The Tripling Question: Watch Us Scale A Paid Newsletter To $50k/month

SA Foreign.

Boom. Welcome back to another episode of the Espresso Hour, where the running joke is this is going to be shorter than an hour because we are once again hyped up on caffeine. Again coming to you live from Amsterdam late afternoon. But that wasn't stopping me from having an espresso before this. How's the week going?

Amazing. I can't wait until next summer when I plan on joining you with some travel. We're gonna be doing espresso hours from different countries.

European Takeover certainly have to be out of out of Miami. But I'm excited for today's episode because we're gonna dive deep into our AI newsletter, how we're gonna think about scaling it, growing it. But before that, we can say again that our business Bottlenecks newsletter is live. We had a bunch of people sign up already. First edition went out. A lot of positive feedback to that. If anyone wants to join, you can go to Bottlenecks Biz. In there we're going to share super actionable things to help you launch, build, scale your digital business coaching program, agency service. Lots of cool stuff coming there. Bottlenecks Up Biz. So if you like this episode, you'll definitely like what we're sharing there. Now onto today. I know we've been jamming back and forth this week on scaling our AI newsletter. We're going to talk through that today. Where do you want to start?

Yeah, I like this. So this exercise, you know, I don't know if we're the only ones who call it this. Probably not. I'm sure other people have too, but the tripling question, you know, so we went through this in February when we were working on ship 30 and we hadn't lost launched PGA yet and we sort of went through a similar exercise. It's like, okay, to, to double or triple the business. What do we have to do? And in a previous episode we talked about how you have to sort of discern between should you keep doing the current thing or should you build a different thing and a new thing. And I think it's helpful to do this both on a micro level, so product by product and on a macro level as a whole company, you have different product lines as you grow. And so, you know, the fastest way to grow the whole means you sort of have to pick one and go, well, what's the next one that I could triple, you know. And I think our recent realization, because Ship 30 has sort of reached a really steady state, we've done about as much as we can to Automate and streamline inside of it. PGA has grown really quickly, but it's also sort of reached a steady state. And in order to triple pga, that would require a ton of effort. And so instead of quote unquote, tripling pga, we've gone, well, an easier thing would be to launch the Mastermind. It's a good example of, okay, don't need to improve the current thing. We should launch a new and different thing. But our paid newsletter right with AI is a really good example of a product line that's been growing. I think we started it maybe like five, six months ago.

Four months.

Four months.

Wow.

Okay, so we started four months ago and, you know, it's. It's still growing. And so it raises this question of, okay, so how do we triple that product line? You know, and immediately question one is, do we keep doing the existing thing or should we try and launch something different? And so I think walking through that logic, how we think about that, how we make that decision, and then very actionably, what we can do to triple it would be helpful for other people that are in a similar situation.

Agreed. So just to crystallize, whenever we sit down to think about growing a business, the first question we ask is, should we launch something new for purchase or should we continue to improve what is available for purchase? And that is the immediate question, both on the macro level of the business and on the individual product line. So why triple? I think it requires different thinking and different answers than doubling. You can double most of the time by just improving your current thing. But there reaches a point where tripling becomes more difficult with only the current product and you might have to launch something new. So let's take right with AI for an example. And if people would be interested, we could do this for the macro business as a whole. But it's easier to look at an isolated product line of our paid newsletter and say, all right, we're going to hone in and apply this tripling framework and growing it. Because I sat down on, I guess it was Tuesday this week and did this exercise of, all right, let's fully go through and think about the tripling question for this business. So sat down and go, okay, here's where we're at, and sort of paint full picture. We're currently at 550 paying subscribers at $20 a month. So call it 11 grand. And it's helpful to think both the tripling forward and the tripling in reverse. So we're at, let's just call it 10k a month right now. 10k a month paid newsletter. If we were to look backwards, when we were at $3,300 a month, we asked the tripling question of do we need to have something new for sale or could we just continue to do more of the current thing? And the answer was we just got to do more of the current thing because we only launched it four months ago. So we got there, kept growing and that got us here. So first decision was already made, keep the current thing only and we're only going to sell subscription. Now we come to 10k a month and we're asking the same question of our current subscriber base. Should we launch something new for them to buy? So a potential course or a upsell or something like that? Or could we continue to triple the business from here, just doing more and better of what we're currently doing? And I think pretty logically if we're at 500 something and we have 15,000 people on the free list and that's going to continue to grow, we could definitely triple the business just doing more of what we're currently doing. Painting that one step forward, could we triple again from there? So really it'd be a 9x from here, which would be about 100k a month. Do I think we could get this business to 100k a month without launching anything new there? I think we would struggle and I've modeled that out a little bit in this exercise of why I think we would struggle to get there just based on kind of the economics and how quickly we could get there versus launching something new to extend the value of each customer that we already have. So that's the initial. So anyone listening how to actually apply that to you is with what you currently have for sale, if you did it better or more, could you triple what you're currently doing? For the most part, the answer is yes. We've talked a little bit about one problem, one platform, one product, one person to a million dollars and then launch something new. Because you can continue to triple, I think to a million dollars a year relatively easily, especially for paid products, newsletters. Slightly different, slightly different economics I think, but that's the overarching picture of where we're headed is we come in tripling question, great decision made. We're not going to launch anything new. We're going to do this current thing better.

