I know that I’m not blowing your mind by telling you that Thrillist is making $5 million through its email-based newsletter for affluent men. You’ve probably read about it on other sites.
I didn’t invite Ben Lerer, the company’s co-founder, to Mixergy just so he could tell you that there’s money in email. I wanted him to teach us HOW he’s doing it and WHY email is still profitable and WHAT you can do to integrate Thrillist’s best techniques into your business.
I keep reading in the Mixergy comments and emails that entrepreneurs love when I dig deep into how profitable companies work, so I know you’ll appreciate this program.
Watch the FULL program
Ben Lerer, Thrillist
Ben Lerer is the co-founder and CEO of Thrillist, which scouts bars, gadgets, sites and fashion finds for its audience of urban, affluent men aged 20-35.
Andrew: This interview is sponsored by HayStack, that’s where you’re going to find the right web designer for your next project. Check then out. HayStack.com. Hey everyone, it’s Andrew Warner. I’m the founder of Mixergy.com home of the ambitious upstart. And what I mean by that is I d
Andrew: 28. He is the cofounder and CEO of a company called Thrillist. Thrillist has 1.5 million E-mail subscribers. We’re talking old school Web 1.0 business that he’s got but he has 1.3 million people who are subscribing and Thrillist scouts bars, gadgets and fashion for it’s audience of urban affluent men aged 20 to 35. How am I doing reading that right off the screen?
Interviewee: Great. That’s beautiful.
Andrew: And what’s exciting for me is big audience, but revenue too. You guys are doing… I read over $5 million. Can you say publicly how much you’re bringing in?
Interviewee: I mean we say sort of this year 5 to 10, next year definitely more than 10.
Andrew: Wow. Wow. And all… Not all. How much of your business is done by E-mail?
Interviewee: Right now a vast majority of the business is the E-mail, is the advertising we’re seeing to the E-mail. Although as time goes on and we’re learning more about our audience we’re finding that there are probably a bunch of different ways that our guys would want to be consuming the content. And while E-mail is going to remain our main focus, we certainly don’t want to turn guys off who might want to reach us whether it’s on their cellphone or online or in sort of different capacities.
Andrew: Alright. I want to dig in. I want to learn everything about your business Ben because I am frickin fascinated by it. Let’s go back, way back to when you met your cofounder. Adam Rich, you guys met at UPenn?
Interviewee: Yup. Absolutely.
Andrew: What did you…
Interviewee: You know already?
Andrew: Yeah. Believe me I could do a large part of this interview on my own but the pieces that I can’t do on my own is why I’m so glad that you’re here because I only know the outside. I want to go inside. What did you guys connect on when you first met?
Interviewee: We actually… We have a lot in common because we both were sort of obsessed with having fun. WE really weren’t particularly conscientious students in college. We lived across the street from one another in the same fraternity and all the BS. But really found that we were both very organized and we both liked to make incredible efforts to have as much as we possibly could at all times. And that’s why I think when we both moved back to New York, we both graduated, we ended up still spending a bunch of time together and that’s sort of what Thrillist was born out of.
Andrew: Was it just about having fun or were you guys also entrepreneurial, even back then?
Interviewee: No. We were both I guess entrepreneurial in different ways but we were not… Our friendship was built not on any sort of business on any level. It was really built on desire to – we took fun very seriously.
Andrew: What does that mean? Can you give me an example of what you guys did that shows that you took fun seriously?
Interviewee: Well we went to school in Philly and we made it a significant effort to really explore the city beyond what I think almost any other college students would do. We would plan nights out with our friends and for our friends that were… We would do sort of an appetizer eating tour of a neighborhood of the city and go to eight restaurants and go gorge ourselves and try a bunch of different places that we were curious about. We would do the same thing, without making it sound too much like going bar hopping, we would strategically sort of plan out evenings or days and really go and spend a lot of energy planning out the absolutely, sort of absolutely the most fun and unique experiences that we could.
Andrew: But you weren’t’ selling tickets or making money off of it? Or getting kickbacks from the bars?
Interviewee: Not in anyway. This was just… Much of the time it was us and other two friends. It was really just because we were curious and we love food. Because we loved going out in the nightlife and exploring. On the aside, I was doing sort of cheesy college promoting and throwing parties and things like that and making money off it but that was not with Adam. That was with other friends and kind of independent of our relationship.
Andrew: Alright. I also often like to ask about family and your father I heard, specifically, is pretty famous. He’s the cofounder of Huffington Post right?
Interviewee: I don’t know if he’s famous, but he’s definitely of Huffington Post.
Andrew: Alright. In my world people like you, your dad…
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Andrew: entrepreneurs are famous. I, I can’t tell you who’s on the pop chart but I can tell who you are.
Interviewee: He’s famous to me also just cause he’s my dad. But, yet, he is the co-founder of the [??].
Andrew: Was, was there about business growing up around the house? Was it?
Interviewee: Yeah, absolutely, I mean, my dad worked in media growing up and I guess without meaning to I, I sort of was surrounded by that lifestyle a little bit. And, I, it’s hard to really put a finger, I mean, my father and I don’t talk an awful lot about business together. We, we generally, you know, his advice is, “Enjoy yourself, be happy, don’t work too hard.” But, but it’s, I think growing up where, you know, your dad is a business person and is someone who is entrepreneurial which started another business that he, a communications firm that he ran while I was growing up. And it was his company that he had started and I think, you, some of that gets passed down.
Andrew: Okay, alright. So let’s go to 2005. You and your buddy, Adam, decide that you’re gonna start a business. Where did the original idea come from?
Interviewee: We were sitting on my roof drinking a [Shandie] in the middle of the day. Hanging out and Adam was talking about a girl he was taking out to dinner. And we were talking about where he was gonna take her and, you know, I had grown up in Manhattan was familiar with the city. And he was, you know, very curious guy and so had been around town a bunch in his few years after college. And we thought we knew the city well but we realized that we wanted to do a little bit of research. And you know it was just for fun. Where should we go? Oh, I don’t know let’s go find a place. And went downstairs to the apartment and started poking around and I, it might have been Citysearch or it might have been New York magazine, or whatever it was. It was one of the, sort of, preeminent city guides and we realized that we were doing an awful lot of searching and not a lot of finding. And that the information we were getting was necessarily content that we trusted. Because it wasn’t written for us. It was written for everybody in New York. And so we.
