Brad: I work closely with our founder, Sam Parr, in a growing team of writers and analysts. We work hard every day to deliver the email and all the deep dive content that we produce every week.
We’re really happy to have you join us today for our first Trends conference call, just a new concept we’re trying out. We’re hoping that it gives me sort of added insights into how to start and grow businesses. A lot of the content we produce for Trends, and we welcome your feedback after this call. We’re going to do our best to present sort of a story here, about how we’ve grown our business, and how we’ve been successful in establishing a sales team and revenue goals, and the strategy around our revenue.
I wanted to remind you that you can ask questions as we go, and I will be doing my best to check in with those questions on that form, the link should be in the email that you just got last night.
So with me today is Adam Ryan, who built The Hustle sales team, he’s now president of our company. Adam has been really instrumental in helping us build a multimillion dollar business. Adam, are you there? Thanks for joining us.
Adam: I am. I’m excited for this first call, and thanks everybody for calling in.
Brad: Awesome. Adam, if you don’t mind, why don’t you tell us a little bit about your background in sales, and how you came to The Hustle?
Adam: Absolutely, so I got started, my first real sales experience outside of, of course, just kind of getting your feet wet in the space, my first time working at a media company was with a company called Spiceworks. They were, when I joined them, they were just taking on their Series E from Goldman Sachs for North of 50 million. It was a B2B publication focusing on tech vendors as their target market.
I was a senior leader there, owning the primary relationship for some of our largest clients. I was an individual contributor, and then from there I moved to, I was there for a few years, and went to Under Armour. That was my next stop. It was during the acquisitions of MyFitnessPal, MapMyFitness, Endomondo, and the creation of Under Armour’s connected fitness division, which was essentially their media division, based in Austin, Texas. I was there, I helped in the early days of figuring out how they were going to monetize 100 million plus users on apps, from health oriented apps. Very much of a consumer focus, which was different than at Spiceworks, during that time.
An old friend of mine who I’ve known for a long time, Mr. Samuel Parr and I reconnected, he was launching The Hustle, the daily email was in April 2016, and I started working closely with him about four months after that, and joined the company full-time about six months after that. That’s a little bit of how I got started, and how I got to The Hustle.
Brad: Just two St. Louis guys, basically, right? I’ve got two Midwesterners.
Adam: Two St. Louis guys who both did not go to the Mizzou’s journalism school, and both ended up in media. That’s something that we can talk to our friends about.
Brad: All right, awesome. Well, I did the journalism school for you. I want to get to the takeaways as soon as possible for our audience here, but I’d like you to start by quickly giving everyone a brief understanding of how our business works. Basically, how do we make money, what are the main revenue levers for The Hustle, which was a smart question one of our people on this call asked.
Adam: Yeah, absolutely. We really have three main revenue sources, and those are, an events bucket, which includes sponsorships and event ticket sales. We have The Hustle Daily, which is our 3D mail with more than a million subscribers. That is advertising driven. Then we have Trends which is primarily subscription driven. For The Hustle, if you take how the weight of that and when our business started, we are heavily skewed towards events. Sam started Hustle Con way before the daily email launched. That was that. Over time, our event business has grown from almost all tickets to about 50/50 sponsors and tickets. Our daily emails has become the vast majority of our top line revenue as we’ve grown and that audience has grown alongside it. Then Trends we just launched in June. Everybody here is a paying subscriber for that of course. We have subscription as a consumer and B2B subscription as that aspect.
Brad: Cool. What I’m trying to get at there is we make most of our money from our daily email and so tell us a little bit about how you built the revenue strategy for that.
Adam: Sure. When The Hustle daily email got started, email as a source of primary revenue was not necessarily a common aspect in the media world. There was a few companies like theSkimm who had started that. Overall most people viewed email as a secondary revenue driver of an overall media business. When we got started, we recognized the value of having a direct relationship with our audience and not being dependent on getting reached from Facebook or depending on search from Google. Having the power to just click a simple button, then Mailchimp at the time, and increase our revenue was something that we’d like to have control over. That was the big inspiration. From an advertising perspective we looked at how we could maximize the quality of advertising for our readers and balanced that with performance for our advertisers. We decided on a strategy there to create custom content for every single advertisers and that way we could charge a premium price for that, but also it wasn’t obtrusive for our readers and it was more in the voice of The Hustle.
Brad: That’s interesting. We were a little bit of ahead of our time. As you mentioned, there were some other players in the market, but what we were trying to do was build an audience. I mean we weren’t like, when you don’t know about a product at first, The Hustle is a brand new thing. When you’re first imagining how you’re going to make money on this product, what are some questions that are going through your mind and how are you trying to answer those questions?
Adam: The number one thing we always worry about of course is the ability to not disrupt the experience for our readers. Actually if we can enhance that experience, advertising is really difficult to do that. When we were getting started, we looked at….I came from a lot of inspiration. I looked at Under Armour, which had an amazing product and MyFitnessPal, but the way they monetize banner ads was pretty intrusive. It didn’t fit to the context of the experience. When we started looking at how to really scale advertising, we made a bet that our team in-house could create ads for clients and brands in a way that would perform better. At first, as you mentioned, it was a little bit ahead of its time.