Yeah. One, one thing that is worth pointing out, paid newsletters are challenging for a very specific reason. Because whenever you're selling a product, whether I mean even a physical product, E commerce or just A digital education product, a template $25 template, a the way up to a $500 course, whatever. It's a one time purchase. And so there's a very different logic there. Paid newsletters, both what make them so enticing is also what make them so challenging. Because what makes a paid newsletter enticing is subscription revenue. It's the closest a writer is ever going to get to sassifying themselves, you know, and subscription revenue is king. But the challenge is that in order for someone to rationalize paying a subscription, they have to understand what they're getting. They have to basically resell themselves every single month unless they buy the year, you know, and that means that your paid newsletter needs to constantly be sharing new things. The aha and why we launched right with AI in the first place was the realization that, well, if every newsletter is a framework and then a chatgpt prompt, you can essentially repeat that forever. It's infinite volume. Which is I think very different than if someone tries to do a paid newsletter that's like I'm just sharing what I'm learning like that that isn't going to, that there's, it's not as enticing. And so part of the challenge with paid newsletters is that eventually the, the, the obstacle that we're going to run into is it's going to be the turn question. It's like regardless of how many people we're bringing in, we're churning to a point where we're just break even. And I think when you get there, the tripling question gets hard because in order to keep growing, that means you have to triple something on the front end, usually marketing or traffic or whatever. And like that is not always the easiest thing to triple, especially organically. And so I think just sort of high level, this analysis makes sense where because our churn is really low right now, we can continue growing without changing too, too much. But after a triple, you know, say around like 30k, maybe 40k, 50k a month, the reason that we're going to need a different product or some sort of, you know, upsell or have to go somewhere from there is because it'll be significantly easier to create that rather than to try and triple traffic again from there.

Yes. So how do we know objectively that it will be easier to do these certain things? Flows perfectly into the next step. Right. So we decided not changing anything, going to do what? We are not going to have anything new for sale. Going to do what, what we're currently doing. But better now from there I sat down and said, all right, well, let's define what it means to do this business better, which means putting your business in a simple formula. So I started with, how much money do we make on a monthly basis from this newsletter? It's how much people are paying per month times the number of monthly customers. It's about as simple as it gets. From there, I said, let's dig a little bit deeper and extract out what it actually means for someone to be a. What the number of monthly customers is. So that's the new customers we added that month, plus the people who decided to pay again from last month, minus the people who decided to leave again. Very simple. But each of those are different kind of metrics that we could play around with. And then I took one level deeper and said, what does it mean to have new customers this month? It's really the new free people. We add times the free to paid conversion rate, and then customers who decide to pay again minus customers who decide to leave. That's really just beginning customers times churn rate. So basically laid out the whole business in one formula because once you have that, you look at each lever that you could pull. So all of the ways that we could improve this business would be we could increase our monthly price, which we're not gonna do. We could increase the number of free customers added. Right. So just drive more traffic to the newsletter. We could increase the free to pay conversion rate, which would come around to incentives around opting in, or we could decrease our churn rate. It's the only way we could grow this business. And I love the simplicity of that. When you put it on a spreadsheet and you put it in a formula and you say, all right, there it is. Those are the only ways to do it. Now which one do we work on? But you're smiling. Cause I wanna. So I'll pause on that.

So, yeah, so this is so important. And I. I was having this conversation with Connor this week, and I wanna share, like, why. Why this exercise is so important and why bottleneck analysis is so universal. So I was drawing the parallel that when I was in my 20s, I had a really hard time dating. Like, I just. I didn't go out with a lot of girls. And at the time, I thought the bottleneck was, I'm not attractive enough. And so what did I do? I went hard in the gym and I got shredded. And I was like, that's the bottleneck. I'm just not attractive enough. And nothing changed. Ironically, like, I was in the. I was in just absolute peak shape. And nothing changed. And it wasn't until, you know, now I met my, you know, now fiance, and I look back and I'm like, I spent all those years trying to solve the wrong bottleneck because the right bottleneck was. I literally just wasn't talking to girls. Yeah, I had a leads problem. Right. So I spend all this time on the product, on getting shredded, and I spend no time driving traffic, AKA talking to girls. I try. I try and solve the wrong bottleneck, and I don't actually unlock the outcome that I want. And so the reason I think you and I both feel so strongly about this bottleneck analysis and breaking things out and looking at each individual lever is because if you ask the average person, like, well, how's your business going? You know, everyone just sort of defaults to, I just need more customers, you know, or I got to spend more on marketing. Like, they just throw out this answer without really looking at it and understanding and going, is that the real bottleneck? Because a lot of times it's not a lot of times it's, no, actually, you have plenty of emails, but you're just not converting them. And so I think laying that out is so important because then you can look at each individual lever and it becomes so objective. It's like, these are the levers I can push and pull. That's where the real problem is. Now, what are all the things I can do to solve that specific problem?

Yes. So I want to just double click on the analogy, because I think the dating analogy is an interesting one because it's very similar to this business bottleneck framework, because you were solving the wrong bottleneck, but you did a bunch of work on something that wasn't. The bottleneck didn't help you improve the overall system, but then when you improved the actual bottleneck of the system, all the work you did otherwise actually was valuable.

Yes.

Right. So you. It might have felt like you were doing nothing wrong or nothing was working, but that effort was, you know, stored in some way such that when you remove the real bottleneck was, which was just talking to more people. The value you created on the thing that was not the bottleneck might have become the bottleneck at that point.

Great point.

But now it was already solved. But you could have gotten there faster if you'd been solving the right bottleneck at the right time.

