Behind The Scenes: The Early Checkout

A large part of Wisdom Media, our media company, is comprised of newsletters.

We’ve made a massive bet on the future of online media and have spent the last year building the infrastructure required to scale— as I write this, we now own 15 newsletters with a total audience size of over 800,000 subscribers.

By the end of the year, we expect to have well over 30 newsletters with a 2.5M subscriber audience, which will help us have massively segmented and targeted distribution.

Today, I want to share a little update on one property that we acquired in September of last year.

That property is The Early Checkout (www.theearlycheckout.com) as a little background, we purchased this business on https://www.acquire.com. One day while looking for great businesses to purchase, it came up. At the time, we were just building the background and investment thesis, however, I knew that it was better to test a thesis… than just sit and think about it.

After some back and forth, I was able to secure the newsletter for far less than asking.

At sale, the stats were as follows:

Total Subscribers: 32,000

Open Rate: 32%

Monthly Revenue: $900

Last email sent to list: 2 Months

It needed a lot of work, across the board… from the homepage…

To the email software (they were using a free email software, with a terrible IP address)… Basically, everything was a mess, and it was obvious that they weren’t really paying attention.

The total price? $1 per subscriber, for a total of $32,000.

That’s less than what you would normally expect, however, considering the lack of revenue and bit of a hot mess, along with the fact that I closed the deal in less than 5 days, it worked.

Great… I have a newsletter with a bunch of eCommerce owners, I know nothing about eCommerce, I’m not an eCommerce expert and the entire business is a dumpster fire. What do I do?

The first thing I did was hire someone to manage the newsletter and become the writer. For this, I tapped one of my old clients, who ran an Agency helping eCommerce companies grow.

As of writing this, he has moved onto some other stuff (but still part of Wisdom Media), but we’ll get into that a different day.

Once he was onboard, we had a new vision for this going forward. We focused directly on Shopify, we redesigned the website, we redesigned the format of the newsletter and increased the newsletter frequency to twice a week (soon to be 3X/week).

We took the newsletter and, using our Email Deliverability Consultant & Company, brought the list from 32,000 to 19,000, deleting all those who hadn’t opened it in 90 days, From here, we started automatically deleting anyone who hadn’t opened it after 60 days.

From the start, we moved to Beehiiv, which we’ve been super happy with for a newsletter-specific email.

We got people on the phone that were on the email list, implemented surveys, polls, and understood who the audience was, and what they wanted.

We spent the next nearly 6 months, focusing on content, infrastructure, and building something great. In total, we were burning about $7,000/month in hard costs, on top of the upfront $32,000 investment.

Total Investment: $74,000… by Feb 2023

Around this time, we knew it was time that we could start bringing in sponsors, and start working on the growth of the newsletter and the brand, and thus, we switched from building infrastructure to building revenue and revenue opportunities.

Inside this business, there are a few ways to generate revenue.

1. Sponsorships - Paying for ads inside of the newsletter.

2. Affiliates linking to offers that will (hopefully) convert.

3. Partnerships - Working with people on deeply integrated offers for your audience.

4. Low Ticket Offers - Things people need like workshops, swipes, systems, etc that are easy to purchase.

5. Membership Offers - Building a course + community on the back of the newsletter.

In our case, we decided to focus on #1, #3 & #4. I simply don’t believe our audience is big enough for #5, and I’m not a big fan of selling things I don’t have control over (#2).

Before we continue… I think it’s important to state a very deep truth in the newsletter business:

Building the newsletter business only works in 3 key ways:

1). You are looking for a business that will likely generate less than $200,000/year and you don’t have a team (or small team)

2). Your business will directly benefit from the newsletter, outside of sponsorships.

3). You build an ecosystem and rollup of many newsletters that allow you to utilize economies of scale.

In order to switch from building the content, the structure, and the overall development, it was important that we build an ecosystem.

If you want to run newsletters (or any media) at scale you need…

A few writers…

An editor…

Someone to work with all the different people (project manager)…

Someone to handle growth of the newsletter (which is managing other people such as an Ad Manager, etc.)…

Someone to work on technology…

Someone to take care of sales for sponsorships…

Someone to take care of outreach for sponsorships…

Someone to take care of responding to emails you get back…

Along with analytics…

Now, many of these roles can be brought together… However, if you look at most newsletters, you have a single person and a VA doing all of this.

In our case, we’re building a $100 million+ portfolio company, so that wasn’t going to work.

But… that story is one for another day… back to The Early Checkout.

As we were building the infrastructure for The Early Checkout, we were building it for 10+ other newsletters, like The Early Checkout.

Different segment, same strategy.

By March, it was time to dive into our first strategy, sponsorships. Quickly, we found success, and we made back our entire investment in the business within 60 days.

We started operating at a profit with a MASSIVE “but”… The costs of running a single newsletter when you have 10+ of them are much smaller than if you were running one.

One sales person is able to sell for 10+ letters…

One writer is able to write for 4+ letters…

One customer support agent is able to take care of 10+ letters…

And now that we’ve got our money back and we’ve proven that this is something that truly makes sense, it’s time for the next phase, which is based on doing four different things at once.

1. We took on a partner and sold 25% of the business to them, This person is deep inside the eCommerce space and has a successful business helping those in this space. This will help with advertising placements and putting a face to the business.

2. As part of this deal, they are going to give us the ability to use their products as offers on the front-end (and back-end) helping us both have low ticket offers and a partnership for generating revenue.

3. We are going to double-down on our content and distribution, which will include sending 3 emails (instead of 2) per week, increasing the number of writers (and authority-driven writers), launching a podcast, and creating a free Facebook group.

4. Spending time, money, and resources on going into growth mode on the newsletter and building further partnerships with those who have audiences in the eCommerce space (partnerships & sponsorships are in the horizon).

This also focuses massively on something that I believe is important for Entrepreneurs to know…

Sometimes, selling a minority share of your future profit & exit (or equity) is one of the easiest ways to get ahead…

In this case, the deal wasn’t worth much money (because the company isn’t worth much money).

However, the ability to get be dialed into this partners world… Expertise and potential will shave 3 years off our growth curve. Plus, this person understands eCommerce the way I understand my own expertise, and I like that.

I’m excited.

In conclusion, my intentions for this business are as follows:

1. That we are able to start growing the email list by a minimum of 2,000 eCommerce owners/managers per month.

2. That we are able to generate at least $75,000 per month with operational costs of $20,000 and growth costs of $20,000, allowing for a profitable growth curve.

3. This allows us to have a model of being able to purchase a newsletter-only business that has limited revenues, grow it and then sell it.

Speaking of selling… My intention with this newsletter is to package it with other newsletters and media we own.

See, inside of Wisdom Media we have specific rollups that we’ve created based on similar segments… I won’t keep rambling… I swear 🙂 

However, my belief for selling is the following…

If we successfully build a model for growth… along with monetization… on top of a non-personal brand… on top of dozens of regular sponsors… on top of a media moat (newsletter + web + podcast + group).

Our ability to be easily purchased by an eCommerce company? Nearly guaranteed.

And… if you’ve built a way for your business to be easily purchased by someone else? That’s never a bad day

Until next time,

- Scott