Defector Media, the sports and culture publication launched four years ago by former Deadspin writers, is an example of the mixed picture for the future of the media business. On the plus side, it is a profitable, employee-owned publication with 42,500 paying subscribers supporting a $4.6 million business. At the same time, the company saw revenue growth drop to 2.2% from 18% last year and 16% in 2022.

Defector's Jasper Wang joined me to discuss Defector’s plans to expand its ad revenue, the inevitable challenges of fast decisionmaking in an employee-owned business, the “lean stack” approach of outsourcing as many publishing and corporate functions as possible, and the growth of its Normal Gossip podcast and diversification of Defector’s audience.

Welcome to the rebooting show.

I'm Brian Morrissey.

very excited for this episode.

Return guest Jasper Wang.

Jasper is the COO.

You're still COO of Defector, right?

Do you guys have titles there?

honestly, in public, I just go by business guy these days.

guy.

I like it.

You know, I, I never know what to call myself.

Cause I feel like CEO is a little bit much.

Founder is worse.

I don't know.

I haven't figured it out yet.

but anyway, I've, I've talked with Jasper before.

I think Defector, it's just hit, you know, it's four years now.

And, you know, one of the things that's great now is there's this vogue for like building in public.

I don't know when, I think this is a pandemic thing, but people are usually cagey.

Unnecessarily, I feel like about, you know, the state of their businesses now.

I mean, as a reporter, I would always get these people who were talking like, Oh, we're up 27 percent and like some vague.

And they would never give me off what, you know, like, I'm like, okay.

And now it's moved on to Twitter where a lot of these building public guys and they're all guys, will like post like screenshots of their like, MR, but they don't like have the X axis.

It's all, but this is the real deal.

I mean, you guys go into quite a bit of detail.

I'm going to link to it in the show notes.

I, Maybe I'm a nerd, but I love, I love reading through this.

so Jasper, let's just start off.

Give me, give me your state of Defector because I think Defector is one of the more interesting new publications that are emerging and I think a lot more publications will emerge and we're already seeing it.

Defector like publications, we can talk about that.

But like, what is the state of it?

Yeah.

the state of defector is strong.

I mean, it's, it's, it's fine.

I think you're, you're for,

That's, that's strong in media.

Fine is strong.

it's, it's steady.

It's, you know, that I, in some ways that's the best thing you can be.

I think year four, year four, we're still a mainly subscription website.

it was a good retention year.

It was an okay acquisition year.

Okay.

It's like 4 million business.

Yeah.

Yeah, that's, that's about it.

you know, it depends on, you add in the merch, you add in the podcast, it's, you know, whatever, four and a half million dollar business.

The subscription part of it is 3.

8, you know, pushing 4 million.

it's just up, you know, one or 2 percent over last year.

And yeah, you know, that's great.

One or 2%, you hire another person, that works.

so things are very steady.

I think, you know, the big decision that we've made is we're going to, push into an advertising revenue stream, like meaningfully deliberately go into that, for the first time this coming year.

Which I'm, I'm sure you're happy about, you know, we talk about it every time we run into each other.

and yeah, I think that's just sort of a real recognition of our ambitions, humble as they may be, are still going to outpace the amount of growth that we're going to see in the smith from business.

And so, yeah, you know, there's two ways to make money in media and we basically only do one of the ways.

So let's, try the other way.

It's, not that, mind blown, you know, it's funny.

We were writing the annual report and the part of where we're talking about investing in an ad business originally, it was like twice that length.

And it's like, okay, we're like DOF protesting too much.

Like what, what are we explaining here?

Like, this is obvious and straightforward, a matter of fact.

Now it could have been one, one graph.

I would have

Yeah.

Right.

We're going to run ads.

Yeah.

one of the things that came, came to me with like when reading it and cause I went back to the previous years and it's kind of, maybe it's a little pointed question.

Like, have you hit a wall?

Right.

Because I mean, it's not one to 2 percent and with inflation at whatever it is now is, is actually a decline.

I remember during the, financial crisis, when they, they like brought you in, brought me into a room at like ad week and told me that my raise was going to be 1%, I was like, That's actually, you're taking money away from me.

I'm like, have you looked at what the inflation is?

That's actually, you're, you have to pay decrease.

but look, I mean, businesses do hit walls and like you said, you guys were pulling only, only one lever and.

You know, I mean, you had, I think, go back two years ago, when Defector was, I guess, 3 million business, I think it, it expanded about 20%.

And then it really slowed in year three.