And this is why. Sorry, real quick, this is why. One of my favorite quotes as a serial entrepreneur, his name's Wayne Chang, and we were friends in LA and he said you give 10 entrepreneurs the same resources, and they will all end up in different places because of exactly this. It's the, the order in which you make decisions drastically changes the trajectory that you're on. So even though that effort gets stored somewhere, it. If you're not solving the right problems in the right order, you're going to grow at a, at a different rate. You're going to hit a different plateau over a different time horizon, very differently than the person next to you who makes the same decisions in a different order. And so I think that's also why this bottleneck analysis. It's not something you start doing when you're doing $5 million a year. Like this is something you start doing day one, because going from $0 to $1000, 1000 to 10,000, 10,000 to 50,000, you know, like, it's the same thinking process. You're just doing it at different tiers and your build order takes on a different order based on what tier you're at.

Spot on. So we laid it out on a spreadsheet, laid it out in a formula. The natural next question is, well, which one should we try to improve? And if I were to ask you last week before we talked about this, which one would you be able to have answered right away without the clarity? Or would it have been kind of a guess? Because that's how I felt. It would have been a pure guess. When I saw that formula, I was like, I don't know how many new freeze we added. I don't know the free to pay conversion rate, and I don't know our churn. So I was literally coming in to improve this business completely blind. And I think that is what most people do. They're like, I gotta get more. Just like you said, I gotta get more customers. It's like, is that I had a tweet more, right? I don't actually know the bottleneck. So the first. And it's funny because it becomes so crystal clear what to do when you have the correct data. I could scale and solve the bottleneck of any business if they came to me with the right numbers. Which is really a reminder to myself that before I make any kind of business decision, it's like, get clear on the numbers. So that was exactly going into step two. Now Substack has horrific analytics. Horrific. So I had to manually download all of our subscriber data, put it into a Python script, write the script for about two or three hours, and then I could analyze the entire business on a spreadsheet. But once I had that. Which kind of puts us at a competitive advantage because right now, if you went to every paid newsletter on substack and said, hey, what's your churn? How many new frees did you add? What's your free to pay conversion? And zero of them know, because it's not given which shout out substack, but like, we love the product. Just add that, Dickie.

After we, you know, when we like really crystallize this and do the full long form, I'll send it to their team and be like, we had to do all this manually. Please build this right.

Okay, so we got the full business on a formula. We got clear on the numbers. Here's what I kind of took away. I had last month's new free subscribers, last month's free to paid conversion, and last month's paid subscriber churn rate. Now with all those numbers, I started to look at where I go from there is, well, what do we need to do to get to our 50k a month goal? How do I tweak these numbers that I now have and say, all right, we need to improve the these certain things and which one should we work on? So for context, once I put all these out, our free to pay conversion was around 5%. We were adding around 1500 new free subscribers a month, and our churn was only 2% a month, which I thought was tremendous. So when I looked at all that, I say, all right, of all these metrics, which one is closest to quote unquote KPI? And KPI just, you know, key performance indicator, I think just an easy way to say, what's the goal? And as I plotted these out, I said, is it likely that we could cut our churn lower than 2%? I don't think so. Could we get our free to paid from 5 to 10%? More than likely. And could we get our new free subscribers from 1500 to 3000? I think so. And if we do that, we are at over 50,000amonth in a year. So I put all these numbers in a spreadsheet and modeled it out by month and said, great, we just have to get there over the course of a year by improving these numbers. So I looked at it at a couple different ways and said, all right, let's only look at doubling our free to pay conversion. That would take us to 10%. Would that be more difficult than going from 1,500 to 3,000 monthly free or relative to cutting our churn in half, Each of those would double the business. Now which one of those would be the easiest. I think it's free to pay conversion. We could easily double and we'll talk about the ways to do that. And then monthly free subscribers, we could definitely double if we gave it our full attention. And so that was very calming to say, all right, we are one year away with our current numbers and current output from a 50k a month business by just making these initial tweaks. And that is without adding in a new product. Because if we see that the trajectory is we're headed here just doing what we're currently doing, we could then launch a new product that will not negatively impact that other growth rate, but simply pull forward the growth of the business as a whole. Right. Because just to pause for a second, we've modeled out the entire business right now as only $20 a month per customer. But what if that was 45 or 50 because a third of the people bought a $150 product? That would be the next step of the business. It would not be monthly revenue, would not be just monthly price times number of subs. It would be total ltv of the customer times monthly subs, which would be how many of our monthly paying subscribers could we say, hey, here's a $200 masterclass, it's for sale or hey, we're doing a webinar this Friday for an extra hundred dollars. Do you want to be there? Right. That is the next question. So once you get clear on these numbers and say, look, the only bottleneck, the whole goal is to get to where the bottleneck of where you want to go is time passing. Because if we have the right numbers of free to paid, that's in good shape, Churn, that's in good shape. All we're doing now is got to tell more people about it. And that takes time. Then you're in golden shape. Because if the business is just a matter of time passing, that's your bottleneck. That's the whole goal of growing any system. And then you could extract this to personal growth as a whole. Right? If you were eating the right way, working out the right way, sleeping the right way, you're still going to take multiple years to get in good shape. But if the only bottleneck to you getting in good shape is being patient enough to keep doing it, that's exactly where you want to be. And so the same thing with growing any kind of business, it's look, I just have to the golden area to be is I just have to keep doing literally exactly what I'm currently doing for Three to five more months and I'm there. Great. And then the new problem becomes how do you get yourself to stick to it when it becomes a little bit boring?

