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What You Need to Read This Week

Andrew Warner is one of the best interviewers I have ever watched. This is a long video (1 hr) with Naval, the co-founder of VentureHacks and AngelList, but totally worth it.

The title might make it sound like a lame MBA post, but it’s far from it. Chris Dixon explains how some startups who start with small features (Foursquare, Instagram, etc.) can become big businesses.

Startups like Groupon, Gilt Groupe, and even big tech companies like Amazon are tiptoeing between the digital and physical worlds now. Even though they are unsexy, hybrid startups were some of the biggest wins of 2010.

Jason is a badass and shares 14 practical tips on being a great CEO. To give you fair warning, it’s not a glamorous job.

There has been a lot of discussion lately on HackerNews around email newsletters by Jason Baptiste here and here as well as our own case study about StartupDigest as a newsletter company here. Email newsletters are a huge business and I believe that we are going through an email renaissance right now (Thrillist founder Ben Lerer thinks so too).

Right now is the best time (especially for a non-technical founder) to start or work for an email newsletter company.

Let’s assume you already have an email newsletter that’s still small but has traction, who do you start reaching out to for advice? Just like in the Web 2.0 world has the PayPal Mafia, the email world has the Email Mafia.

The Email Mafia is made up of 8 individuals who are pros at building newsletters from small media channels to huge enterprises. At risk of getting whacked, here are its members:

The Email God, Bob Pittman, Founder of Pilot Group
Referred to as the Man with the Midas touch, he has invested in almost every single successful email newsletter company. Bob is the creator of the MTV - the Music Television cable network – which revitalized the music business and spawned the music video industry. Now he leads Pilot Group, a NYC based PE Firm that has invested in Thrillist, DailyCandy, SailThru, Zynga, Rapleaf, GeekChicDaily, Ideal Bite, and more.

The Great Success, Pete Sheinbaum, former CEO of DailyCandy
When email newsletters are referred to as “a serious business”, the acquisition of Daily Candy is what everyone references. Jason Batispste (also part of the Email Mafia) put it best:

In 2008, [Daily Candy was] sold to Comcast for $125,000,000. That’s right- 9 f**king digits.  I remember hearing about these rumors when they first started to surface in 2006, and I took a look at DailyCandy.  I thought I was missing something since the site was just for an email newsletter.  I thought there had to be some social network or great hot new product I was missing.  Nope, it was just that an email newsletter.

Pete was the CEO of DailyCandy during the acquisition and lead the company through the transition before leaving to start his next company, The Mandelbrot Project, funded by the Foundry. He has also sat on the advisory board of IdealBite, TravelPost, TotalBeauty, and more.

The Golden Boy, Ben Lerer, CEO of Thrillist
Ben, co-founder of Thrillist, has arguably the fastest growing and most profitable private email company today, reportedly doing $10,000,000+ in revenue this year. They’ve already completed their first acquisition of JackThreads and have been on a hiring tear since. In addition Ben has started his own venture capital fund with his father Ken Lerer named Lerer Media Ventures, which has been in on some of the most prolific deals this year: Betaworks, Gdgt, ZeFrank Games, Sailthru, Hot Potato, Canvas Networks, and more.

The Pilot, Andy Russell, Founder of Pilot Group
Not much is said publically about Andy but he is a partner at the Pilot Group which he founded with Bob Pittman. He sits on the board of VitalJuice, IdealBite, Thrillist, and DailyCandy. If you can’t find a lot of public information on a guy like this, you know he is truly a badass mafia man.

The Skydiver, Peter Shankman, Founder of HARO
Peter is best known for starting Help a Reporter Out or HARO for short. In less than a year the HARO newsletter went from nothing to the standard for how journalists and reporters source news stories. HARO reportedly was doing ~$1m in sales per year and recently sold to Vocus for around $20,000,000. Not bad for a bootstrapped email list.

The Green Queen, Jen Boulden, Co-Founder of IdealBite
Jen Boulden is the founder of IdealBite an email newsletter of one green living tip you can act upon, once a day. Started in 2005, Ideal Bite grew to 100,000+ subscribers and sold to Disney for $20,000,000 all in less than 4 years. You can check out Andrew Warner’s interview with Jen about how she built her email newsletter business here.

The Reporter, Jason Baptiste
Jason Baptiste is the reason I found out about the business of email newsletters and he has been the person covering the email renaissance since the beginning. It was his two posts here and here that sparked the email business discussions and rumor has it he is working on an email based company of his own :)

The Up and Comer, Neil Capel, CEO of SailThru
SailThru is a relatively new company which just received funding from Bob Pittman, Ben Lerer, AOL Ventures, etc. It has received the email Midas touch and has a very intriguing product which is still in alpha. Although their product is new, you will definitely be hearing much more about Neil and his company in the near future. He’s the up and comer, so keep him on your radar.

The Health Nuts, Amanda Freeman and Lisa Blau, Co-Founders of Vital Juice
On both Hacker News and the comments below our readers said, what about Vital Juice? I’m not exactly their demographic (which is why I hadn’t heard of them before) but they deserve to be in the Email Mafia. They were funded by Pilot Group, have been killing in on Compete, last reported to have 100k subscribers growing at 10% a month.

