where you can get to the scale, right? We only have 80 people at ConvertKit.

Mm-hmm.

You know, we have $500,000 in annual revenue per employee. Yeah. And I'm like, let's get that to $1 million. Like, that can be so much higher. Yeah. Um, and it's going to be because of these— yeah, these vibes.

Well, I mean, I think this is a good place for us to— this, this will be the final bit here, but, um, you have, uh, do you call the ConvertKit Creator Network now? What do you call it? Your partner network?

Well, I gotta figure out some branding. Um, we have 2 different sides of it. So overall, our Creator Network is at creatornetwork.com, and that's just the idea of how do we Network as many creators together as possible. So, and that'll be a whole bunch of features underneath that.

That's not the SparkLoop acquisition, right?

Yeah, so underneath that, then we have 2 sides of it, which is free recommendations, uh, and then paid recommendations. And we acquired SparkLoop to power all of the paid recommendations.

Got it. So can we talk about the— what are you more excited about, the creator network or the recommendations?

Uh, they're one and the same to me. OK, it's basically how do you build network effects Yeah. Between creators. Because, like, email has never had— well, we were kind of talking about this last night— email's never had network effects before.

Yep.

You know, and all of a sudden, they're there in a huge way. But I think the earning potential for creators on the partner network is just absolutely huge, because you get paid to recommend, you know, your favorite food blog, Sahil Bloom, like, all these people. Because they were out there spending all this money— like, they were paying all this money to Mark Zuckerberg. Now they can pay it to you as—

Yeah. You feel better about it, too. And your ARPU goes up, too. So you're—

Oh, yeah. Like, it is absolutely a win all around. And then the cool thing is we've taken a very open approach with it. And this is what the SparkLoop guys are so good at, and why we acquired them rather than building it ourselves, is that they integrate with 18 different email providers. And so that means that the quality of the network— actually, here's the flywheel. The quality of the network is way higher. Because of who's on there. So for example, uh, a lot of creators have a pretty low revenue per subscriber, right? If you're new, you might be like, okay, I know how to make a dollar. I know, I know if I spend a dollar on a subscriber, I can make that money back. But if you look at sophisticated brands like Morning Brew, The Hustle, Motley Fool, they're like, I'll pay $6 for a subscriber because I know Back end. I know exactly how to make that money. It's always the case when you're being outbid on pay-per-click, you know, it's easy to say, like, oh, this person's just burning VC money, and so they're willing to pay all this. And like, maybe, but most likely their back end is way better than yours.

Yeah, yeah, yeah.

And so that's why they can pay $20 a lead, and you can pay $3 a lead. Um, but those, you know, Morning Brew, Motley Fool, et cetera, Those will— brands will never be on the same platform that me as a creator with 5,000 subscribers teaching product management or finance will be on, right? Using the finance example, one of them is on ConvertKit, another is going to be on SailThru, right? Or some big enterprise platform. And so what happens with the SparkClip ecosystem is because it's so open, Um, you can get the big brands on there, um, because they can pay and like only pay for engaged subscribers, and that's all automated. And then the big brands can charge more, or, you know, are willing to pay more, which means that higher, higher quality creators are saying, oh yeah, do I want to choose on the network where I get paid a little bit or the one that I get paid more on? Which then feeds back into you're going to get higher quality brands because they're getting better and better leads. And so the flywheel is basically having a really open network means that, um, like the 2 byproducts of that is that you have the highest quality network and then also the highest revenue, uh, per subscriber for the individual creator, which breeds more quality. So it's very much a virtuous cycle or a flywheel.

Got it. What numbers can you share around the SparkLoop network right now? Like, what's interesting?

Yeah, so One thing that we learned, just as some data came out, um, over the last year, is we learned that, that the SparkLoop network is doing about 90% of all paid recommendations in the entire industry, is done by SparkLoop. Um, uh, you know, it's tens of millions of dollars paid out at this point. Um, it's still very small compared to what it could be.

What do you think it could be?

I think that the amount of money spent on the internet to get an engaged subscriber is billions of dollars. And I think that if we can build the best system to do that— like, I believe that this part of our business will be bigger than subscription revenue in 5 to 7 years. Because if you think about— if you go to butcherbox.com, that home page, you'd think, like, oh, they're trying to get me to buy a product. It should look like a standard e-commerce. page? It doesn't. It's all around getting an email address, right? So it's like, OK, if you care that much about getting an email address, well, how else could you do it? Well, why not? Why doesn't— if we use, uh, Susie Bulloch, Hey Grill Hey, right? It's a barbecue blog. So why on her opt-in, you know, when it comes up, she could recommend another food blog that's a friend of hers, and she could have ButcherBox right there? So now ButcherBox isn't doing like CPM-type ads in the newsletter, they could pay for an email address right there. That email address could drop into, you know, a 5-day email series of like, here's the best grilling recipes for this summer, here's, you know, 5 tips to show up your friends at the next barbecue, or whatever else, right? That then in there, like more soft pitches, oh, and why don't you have a ButcherBox subscription?