This is what's so cool about this, is you, you start becoming aware of how many different bottlenecks there are and then which one you're really faced with and then how to solve it and then the next one that you're probably going to be faced with. So a couple of things I want to double click on. So really, if you just simplify what you laid out growing right with AI, the paid newsletter, there's three primary levers. We can increase the number of people who get on our free list, which is marketing traffic. We can increase the free to paid conversion, which is copywriting, offer creation, or we can reduce churn, which is customer service. And so immediately where my brain goes is a big part of this exercise and a big part of the bottleneck analysis is like, you have the analysis side and then you have the execution side. And I think the part on the execution side that doesn't get talked about enough is okay. So you have these three options, two big questions. One, which one has the volume where the juice is worth the squeeze? So for example, if our churn is less than 2%, expending a ton of effort to cut that in half when the volume is really low means like, it's not like, you know, why do that now when, if we increase the other levers, volume of that will probably go up as well. Solving that later makes more sense. But second is also skill set. Like, of those three levers, like, what are we best at? You know, and, and this sort of goes back to the reason I want to double click on this for a second is this goes back to the decision in February when we had ship 30 and we were debating doing PGA. At that point, the bottleneck was in order to grow, we need to acquire a different skill set. And so you have to go do that, right? And so in this situation, I think we're, we're really good at traffic marketing, and we're also really good at conversion. And so both of those are worth executing on because we know how to do it. But if one of those we knew how to do and one of them we didn't know how to do, you would rather do the one that you know how to do as long as it's high priority. And then once that's done, go acquire the skill to do the next thing. But what most people do is they look at all the things that they could, they could improve on a specific lever. And then they go, well, the thing I know how to do isn't actually that high of impact, but I don't want to go or I'm afraid to go learn a new skill. So I'm just going to keep doing the thing I know how to do, even though that's not going to grow the business. And you see so many of these people on Twitter right now where it's like, your bottleneck isn't traffic, your bottleneck is conversion or monetization. But you keep churning out Twitter threads thinking the next Twitter thread is going to grow your business and it's not. And so that's a huge part of this exercise is like identifying the bottleneck, listing out what are all the things I can do to improve that bottleneck, and then asking yourself, which one of those do I know how to do? And is it actually going to drive an impact versus which one of these do I not know how to do? I need to go. And then our framework, identify, inhale, iterate. Right? I have to go do that in order to grow the business.

I want to go deeper on one or two of the things you said. What we were lucky to find in doing this analysis is that our bottleneck is actually pretty much right now, time passing. We can go and get more free subscribers. Relatively straightforward. And our free to paid was pretty dang close to KPI and our churn was solid. Now let's pretend for a second just to fully paint the picture of what we could have done. Let's say our churn was 80%. And for whatever reason that was the case when you signed up. Just to paint a hypothetical, if you signed up and like the redirect page was lol. Thanks for the $20. This actually doesn't exist. What would our churn be? Probably 100%. Which would mean if we added a million new free subscribers, the business still would not grow. The bottleneck of the business would be churn. Now also, let's paint another funny example of let's say you sign up for the free list and it was like, hey, free free to paid. This is a million dollars or $10 million a month. Our free to paid conversion would probably be zero. So no matter how many free subscribers we added, the business wouldn't grow. I like to paint this level of extremes because if we were presented with a free to pay conversion that was like 0.1%, that would be clearly the bottleneck. It's like we need to do better job converting or if we saw churn, that was 90, it's like we should stop marketing anything until we fix that because the bid there's a massive leaky bucket. Right? So I like to paint that picture because it was relatively easy for us to say, okay, we just kind of need to either slightly increase free to pay and here's a couple of low hanging fruit, but really we just need to talk about this thing more and we'll talk about how we're going to do that in a minute. But those are the different scenarios you could have in your business, right? If you realize and you run a subscription business that you're churned 60, 70%, you got to go fix that. Doesn't matter if you're better at marketing, you have to go inhale the resources to say, okay, I have 70% true, and how do I fix that? Or 0.1% of the people on my free list are buying anything from me. It's probably because I don't know how to put an offer in an email. So there are so many different bottlenecks that I think we're, I don't want to subconsciously overlook just because we've faced them in the past and kind of built a business that I think skips over those because some of the basic things we know how to do now, but when you're doing this analysis, more than likely, and for most of our businesses early on, the, the problem is not traffic, it's conversion and churn, which I kind of think churn. If you don't have subscription business, it's really just customer satisfaction, right? You don't cancel something that you, you don't refund something that you enjoyed. You don't cancel something that you're using. You tell your friends about the products that you like. So why our, our scenario might be different than someone else doing this analysis. And I just want to make that clear.

Yeah, the extreme examples are really, really helpful because I think it makes it all of a sudden, then all the ambiguity goes away and you're like, oh, of course, that's the thing I would solve. But the problem is when people are dealing with smaller numbers, I think it's, you know, a, it's really easy to rationalize, you know, yourself out of it. We see it in ship 30 all the time too. You know, people are like, why only have 11 followers? And then they sort of come up with all these excuses as to why they can't write on the Internet, you know, and it's, you're rationalizing your way out of It. And B, the challenge with this is you have to be really honest with yourself. And oftentimes that honesty means you have to stop doing the thing that's comfortable. You know, like, there were a lot of points in ship 30 where what was most comfortable was for us to just keep churning out Twitter threads, you know, and we had to have conversations being like, that's not actually the bottleneck. The bottleneck is we have to go rewrite those 17 assets over and over and over and over and over again. That was painful, you know, and so I think that I just really want to emphasize how much a really helpful internal signal here is when you. When you identify a bottleneck and you sort of know what you need to do but you're not doing it, you should take that as a signal within yourself that it's very meta. The bottleneck to the bottleneck is an inner problem. Either it's uncomfortable, you don't want to go do it. It's boring, you're afraid to go do it. You've never done it before, you know, and so that's where I love this analysis, because it gets very meta. And you also have to be aware of yourself, like, well, then why aren't you solving that?

