Partner Deep Dive: EmailSmart

We own over 40 companies, and every single one of those companies has a singular thing in common: Email

Since 2007, I’ve been using email marketing. Back then, I would use it for my Agency in a super clever way.

I’d go to tradeshows and give away a website, but you had to enter your email. Email was my #1 source of new customers.

Since then, not much has changed. In some of our businesses, the newsletter is the core product, and in others, we simply use email marketing as one of our channels, alongside social media, paid ads, SEO, etc.

For 15 years, I’ve known that Email Marketing crushes it — doesn’t matter what business you’re in. However, what have I only known for the past 5 years? You’re in control of your ability to get in front of your customers with your emails.

Simply put, there is an art and a science to ensuring you end up in the inbox of your potential customer, and there’s a lot that goes into making sure that occurs.

When I decided we were going to do a portfolio company of online businesses, I outlined the businesses we needed to create a “moat”.

A moat in business refers to a sustainable competitive advantage that a company has over its competitors, making it difficult for them to enter the market and compete effectively.

Further, I wanted to ensure that, as we scaled businesses, the common problems I knew most businesses faced were covered.

Email delivery is one of those problems. Much like when someone has their Facebook ad account shut down. Having your emails go to the spam folder or people not opening your emails can kill your business.

I’ve seen it happen again and again.

Thus, back in 2022, we took a minority interest in EmailSmart, an email deliverability company. Outside of allowing us to have amazing email deliverability and protecting our companies as we grow, along with the fact that I’ve known the founders for years (and mentored one of them), The truth is pretty simple.

I believe in 5 years you won’t find a business not using email marketing, and the number of email newsletters will jump drastically. My bet is that more and more business owners will HAVE to take control of the assets that they can own.

Let’s dive into how this works inside of my portfolio—while I can’t give you all the details due to our partnership agreement, I’ll give you as much as I can.

First off, my portfolio is divided into two categories:

1. Partnership businesses—where we own less than 51% of the business, generally in the 10–35% range

2. Wholly owned businesses—where we own 70% or more of the business

My belief in business is that you either need to have a leader and be supportive, or you need to be the leader and be supportive.

These two sides of the business are managed completely separately, by entirely different teams, and have completely different strategies.

While not always the case, we generally look to be in our partnership businesses for a minimum of 5 years without taking any dividends for at least 3 years to allow the business to grow.

What this means is that our partnerships, as of today, generate almost zero active cashflow and will likely not generate any direct capital until 2025.

That’s perfectly fine, because I think a strategy like this will pay off massively in 5+ years from now…

Okay, back to EmailSmart…

My bets are as follows when it comes to email deliverability is as follows…

1. Email is going to become more and more important.

2. Email is going to become more and more complicated due to privacy, big tech and increased usage.

3. More and more people are going to have issues getting to the top of the inbox and high levels of engagement.

4. Email is a bit of a black box that most creators and businesses don’t understand. When things aren’t understood there is a massive opportunity.

As part of our model, we take businesses that I’ve mentored and invite them to be a partner of The Wisdom Group— generally I will work with an Entrepreneur for 6-12 months and from there, if it’s a good fit, we will help them scale.

Partnering with a business isn’t a small deal and I think it’s important to realize that as an Entrepreneur myself, when I partner with someone it’s a big commitment— quite frankly, I’m betting on the industry, the entrepreneur and the growth path.

Unlike a financial investment, when we partner with someone we bring our time, resources, expertise, media network, audience and money to the table.

Money is really easy to get back— all of those things combined, aren’t as easy.

However, for this business? We’re really excited for a lot of reasons and there’s a lot of opportunity… so let’s dive into it.

Please note: I cannot talk about revenue or specifics of the programs, offers and inside due to obvious reasons.

Opportunity #1: High Ticket SaaS

The first thing that we did when we came into the business? We stopped selling the low-end side of the business.

This is one of the first moves I make when we get into software due to the simple reason that if you’re into B2B SaaS and you don’t have a pile of VC cash trying to make MRR that is less than $200 work, isn’t easy.

Further, the truth is, most people want more than just a software to help them with deliverability— they want actual help. This required us to refocus our avatar to those who have an email list that is at least 5,000 people in size and a business generating at least $250,000/year.

The cool part with high-ticket SaaS? You get the revenue upfront AND you get great recurring revenue. This allows you to build the revenue you want for an exit, while also helping ensure you have cash to grow.

Opportunity #2: Certification

Beyond the High Ticket SaaS the other truth is that the market for this type of work is massive. If you have a business, you’re going to need someone to at least review your email deliverability.

We own (or partially own) over 15 certification companies and we know that when it comes to something like email deliverability there is a place to help freelancers understand this so they can sell services to business owners.

We see this, in the future, complimenting our high ticket service where it naturally transitions someone into maintaining your email deliverability after our initial setup.

Opportunity #3: Verification Network

We own www.sponsorships.com and are actively growing this platform. Further, later this year we will be launching our software based platform that will allow you to manage sponsorships.

Through this partnership, we will be able to automatically verify someone’s email list and our software will be able to predict how well the sponsorship will do— further, it will verify the information such as clicks and opens ensuring that you get what you paid for.

This alone is worth being part of this business, ensuring the relationship to 30+ ESP’s.

Opportunity #4: Owner Media Brands

We own over 25+ owned media brands, such as www.thegrowthmemo.com.

We expect to have over 2 million active subscribers within the next 9 months across our brands. Having this business inside of our world allows us to both ensure our own deliverability, while also helping those businesses that we help launch owned media brands (part of our 2024 growth strategy).

This allows us to protect our ability to own the algorithm.

In our portfolio, software companies are a very important element… however, we approach it a little differently than most…

When we partner or acquire a software company, we’re looking for software companies that aren’t unicorns. This is a prime example of a software company that is easily a $5-10M/year business with a great profit margin.

However… unless every person on the planet started an email list the TAM (total addressable market) is simply not big enough for it to be a unicorn.

That’s okay— those software companies? Those are the one’s we specialize in… and here’s why…

While everyone is out unicorn hunting… we’re playing a different game with SaaS… here’s how…

In our portfolio we have SaaS that will likely…

A. Not exceed $10M/year revenue, however..

B. Has an extremely high level of stickiness and low churn that…

C. Has a high-ticket upfront component focusing on…

D. SaaS that wouldn’t make sense if they had to pay for user acquisition that allows us…

E. To use our media and education businesses to “tuck in” these softwares and ensures…

F. A moat for the rest of our businesses.

By doing this, it allows us to take a business that perhaps would have a difficult time gaining traction and build a beautiful, boring, linear, high-profit business inside of our portfolio.

And as you know… the more boring the business, the more money it generates.

This is why I believe so deeply in having a portfolio of businesses that allows for the “network effect” and economies of scale.

Simply put… it allows you to do things that you couldn’t do if you simply had one business— when we partner with entrepreneurs with their business we’re always looking for a massive win for them (an easier time scaling), along with a massive win for us and our other businesses.

This allows us to build revenue, cashflow, profit and a future business that can exit (or be bundled to exit).

Speaking of email deliverability…

1. If you want to know more about this for your own business, check out this guide.

2. If you want an audit on your own email deliverability (and have a list of over 5K AND make $250K/yr+) hit reply and I’ll intro you.

Just know… expect 50-70% open rates and a nice mid-4 figure item on your AMEX.

- Scott