I remember my very first meeting with HP and I met with a senior marketer there and I pitched this idea and they were like, why would I ever let a startup make something on behalf of our brand? There were some case studies like Vice and Intel that we leaned on that this is a path to go down. That was the biggest hurdle at first. That hurdle was officially jumped. Microsoft in March of 2017 decided to utilize us to launch their Teams product. That was the validation we needed really across market. Those first six to eight months, it was really getting the buying of advertisers because we knew what we were doing was best for the readers.
Brad: The other thing that was really interesting from my perspective was that there wasn’t a lot of difference between the voice that we had and there still isn’t in the voice we have in the installation of the news where we basically write stories that where we have a take on different things that are happening in the business and tech worlds and the advertising that supports those stories. I can probably speak to that more, but what was the importance of making sure that those two sides align so that people, when they read it and they felt like the readers were essentially reading the same content and they would be more likely to click those ads?
Adam: Well, I think that when people are launching a product where attention is the product, and I think people forget that a lot, right? Creating something where you get people’s attention has a really low barrier to entry. Anybody can make up a blog. Anybody can throw a website now in a couple hours. Creating an attention based product has a low barrier to entry. The question you need to ask yourself though is why do those people like to give you their attention? When we asked ourselves that at The Hustle, it was because of our voice, because of our pulse of what’s going on and the convenience of email and the brevity of our content.
When coming up with a revenue strategy, you shouldn’t match those value props of why people are actually giving you the attention. That way you don’t abuse that attention and drive them away, which I think many publishers fall into that trap. That was the argument yesterday to bring up Deadspin, that was the big argument of how do you capture attention in a way that’s not disruptive to the experience, but also can perform for an advertiser.
Brad: Now we have more than a million subscribers for the daily email and this super engaged audience, super high open rate every day, which makes it a lot easier to get brands attention. Go back, just for another second here, to those early days when you were building the email list and the question from our audience was: how did you come up with an angle for The Hustles media deck? How’d you get people’s attention?
Adam: Great question. Coming up with a media deck is really difficult because you have in your mind what the value props is. You’re saying, Hey, this is an entrepreneurial focused. The builders of our generation, they’re reading this news every day. That’s what you believe it is. Perspective is important when you’re coming up with your pitch deck. From an advertising perspective, we went through many iterations. It’s kind of funny to go back and look, we went through this, the world is busy and we’re making it simple pitch, which was okay, but what we finally landed on was leaning into what we thought our users want. We took this angle of, we are in this crazy world of news that people don’t really trust, that they don’t really enjoy. We have a voice similar to Jon Stewart.
It’s trustworthy, it’s enjoyable, it’s smart. And because of that, we can capture the loyalty of a large audience, and who wouldn’t want to be a part of something like that? That’s the angle we ended up going with that still very much sticks around. As our business has evolved and we’ve added more and more products, we’ve pivoted that to even further of really owning the email channel and how happy advertisers are of proof of validation from working with us for years and years. That obviously is not something we could have done early in the early days.
Brad: Okay. Really want to get into the marrow of what this call is about now and get to some of the questions about building a sales team that really drives our daily email business. Can you start on a sort of broad level and give us some ideas of how you thought about building a sales team. Coming from the background you came from with these different bigger companies and a startup company, what were the essential ingredients that you thought about as you were thinking of building the sales team?
Adam: The first one is a revenue plan. You should never look to hire anybody. You should never look to buy software. You shouldn’t do anything until you have a plan. Sam and I and many of the folks early on worked really hard to come up with a model that we thought was scalable, that we believed in, that made math sense, is what I always like to say. It not only feels right, but it is right in Excel. We launched the email in April of 2016 and by December of 2016 we had that model figured out and that was the first step. At that point, we also then once you have the model and you believe in the scale of revenue that you can achieve, now you need to look at the resources that you need to execute towards that. Can you just do it by yourself?
Can you use a Google sheet CRM or do you have to buy Salesforce? These are questions early on, right? You have to start first with a business model of does this make sense? I think that should be for every business, e-commerce, media, you name it, understand your numbers first and where you can go, because you don’t want to spend money that you don’t have. For us, once we figured that out, we started purchasing some early software. We had Salesforce almost from the day that we knew what we needed. That’s what we purchased. We started building it out and then you start building hiring plans and models of quota and that, which I’m sure we can get to as well. That was the first big thing is let’s have a true plan that we can stick to for the next 12 months and really that first plan is still essentially the model we use today.
Brad: How’d you come up with the numbers?
Adam: I think the mistake that I didn’t want to make was avoiding a variable. When coming up with the numbers you can always assume, whether it’s e-commerce or media, what’s the largest variable? For us it was email subscribers. How many subscribers are going to be able to grow to, that’s a hard thing to guess, right? We made some assumptions there and then you have to go to other variables. How often do they open? What is the churn rate? Are we going to have to discount on certain days? Really come through variables of the business. That’s really where some of my experience in the past came through as I recognize, in August let’s discount here. We’re going to have a higher discount rate that month. Hey, this is a premium month. Black Friday, we’re going to have higher rates. When you start to do that and understand the variables and attach some percentage to that or change that over time you can really start to put that together to make a true model.
