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Read time: 5 minutes 13 seconds
Today’s email is a project I’ve been buzzing* about for over a month.
< * you couldn’t even wait past the first line to drop an obligatory bee joke? yikes >
It’s an interview with Tyler Denk, Founder of Beehiiv… but not just any old interview.
Here’s a few reasons I can’t wait to hit ‘publish’ today:
[✓] I’m a power-user of the product - Strategy Breakdowns is built on beehiiv, and it’s one of a tiny handful of products I’d candidly describe as ‘exceptional’.
[✓] As of a few weeks ago, I was able to secure a small investment allocation to beehiiv as an early user. Power-user → Super-fan → Investor → Collaborator, is quite the customer journey!
[✓] The chance to chat with Tyler came off the back of an overdue yet timely personal awakening to the power of cold outreach + a first-attempt at an opportunistic DM (story for another email).
[✓] The format of the interview is different to what we’ve published before, and I’m pretty excited about how it’s turned out (h/t to one of the internet’s greatest treasures ‘The Generalist’ for seeding my curiosity on innovating with written content packaging).
[✓] There’s been plenty of other great analysis on beehiiv’s story, but very little (if any) that focusses specifically on their long-term strategic bet. Hint: building an email mega-SaaS is only one part of the equation.
[✓] Founder interviews, concentrated on strategy, are an experimental format for us - but on paper they seem to align superbly with the purpose of this newsletter. Plus, it’s something you’ve been requesting more of.
A few asks we’ve received (and heard!) for more interviews
Enjoy.
– Tom
P.S. Our next interview will be a ‘Reader Mailbag’ with Nicolas Sharp, founder of Attio. In other words, you send the questions, Nicolas and co will answer them.
Send a reply to this email with your best strategy questions for Attio (here’s our recent breakdown for inspiration).
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beehiiv's long-term strategy (with founder Tyler Denk)
Chess Move
The what: A TLDR explanation of the strategy
Without burying the lede, beehiiv is an email platform that successfully wedged into a crowded market by targeting the high-growth creator newsletter segment.
Currently, most of their revenue is SaaS fees ($10m ARR after just 2.5 years).
But their most interesting, differentiated, and fastest-growing line of business is the Ad Network.
Modelled conceptually after Meta Ads and Google Ads - beehiiv Ads lets brands programatically target, deliver, and optimise their creative campaigns via a suite of scalable self-serve tools.
Rather than injecting ads into a newsfeed or search results, they are automatically served across thousands of trusted email newsletters, which also creates a low-friction revenue stream for beehiiv creators.
As beehiiv’s b2b SaaS customer base scales, so does the b2c reach for its Ad Network. As of Jan 2024, beehiiv creators were sending 800 million emails per month.
💡
Strategy Playbook:
Generate paying customers →
Generate paying customers for your paying customers →
Generate paying customers for the paying customers of your paying customers.
‘Strategy Playbooks’ in hand-drawn Post-It Note form. Y / N?
Breakdown
The how: The strategic playbook boiled down to 3x key takeaways
TA
Let’s start with this: Meta Ads and Google Ads are *probably* the world’s greatest business models. They have b2c attention AND drive efficient b2b value, both at tremendous scale.
What’s the tldr for beehiiv’s strategy to create the next great ad network?
8:06 PM ✓
TC
Newsletter ads convert considerably better than social media, marketers know this.
But there hasn’t been a way to both dial in on your target audience (with confidence) and scale within email like you can on Google or Meta.
Where are bringing 1P data + scale to one of the largest mediums, and building it in a way where advertiser ROI and publisher payouts are both being prioritized.
8:13 PM ✓
TA
LiveIntent is playing in a similar space - they were making $52m in 2019. That’s impressive scale, but it’s hardly a slam-dunk when you consider other successful ad networks. Even tier 2 networks like Snapchat and Pinterest are both in the $2-5 billion revenue range.
Has anyone else cracked the email ad-tech space in a meaningful way? If not, why not, and what makes this an untapped opportunity for beehiiv?
8:20 PM ✓
TC
PowerInbox is a LiveIntent competitor that does something similar, although I’m unsure how either company is performing currently.
When you think of the entire email techstack both from a process and data perspective, they sit in the least opportunistic place: the middle.
They don’t have access to the platform where publishers are actually creating content, and they don’t have access to the data being collected from the email sends. They are simply a pixel that sits in the middle with limited access to additional context, data, or control.