Andrew: Why, why did you decide then to do email? Because email seems like it doesn’t really solve that problem. With email you have to hope that the day that you have a date you get the right email with the right restaurant versus a website where people could search.
Interviewee: You’re absolutely right. The reason we, we liked email is because we thought it lent itself to being a filter. So, what we wanted was someone would go in and not review every restaurant but someone who would recommend the winners. So the concept was, we would have something, we would be the people to pick the winners. We would, and, and the easiest way to distribute this was by email because rather than having to, sort of remember. This was, that was more of a business decision, quite honestly. As we, we felt that we could attract someone one time into our website to come and sign up we would be able to capture them for a long time moving forward. Rather than having to constantly remind people to come back and find us.
Andrew: Yes, so the first business that I built online was email newsletters. And I had that same realization that if I was building a website I’d have to keep advertising to bring you back to my site. Or I had to hope that you’d remember to come back to my site. If I got into email, all I had to do was convince you once to join my mailing list and unless I sucked or you changed your opinion of, of this content overnight you were gonna keep subscribing to my newsletter. And I could keep bringing you content without worrying about how to bring you back.
Andrew: That’s the same realization. And the costs also make sense.
Interviewee: Same realization. Same realization.
Andrew: You paid once to bring them in and you earn revenue from them on a regular basis.
Interviewee: Yes, from a business perspective. And, again though, from a consumer’s perspective, I really think that it’s nice to have this constant reminder and someone who’s there on a daily basis. To have it, it’s something that if you really like the content it’s a great and welcome thing every morning to have arrive in your inbox. Obviously, the onus is on us to create relevant content that’s gonna speak to the interests of our guys.
Andrew: Alright, Cover Cash is asking, he’s watching us live, he’s asking us, “Are you guys based out of Philly?”
Interviewee: No, we based in New York, sort of the, you know, while we’re not particularly corporate, our corporate headquarters are in the city here. And then we have a local person on the ground in every market that we’re in. And so, we are in Philadelphia, we have a Philadelphia edition where we send out a daily email to our Philly audience and we have a guy we lives and works full time in Philly for us. Sort of picking the winners in that market.
Andrew: How much of your original business was influenced by the success Daily Candy which sold for $125,000,000 to Comcast a few years ago.
Interviewee: An awful lot. An awful lot of their success was, was an influence for us. You know, from an editorial perspective, we wanted to different things. We didn’t wanna take their content and switch the word girl for guy. But we did want to, sort of, take a page out of their business model. They had done a really fantastic job really zeroing in on a specific demographic that advertisers found valuable and we thought we could do the same thing for guys like us.
Andrew: Okay. The tone, how do you get your tone? A lot of the, a lot of the appeal of your site comes from the way that you guys write. How do you, how do you get that in the beginning
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How do you get that in the beginning and how do you transfer that as you grow to other people?
Interviewee: I think I had that at the beginning naturally. That was… We tried to capture the tone that Adam and I and our group of friends sort of banter with each other. We really try to capture the communication that we naturally had built with one another. I’m not a great writer and by trade Adam wasn’t a writer at the beginning so we needed to do was take what we thought was this voice that we wanted on paper that was in both of our heads and find a writer who was able to translate what we wanted onto the page.
Andrew: Excuse me. So from the beginning you hired… That was sneezing there. So from the beginning you hired writers to do it all for you. You guys didn’t’ write the first versions yourself?
Interviewee: We edited the first versions very, very heavily but we found a writer very early on. His name is David Blend. We met in a bar on sort of day three before we had raised – excuse me – before we had raised any money and we ultimately ended up… He was able to sort of capture what we had in our heads and put it on paper and from there their brand has run out of, has become a writer after, you know, doing this for four years. We’ve been able to recruit and find and train other writers to sort of speak our language.
Andrew: What’s going on by the way in the background? You guys rebuilding the business?
Interviewee: No, no, no. That is… There’s a window right over behind the screen and there’s someone doing work on it, on the side of the building I think.
Andrew: I see.
Interviewee: So I’m looking out and hoping they will go away but it’s not.
Andrew: Is the window closed?
Interviewee: The window is fully, fully closed.
Andrew: Alright we can continue going through anything. This is good stuff. Alright let’s see what’s next in my story here. Um. You started out in New York. Why didn’t you go national? Why was it so important that you start out in one city?
Interviewee: I think we needed to prove the concept. We needed to prove that people were interested in the concept in one local market and that it was working from here before we go and hire a bunch of people and take on a bunch of overhead. We needed to know that we could do this in one city that advertisers would be interested in buying it. That readers would like subscribing to it. That people would forward it along, etc, etc. Frankly, we were all sort of not confident that we would be able to take the voice that we had in one market and roll it out to other markets and maintain consistency.
Andrew: Why did it have to be about… Why was it important for you… You talked about local restaurants, you talked about local businesses instead of talking about national companies?
Interviewee: Oh. Well I don’t think the national news on restaurants or… I think that local news is much more relevant. For me, if I read on something that touches my life on my day – a restaurant opening around the corner, something that I can go to today – that’s more relevant for me. Then a trend story that vests are in the summer or whatever it would be. It’s… We wanted to create the concept that people would actually need it. That people, not just stuff that was toilet reading or airplane reading.
Andrew: I see. OK. And what about the competition. How much did that factor in? That a lot of people were focussing in on local?
Interviewee: I think there were enough. City Search is all over the world. The Zagat’s of the world and Yelp was already coming popular. There were brands that were relevant but they just weren’t filters. They were just aggregators, effectively. And I think that we didn’t look at it as being sort of a wide open area, but we thought that if we could execute well and that we could create relevant content that there was a business.
Andrew: You have a national newsletter right now. What’s in there and how does that compare?
