Over the weekend I received a cold phone call from a guy named Sebastian who is a subscriber to StartupDigest. He was calling because he had read our case studies on email newsletters here, here, Jason’s case studies here and here, and the recent Hacker News discussions about email, so he wanted to start his own email newsletter business.

He lives in NYC and has the idea of doing a newsletter of the best fashion events in NYC for the fashion community. He was calling to ask about my experience in starting StartupDigest, what he should do first, what software to use, what tools to use, and the story of our first 3 months in operation.

Here is a rough transcription of what I told him:

Let’s ask the most important question:  what content are you delivering and what market are you serving?

If you want to reach the fashion community in NYC, what content are you going to send them? Is it event info, videos , news, or analysis? What resonates most with the fashion community? For StartupDigest our audience is the startup ecosystem and we are sending them the best events once a week.  When I started this company there was no comprehensive events guide for founders and hackers and it was a big need in the marketplace.

First you need to figure out exactly what content you will be serving and exactly the community you want to reach. You need to be uniquely passionate about this community of people.

When I started StartupDigest I had just moved to Silicon Valley (Palo Alto) and was working for an investment fund/incubator at the time. I was going to events and conferences to meet people, make friends, and meet the startup community and I was originally compiling “the digest” just for myself so I knew what events to go to and not to go to.  I actually attend the events featued in StartupDigest and I deeply care about the startup community.

Do you deepy care for and want to meet the fashion community in NYC? If not then you shouldn’t start a fashion email newsletter of the best fashion events for NYC. Honestly I am not very fashionable, I don’t know anyone in the fashion industry, nor do I care about getting into that community. I would be the worst person to start this fashion newsletter company.

If and only if you have found your niche and type of content then you are ready to do your first newsletter. Our first “StartupDigest” issue was sent do 22 of my friends in November 2009 through Gmail (not recommended) and I managed the email list using an Excel spreadsheet (also not recommended). We didn’t start off with any special software, or any special tools, the most important part was figuring out what our unique content was and niche was. Everything else will follow.

For Advanced users:
Now that we serve over 60,000 subscribers, we don’t use Gmail and Excel anymore. We use Mailchimp to send emails, Wufoo on our front page for email collection, WordPress for the website, and ReturnPath for deliverability.

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.