Brad: Cool. I’ve listened to your feedback in the discussion group here or the doc that you sent in some questions too as we’ve been having the call. Hopefully we cleared up the sound issue. It sounded like maybe Adam who I’m talking to was giving you some feedback. So hopefully that’s a little cleared up. Just as another reminder, if you have questions as we’re talking here, please feel free to drop them in that Google doc. I’m looking at that as we have this conversation and we’ll add questions as they fit. A lot of people have asked about how to build a successful team. Can you start Adam by answering what are the top qualities you look for and the character traits you look for in potential sales hires?
Adam: Yeah. At first, I wanted to hire someone I could trust. That was it. There was almost no other factors besides, I just want to hire someone I can trust that I know will hit the goals that we decide on and early on one bad hire really can turn a company upside down potentially. The first three hires I had were all people that I had relationships with before, people that I knew had performed in the past and that I could lean on when times were good and when times weren’t good. That’s what I looked for at the beginning. As we grew, I really started to look at skillsets, culture. What is one person great at? Can I find someone else that’s also great at something else? I think there’s an issue sometimes building out a sales team where you have a lot of people who are wonderful at pitching to clients in person, let’s say it as one part of the job.
Are they good at identifying clients, prospecting, cold emailing? Are they good at putting decks together? Everybody has kind of different things that they’re great at and early on I would say when I was recruiting folks, I would say there’s three parts of this job. A zero to 50 is prospecting. Identifying clients that want to work with us that are great fits for our audience and reaching out to them and getting meetings set up. The 51 to 100 is listening to those advertisers needs. What do they need from us? What can we put together? Putting together media decks for them, finding solutions to match their problems and and pitching them and selling them on that. Then the last piece, and I always say it’s 101 to 150 because if you’re good at those first two and you can do this, you’ll always exceed a hundred percent of your quota is really having a relationship based sales process and having people trust you.
Anybody can find somebody and pitch them one time, but can you get the renewal business? Can you get someone to come back time and time again? That is a different skillset than those other three. As we started to build out the team, I evaluated the team and said you’re great at this, you’re great at this, we’re going to have to be trained so we get great at everything. For now I’m going to need to hire someone to really fit this need in this hole that we have. That was part of that process.
Brad: That’s great. A bunch of people also are asking when you’re in the real startup phase, how do you know when to start hiring a sales team versus just doing the sales yourself? You were in the sales space. You spent a number of years working at The Hustle, not just overseeing it, but actually doing sales. I think you still do, you still come in at the end on some of them just because you’re great at it, but how do you know when it’s time to flip that switch and start hiring?
Adam: Yeah, it’s a tough question. It’s a little bit of gut feeling of am I actually getting in the way at this point? If you’ve hired people who are better than you, sooner or later, you’re just not really needed. Your time can be spent elsewhere. Finding new products, talking to customers, learning what else we can do to build the business larger rather than sitting on calls and closing a $20,000, $25,000 deal. For me, I was by myself for about six months before we hired our first person. I hired that person because the demand, I knew that was coming in the next three to four months. I could not do on my own. I needed assistance. That’s been every hire we’ve probably been a little slow to hire on the sales team at times because we do it on an as needed basis.
Then when I finally, I stepped away officially last December from owning my own quota, I owned a quota for, even when the team got to six, seven, eight people, I still owned a quota and was a player coach role. I stepped away from that last December because I totally trusted the team that they could do more than I could do because I had other things on my plate, bigger, bigger problems to solve that for our business. That was kind of the moment. It was a little bit of a gut feeling. Also hearing from our team like, Hey, we got this, you don’t need to sit on this.
Brad: Yeah. I think one question that a lot of people have too is how do you pay people, how do you think about structuring compensation base plus commission, commission only? What are some numbers that people should think about? Obviously it probably differs based on the type of thing you’re selling and the experience of the sales team, but when you start from a baseline level in terms of thinking of what someone needs to be successful, how do you structure that compensation?
Adam: Yeah, it evolves over time. Undoubtedly, right. You can only do what you can afford. I don’t think enough people ask that question themselves. When we got started we had a lower base salary for folks. There was a base salary but we had variable upside. Right? There was only so much money to make because our inventory was so low aka readers and subscribers, and as we scaled up, that becomes more 50/50 50% base salary, 50% variable and on target earnings. Something that I believe in that the places that I had worked at previously didn’t do was having the same commission percentage for all staff. It’s kind of an industry standard to say, oh if you have a five, six $8 million quota, you get a smaller percentage because your quota is so much higher, you’re obviously making more money and if you have a lower quota, you get a larger percentage because we’re trying to make sure that you can afford your dinner tonight.