Compare that to beehiiv where we are the initial destination publishers go to actually create and craft their emails. We have all the 1P data about the type of content they create, how it’s performed, who their audience is, etc. We can seamlessly offer opportunities that align with their goals and audience without them leaving their workflow.
8:27 PM ✓
TC
We also are the final destination for all data collected regarding the campaign performance and subscriber actions (or inactions).
The vertical integration here is critical to ensuring advertisers see stronger ROI and publishers are being compensated well with opportunities that perform best for their audience.
As to why others haven’t cracked the code, I think most ESPs focus on email marketing and ecommerce (vs newsletters and “content based emails”).
I think this recent wave of content-first newsletters has grown really popular over the past 5-7 years and there hasn’t been a platform to truly serve this audience first (until beehiiv).
8:29 PM ✓
TA
Can / will the ad network eventually expand beyond beehiiv publishers?
8:31 PM ✓
TC
Right now we are hyper-focused on building the best solution for publishers and users utilizing the beehiiv platform.
The answer above regarding the upside of vertical integration explains our reasoning there.
YouTube doesn’t serve ads on Twitch despite similar formats, not because they can’t, but they lose all of the context (i.e. data) for the ads to perform for advertisers and for the processes for users to remain seamless.
8:35 PM ✓
TA
What’s the biggest risk you see for the ad network to be a success?
8:36 PM ✓
TC
I think the biggest risk is internal: execution.
We are attempting to build a world-class ad network, but are also balancing building better editor tools for writers, better automation features, better dashboards and data visualizations, etc.
We are intentionally taking a homerun swing here, and I am confident we can pull it off, but it’s not without risk.
The platform comes first — if the platform doesn’t work seamlessly and provide an incredible experience for publishers, the Ad Network doesn’t matter.
8:40 PM ✓
TA
Let’s say everything goes exactly according to plan over the next 5 years. Describe the beehiiv Ad Network product experience for publishers, advertisers, and readers.
8:43 PM ✓
TC
For advertisers: it’s the Facebook Ad Manager where you can easily create self-serve campaigns, build target audience demos, tweak your goals, and ramp up your spend accordingly.
For publishers: it’s having access to dozens or hundreds of available opportunities at your fingertips. Choosing to put it in auto-pilot and monetize without any work, or perhaps curating more premium sponsorships with a bit more effort but potentially higher payout.
For readers: it’s getting the most relevant ads that are actually useful and interesting. Instagram has accomplished this, their ads are so well targeted I don’t even mind them. I actually purchase a decent amount from Instagram ads.
8:48 PM ✓
TA
Any interesting anecdotes / backstory / conversations that have led to / shaped your vision for the Ad Network?
8:51 PM ✓
TC
The biggest anecdote for me is really just my experience at Morning Brew.
I was there when there were just 3 of us with no processes and little revenue. We scaled the Brand Partnerships (i.e. Sales) team to dozens of people, implemented a ton of processes, and I personally built the ad management software that took an advertiser deal from closed won to execution to renewal.
I’ve seen the machine work up close and know how it’s done. I also work very closely with dozens of senders on beehiiv as we continue to iterate and build the Ad Network. I can see what’s working and what’s getting them excited, and our team from top to bottom leans into that type of feedback.
8:53 PM ✓
TA
Well I’m buzzing to see where this all goes, and happy to play a small part of the story. That’s all for now - thanks for doing this!
Will aim to publish this ~1mo from now.
8:55 PM ✓
TC
Dope lets send it
8:56 PM ✓
Tyler is typing …
Rabbit Hole
The where: 3x high-signal resources to learn more
[8 minute read]
Founding story + product culture + North Star Metric + company goal setting = A delightful read for strategy nerds.
[5 minute read]
The official public launch post for the first-generation beehiiv Ad Network.
Bookmarking this one to revisit in 2027 when ‘beehiiv Ads Specialist’ is an essential marketing hire for any high-growth company.
[48 minute watch]
Tyler sat down with Erik Torenberg to dissect the new media landscape for newsletter creators, and beehiiv’s role in shaping it.
2 of our favourite thinkers in the space, jamming out on top-of-mind topics.
That’s all for today’s issue, folks!
This one was fun to create. Hope you enjoyed reading it too.
If you’ve made it this far, chances are you’re the type of builder / thinker who’d get huge value from today’s sponsors JPD and Mixpanel.
Thanks for being here.
— Tom Alder
P.S. Don’t forget to reply with your strategy questions for our reader mailbag with Nicolas Sharp + Attio HQ.
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