Interviewee: We launched the national newsletter because off the bat we were a little bit, like I said scared as far as rolling the voice out. We thought that if we launched our second edition in L.A. we would have to trust some guy in L.A. to be able to capture the essence of the tone. So with the national edition we could publish out of New York City and have our first national editor operate out of this office and have our thumb over him – to make sure it stays consistent. So that was the first reason. The second reason for the national one was that we thought that it would plant some seeds in other markets. So when we were rolling in New York and we intended to go to another 14, 15, 20 markets, by having a national edition, when we announced that we were coming to L.A. we would already have a base of people who are familiar with the brand because they have been reading the national edition. So we get a jump start.
Andrew: What’s in the national edition?
Interviewee: From a content perspective, it’s really a best of the web. So it’s services online. It’s brands that are just launching. It’s really cool websites. It’s non, sort of, location specific food and drink – although there’s not as much of that. There’s travel content. It’s really things that are relevant to us that don’t necessarily have to do with the city limit.
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Interviewee: that don’t necessarily have to do with the city that we live in.
Andrew: I see. And if what I’m understanding is right, you find that, that doesn’t appeal as much as a newsletter that talks about the local restaurant on 5th Avenue.
Interviewee: Yeah, I don’t think it’s as relevant. I don’t think it’s irrelevant, or we wouldn’t have it. But I think it’s, I think the most relevant content is the localized stuff. And what our national edition does, is for people who love our local stuff, it gives them another entry point to get more content from us on a daily basis that can still be relevant. Or, for people who live in markets that we’re not in yet, it gives them content that they can, that they can sort of access that doesn’t, you know, until we get to their city. With that variation, right?
Andrew: What’s the value of throwing the kinds of parties that you guys throw. Like I read that, I think you guys got a whole Jet Blue flight for your, for your party, flew people to Las Vegas from New York, had a party there, flew them back. What’s the value, business-wise for that?
Interviewee: Uh, we do parties for a bunch of reasons. One is that it’s a brand-building exercise in that it’s a great way to bring our brand to life, and showcase what we do to members of the press. And so we can create buzz for the brand that way…
Andrew: Hmm. Hmm.
Interviewee: to our advertising partners, and to loop in our advertisers who want to come and sort of touch our consumers, and to create buzz for themselves to integrate into these events. It’s a fun way to engage the readership, to offer them access to either get invited to, or to win access to, these sort of events. And when we do have the consumers out, it’s a great way to actually interface with them, and meet our readers and create a little bit of a community feel.
Andrew: I see. How do you decide who you’re going to bring out to an event? And, more importantly, how does Andrew Warner get invited to an event?
Interviewee: You are invited, dude. You tell me when you…
Andrew: John, I just got the most value out of doing these interviews.
Andrew: Coming out to the Thrillest Party. I’ve heard a lot about your parties.
Interviewee: You certainly have. But the way that we decide who we’re inviting, it really depends on what we first think about our goals and our sponsors’ goals. And so let’s say, you know, with the Jet Blue trip, there was only 150 seats. It was very limited. And so we said, what makes the most sense here? How do we achieve all of our goals? One is to you know, to help our sponsors. One is to, you know, engage our consumers. Another is to get a lot of buzz. And so we start allocating a certain amount of seats for members of the press, a certain amount of seats for our sponsors, a certain amount of seats for winners, and, you know, like that. There’ll be other events where we’ll throw a thousand-person party in New York, and we’ll bring out a ton of our consumers because the goal with that event might be to sort of celebrate all of our readers, versus something that’s as advertising facing, or that’s trying to generate as much press. It really depends.
Andrew: All right. I’ve got to take you just a second here. I went from the height of cool, of getting invited to a Thrillest Party to now the biggest dorky thing. I’ve got to pull over for a sec here just to wipe my nose. I’ve got a cold here.
Interviewee: That is amazingly weird. I respect that.
Andrew: Oh, there we go. There’s something Charlie Rose never did. I’ve got to compete with Charlie Rose by being a little more real.
Andrew: Ah but some, here in Buenos Aires, and you don’t drink tea here. They drink a lot of [Yurba Monte]. I don’t know if you could see that. It’s this cup. You know [Yurba Monte]?
Interviewee: Ah, yeah. My Director of Technology drinks that every day.
Andrew: Who does?
Interviewee: My CTO.
Andrew: It’s good stuff, man.
Interviewee: He loves it. Ah…
Andrew: Only thing is, you have to keep filling it up with hot water from a thermos.
Interviewee: Yeah, I know how it works. I like it. Orange and brown.
Andrew: But it keeps me healthy. Yes, a lot of prep involved. All right, let’s see. So we talked about throwing parties. We talked about the tone of the writing. What other keys to success are there in your business?
Interviewee: Well, I mean I do think that, I mean I think it really does almost start and end with the tone, and with the content. If we have content that’s not relevant for our guys, this business isn’t going to work. And so we really need to…
Andrew: Define content.
Interviewee: Well, it’s an inexact formula. It’s sort of more art than science. At this point we have, you find an editor who just has that sort of magic touch. Who knows what, who knows what he likes, and who knows what his friends like, and who knows when he sees something, that he thinks that there’s real potential there. And someone who’s sort of a consumate networker, who’s always out there meeting new people. And someone who’s just genuinely very curious. And sort of an explorer within their local market. And then, of course, they need to be a really great writer. And they need, you know, take edits well, and they’re going to be organized. I mean there’s, it’s a very tough fit to find a Thrillest editor, but when we do, it’s a really fun job. And so when we do find the right fit, usually they stick around for a really long time, because the perks that come with it are not insignificant…
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Interviewee: are not insignificant.
Andrew: What about design? How important is design?
Interviewee: Design plays a big role. Design plays a very big role and design is what we’ve, I would have to say has been our weakest link for, for most the years that we’ve been in this business. And we’ve made it a much higher priority very recently to redesign. And so the email has been redesigned. We’re in the process of redesigning the website entirely. The idea being that, you know, creating an interface that’s inviting to the user and is presenting information in that most visually stimulating way is, that’s going to be more engaging and…
Andrew: What did the site look like? What did the first newsletters look like when you launched?
Interviewee: Ugh, terrible. Terrible.
Andrew: I love hearing that. Tell me more. What did it look like?
Interviewee: I mean, the first newsletters were much more text based. We used almost no images or very small stock photos. They were, the advertising was not particularly visual, it was much more, it’s, it’s, it was really disgusting. I mean, you should use the way back machine online and look at early days of Thrillist and you’ll be amazed that we’re still in business.