And on a personal note I am extremely proud of all that our email newsletter company StartupDigest has accomplished so far. Our email newsletter StartupDigest has grown from a 22-subscriber side project to a 60,000+ subscriber international media company in less than 7 months. StartupDigest is still very young but we are already seeing the massive potential of what we have created.

Sign up for StartupDigest here.

Today I read this post on Hacker News which was a follow-up to Jason Baptiste’s first post about email newsletters. In fact, it was Jason’s newsletter that inspired us to focus on email newsletters in the first place. It’s been 6 months since we started StartupDigest and I wanted to give a real first-hand account into what it’s been like to start a company around email newsletters and why email newsletters are valuable.

First, here’s a little history of StartupDigest is and why it’s valuable. If you are already a subscriber feel free to skip the question below.

What is StartupDigest?
StartupDigest is a weekly email newsletter of the best technology and entrepreneurship events in your local area. We serve 43 cities, 4 Universities, and one specialty group of SF Bay Area hackers.

Each digest is written by a local Curator, an entrepreneur and handpicks the best events to feature each week. We don’t feature every single event in each area; instead we filter through all of the available events and highlight only the best events for you. If you haven’t received a StartupDigest issue before you can check out one here. As you can see there, we like keeping things really simple and easy to read.

We chose to distribute our content via email because everyone has an email address, no matter where they are or what language they speak. As we’ve grown, we are learning first-hand that email newsletters are even more valuable than we originally thought. We will be reiterating many of John’s points here, but here is our own account of why email newsletters are so valuable:

Email Newsletters Are Opt-in and Permission Based
To get curated events content in any of the cities we cover, all you need to do is enter your email address on our homepage. All of our subscribers have opted-in to the content we provide and enjoy our email newsletter on a consistent basis.

When a person willingly (and indefinitely) opens their inbox to your content, it’s a big commitment for both sides. There’s a bond between content producer and subscriber from day one that’s much more personal than that between content producer and website visitor.

We measure the strength of this bond by the number of people & sites who have linked to our signup form (currently 8,000+ links to our homepage), the rate at which our subscribers grow (currently 1,200+ every week), the number of digests to which an individual typically subscribes (currently 4) and how new subscribers hear about us (word of mouth from existing subscribers).

Email Newsletters Empower You to Engage a Specific Target Audience
Our newsletters serve the startup ecosystem, made up of founders, hackers, VC’s, service providers, aspiring entrepreneurs, and University students. In the past, this audience has been very difficult to collect and reach consistently., making StartupDigest very interesting to any person or businesses looking for a new, direct way to engage members of the startup world. How we handle that interest is entirely up to us (we are very picky!) but having that interest makes what we do a viable business. The same can be said for any other company (Thrillist, DailyCandy, Tasting Table, HARO are great examples) that serves a target audience with trusted content delivered through a simple email newsletter.

We updated our demographics two weeks ago here, which confirmed to us the exact people we are reaching.

Email Newsletters Empower You to Serve Key Locations and Expand at Little (or No) Cost
Since everyone has an email address anywhere in the world, you can choose the locations that are most important to you and easily distribute your content to them. Localization is a great way to provide additional value to potential subscribers and provide additional social proof for the value of your business.

To date we cover all of these cities and Universities:

US: Silicon Valley, NYC, LA, Boston, Seattle, Pittsburgh, DC, New Orleans, Baltimore, Chicago, Dallas, Columbus, Indianapolis, Salt Lake City, Phoenix, Des Moines, Philadelphia, Houston,
International: London, Paris, Vancouver, Toronto, Montreal, Tokyo, Mumbai, Cape Town, Seoul, New Zealand, Tel Aviv, Copenhagen, Singapore, Berlin, Sydney, Shanghai, Madrid, Hong Kong, Malaysia, Philippines, Lithuania, Beijing, Nürnberg, Germany, Mexico City, Middle East,
Specially: Stanford University, New York University, Columbia University, SF Bay Area Hackers

People Take Real-World Action on Emails They Receive from People They Trust
The whole point of our newsletter is to be a utility tool to make it easier for members of the startup community to meet each other in person.

If more entrepreneurs and investors get in the same room together more often, the entire startup ecosystem will benefit by creating and improving more great companies, faster. By solving the problem of high-quality technology and entrepreneurship event discovery, we are making a real difference in the amount of valuable feedback startups receive, the people they can choose from to work with, and the sheer number of startup ideas that are created and developed into real products and companies around the world.

We’re delivering all of that through email because people have shown that they are willing to take real-world action based on the emails they receive from sources they trust.

One of the ways we measure success is through our click-through rates (which average ~30%) and conversion rates on ticket sales (which average ~7%). We want to make those numbers as large as possible to make sure that the cross-pollination of people and ideas in every city around the world is as high as possible.

We believe that email is never going to go away. You can build a great business on top of email (like Thrillist, DailyCandy, etc.) and we are only one example. If you are working on an email newsletter company too, leave a comment or email me directly chris at thestartupdigest.com or @mccannatron.