It all comes back to personal growth because there's only three reasons. You're not where you want to be. You don't know where you're going, you don't know what to do to get there, or you're not doing the things you know you should do to get there. So your business isn't growing because you don't know where you want it to go, you don't know what to do to get there, or you're not doing the things you know you need to. So applying that to this, where we want it to go, 50k a month, what do we need to do to get there? Well, we need to lay this full thing out and get clear on exactly what it is. Now it becomes simply execution risk, which the only risk to execution risk is doing the things that you know you should do. And if you can put yourself in any lucrative scenario in business, it's to where the only bottleneck to your success is you showing up and doing that exact list of things that you know you should do.

And by the way, so this, I mean, there's so many other, like, personal growth rabbit holes we could go down. But I find that the vast majority of the time the bottleneck to that third piece, which is you're not doing the things that you know you should do. Often comes down to a fear of losing what you currently have. So when we have these conversations with other entrepreneurs or even within ourselves, it's like, you know what to do or you know what could work. But in order to do that, you have to burn the boats a little bit and you have to sacrifice the ground you currently have. It's that idea of one step back to take two steps forward. And I think a lot of times, and I'm sure we're going to run into this as we dig in more with other entrepreneurs and creators, it's like, hey, you have this business that's doing 10k a month, but here's the problems we can tell you to solve it to get to 50k a month. But that inherently means risking the 10k a month because you know what you're doing, even if it's broken, it's working right now. And that I think is the hardest part. But it's also the essence of entrepreneurship, which is constant, quote, unquote risk. You know, you have to risk the land you have in order to get to the island you want to get to. And that's where I just think, so we can. I think it's helpful to lay out all the logic so it's very objective. But at the end of the day, the decision is very emotional because people are like, what happens if I change the words on my landing page? Or what happens if I change my offer? You know, I can't wait till we're.

In the studio next to each other for this because we should get like an iPad that we can draw on to draw some of these things. Because if you saw ship 30s revenue chart in June of 22 or April of 23 or August of 21, each of those were our low months of the year. And every time before that it was up, up, up and then sharp down. And all of those during that time were when we were making a new product transition that was not for sale, that required us to change something we were doing that was going to lead to an immediate that month revenue hit. And you can only look back on it at the benefit of hindsight, to see the chart go like this and then up here and then now we're back up here and you see another spike. Like if, if you would stop the world and that was the last month, it'd be like, the business is dead, it's going to zero. It's done for. And that's how it felt a little bit during those months, right? During those months of it going all like, you're in a slog, you're, you're, you're emotional, you're kind of pissed off, like, you're antsy. You have to be able to slog through that. And now that we've done that three times, I think we can look back with the benefit of hindsight, and next time we feel it, it'll probably still feel the same way, but it, you know, and it's funny because each of those, like, low points was at one point your high point. Like, when you look back on the chart, the relative feeling where if you were telling yourself, like, oh, yeah, we only did 150k that month or something like that, and it all felt like it was going to zero, it'd be way different than that in your first couple months if you told, you know, that was going to be your biggest problem. But I like to share that. And if, if I could draw that, I'd show the chart because it's like, great. Whoosh. Oh, and then we're back up and.

Well, yeah, and not just like, we're back up, but that. That drop down is immediately followed by a new high score that's happened over and over and over again three times.

August 21, June 22, April 23, bang, bang, bang. About a year apart. So. All right, let's finish this out. So we got our key metrics. We know which ones we could get closer to KPI. We're not going to worry about Churn right now because it's not the bottleneck. 2%, 2% industry standards, probably 5 to 10 on a paid newsletter. Now, will we eventually see an increase in Churn as a function of just having more people on? Probably. So later that might become the bottleneck, but it's not right now. So two things we could do. Grow free subscribers, increase free to pay conversion, put those two things on a list, and then list out seven things that we could do to increase it. That's step one. Then we'll stack, rank them in order of least effort to highest effort and also least impact to lowest highest impact. It's not a perfect science, but you'll have a sense for like, oh, yeah, we could easily do that. Let's do that today. So as I started, do you have these pulled up where you can see the seven? Which one you want to start with?

Let's just do both. Let's go. If we were to increase number of free subscribers, what could we do?

So we could start an AI digital writing Twitter account, which we've done, right?

Yep. That's. And and as we go through this, let's just make a note, that is very low effort. How long does it take to create a Twitter account? Right. I can do it right now. You know, how long does it take to write tweets at this point? That's low effort for us, right Impact, not super high impact right away. It's gonna take some time to grow, right? So, so it's worth for each of these. That's why you should go through the exercise. Like low effort, but also low impact.

Okay, so second, partner with other AI newsletters to drive traffic to ours or one another's.

Great, great example of low, low effort. Like, all you're really doing is reaching out to people and partnering up. But high impact, high impact.

And it's like when you put a bullet like this on a list, it's like, what does that actually mean? We should sit down for two hours, have someone create a list of 50 AI newsletters, write one cold email that says, hey, we, we'd love to partner. And we have a list of 15,000 AI subscribers. We'll do swaps on a weekly basis going forward. Would you be interested in that? That's something we should probably do, like today. So we'll come, we'll save for the end. But the idea that we're circling around is finding someone. So let's just do it. If you're interested in helping us do this, where it becomes your full job to help grow this newsletter and you take on this kind of bottleneck analysis, reach out to us via Twitter dm. Leave a comment if you'd be interested in something like this, because that's kind of where we're headed is the level of leverage above this is when you do this bottleneck analysis, you then have an incentivized operator to build it underneath you with you guys. And then you can do this for multiple businesses at one time. This is pretty much the whole private equity route. But we'll pause on that. Talk about at the end, we could write a guest post for other AI newsletters. So in the same way, rather than just say, hey, drive traffic, what if it's like, hey, we'll write a full edition for you of something relevant to your audience. So if we went to an AI newsletter and said, hey, we're going to do the best 10 AI writing tools for you, we'll put that out there. And then this is from the guys that write with AI.