And then it kind of, I don't know, did you hit a wall or is this, cause I think some of the things is you have to figure out like, did we hit a wall with our product you know, in the market, right.

Is this just, okay, this part of the business maybe is we can optimize it to a certain degree, but we have to, we have to expand into other, other areas like ads.

I mean, you could do a bunch of different other things, I think.

No, I think, I appreciate just the, the matter of fact, nature of your question, you know, I think it wouldn't, it wouldn't be unfair to characterize it that way.

Like, if I think back to, before we launched in 2020, we were doing estimates of what our market would look like the addressable market, and we said, we just did the back of the envelope math of how many people we know used to read deadspin and, you know, trying to think about what that conversion could look like.

And we said, eventually this could be a 30 to 40, 000 subscriber business.

And in some ways the blessing, and what now looks like a curse is that we got there fast.

Like we got to

It's a good news, bad news thing.

Yeah, like we got to 20, 000 paid subscribers before we had even published a single word and you know, my original modeling on this was like, okay, you do a couple thousand subscribers a month and then you get to year two and you've hit like 25, 000 subscribers and then you keep growing from there.

So it's just like we just front row front loaded it like we got to the people who we were hoping to get to.

Faster than, we, we could have hoped in a best case scenario.

So, you know, we're getting up to, we're in the low 40 thousands and it's just.

It's a hard business to be in.

We're definitely at that point where it's like each thousand additional subscribers is so much harder than the previous thousand and we get better.

We get more sophisticated and how we're bringing them in and engaging them and, you know, putting the right messaging in front of them, but it's just, it is harder.

So, you know, if, if you told me in five years, we were.

At 45, 000 subscribers, I'd be like, yeah, that totally makes sense.

You know, I hope it goes faster than that.

We'll keep learning and we'll keep trying to grow.

But, yeah, it's just, that's, that is, there's no, I don't think anybody in house is under any.

false ambitions or pretenses that like, ah, we will find the next gear in the next year that gets us back on the 20 percent year over year growth.

Yeah.

I think the good thing about having subscriptions as a base, right, is that, look, it's terrible if you get into churn spirals, right?

I mean, we've seen this at like, you know, I think there's a bit of one at the Washington Post that they've, they've steadied at this point.

But it's really bad if you get into a churn spiral.

but, you know, you're not.

You're not in that situation.

It's really at least going through the, the report.

What I took away from it is it's really about attracting new subscribers, right?

And, you know, there's a bunch of different factors there.

If you're looking at it, right?

Like, obviously, It's completely different.

Discovery is very different on the internet.

I don't even know if the open web will will even be talking about it because in like five years, I don't know if it'll exist.

Right.

But search and social.

I mean, you mentioned this in the report.

I mean, they're so flaky.

And the reality is, in this business, like, you have to get people involved.

Right.

Right.

Right.

In the front door, you got to get them exposed to the product and the way people find new sources of content these days, leave aside the homepage.

Like they need to know that they need to know that this is, is something for them.

And I always think that every brand, no matter its size really has an organic amount of demand for its product.

And you harvest that.

Not immediately, but you harvest that over the first couple, couple of years, you know, and then you have to find new sources of, of demand for the product you can optimize.

And that'll get, I always think optimization is a 20 percent thing, but you have to, you have to find sort of new sources, right?

Yeah.

And I think, you know, we are limited by our unwillingness to take outside money.

I mean, it's, it's the greatest thing in the world that we don't have to.

but if you're not going to take the outside money, then you, and we're only fueling growth by our own cashflow.

Then you can't do the big pivot, right?

We can't do the higher five people and grow out this, you know, new vertical that we're in or buy a bunch of ads that, you know, the payback period on it, like it's positive ROI, but over a three year cycle, like we just don't have the luxury of doing that.

And so, you know, like who's, who knows what, what the internal discussion is 24 months from now, but I don't see that coming in the, in the near future.

And as such, it is just.

You're trying to do incremental improvements on the subscription side.

Again, thankfully we can pull the levers on, display advertising, more podcasts, you know, there are other ways to go about, goosing revenue to, to hire more people and, you know, make this an even better product for what it is.

but it's just, there, there's no version of this.

That's like, ah, let's go out and be bold and, and, you know, do the high variance thing.

Like we just, we're not built for that.

That was never the intention.

And that's the trade off, right?

I mean, you've got so many, You got so many advantages bootstrapping something.

I think it's interesting these days because particularly in media, sort of bootstrapping is now it's like, yeah, that's your, it's the way to do it.

You know, whereas before people would dismiss it as, you know, Oh, you're trying to build a lifestyle business.