Interviewee: But, but design is, is becoming increasingly important and we’re finding it’s important because our users respond better to messages that look good. We can give, we can give a better review or a better recommendation to a restaurant or product with really great, with, with great images and with great, with just a nicer presentation. And obviously of sponsors appreciate being in a more beautiful environment.
Andrew: Were you, did it help reduce unsubscribes to change the design? Or was it just an increase in, in clicks?
Interviewee: It’s really not about, the business is growing quickly enough that, it’s not, we don’t look at it from a, sort of, reduction of unsubscribes or an increase in, in subscriptions. It’s more about performance on an email. So more people clicking and more people doing things because we’re providing a, a big sexy picture is gonna entice people to go and look for more information a lot better than a small text link, for example. But it’s also, a big part of it is for our advertisers. And to create an environment where our advertisers see their brand along side our content and feel proud to be there.
Andrew: I, I think I read that the first logo that you guys got costs ninety bucks and was designed by, actually, somebody here in Argentina. True?
Interviewee: That is true. A company called, I, I believe their called, The Netmen. But I’m not positive.
Andrew: What are they called?
Interviewee: The Netmen? I think?
Andrew: The Netmen, I wonder if I’ll run into them while I’m here. Small community here.
Interviewee: I, I, if you do give them a hug for me.
Interviewee: But we, that’s, that’s true. I think it was a $95 or a $99 logo. It’s actually still the logo we use today. I mean we’ve done different treatments of it but the brand has not evolved and awful lot. And we, it’s the same color scheme. It’s the same general feel, but we’ve sort of modernized it a little bit and cleaned it up. And I think our next design will be even cleaner and even, even cleaner, even clearer and we’ll take out a lot of the, the, sort of the useless functionality and build in some more functionality that we think our audience will like.
Andrew: What do you mean? What’s useless functionality?
Interviewee: Well, right now I think we, we’ve created a bunch of boxes on the website. We call them media boxes, but effectively they’re little, you know, widgets or little gadgets on the website that help you navigate. And a lot of them are not being used because they are showcasing information that maybe is not as relevant. And probably we’re doing it in a way that’s not as attractive as it should be. An example is if you go to, like, the front page of New York or the front page of any of our city editions, you’ll see some boxes or you may or may not see a box that has a, a top ten list. Of, like, top ten new beer spots in New York. But, unfortunately, the content that we’re pulling in is just a portion of the title because of the way the box was designed. And so it’s effectively a useless box of content. And so we’re gonna eliminate a lot of that stuff. Use the images that we’re taking more efficiently and, and just clean things up. And really let people get to the information that we think is most valuable. And that they think is most valuable based on feedback that we get.
Andrew: Who designed the first version of you site? And newsletters?
Interviewee: I guess it was a combination of The Netmen and Adam, who’s my business partner. And Adam had a, has a degree in fine arts. He’s not a designer by trade per se but he has a very good, sort of, keen sense of design. And is, is decently schooled in, in sort of, graphic design.
Andrew: Here’s what I’m finding in my interviews. Over and over I hear that the first
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Andrew: Here’s what I’m finding in my interviews. Over and over I hear that the first version of successful sights was ugly, embarrassing almost. Embarrassing to the people who owned it and maybe embarrassing to show it to their friends. But the guys who failed had beautiful sights. Maybe they invested too much money and too money time in having the ultimate perfect.
Interviewee: I think that that’s a very keen observation. And I think that if you go and look at… If you want make a link between… You know people often ask me why you think that ??? and Hirst and a lot of the big media companies didn’t come in and transition their big brands – their GQ’s and their Maxims – online in a really efficient way and I think a lot of it is that the tendency that those brands have is to grow money from the bottom up, so to speak. And to come in and to create a beautiful thing and hire a ton of writers and put all this money towards building something that’s really nice and shiny but it doesn’t have an awful lot of really valuable content. Sort of creating something that they think the kids will like versus building something organically and even if it’s ugly we’re doing our best and we’re really creating content that we think is really valuable.
Andrew: How did you know what people would respond to? What kind of content? Were you measuring clicks? Were you asking for feedback? What was the feedback loop?
Interviewee: We were asking for feedback. We were definitely measuring clicks but we were really more going with our gut and that’s the way we’ve run the business since the beginning. We are the consumer that we are speaking to, generally speaking to. Our editors are within this demo. We’re hiring people that we think are normal, cool dudes. The idea being that if we as a company think something is cool, there’s probably a lot of other people that feel that way as well. And we sort of tried our luck in it to see if we had the same or similar tastes to the kind of people that we were looking to reach and it turned out that we did.
Andrew: But you don’t have a feedback loop that tells you people aren’t so much into clubs in our mailing list but they are into bars.
Interviewee: We just created our first feedback loop that we launched last week. That is something where we now have information about every article. There’s a button at the bottom of the article that says “Sweet”. Which is basically when people like an article, you tell us it’s sweet. And so we’re starting to collect data so that we have a better sense. Not just relying on clicks but so that we actually have a positive feedback loop where somebody says, “I like this” and that information is going to be useful to us. A, so that we can influence the kind of things we write about in the future, but B, we can implement what we present to our users on the website and what information sort of rises to the top as being the most useful and the most prominent stuff that we’ve written about.
Andrew: Guys, if you’re watching this live, tell your friends to come watch us. I’ve got the cofounder of Thrillist. This is an incredible business and we’re going to get into the money part of the business in a couple minutes here, including the question that Shnaz asked – Shnaz is his Twitter name, I’m sure his mother didn’t give him that name – about how much you guys are charging for advertising. So people if you’re watching this live, tell your friends to come watch us the way the ??? did.
True of false? In this business it’s not so much about the design about the site, it’s not about the design… Maybe not so much about the design of the E-mails but it is a lot about the designs of the landing page that gets people to register for the mailing list that you probably have to spend a ton of time on that increasing conversions and that’s why you didn’t have time for the rest of the business?
Interviewee: Yeah, I think that we probably didn’t realize that that was an important part of the business until a few years in.
Andrew: The landing page? You didn’t realize the importance of?