So this is a great example of. This is where, you know, you have to be aware of so many different things. At once. If we go, we should do that. But I'm the one who's writing it. Right. That's maybe medium to high impact, but also medium to high effort. Because now I have to like sit there and go write it and go through everything. But if we have a writer who has the bandwidth to do that, from our perspective, it's medium to high impact, low effort. So part of the question too is like, are you the one doing it or do you have labor leverage?

This is where it gets fun. Is like is the bottleneck to getting all these things done simply your ability to attract someone to go and do it?

Yep. Or do you have the cash to pay someone to do it or do you have the time to do it yourself? Or like which one is the.

It's like 8D chess, bro.

Yep.

So this is what's so fun about it is doing all this thinking. So okay, number four, we can make an Instagram account. That's the thing. Twitter we know how to do. Instagram, we don't even know how to do really that well yet. Probably shouldn't do this one, but it's worth just putting it out there. This one I thought was interesting. What if every prompt we cross posted to Reddit slash Reddit or chatgpt to drive traffic. That could be an interesting, very low effort, instant do at the end of each time we're about to hit publish. Probably pretty high impact.

That is pretty cool. Again, this is a great example of cool idea. Potentially high impact. Not our skill set. So whenever something isn't your skill set, it's worth putting a little asterisk there being like assume an extra, you know, 10 to 20% learning curve in terms of time. Right. So as you stack rank all of these, here's all the things I could do. Effort and impact and asterisk. Is this a skill set of yours or not? And if not be prepared to pay the the time the ignorance tax.

This is. It was just a free flowing get all these ideas out there and this is what we do. We just go back and forth. So then we could run paid Twitter ads to the free opt in but then we have to model things completely differently again. That sounds like a lot of effort makes us change fundamentally what we're doing. I don't think because then think about how that impacts the business churn probably goes up because subscribers are colder. Right. It really changes the way we do everything. So I'd rather not go that route to start.

And the other thing to keep in mind with paid too is going Back to the tripling question. You know, paid is best when it's an accelerant on something. And so really when you're debating paid, the question is, do you, do you not think you can grow or triple from here organically? Because if the answer is I can't triple from here organically, then maybe paid makes more sense. But we're looking at all of these numbers. It's like, of course we can triple from here organically, so not even worth it. We went through this with ship 32. We debated running paid with ship 30 for like three years. And it's like. But we didn't need to.

Yeah, but it's so interesting because like, we totally could model out a paid subscriber now of if. Let's just say churn goes to 5%. So it'd be 20 months on average customer lifetime value. That'd be 400 bucks a subscriber. And then if we say our free to paid is 5%, as long as we acquire a newsletter sub at under 20 bucks, it's profitable.

That's interesting, right? Because we could acquire definitely from a dollar low end to yeah, probably two bucks.

Yeah, See, I wish I could draw that formula because I did that in my head. But it's basically one over churn times dollar amount, times free to paid conversion. But we don't need to worry about that. All right, last couple two reach out to AI writing tools. Ask them to plug our newsletter in exchange for featured sponsorship slot. So basically if we said, hey, we'll talk about your writing tool to our audience, all we ask is that you recommend us to your customer base or something like that.

Yep, that's another. Yeah, low, low effort, medium to high impact.

And someone else could very like skill required to write and create that va able to do it. Like there's, there's the extra dimension again of this whole thing is how many of these could you have someone else do in parallel? And you, your only job is to come up with the thinking.

It's a great point.

And Then lastly, more LinkedIn threads from our personal account, which I think again, we should just start doing.

Right. So okay, I want to recap for anyone listening, but also crystallize for ourselves. So when you're stack ranking, so you identify the bottleneck and you're stack ranking. Here's all the things I should do or I could do. Step one, just list out every idea that comes to mind. You know, don't censor yourself yet. Once you have a list of seven to 10 plus ideas, go through Each one and really what you're looking for. Think of them as like you're tagging them in different categories. What's the impact relative to, what's the effort, what's the skill set required? So would you need to do this or is this a VA task? Is this an operator task? Is this easy to outsource? And which one of these have you done before and which ones haven't you done before? Because if you've done it before, you're going to be able to execute it yourself better or you're going to be able to teach someone else to do it really well. If you haven't done it before, you're not going to know how to do it and you're not going to be able to easily train someone else to do it, which means you're going to have to go find someone who already knows how to do it. Right? And so once you do that, really what you're looking for is you're looking for what are all the things in an ideal world, what are all the things that are highest impact relative to lowest effort? And you are not the skill bottleneck. They're things that you can easily pass off to some, to an operator, to someone else.

The goal is to identify the high impact, low effort, low skill required and do those first. Or sorry, and delegate someone else to do those immediately. Then I think here, just, just to fully go, then it's high impact, low to high effort, high skill required that you should start doing. So in our scenario, we should have someone else first research all the, I don't want to type this whole thing out, but this is, this is the line of thinking that we would go and do. It's what are the high impact, low effort, low skill required things? Delegate someone else to do it and then high impact, doesn't matter what effort, but, but we have to do it. And then we should stack, rank it to low to high effort.