That’s been standard. I’ve been in that situation where as I grew and I had more responsibility and more quota, I actually made less money per dollar I brought in. I thought that was a pretty backwards way to motivate your top employees. Something that we’ve done from the very beginning, and it’s still the case today, is no matter your experience level, no matter how big your quota is, every salesperson gets the same commission percentage and their plan is the same. What it’s enabled is a culture of transparency. Now instead of other sales teams, when you close a deal and someone gets 5%, someone gets 1%, someone gets 20%, and you don’t really want to be like, oh wow, I just made 100 bucks, that $100 is different for everybody. Having the same percentage has allowed a very intimate team to be able to celebrate their wins in a real way and talk about money, which is so important for motivation for a sales team.
Brad: One of the biggest reasons that sales teams are successful is that there’s a culture that you’ve been able to create, at least in our company. I wanted you to speak to that and also a little bit about how you train your sales team and how sort of what are the ways that that training is working effectively.
Adam: Yeah. Before I got into media, I was a teacher. I got my own graduate degree in corporate education. I just believe that if in any role, in any job, if you’re not learning or growing, you’re a flight risk to leave the business. You can make a lot of money and love the people that you work by and sit by, but if you are bored, you’re a high chance to leave and great contributors and great leaders are hard to find. Something we’ve implemented, is every Wednesday morning there’s a weekly training for the sales team, every week. It’s not easy to come up with. Sometimes it’s difficult. Sometimes it’s done on Tuesday at 11:00 PM. Sometimes it’s done three weeks before. Sometimes we bring in outside people, but every week we train the staff. Sometimes the staff leads the training themselves, but it’s a great way to just get everybody reset on, hey no one is above growing, no one is above learning. Don’t be afraid to ask questions. A value that The Hustle has, a company value, is I would rather have you look dumb but learn than look smart and not ask. That value comes through that training and it also allows us as we’ve hired more and more talented people, they even reach new levels of success that maybe they didn’t believe in before.
Brad: What’s one or two examples of effective training sessions where you’ve gotten a message through that’s really helped the team be successful?
Adam: I’ll give a couple examples. One, we have a seller on our team who gets called out all the time on social media, Katy Huff. She writes some of the best emails I’ve ever seen to get people’s attention. It is such a busy world out there getting cold email meetings set and she is phenomenal at it and she has led trainings before for our staff. It’s a perfect example of that is a strength of hers that she’s now making other people great at. We’ve also, another more recent training, is as we’ve rolled out new products, it’s really important not only to train people what to sell it for and the gist of it, but why? They have to believe in it. Why are we doing this? Is there a bigger reason for it? Is it just chasing dollars or is there a purpose? We use those ones, the meetings, also to remind people the purpose of why they’re doing what they’re doing. Even when we roll out new products or just doing a soundboard for some of our originals.
Brad: That’s great. So tell me, imagine you have somebody who’s not carrying their load, not hitting their quota or meeting their quota. What are some things that you do to help them? Or can you think of an example of a time when you were able to turn someone around when they were struggling?
Adam: Yeah, that’s the shittiest part about this job. Excuse my language, but when someone’s not doing well, the first question I ask myself is the fault optimism. Why aren’t they doing well? It’s not because of effort. It’s not because of ability. It’s because of something else. There’s something, when you don’t believe in yourself as a salesperson, that the people on the other side of that phone call or that table, they’re not going to believe in you either. There’s this confidence that you have to have or it’s just not going to fall through. When people are struggling on this team, I think lifting them up, giving them chances to succeed, to use an analogy, instead of throwing a fast ball at him let him hit a tee ball. Set it up for him, tee it off, let them feel a win.
Celebrating little wins is a great way to build someone’s confidence up. Also I think when people are getting lost in the shuffle, one of the biggest tendencies I see is when you have really outgoing personalities on a sales team, people who are big thinkers and big dreamers, a weakness tends to be details in organization. I am a firm believer, the first thing I really ask people when they’re struggling is, what is your system every day? Do you know everything that you’re doing when you’re coming in to the office? If not, that’s where you start. If you start to do that and take little wins at a time, you can start to build you back up, get you that confidence back, and all of a sudden that preparation will turn into luck, and you’ll kind of get out of that hole.
Brad: You hit on something really interesting there about what is your system every day apart from expectations around how many sales someone would have over a week or a month or whatever. What other key performance indicators should you set for salespeople? Like number of calls a day, number of presentations a week. I’m reading as some of you are listening in, you probably recognize these very questions, so thank you for all the feedback. You can ask more questions as we go. We still have about 30 minutes left in this call, but that was a question that someone asked specifically apart from these monthly or weekly sales, what other KPIs should you set for salespeople?
Adam: Yeah, it’s a great question because it’s a controversial answer. I know sales leaders who have a ton of success, a ton of success and they micromanage you to make sure that you’re doing, 50 emails a day, 20 calls a day, and they believe that that management will lead to X output and there’s math normally that says that’s true and those folks are really, really smart that do that. I do think through that math you lose some culture and you lose trust because you’re not empowering your team to make their own path. From a system perspective, we’ve rewarded the team for a long time. Now we give away a few awards each week. One of them is the ice man/ice woman, which is the most cold meetings set for the week. I think that’s a really important measure.