Interviewee: No I mean I think we realized it but I don’t think we really did as much AV testing and as much nit-picking on those pages as we did. I think we generally, like I said, we’ve let our gut make a lot of the decisions. And I think that’s a place where our gut should play a smaller role and conversion should play a larger one. And I think for a long time we didn’t necessarily think that way. We said, “Well we think this looks better. We don’t care what’s converting better. But. Oh well. We like the way this looks so we’re OK with it and the business seems to be growing.” Where as now, we’re much more numbers driven. We look at it and say, “This is OK. Let’s create five other versions and test and see what works best. And then create five other versions from the best one there, etc, etc. And right now we’re in the process of redesigning a lot of the landing pages that we use for E-mail capture and I think that it’s… You’re absolutely right that it’s a really important part of the business. But again, it’s not… It’s a very important part of the business but it’s not only a numbers game for us. A lot of this for us is the image that the brand has and the numbers back up how strong the brand is…
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…but every single user is not … It’s not as grandular as some business models that rely directly on the amount of traffic they have and how much money they make. There’s a little but less of that relationship with us.
Andrew: What are you guys paying per subscriber?
Interviewee: Well, most of our growth is organic. At the end of the day if you look at what we spend on marketing, over the course of a year versus how much we grow, it’s cents; it’s not dollars, because most of our growth is organic. When we do go out and market, we don’t have a hard and fast metric that we use. We don’t say “We’ll spend two dollars to reach any user” or three dollars or any metric. What we do is we try and get a sense of where we think our most valuable users are as far as where we reach people that we think perfectly fit the profile of who our audience should be and who our advertisers want, and we sort of work backwards from there and say “Okay, we’ve established that guys on Facebook who like to cite Family Guy as one of their interests, that’s gonna be a good Thrillist user, and therefore, we need to figure out how we can sort of reach that person most efficently.
Andrew: But you don’t get deep into it and say “We thought that last month, now let’s see how long that person who we got from Facebook has been with us and how many clicks he has.” Do you do that? Do you tie it back in?
Interviewee: Yeah, we do. We do look at that, but the business is not driven by arbitrage.
Andrew: But you do have those metrics. You can tell from Facebook, this is what is costs us per user, and this is the kind of action we get per user.
Andrew: It’s that sopisticated even today.
Interviewee: Yes, we can do that. We have that data. But again, this is a lot more art than science. This might be another thing that when you talk about the brands that have not been as successful and who have used a lot of the designs beautiful. And I bet you they have really, really, really neat models for user aquisition as well. For us, it’s a lot more of using our gut and using feel, to feel like if we’re doing something we’re spending against something that it’s truly efficent, versus modeling everything out and having this all driven by numbers. That being said, as time goes on we look more and more and more at the details of the financials and what users are worth. But again, we do try to take a step back from that and not let that drive all of our efforts.
Andrew: So we got over 1.3 million subscribers, right? What number of those came to you organically and what did you advertise for?
Interviewee: I actually don’t know.
Andrew: Okay. Is it 50/50? Is it more than 50 percent?
Interviewee: More that 50 percent are organic.
Andrew: Wow! That’s incredible!
Interviewee: Well, I think also a big reason for that is that when you have an organic subscriber I think there is probably far less churn on those users. So I think when you find an organic subscriber they stick around longer and when you go and market yourself a user comes in and the chances of them leaving is much greater, which is why we really spend most of our time focusing on ways to organically grow.
Andrew: So what have you come up with? What has worked well?
Interviewee: Well, as an example a year ago or maybe a year and a half ago we created an invitation feature. In the past you had forwarded emails. So you like an email, we created a forward mechanism. But what we said, if you really like Thrillist, why don’t you invite your friends? And we’ve had hundreds of thousands of people invited by their friends using that simple tool. This isn’t rocket science. This isn’t a revolutionary change to the way we do business, but it’s just giving users the ability to share their content. In addition, a year ago we added the social media tools (the Facebook, Twitter and what not), and I don’t think it’s a coincidence that our growth has gotten significantly faster since we added those. It wasn’t overnight we put those on the site and our growth rate doubled, but we are growing faster now and there is some correlation between us adding share tools, us adding invite features, us doing more reminding about sharing Thrillist, sort of verbalizing that more to our audience and increased growth.
Andrew: By the share tools I’ve seen, when I see a restaurant or see something you guys are reccomending to me or telling me about, I think underneath it there are share tools even within the email. Am I right?
Andrew: Okay. And that allows me to tweet it out to my friends. From within the email it leads me to Twitter…
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Andrew: and if my friends see it on Twitter, they’re gonna click over and they’re going to come over to not the page of the restaurant, or not the page you guys are telling me about, but a framed page on Thrillist website where the bulk of the page is what youâ€™re recommending to me but at the top it says tweet this out, add this to Facebook, add this to your watch list on Thrillist, subscribe to Thrillist.
So right at the top you’re giving them options to be members.
Interviewee: Yeah. Really, the biggest option is sign up. Sign up, sign up, sign up. Itâ€™s education. Itâ€™s here for those days. You probably donâ€™t know who we are, Sign up, and then we do provide those other jewels to go and share. Although what I find is that people are more likely, more valuable to us if they subscribe, than if they share a single piece and then disappear. So we really push the subscription mechanism.
Andrew: So sharing is big. You tell your users to invite their friends. You give them mechanisms. What else? What else has worked for you?
Interviewee: Partnerships have been really good for us. So we find websites that we think have complimentary but not competitive audiences. It might beâ€¦some of theirâ€¦Wired Magazine, or you know, or Yelp, or Menâ€™s Health, or a wine newsletter, or whatever would beâ€¦you know where the audiences are , you know, at the end of the day, covering the same thing as us. They may be trying to reach guys, but there are a lot of guys out there. I donâ€™t think that it would be in our best interest to have sort of a closed guard where we canâ€™t do a deal with Menâ€™s Health, or other meaningful brands. And what weâ€™ll do is weâ€™ll figure out what their paying points are, or what they need help with as a business, and in exchange we help them achieve those goals. And so maybe weâ€™re working with a brand who is a big national brand, but maybe theyâ€™re throwing a party in LA and Chicago. We can help them on the ground actively to go to those parties. Have them not have to worry with filling the events and having to deal with certain guestlist bullshit. And on our sideâ€¦Iâ€™m not sure if Iâ€™m allow to curse, sorry.