And the most, I think the coolest takeaway from this is recognizing that. And this is where you really start to see the skill gap in entrepreneurship and the creator world. Because if you do this, you can run those in parallel, right? Like, we can identify all the things that we can do, but we don't need to be the ones to do them. And we can find someone to execute them for us or with us. And if you're sitting there going, well, I don't have the money to do that. This whole game is all about incentives. Oftentimes you can find someone to do it for free, but they you then share in the upside with them. Right. So there's always a way to make it work. But you can go find someone to execute all of those things. And then Dickie, you and I, because our time is very high leverage, we identify the one or two things where we have the unique skill and that's going to be high impact. And now we can run both in parallel and notice how going and doing that and executing through that mindset compare. Then you know what we're going to be able to go do to. If someone else had a paid newsletter and did this and was like, I didn't do my bottleneck analysis, I'm not running two different things in parallel and I'm just going to write more Twitter threads. That's the skill gap.

So in our scenario, I think the things that we should have someone else do would be have an assistant find 24 paid AI newsletters to run swaps to. We write one email offering to write newsletter swaps at the top of ours. We say, hey, if you're interested in AI writing tools, you'll also love X and then ask them to do the same thing. All we would need to do is write one email and then we could have someone go and send those and manage the whole process. Justin would just have a list at the beginning to upload those as he writes them. That's something we could do. I think the immediate before you hit publish, copy, paste, upload to Reddit and see what happens for the next 12 newsletters is pretty easy. Doesn't take any effort. We'll see what happens. Like free value. Hey, if you like this, subscribe to the newsletter. And honestly, I don't think there's much that we need to start doing on these.

Exactly. So we can now solve two different problems in parallel. We can labor leverage. Someone else can go focus on get more free subscribers. Which then allows us to focus on really the highest priority bottleneck, which is free to paid subscribers.

Yes, because free to paid compounds our free subscriber efforts. Right. Because it's further down the formula bottle. Like the formula. If we increase this, all the efforts that we put into more free compound. Right. So same idea here. Seven things we could do to increase free to free to paid conversion. So immediately create a better incentive when someone upgrades to paid. Right now it's like, hey, it's free. What if it was you got an instant library of all our prompts in one post that you lose access to if you cancel. So here's every prompt in a mega post up, you know subscribe now or again. Say we sat down for 10 minutes and said, what are all the ways we could improve that offer? It would be pretty easy and then we would just go build them.

Yep, that's an. That's such a great example of very low effort, super high impact. And again, the beauty of digital products and education. It really just means let's just bundle in more other things.

And these should be stupid simple. Like, number two, send a weekly email to our free list and say, hey, start a free trial. Literally, like, that's it. It should say, hey, notice you're on our list and not getting the full thing. Click here to start a free scru. Free trial.

So actionably right. It like immediately my brain goes, okay, cool. Go create four to eight weekly templates. Here's the different ways to pretend, you know, present offer stacks and like, what you're going to get out of this paid newsletter and all of the things we know how to do. And then go to Justin and go, here's the templates. Now part of your weekly stack is you're going to send one of these a week. That's it.

Take about 10 minutes. Right. Number three, let's send a survey to our free list and say, could you leave a comment or respond to this survey with what you would need instantly or what you would need right now to instantly subscribe to paid, which also.

That, sir. Okay, that's an amazing idea because that survey then also is going to tell us, well, here's the next product you should build.

Yep, exactly. Number four, improve the offer stack of what happens when you upgrade. So I was like, what if we had a community. What if we had a shared prompt library that only people within the paid newsletter could share with other people within the paid newslet letter? Right. Like a weekly guest post kind of thing or some kind of chat? Like, all those ran through my head of what? How could we just improve the offer? Because at the end of the day, free to pay conversion, the bottleneck is usually what you have to offer.

That's a great. That's a really cool idea. That makes me think, yeah, if we structure the incentives correctly, it could eventually become a mini publication where people submit their own prompts and publish it under write with AI.

Yep. This is, this is where we're going, man. This is the thinking. So I put number five, create a paid webinar vault that you only get access to when you subscribe and you lose access to when you cancel. Like a pin post.

Easy. Yep.

And then give away some more courses when Someone subscribes, it's the same thing.

So, again, so first, big takeaway. Many of the things on this list have more to do with a skill bottleneck. So we have, you know, we're the ones creating the offer. We're the ones deciding what do people get. We're the ones creating the what's the template that we're going to send once a week prompt, you know, so it's worth. As you kind of go through this exercise again, what are the things where you can really only do them? That's where our time is best spent. Whereas the get more free. We don't need to be the ones reaching out to other newsletters or we don't need to be the ones like figuring out who else has a, a Twitter account or something that could drive traffic. Like, that's a very easy thing to offload. And this is where, when we run these in parallel, what's so cool is everything we've just listed out, if we pick, you know, three to five things from the first list and three to five things from the second list, we can do all of them in, like, two weeks. It's not that much time. And then, and then after those two weeks, you've cranked through your list and you run the whole exercise back again and you're like, now what else could I do?

And the way you move faster in the business as a whole is you have operators doing this thinking for every single one of your product line with shared incentives to grow that revenue source. Right? So if rather than us sitting down and saying, all right, let's do this bottleneck analysis for each thing, if they're the ones doing it, and then they report the results to us, that's where you really ascend to taking this level of thinking, applying it to every revenue stream within your business and ascending out of the actual operations. But just more in the, okay, let's teach everyone how to do bottleneck analysis. That's the highest leverage thing. Let's have one, two conversations with the head operator of our AI newsletter and say, all right, cool. That they come to us and say, hey, just ran this month's bottleneck analysis Churn. Was this free? Was this. Here's what I'm doing. I'll check back with you next month. And that's how you really compound in this game is what I'm slowly but surely coming around to and realizing.