And that was a bad thing.

I never understood that.

but now it's kind of cool, but it comes with.

It's trade offs.

And, you know, one of them is, you can't over invest.

You can't make as big of a bet as, you know, we saw, look, a lot of the big bets that people made in that previous era turned out to be horrible bets.

So, like, maybe that, maybe that's actually a good thing, right?

but.

You still want to grow.

So one of the unique things with with defector is its ownership model because there's you know So there's how many was it like 40 worker owners.

I don't know you

Sorry.

We started with 19 and then we are at 26 right now.

Okay, so 26 and Are there there are other employees that are not owners or so all of it?

So is that so I'm interested in that model because you know when it was born like I I spent a couple of months intrigued by like web three and dowels and stuff, right?

I remember.

Yep.

I know like I look everyone else tries to deny it.

I didn't go back and delete the tweets.

I've got more courage than that.

Not much more, but slightly more.

but one of the things that I really was really attractive to me, and maybe it was the pandemic and not seeing enough people.

It was that.

You know, companies, the company organization just felt outdated.

It felt from like an industrial age.

And I, and I think particularly in media, anyone is, is, you know, been in it long enough.

There's a lot of divides.

A lot of the people who make the product have felt, I think kind of almost betrayed by the people who were owners and quote unquote, you know, the operators of the businesses.

And so, I thought it was a really interesting, you know, approach.

at the same time, having known journalists, I was like, Oh man, this could go, this could become Lord of the Flies.

Um, how, how hard is it?

Because you, you, you, you had an entire section in there that, You know, it was a little bit light on the details, but I have to admit, like, and it was about making a change to the editorial system, right?

And, you know, these kind of things like happen, I mean, I think Condé Nast, you know, basically, it's just, it just goes through reorg after reorg after reorg.

They've got another reorg, they call me.

And, you know, that's just the way these businesses go.

But like that kind of change.

you, you had this like very convoluted voting system and people had memos and then all this thing because it was not clear in the agreement and when does that kind of employee ownership become a liability versus an asset?

a business, I, again, I love it.

I love it.

I think everyone needs autonomy and ownership.

I think it's very important.

no, I, I, I think it's a, it's a totally fair question, and I, I'm trying to figure out how to answer this in a way that does not like, Oh, put us on a pedestal or, you know, put, put me at the center of it, I think the truth

I would go with, I would go with that.

it works because there just is a, a real sense of.

Trust among this group, you know, some of that is some people on this staff have worked together for 10 years.

And so, you know, you say, people say, you know, your coworkers are not your friends.

Well, at some point your coworkers are your friends.

And, you know, that like is an important part of thinking about how your culture is arranged.

Right.

And so.

You know, part of it is also this industry is so messed up that you can't be flippant, right?

Like you have to make it work.

Like, this is just how many other good jobs are there.

You just want to make this job as good as it can be.

And so you can't throw your hands up and, and say, ah, I'm, I'm, I'm not engaged.

Or you can't say, you know, I'm going to blow it up and walk out the door.

Like you just, you have to do the dirty work of, of going through it.

And yeah, it is, it's like, you know, Slow moving to like, if I, you know, we started talking about, Oh, what exactly were the editorial team changes?

It's all, it's boring.

but you know, it's slow and deliberate that we, we get there because we want everyone to feel bought in and they felt like they had, a say in this and, you know, is there a version of this that is Tom lay the editor in chief, snapped his fingers a couple of months ago and said, Hey, we're going to, we're going to do it this way.

I think.

By and large, that actually would have been fine, but you don't want the people thinking in their heads of, wait, is he allowed to do that?

And wait, shouldn't I have gotten a sense to a moment to say my piece about that?

And, yeah, you just, you got to be methodical about it.

You got to think about the meta process of, you know, How do we get everybody feeling like they're bought in?

Because, you know, ultimately like with the work, you have to feel committed to the company to feel like, you know, you're giving it your all.

And so look, is there a moment here where I can imagine a different company or our company at some point in the future, in a moment of crisis and feeling like we don't have time for this with just, you know, Have to make

well, that's the trade off, right?

Like, the trade off is that's friction.

I don't know, organizing, having some sort of memo writing, and, and voting, and rank choice, and there was like a lot of, like, details, whereas, you know, in a more hierarchical organization, yeah, it's just, you know, you just, you know, Come to them.

You have a meeting and you say this is the new system

Yeah, no.

Right.

And, and lots of

Monday it starts now.

Yeah.

And that's not like only bad bosses do that.

Like plenty of like people, bosses that people like to work with and, you know, our good managers would do that as well.