Andrew: You can. Go for it.
Interviewee: I can, great. And then on our side having guys who are basically a national audience who isnâ€™t sort of turned on to Thrills and saying to themMenâ€™s Health email base hey guys I know you arenâ€™t familiar with Thrills yet, but if you live in X, Y, or Z city, this could be a really valuable local city ad for you and sort of leading guys to subscribe to us. And those kinds of trades have been really fruitful for us. And thereâ€™s obviously no cost associated with them. And while one way is marketing, in another way weâ€™re not subjectifying people to subscribe to Thrill List, weâ€™re just putting ourselves out in front of them in creative ways.
Andrew: So if I’m understanding you right, what you get from someone is people on the ground to throw a kick-ass party, and you pretty much run the party for them and in return.
Andrew: You don’t.
Interviewee: We don’t really throw the party for them, but we’ll say like, if it’s rsvp’s that you need, we’ll deliver those rsvp’s by activating the initial audience. And it’s not just bodies in the room, but it’s good people. It’s people who are going to spend money. It’s people who are there because they want to go to this (xx) event, or because they want…
Andrew: And in return, a magazine like GQ would send out an email to their whole list saying if you’re in these cities, go join…
Interviewee: Yeah. It depends on the nature of the deal. Sometimes, you get a whole list. Sometimes you get something geo-targeted where they will just have their Chicago people, and you will do a local deal. Sometimes it’s something big, sometimes itâ€™s small, it really depends on …
Andrew: What other kinds of partnerships do you do? What else do you give in return for promotion?
Interviewee: Well, what we give in return for promotion is generally promotion. Whether that means helping people fill a party, or whether that means driving people to a micro site that they are doing with a partner, it’s promotion in return. Sometimes, in variousâ€¦although not that often, weâ€™ll give them access to our content, so they can syndicate some of our content or have some of our content on their website. Because they are obviously siting it back to us, They can create a little bit ofâ€¦they can create something to make their content a little bit stickier.
Andrew: Is that promotion expressed as an ad or as an editorial?
Interviewee: As an ad.
Andrew: As an ad. So you say GQ’s throwing the party in New York. This is an ad for GQ, and in return they advertise for you.
Andrew: We only have about 20 minutes left, even less than that together, and I want to maximize our time here, so let’s move on to the money that I promised people we would be talking about. First of all, are you profitable?
Andrew: Profitable already. How many years have you been in business?
Interviewee: We’ve been in business for 4 years and we’ve been profitable for 2.
Andrew: Wow. Ok, you got funding from Bob Pittman’s Pilot Group, true?
Andrew: Thatâ€™s the same guy who backed Daily Kennedy.
Interviewee: Yes it is.
Andrew: Guy who used to work at AOL, and incredible career in this business. If people donâ€™t know about Pittman, they shouldâ€¦.
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Andrew: They shouldn’t watch any of my interviews. Why did you need funding? Why not boot-strap this thing?
Interviewee: Well, we did boot-strap it. We raised very little money. But at first
Andrew: For a short period of time though, right?
Interviewee: Yeah. We boot-strapped it for a few months. I mean, for us boot-strapping meant, the money was spent so that we could quit our jobs and pay our rent. It was little bit of cash to put the first few members of the team in place; to build a little bit of technology; to do a little bit of PR; to go and sort of create the initial buzz for the brand; to put someone in place to go and sell the first few deals; someone to help figure out how to reach get some [critical mass] on the list and some people to go and create the content.
Andrew: That’s what you needed the funding for. So you could do all of that together?
Interviewee: We, exactly. So that at the same time if you create content but you don’t have any engine for sort of getting it out there at all, you’re not going to have success. If you have a sales team, but without a product, you’re not going to have success. If you have a product and distribution but no sales team, you’re not going to have success. So there’s a few pieces that needed to come together. So to do that it required a few bodies. Not a lot. And not expensive people. We were all kids. But it required a little bit of cash. So we raised a little bit of cash.
Andrew: The question that I got earlier about money from, [theschnaaz], [the schnaaz] schnaaz, you gotta tell me where you came up with that name. Is it true that you guys are getting $275.00 cpm, and that’s for the full emails that you send out?
Interviewee: That’s for full video email.
Andrew: Full video email?
Interviewee: Full video email. Yeah. That’s absolutely true. That is certainly our most premium ticketso to speak. We have, there are options to come in and pay significantly lower cpm’s for the units that we think are less impactful and are different. But we do have a unit premium that’s up to $270.00. And then everything in between. We understand that there are some clients who are more price sensitive from a cpm basis. And so we try to put together packages for them that provided the cpm’s that they’re looking for within reason. And we have other ones that are less cpm-focused. So we’ll use our sort of premium inventory and work with them. And I don’t think one is more effective than the other. When we work with the client, we try to figure out what their goals are. And we know what our different media, how our media performs. So we look at their brand and we look at their goals and we suggest what we think is going to be most efficient.
Andrew: A Forbes Magazine article that I read said, that you guys get a cpm of $25 to $60 for regular ads. Is that true?
Interviewee: Yeah. I think, usually, probably $30, $35 to $60, but yeah. That’s for our display units or our small advertorial units.
Andrew: And by the way, for anyone who is listening and doesn’t know cpm that’s price per thousand. Per thousand impression you guys get you’re saying over 30 bucks. Is that every time the ad show? Or is that based on the people who subscribe to your mailing list?
Interviewee: Well, you’re, there’s sort of different rate bases for whether we’re selling online or in email. If we’re selling on email, we’re based on the number of delivered emails that we send out. So it’s not based on an open rate. It’s based on saying; the feedback loops that we’ve built with all of the different email service providers are showing that the following number of emails were successfully delivered to the inbox of, you know, our list. You’re paying for that. The reason we’re doing it that way, is that the open rate is a really shoddy metric in a world where online media and digital media is typically you know quite measurable. That’s one of the few metrics that’s particularly relevant because there’s of the biggest browsers, like Gmail don’t automatically download the images, for example. So you can read your email every single day and not click a download images button and never register as having read an email or opened an email.