Showing that you’re building new business for us that means you’re also doing outreach. It’s also an end result piece. There are some really talented people. Like I mentioned Katy, she can send 20 emails and set three meetings and that’s it. That’s all she needs to do, where other people might need to do 40 or 50 and make 10 phone calls. That is one aspect. The other one that we tend to lean into is just most meetings in general. If you have a lot of clients who are renewing, if you’re on the phone with them building these relationships, that should be rewarded. Then lastly, it’s pipeline creation. Some people are great at getting on meetings, but also you got to create pipeline and Salesforce. How are those deals flowing? Each week we give a prize out, essentially a cash prize, for the winner of each three of those.
Then something The Hustle’s done from the very start was we have something we call the money man. It is a Slack, a bot, that comes through after each deal to provide transparency to the business who were winning and who were not. The money man brings the deal in. We also have the money man prize each week for whoever brought in the most revenue. Those were the four key metrics each week that we’d look at. Cold meetings, completed meetings, pipeline creation, and closed one revenue. I don’t pay attention as much to activity based things such as calls or emails. I think that’s a controversy in the sales orbit. If you hire really talented people, I believe you can just look at the outputs instead of there.
Brad: Yeah, I wish every time the Slack thing was popping, it was the money man, but unfortunately there’s a lot of other reasons why that pops. Tell us a little bit about, a little bit more back to the the revenue model that The Hustle has. How do we charge advertisers? Can you talk about how that works and how that’s changed and why?
Adam: Yeah, absolutely. This is one that I have to swallow my pride for [inaudible 00:32:04]. In the beginning, early days of the business, advertising is so volatile. It’s why subscription is so important to have a leg of business in recession in general. Anybody who sold advertising, it’s just a really tough business to find predictability in. That’s what we prioritize early on. Prioritized, I want to know every month exactly how much we’re going to make and have as little variance to that as possible. We were really good at it. The way we did it was we charged on a per send basis. If we had 1 million sends, we charge you $30 per thousand sends. It’d be a $30,000 send. It was very straight forward. Matter of fact, and no matter if that opens were high or low, that’s how much we got paid.
I really appreciated that model. When we were early on and kind of like if we’re going to make it not how big we’re going to make it, before that transition question happened, we knew we were always going to get paid no matter what. Over time we’ve addressed some needs of our advertisers as well as shifted the model on a per open basis primarily. Meaning if we have 700,000 opens of our email and we’re going to charge $100 per that and then that’s the map there. Instead it’s more variable, right? Because opens can go up or down each day. It’s not as predictable as sends, but we’re putting more of the performance on our staff of our email and it’s showing advertisers were investing in our lists now, which is really important I think in this time. We addressed the need in the overall industry doing that as well as, because we’re taking on more risk of our lists, we can charge a more premium price, which then raises the revenue per subscriber pretty significantly, which is a key piece of the model. That’s how we’ve evolved over time. The key reason why we did that, because it went from, if we’re going to make it, to how big we’re going to make it and some other industry factors and why we switched.
Brad: One reader was asking: are the ads in The Hustle dynamic based on the profile of the reader receiving email or does everyone receive the same email?
Adam: Great question. We do not have dynamic advertising in The Hustle daily email. Meaning if you are, using this example, if you’re a male or female, you do not get a different ad from us. If you’re under a certain age or if you’re in a certain location, you do not get a different ad. Part of that, I always tell people, is when you sign up for email, we only asked you for email address, so we don’t have any first party data on that. Additionally, it’s part of this bet that we made. When I was an Under Armor, they could target by, and I’m not exaggerating here, they could target by your body fat percentage. They could target by how often you run, what time in the morning you run. They have so much data and the ads were very targeted to those people and they were incredibly ineffective.
Nobody clicked on them. They were bad experiences and my lesson to that was like, hey, context is obviously important. Getting the message in front of the right person is important, but the actual content of the ad is more important because if it’s disruptive to the right person, it’s actually potentially a net negative experience. The bet The Hustle made early on, which now a lot of the folks in the industry I believe are also following suit on, is let’s invest in the content of that advertisement. Let’s make it in our voice. Let’s make it something that we’re proud of, that we believe in. If that person is reading it is not the right fit, they may say like, ah, I don’t really need to buy CRM software. However, that’s not intrusive to me, it’s not offensive.
I actually appreciate that they invent like have ads that aren’t just banner ads. That’s feedback that we’ve gotten from day one. Our advertising has historically been a positive note of our business from our readers and our advertisers are happy. Instead of investing in dynamic ads, we’ve invested in custom content that it matches our value props. You can’t really do both because if we would send contextual ads based on who you are and create the content, we would have to make 500 ads a day and that just wouldn’t be sustainable for me.
Brad: Yeah. Speaking of the value props, another question from the group was that this person said, I know brands are sensitive when it comes to controlling their messaging. Is there a back and forth approval process when it comes to putting a sponsor’s brand and their message in front and in the voice of The Hustle Daily and if so, what do you do to overcome it?