Yeah, And I think the one thing just to crystallize on that point, because I think it's very easy to hear that and go Oh, I just want to skip to the top. I just want to skip to. I'll tell other people to go do the work. A really great rule of thumb is you should always be the one to do it the first time. There's circumstances where that isn't the case, but you should always be the one to do it the first time. Because if you've never gone through and done the thing, you're not going to know what to ask for. You're not going to know what the measure for success is. You're not going to be. You're not going to effectively be able to manage or train or hold someone accountable doing that. So there isn't anything on this list, Dickey, that you and I haven't done before. It's just we know how to do it. It's just. That's not worth our time. This is worth our time. We need to delegate, you know, so I'll pause there.

There's one more thing we could have done, which is seven ways to Reduce Churn. Alex Hormozi's got a great video. I think if you just look up like, I crack Netflix recurring revenue, he breaks down the seven C's of of Churn. Highly recommend that one. If we were going to go down that path, I'd go re watch that video after this. The next step in this analysis that we're kind of building the full newsletter around is inhaling the resources necessary if it's a skill bottleneck. But we just identified things that we do know how to do. If you got to one and it was, hey, my churn was 15%, your skill bottleneck would be, I don't know how to get that number down. I need to go read books, listen to podcasts, talk to people, go figure things out. But this is the most important meta skill of this whole business game is that you inhale and consume resources intentionally, just in time to remove them. When that skill bottleneck is the bottleneck. Not just in case where I'm just reading endless business books. Every time you pop open a book or podcast, it should be, I am looking for this answer to remove this bottleneck so I can improve the business as a whole. So it's like, I need this page and this chapter. It's not like, oh, I'm going to go read, you know, this business pop book of the month because I want to just learn about business. No, it's just in time versus just in case learning where you are moving so much faster because the only time you spend on any kind of resource is to get an answer, and then you come out, you solve it, and you only dive back in when you need to. So, last thing, last thing. And we should do a full episode on that. We should do a full episode on all of these. You know, once we're in the studio, I think we're going to really accelerate because we could do three of these back to back to back if we wanted to. The very last one, and we'll do this is setting up a review process to iterate on the improvements you made. So let's say we go and do all this stuff we want to know on a weekly basis, what was our churn, what was our free to pay conversion, and how many free subscribers did we get? Those should be improving as you put more efforts in to fix them. And so you need the measurement feedback loop right where it's like, all right, we just started these five new things to get more free paid. We better see the damn chart go like this. We better see free to paid go like this. Otherwise we're just wasting our time. Because that'd be the biggest waste of time. Be like, all right, great, we're gonna go fix this and then not actually measure that we went and fixed it.

And if you're not. And it sounds so simple, but if you're not measuring and not paying attention to it, what happens is you go spend four months hacking away at something, and then it occurs to you four months later, like, oh, this isn't working. Whereas if you keep these feedback loops super tight, you can usually get a sense very quickly, you know, within a week or within the first newsletter partnership or something. You're like, oh, there's a little signal. Okay, let's keep following that. So tight feedback loops.

Mmm. Dude, I can't wait till we have the studio to talk about these all day.

I love this. I'm just imagining if I had access to ship 30 PGA and this podcast when I was in college or right after I graduated, and I was like, I want to work for myself. What do I do? It's just nuts. Like, I love creating the thing. I wish. And I'm sure you feel the same way that I wish we had 10 years ago. You know, I agree, man.

All right, so we got our list. Let's go build this thing to 50k a month, and then we'll do another episode in two months and we'll check in on what happened.

1. One quick sort of, like, call to action for everyone. A. I mean, subscribe to Bottlenecks Biz. We're going to be pouring a lot of time and energy and heart into that for the foreseeable future. But also, you know, we're going to start stacking the bench. And I think it makes sense where the next step is to be looking for these operators, looking for people who want to take over a product line, own it, you know, be the one to do this bottleneck analysis and share in the incentive. So if that's your personality or if that's something that interests you, reach out to us. You know, a lot of this is early. You can tell we're. We're piecing a lot of this together. But I think, Dickie, it's fair to say this is clearly the path that we're headed and so definitely want to open up as many of those conversations as we can with people.

And the people we definitely want are the ones that are an hour and change into this or wherever we ended up on this episode and are still listening. So if that's you and we're coming through your ears right now, and it's like, I want to work with these guys, love to talk to you, because that's where we're headed, is we do this kind of thinking, you come in, work directly with us to build out some of these product lines and ideas, because I know surely we have more than we know what to do with, and it's gonna be an exciting couple years.

Awesome. Ah, wait till we have the shipyard, bro. Wait only so many more the final.

Renderings do to look so sick. It looks so sick. I think. What? Today's the 17th. It's like one month. One month.

Ish.

We'll have the studio ready to rock, so counting down, a little bachelor party trip in the middle, but then we'll be back in action. All right, y', all, thanks for listening. If you're on YouTube, leave a comment with your biggest takeaways. Hit like, hit subscribe. All that good stuff. If you're listening to this via your podcast player, hit like, hit follow. Hit whatever notification bell, take a screenshot. If you're listening to this, put on your Instagram story, tweet it out, whatever it is you got to do. Forward it to a friend. It helps podcast grow. If you got any questions on this bottleneck analysis, leave a comment, send us an email, send us a Twitter dm. We read and respond to all those. That's all we got. We'll be back next week with whatever it is we're up to at the time. Thanks for listening. Y' all have a good one.