Andrew: Yeah. Because the only way you can count an opening rate is by having an image load on the, in the email.
Interviewee: Exactly. And so if you read when you’re connected to the internet, not connected to the internet, so you’re on the subway reading your Blackberry, that’s not going to register as an opened email, for example.
Andrew: Yes. Exactly. And so how tough is doing the images in full html emails? Still today, it’s tough, isn’t it?
Interviewee: It’s tough. I mean, we have put a lot of time and energy into it. And we have gotten good at this. So, I mean it’s not easy. I mean it’s a different sort of publishing level than a lot of online media. If you’re a blog and you make a mistake, you can very quickly go back and correct that mistake. We don’t have that luxury so when we schedule an email and push send, it’s out the door and has to be perfect. And that’s a real undertaking when we’re sending out 15 emails a day right now. But the fact is, it forces us to have really,really fantastic quality control. And it means that the content that is being delivered is going to be higher quality than a lot of stuff that’s being produced online right not.
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Andrew: Just caused a lot of noise so ultimately we ended up having to part ways with the major affiliate networks. But despite the facts that you read on the internet about us being using falsies evil guys in the background, figuring out how to steal commissions. It was never the case we never did it and to the extent that it happened it was a buy product of the actual product. And it happened on a very, very small amount of cases. In fact one of the solutions that we came up with, well we came up with a lot of solutions as how to solve this. One of the simpler solutions was the affiliate networks contracted this they seen when we step on a cookie don’t pay us for those. We didn’t want to get paid for those; we weren’t trying to purposely trying to get paid for those. Just don’t pay us for those and you know despite that in a very common set solution it didn’t make sense in the world of kind of the public out cry that was going on.
Interviewee: What about the one last thing then I’ll move on.
Andrew: I hope I don’t sound offensive Andrew you could tell it expires this little an argument that’s I had to face for you know several years of this company. So when the facts are on your side but the public isn’t it intends to make you a bit zealous about your position so.
Interviewee: You know I got to say I made a mistake as a interviewer early where I was making a statement what I said,” the only way you can make money is buy figuring out what your users want, figuring out what the world wants and giving it to them.” Because I made that statement I couldn’t allow this interview to continue without addressing the questions about whether you guys are really be doing that, or whether you guys are out to see if there was money in cookie stomping, whether there was money in misleading users, whether there was money in some of the shadier part of the business. So that’s where that came from and that’s why I had to bring it up.
Andrew: I’m glad you brought it up because I was always happy to have this conversation especially when were in the middle of this whole battle. I was always happy to have this conversation the problem that we ran into is that a lot of times you’re just not able to have the conversation. Because it becomes well known fact on the internet that you as a company are doing something and then everybody just kind of believes it and assumes it just never gives you a chance to actually explain what actually is going on. So know I’m happy to have the conversation that was on early.
Interviewee: I know other companies that did some early things it was gator.com that actively replaced banner ads on peoples web sites, and showed up pop ups and was eventually in conversations with Microsoft from what I understand about a sale to Microsoft and so there were people who were exploring this phase. It was just a tough space to be in because you were battling with publishers about popping up ads on there sites because users are kind of clueless that to as it is to what is going on the internet.
There are a lot of users still double click hyper links on a website so its hard to expect them to understand what’s even on there computer beyond what they are looking at on there screen. And further issues know also one last thing on this two things on this area that the virus programs. The virus sites gave you guys a hard time I think I identified you guys as spyware and adware. And there was also an FTC issue around it right?
Andrew: Yea that’s right, up exactly. So these were some of the head wings that came after we kind of went through that initial scale we raised this capital. On top of that there were some other companies that were well known adware companies. All of a sudden we found yourself in this space called adware that we know was a little bit foreign to us but certainly wasn’t where we intended to be going in the first place.But yeah the business model that were out there executing on was we were saying sites that have users coming to there sites that aren’t making money off of there existing advertising platforms need a way to be able to make money. And so were helping them make money, were paying a lot of money to publishers. The content publishers who where providing lots, lots of content that are games, videos, etc. are having a difficult monetizing that were helping them monetize that. Consumers who want access to this stuff want access to that and they don’t want to have to pull out there credit card to pay for it. So if they opt in to install are software then there able to get access to that stuff for free. And of course advertisers want to be bale to have a targeted platform be able to get to consumers. Want to be able to have really reliable effective advertising and we were providing that for them.
So we were out there executing that business model, turns out what everybody felt like we were doing or fair enough people felt like we were doing was out there stomping on affiliate cookies and stealing affiliate links and you know things.
Interviewee: In retrospect how do you battle that? Know you got 20/20 hindsight what could you have done differently in that situation?
Andrew: Well I don’t think I have 20/20 hindsight that relates to this. I think I have better vision probably now and looking back then I did at the time. I guess what I say is…
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Interviewee: …what an awful feeling to work, work, work, work, work, and realize that you were shrinking or you were effectively remaining stagnant. But those were lessons that we learned and we would come in and say, “Why the hell did we not grow yesterday?” And we would look at the content and realize it wasn’t being forwarded. Or we would look at the technology and realize that something was broken and forced us to sort of just get better at what we did.
Andrew: Is it, um, what was I going to say? Uh, shoot, and I just lost the rhythm of the question, too. [laughter] Um. Advertisers, where did you get the advertisers? You have some big name advertisers. Did you need somebody with contacts? Was there something else?
Interviewee: No, no, it’s built over time, like everything else. There’s brands that I bring, hold on and used a friend of a contact to go and pitch four years ago until last week. It takes a long time to develop, again, it’s about trust, it’s about these brands believing that we’re relevant and we’re going to be around. And maybe the first time they get a proposal from us, they say, “that looks nice, but we’re going to work with the partners we know”. Maybe it takes ’till the tenth time we send them a proposal that they say, “we’ll give these guys a shot.” And then you have one chance to prove yourself and to deliver results for them, to run to campaign and be easy to work with and to run a campaign that’s efficient and they’re proud of. And if you do, you have an advertiser for a while. And then you need to consistently prove yourself again and again over each campaign that we run.