Adam: A great question, it is a challenge. I think anybody who’s tried to sell custom content and the value of your own voice understands that. There are really brilliant people at Red Bull and Microsoft and on running and people that we’ve worked with in the past that have great brands. Their messaging is strong. They know that. They know what works for them. They tested a lot, but what we have to do upfront, this is a proactive approach. Our sales team has to sell the value to them before the contract is signed. They have to get in front of them and say, the reason why you’re working with us is because you believe our audience loves the content we create and because they love the content we create, we’re going to create this content for you. It’s added value to you. It’s not, we’re going to listen to your message and give it to our audience because that’s not why they read us.
If that’s done proactively, it’s way less of an issue. If we rush a sale, if we jump into something which has inevitably happened, that’s when we have pushback of like, hey, I know this works better. I know this is better. Of course, then we have to have that argument. We do have a system in place to ask people upfront, hey, what are the do’s and don’ts of your brand? What can we say? What can we say? How would your shark tank pitch be? Various questions in an advertising brief that they have to answer. That does help us have our team create something, hopefully the first time that’s a home run for them. Most of the time it’s one or two tweaks after that and it’s a pretty smooth process.
Brad: There were several more questions about the ads that go into the email every day. I’ll get to those in a second. One thing I wanted to mention was we have this thing called an ad council that is I think one of the coolest things about our company and how it works across the different content we produce and the sales team and the advertising team and the content team are represented in these meetings. Can you describe what went into the thinking behind creating the ad council and how it’s helped the business?
Adam: Absolutely. It came from my own self awareness of my own motivation. When you’re getting a business started, I was incentivized to drive revenue up as much as possible. It’s actually easy to do that if you can cut corners, if you want to kind of cheat your way through there and I think in advertising that’s been most people’s past, if they can steal the attention of their user, they don’t care how they do it, they’re just going to do it because it’s money. It’s why you have websites with nine display ads all over where you can’t actually read the content. They’re cutting corners to grab that attention from their user. When we were getting started, it made a lot of sense to me that there were brands that we shouldn’t work with. There were styles and categories that we should avoid because we’re lending our voice to these brands because we’re creating the content.
We have to be selective of who we work with and also we get special requests. Hey can I add a picture here? Hey can I do this? People want more and more and more. To have someone whose incentive is revenue be responsible for that decision making I think is a crucial mistake of any media business. We put together the ad council that has essentially a representative from every department at The Hustle. Tech, editorial, advertising, sales, everybody across the board and we come each month together of are there any, any categories that we should blacklist? Are there any clients that we should blacklist? Is there anything that we should evolve to? Hey, we had this complaint from a reader. How do we take that in consideration? We had this complaint from an advertiser, how do we take that in consideration, but it’s a non-biased group who their primary motivation in that group is to improve our business, but improve our business comes from multiple perspectives, not just revenue and because of that, I really believe as we’ve scaled up, we’ve made decisions that cost us short term revenue, but long term loyalty.
Sometimes it’s been where a lot of innovation happens because we have national attention and more importantly it buys into this wider goal.
Brad: I’m going to get to a couple more questions about what goes into the email and related to the ads. How do you go about pre-selling a newsletter and are there different ways that that happens? Related to, I mean obviously the needs of different advertisers, but how do we pre-sell newsletters?
Adam: Yeah. Most newsletters are sold about six to seven weeks ahead of time at least. Sometimes in the beginning of the year, we’re 12 weeks sold out. We have a calendar system that’s automated based through integrations, various integrations and essentially it’s just like an inventory calendar. You have this slot, you can fill it in, and then our sales team looks at that before they go into a call with a client and they say, hey, we have 11-2 available. Is that a good date for you? You work that way. We have a lot of clients. About 30 35% of our year is booked in advance. So by the end of December this year we’ll have about 30 35% booked which is pretty common in the industry of advertising. Then that’s all calendar based as well. If you want Black Friday, I actually think potentially we’ve even sold black Friday for 2020 already. If you want prime dates, you have to do that. Which obviously creates incentive for our advertisers because we truly have inventory constraints, which is wonderful for our business. At times, frustrating when working with clients who want to spend money and we don’t have a way to do it, but also it really shows the value that they have to sign on early and really pre-buy.
Brad: When you think about the referral platforms, what’s the best referral platform to use to manage sharing incentives?
Adam: Good question. We’ve done a lot of it in-house. I’m fairly frugal as a sales leader. I haven’t invested a ton into platforms that we don’t absolutely need or won’t save us a ton of time. From a referral standpoint, normally each quarter if we hit a goal, there’s a bigger event that we’d gone on a boat party before. We’ve done different various things similar to that. Then on a weekly basis, of course it adds up and we put in payroll if you won 25 bucks on this contest, et cetera, we’ll add that to your payroll. That’s how we manage it now overall.
Brad: I think Adam, you’re cutting out a little bit there. I don’t know if…
Adam: I apologize. Can you hear me?
Brad: Yeah. I lost about the last 10 seconds of what you were saying there.
Adam: Oh, mostly, we just manage our incentives and spiffs in-house and we just add it to the payroll. We don’t have a platform that we use right now.
Brad: Got it. We had talked before this call, Adam, you and I about the media deck. I wonder somebody had asked if we could share that with the subscribers. I’m wondering if that’s something we could consider doing?