Yeah.

And so I think that transition from Creators like myself and Sahil and others saying, hey, I want to grow my email list, and I'll do that, and bridging it into an engaged subscriber into e-commerce. If we fully complete that, or open up that world, then there's hundreds of millions in ad dollars being spent.

Got it. And that's your take? Or you guys are taking like 10%, 20%?

We're taking 20%.

OK, got it, got it. The last thing— the last question I have for you is a quote. I think I picked this up from your blog, but making money is a skill. What do you mean by that?

Yeah, so Jason Fried first talked about this, and it had a huge impact on me. And that's that we think of things— I first thought of things, um, you know, many things in life as a skill, but making money as luck. You know, it's like, oh, it comes down to, like, What career path you chose, you know, or something else. Like, someone— one person decides to be a nurse, another person decides to be a lawyer, right? And you're locked into that. Whereas all these other things in life are obviously skills, right? If you hand me a guitar right now, I'm like, oh, I don't have the skills to do that. If I sit down at the piano, I don't expect to be able to immediately play a concerto because— I know that it's the combination of like 1,000 little skills. And business is actually the same thing where we expect to be able to jump in and be like, you were able to build a business, so why can't I? And it's like, well, no. Using your analogy, like, you understand timing and music theory, you know, like you've practiced for thousands and thousands of hours. And so if we can break down business in the same way, then it's like, okay, the early skills We need to learn, how do we show up consistently? How do we— if we make a commitment to someone, how do we keep it? Those are like level 1 basic skills. Level 2 is like, how do you form an LLC? How do you invoice clients? How do you follow up? That kind of thing. Level 3, as you move up— and I break this down in an essay called The Ladders of Wealth Creation.

That's a great post, by the way.

Yeah, it's one of those that I've worked on for a long time and will eventually be a book. But, you know, level 3 is you get into other things like maybe selling productized services. Okay, how do I make a sale without having to talk to someone? Okay, now I need copywriting, I need landing page design, I need, you know, like there's a bunch of skills within that, right? And you get into the next level of selling products, like, okay, how do I fulfill a product without talking to someone?

They're all like little Infinity Stones.

Yeah, and they're all these things and you stack them up. And the point that I make in the essay is that too many people are trying to jump from, like, bare-bones level 1 to the top. You know, they're like, you know, I have an hourly job making money, and I think I'm going to start a SaaS company.

Yeah.

And you're like, please don't go from the bottom of ladder 1 to the top of ladder 4 in a single move, because it's going to take you forever, and it's going to be very demoralizing. But if you can jump up from, like, you know, your own— from an hourly job to then like running a service-based business, to then productized services, and then to products, you can have a pretty consistent step up in income.

Yep.

Um, as you build those skills, and it might take you 5 years to build those skills, it might take you 2 years if you work at it like crazy. Same way, uh, I had this friend who in high school, he was probably 17, decided to pick up playing the piano. And people would be like, Isaac, how long have you been playing the piano? Like, you're so good. And he'd say, oh, uh, about 9 months now. And like, people are like, you didn't do it like for the last 6 years, you know, or 12 years? Like, your parents didn't make you do it since you were 6 years old? He's like, no, I just decided to pick it up. And they're like, how did you get that good in less than a year? It's like, well, he worked at it very deliberately for like an hour and a half every single day.

Mm-hmm.

And so his 9 months was equal to someone else's 10 years. And the same is true in business. Like, how deliberately do you want to do this? Going back to Trent, who wants to become an airline pilot, his 90 days of just, this is all I do, you know, I have an entire career of knowing how to study, how to show up, all of this, and like, I'm going to apply this. His 90 days was equal to most people's 2 and a half years.

Right.

Because he chose to show up in that way and build those skills. But he had to learn the exact same skills as everyone else.

I think everything in life— we talked about this yesterday— just comes down to pattern recognition. And the people, you know, if you're not good at it, you just haven't recognized enough patterns yet, right? That's all it is at the end of the day. But Nathan, this has been great. What's the best way for people to find you online?

Yeah, so I have a podcast called The Billion Dollar Creator, where I like to nerd out on all of this stuff. Check that out on YouTube. And then, yeah, nathanbarry.com. I have a newsletter where I link to everything else that I do.

All right, amazing. Thanks so much for doing this.

Thank you.

Thank you.