Andrew: Actually, that reminds me of the question that I had before. One of the reasons that I think you guys got a lot of press is because you were different. Everyone else was going blog, blog, blog, or website, website, website. You guys were only available by e-mail and it kind of became a purple cow, as Seth Goden [sp] says. True?
Interviewee: Yes, we were different. I think what was interesting is that, you know, Web 2.0 world, in a world where mobile, video, and there’s all these buzzwords. And there’s all these new technologies, and we were doing something and leveraging a technology that existed for an awfully long time. And I think that the un-sexiest of the technology was something that interested people. And once they got in and they realized that the content was very sexy, but we were delivering it in a way that was not of the moment, was something that people were sort of intrigued by.
Andrew: Yes, unsexy can be profitable. Um,…
Interviewee: But we have, I think, e-mail has got to become very sexy again.
Andrew: Yes it has. There are actually investors now saying, “bring us e-mail newsletter businesses. We see the money in this” You must be reading this all the time, because your name is mentioned in them a lot.
Interviewee: Yes, absolutely. The e-mail space has gotten hot. We feel like we’re largely responsible for the [heat] in the space right now, because Daily Candy did such a great job and everyone said, “well, that’s a great business. It’s one of a kind. It’s amazing they pulled that off. It’s not something that’s repeatable.” Well, we’ve come in and we’ve repeated it. And since we’ve repeated it, Daily Candy has sold for a big number, and so a bunch of people have sort of looked at this category , and said “maybe there’s more to it than we thought there was.” And I think that what’s really amazing about e-mail is that people take it for granted. It’s such a powerful tool. It’s part of every single person’s life. Every somewhat education working adult human being is on e-mail kind of all the time. And you talk to people, you say, “ oh, but you know, the next generation really doesn’t metric as well against e-mail. And they prefer social media, they prefer Twitter, blah, blah. You know, wait till these people get jobs. Because I’m not running my company’s communication on a Facebook page. E-mail is not going away any time soon. And I think people realize that. That it’s one of the pillars of communication in the universe right now. And the technology is getting better, not worse. And there’s right now, some breakthroughs with, sort of the re-introduction of video into e-mail, which is something that will become more prominent over time. And there are better tools for sending e-mail and for mass senders. And spam, while spam is not becoming less of an issue, good senders are having less trouble getting to the places they want to go, because there’s an industry built around it now, and there’s software and service providers who make that easier. And people are comfortable with e-mail. Um, Daily Candy and Thrillest and a few other brands have done a really good job conditioning people to understand the concept of signing up…
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Interviewee:Have done a really good job of conditioning people to understand the concept of signing up for e-mail and reading it each day and getting your content that way.
Andrew: I’ll give you another one, Ideal bytes, they did environment tips, I think, they sold to Disney, from what I hear, for 20 million dollars. What, all right, somebody is watching us here, they are listening to you, they are getting excited about e-mail and they say I want to jump in. What areas, what categories are still right?
Interviewee: This is the thing, It is very..we think about this all the time. We say what categories are still right, should we be producing a music e-mail, should we be producing sports e-mail etc, etc, etc. Yes, these categories do exist. The question is how scaleable they are. We can enter these categories in a heartbeat, we have the editorial team, we have a trusted voice, we have the delivery, we can go do this but the questions is how big the opportunities are in those categories.
Andrew: How do you figure this out. Somebody is listening to you and they want to find out an opportunity that is big enough, but not so big and so close to your business that they get trampled by you. How do you find it? How would you go about it?
Interviewee: I think you have to start at content. I think instead of saying ooh! music is still open, you should say what content do you want delivered to you in an e-mail each morning? What is going to be relevant to you as a consumer? What do you genuinely want? Not what you would be ok getting. What is it– we sort of rose because we desperately wanted a city guide that we could trust delivered to us. We wanted the product we created. Sort of exactly the product we created. I think you have to go content first. I always wrote content is king. That was the case for a while, then technology trumped in. But I think you know content remains key to getting people to interact with your stuff. You creat an e-mail/newsletter that is really relevant, that people love, you are gong to be able to find a way to monetise it, if you are smart enough and you surround yourself with smart enough people.
Andrew: People keep asking me about different cities. When will you be there. I am going to bring one of them John Chu. He and I were talking before the interview. He is aking when will you come to Vancouver Canada or anywhere Canada.
Interviewee: Good question, That is something that is definitely on our short list of discussion topics. We do not have a time frame for when we will come to Canada. I would love to be in Canada. One challenge that going international presents is that we need to not only have to hire a local editor but there is different sales people needed to go international, because for eg: the buyers that we work with right now or the brand managers for canadian club is not, is probably not in charge of dealing with the marketing in Canada. So we need to bring in a different person or people to work with these ad agencies and brand managers of these and so it is a little bit more of an investement. It doens’nt meant that it is not one we don’t want to make. It is something to think about. You know, for us there is a limited number of hours in the day. Even though we have more infrastructure here than we used to there are certain number of places we can go and focus our time and energy and I think if we try to do everything and spread ourselves too thin, we are going to do everything pretty well, and we have gotten where we are by doing one thing really well and so I want to make sure that as we expand that we can do whatever we do better than anybody else, while not sacrificing anything on sort of our core business or the business that we built today.
Andrew: All right, I think we are at the end of the hour here. Is there any advice for anyone who is getting into this space, anyone who is getting into.. building an internet company.
Interviewee: Well, I think, ..it is different advice depending on how far along you are. The advice …make sure whatever you are doing you are doing for the right reasons. You are creating content you are really proud of, that people really love and don’t just chase dollars, chase..create something that you are confortable putting your name on and then you can go out and whether you are selling it to an advertiser or to a consumer you can be 100% sort of comfortable and proud to say that it is yours and that is something your name is on, versus, you know, a lot of businesses that are out there that are probably not there for the right reasons.
Andrew: So let us leave it there. hang with me while I say goodbye to everyone who is watching us live there, including kristin winkler who keeps throwing out great quotes in live chat and everyone who is watching us in the recorded interview, most people will watch us or listen to us recorded. I want your feedback guys, so come back to mixergy and tell me what you thought of the interview. Give me feedback on your experience with Thrillist.