Adam: Yeah, absolutely. We’re happy to share our deck for The Hustle.
Brad: Cool. Also, someone asks about the open rate, which we talked about earlier in the call. Would you want to address how we think about our open rate and give any details about it?
Adam: Yeah. If you would see any interview that we’ve done recently, we’re really proud of our open rate. It’s north of 50% for The Hustle Daily. We think it’s really industry leading, not just in the sense of a a Mailchimp industry average, which is everybody in the whole world. I think it was like 19% but if you look at daily emails out there, it’s one of the industry leading averages and so it just shows for us the reason why open rate matters. It shows the loyalty and engagement where people actually are creating a habit with our email, which is exactly what the purpose was. We want people to read us every day and have that be part of their day-to-day habit.
Brad: Yeah. More specific questions here. Folks, keep adding them to the doc if you’ve heard something you’re interested in, you want to follow up on. I’m doing my best to read through those as we’re talking. One of the questions was for a digital course business that sells direct to consumer, at what price point do you recommend hiring a telephone sales team to call leads to convert them into customers? Meaning if the price is under 15 to a hundred dollars for example, I assume it’s not worth hiring a phone sales team and instead I should just use an automated funnel on its own.
Adam: Yeah, absolutely. I think anything in that price point you could automate a funnel and more so you could find efficiency with that. I don’t know the exact number here, but normally I think most people say a lifetime value of cost of about 5,000 is when you could start to look to outsource a sales team, but I would always, always, always look to automate before hiring and building out a team.
Brad: Excellent. Another listener asks, I want to build a sales team to help me sell my subscription based app for health-related patient relationship management. Sounds like a great business. Any specific suggestions for this industry?
Adam: It sounds like potentially you’re going to have healthcare and medical doctors, et cetera. That’s a tough industry to crack. I haven’t worked specifically into that market. If you’re starting something out, find someone who’s worked in that space before. Find someone who knows who your customer is. If you identify your first customer yourself, which you should, and then once you know who that person is, go find someone else who’s sold to that group of people or that constituency beforehand and your life will be a whole lot better because they’ll know a lot more than you.
Brad: Great. Thanks. Another specific question related to sort of advice. If I wanted to create a conference for event planning professionals and want to hire a sales team to bring in sponsors for the event, what would be the first few steps that you recommend to hire the right sales team, find the right target audience, and figure out how to price the sponsorship packages?
Adam: Yeah, it’s a wonderful question. The first, you know with events for us, you also have to know, I mean going back to the advice I said earlier, know what your business model is. Some people sell events where you break even on tickets and sponsorship is the icing on the cake. Other people you absolutely need sponsorships to get into the green. Some people, it’s a free event and it’s all sponsorships. Those questions matter. First, you have to know what you need. If it’s icing on the cake, maybe you just outsource it. There’s a lot of outsource sales teams specifically around events sponsorships where they take 30 40 50%. Pretty hefty fees, but you don’t have to hire anybody. You don’t have to deal with it, and it’s icing on the cake. If you need sponsorships to actually put you into the green, if it’s that crucial of a KPI, I would probably keep that in-house when looking for somebody. I would always start yourself. This is what I admired most about The Hustle and Sam damn did almost, I think he did do essentially every job himself, including selling our first advertisements.
He got to know what that process was and then immediately hired people who could do that and had done that before. That’s what I would do. I would sell your first event sponsorship yourself, cold call, cold email, find someone you know, take whatever money. If it’s 1000 bucks or 5,000 or 50,000 just take whatever you can get, and then use your network, LinkedIn, et cetera to find somebody that does that. Know why you need sponsorships before you go hire somebody.
Brad: All right. We’ve got about nine minutes left on this call. I’m going to move into what I like to call the speed round. These questions are a little bit shorter. They’re not necessarily any simpler, but I’m going to make you answer them as fast as you can as and as thoroughly. But you know, try to be, let’s try to do these in about 30 seconds each. Any suggestions on gaining more signups through non-paid advertising?
Adam: More sign ups through non-paid advertising? I don’t exactly understand that question. I would, if it’s signing up for the newsletters, I would create a referral system. I would ask your friends and family to spread it. Use organic and sharing and social. LinkedIn has the most reach for the less cost on an ordinary site, so maybe start there.
Brad: What’s your best suggestion in managing unhappy clients?
Adam: Have empathy. Defend your business. Recognize sometimes walking away from the partnership is the best thing for both of you, but both of you don’t want to do it.
Brad: You do a great job of that. I think that’s super important across our business is to really have that sort of empathy. How do you react when you miss revenue goals and how do you set things up to go again?
Adam: We’ve missed quarter three times since I’ve joined The Hustle in total. Those are really when your leadership skills get challenged the most. One, you have to know why you missed it. What went wrong in the model? What was the variable that was off? Adjust for it, learn from it. Tell the team that you’re learning from it, that they’ve learned from it. If it’s an execution issue, then you have to look at the staff you have on hand. Make sure that they’re the people that you want to make the bet on. If not, you have to make those changes as necessary and move on, but it’s tough. You have to be the leader of that team to get them out of that hole. No one else is going to do.
Brad: Outside of coupon codes and tracking the URLs, how do you measure conversion rates for your advertisers?
Adam: We, most of the time are dependent on them to provide that feedback to us. They can use UTM, they can use codes, pixel tracking. There’s numerous ways to do that, but right now our clients are primarily responsible for sharing that information back to us and we don’t control that, which is unfortunate. I wish it could be the other way, but it’s tough in the industry that we’re in.
Brad: What do you consider successful in that realm, Adam, in terms of conversion rates for advertisers? What are the goals and how do you ensure that you hit those goals?
Adam: It totally depends on the type of client. If you are selling a CRM software or a communication tool for a business B2B that the lifetime retention is 110%, sometimes that cost per lead can be three, $500 like that’s good and it’s, right? It’d be really, really high. If you are selling a $80 tennis shoe or a $100 watch, your cost per click has to be low and your conversion rate has to be high, so it’s just really identifying and knowing what industry you’re working at. My client at, Spiceworks, HP, they would acquire a lead for $1,000 if there’s an IT manager. They knew that they were going to buy $100,000 laptops. When I went to under Armour, Fiji was one of my clients and they wanted a cost per click of about 50 cents, so it just depends on who you’re working.
Brad: Yeah. This question is a little bit fuzzy, but I’m going to have you take a stab at it anyway. The incentives of sharing. Can you speak about this in terms of why, et cetera?
Adam: In terms of sharing? I don’t exactly know what that question is referring to. From a referral standpoint, I guess Brad, is that what they’re talking about?
Brad: I think exactly, yeah. That’s how I would answer it.
Adam: Yeah. I mean it’s really easy to forget referral systems are set up because when businesses, if I buy an email address for $2, but I know for every email address I have, it’s going to add a tip of a new subscriber, then that needs to be added to the lifetime value there. Referral systems help that, and if I send a sticker to you, it’s $1.25 I add that as my cost; my CPA for those five email addresses. It’s a low cost way to grow your business, create a viral effect.
Brad: I’m not sure this is directly applicable to our business, but do you have some thoughts on working with Legion experts, so to speak, for B2B who promised appointments using automation tools?
Adam: Yeah, this was my previous job. This is all we did. We dealt with these people all the time. I compete against them. Be really, really cautious. If I was in your shoes, I would incentivize them for pipeline creation, not for meeting set that most people don’t want to agree with that. If their product is good enough then they will. It is wonderful to outsource leads and meetings. I know someone who does it really successfully and runs an entire business by not having a sales team because he can close all the deals by having meetings set up for him. I know other people who’ve wasted $50,000 on outside agencies of setting meetings that lead nowhere. Be cautious asks the right questions. Be outcome oriented.
Brad: This is a very relevant question for where we’re at right now? How do you validate new newsletters?
Adam: Validate a new newsletters? Understand the variables of what makes a newsletter successful. Audience interest is obviously a big one. Advertising rates. If you had a really, really niche audience, sometimes they can get a really, really high advertising rate. Sometimes that means the addressable market is smaller. What’s the customer acquisition costs of an email address? I think my favorite podcast that we’ve had is with Moiz from Native. We also talked about him in Trends, and he did validation of the product of customer acquisition costs before launching Native. That gave him then the price point that he had to launch with to be profitable. That is brilliant and it should be taken to the same approaches as building out a newsletter.
Brad: Adam, this is the speed round my man. Let’s speed this up. The last couple of minutes here. Last questions. Do you have any thoughts on the quote “predictable revenue model” in today’s B2B market?
Adam: Predictable revenue model, the B2B market is subscription. It’s the most predictable, best for recession. Work towards that.
Brad: What has been a surprise of building out a newsletter business? What’s the biggest surprise?
Adam: How big it can be.
Brad: I guess one of the last questions I wanted to ask is do you have a cross promotion? I guess it wouldn’t be almost Friday if we wouldn’t ask a question about shower thoughts. Do you have a cross promotion with the shower thoughts section on Fridays, which those of you who aren’t familiar on Fridays we run a section where we curate the best shower thoughts from Reddit and people love them and as this reader says, can you have the shower thoughts have a shareable link so I can post that to my company Slack channel each week? I post it anyway, might as well have a back link.
Adam: We don’t have a link like that. I love that idea. We don’t have a partnership with Reddit. It’s just simply a subreddit that loves and enjoys and I think the feeling was that our readers would, and it’s turned into one of the favorite sections arena.
Brad: Cool. We are an hour in so I’m going to call it on this experimental first conference call for us. We are going to pass back to you through email the media deck that we talked about and anything else Adam can think of here that he wants to share with you, but love to have your feedback on this call. We were considering doing these on other kinds of topics, but we thought we would just test today using this as an example. Adam, anything else you want to add today?
Adam: No. I appreciate all the conversations and the Trends Facebook group. I’m happy to jump in if anybody has any follow up questions there as well and answer any. I appreciate everyone jumping on today.
Brad: Thanks everyone. We appreciate your business and we look forward to having more of these and hearing your feedback. Have a great day everybody.