And so, you know, that's just like, this is the version of a company that we're running and.

I'm not saying it's foolproof.

It's just like that, that we've had the luxury to run it the way we want so far.

Yeah, and I think more organizations will move Particularly of this kind of size I mean, I wrote about the indiverse I don't know what to call it But like there's this I really feel like with the state of media now the most I, I find the most interesting conversations I have are not with people managing decline with, but people who are building new models and the ceilings might be lower for these new models.

to me, I used to, I was talking with someone the other day about this.

Like it used to be like with the venture funded, digital publishers that I always felt there was a wall around like 75 to a hundred million.

And now it's down to like 25 there's a lot of these new publications that are gathering around.

Now, maybe, you know, they will get around that and will keep incrementally growing.

But the reality is the market is the market and the ceiling is going to be lower for a lot of these businesses.

I think it's like probably higher than four for, for defector for sure.

But, you know, it's, It's just completely different.

And I think, you know, Having like a more consensual management approach in a way, is probably going to become more the norm for a lot of, of these businesses.

because I think you can build better products that way.

It's just the trade off and, you know, you have to like reel it back in.

I, I would the trade offs of.

Not being able to move as fast are real and at some point in the trade offs might not become worth it And you just sort of hope everyone sort of embraces that I want to get into some of the the details in there Because you know you guys always share a lot of details So one of the things is I just want to get back to distribution on the site So what are you doing then to to drive more?

You You know, distribution, because you need new people to find defector, right?

Like you, you, you've probably realized a lot of the people who were, who have ever logged into Kinja, you know,

Yeah.

It's funny where sometimes you run into one of those people in the wild where I'll see a tweet and it'll be like, Oh, I wonder where those dead spin people went and it's just like, what, how are you like on the internet musing about this in public and you, you have never kind of processed, which, you know, there's always going to be edge cases.

I, I think the distribution question is just, in some ways, this annual report is more in conversation with what other people are talking about in the media industry than any of the past ones, just because we're reaching this point where it's like, we're trying to figure out the exact same problem that other

people are, and we want to be a part of that conversation and try to learn and, and try to share our notes, you know, for us, it's like, Before the Elon Musk era of Twitter, and maybe even some amount before that, that, that change over in 2022, like Twitter was just still an excellent distribution vehicle, right?

Like you would, you could post a blog to Twitter.

That's just the blog.

And maybe, you know, the first two sentences of it and see, something that got 10, 000 likes and, you know, thousands of replies, you know, Like that, that could still happen off of a random blog that catches a wave.

And today that just does not happen.

Right?

Like, I can't think of the last blog that we saw just a ton of Twitter engagement of, and that is why.

you know, we, we got all these new page views, like part of it is, you know, algorithmic of, of what they're choosing to spread.

Part of it is just, you know, is our user base still on Twitter?

It's, you know, our, our sort of like, left leaning sports fans are largely.

Not largely, but many of whom are, are sort of swearing off Twitter.

So it just like, there's a, there's a cold there.

There's a gap that we're trying to figure out how to plug a little bit.

And, you know, we write about it in that annual report.

It's, it's, if, if you were occasionally previously hoping to hit home runs on Twitter, on Google news, now it's sort of like, what are the string of singles that we can get, right?

GIF links and.

you know, swap ad swaps and newsletters and, you know, this or that little thing that is more high effort.

And yeah, you probably get more qualified leads, but the top of the funnel is just so much narrower.

And my answer is like, I don't know.

You know, are, are we, are we cobbling together, you know, 50% of the good leads we would've had?

Three years ago, maybe, but I don't know where else to fill the gap there.

So is your funnel, is the funnel basically, I mean, I always think of the basic funnel is you use search and social, you know, to get people to the site and then, you know, most places we always like, then you try to get them on an email list and then you try to convert them to, to pay, right?

So, what does that look like?

Like, so you get, I think you said like a million, visits a month.

we get like one to one and a half million unique visitors a month.

And you know, the number of pages is some, some number above that.

And, and yeah, like that's just, most, most of those are bouncing ones, just the nature of the internet.

Some of those are bots.

but

then,

lot of, a lot of bots out there these days.

A lot of traffic is bots these days.

There are a lot of these bots out there and it's screwing up people's analytics.

So you do not have as many visitors as you think you do.

right.

Yes.

And so in some ways that makes me feel better because it's like the denominator is actually smaller than you think.

So your, your percentages are actually not as bad as you think on conversion.

So how many then are on the email list?

You said 200 to 300, 000.

That's a pretty broad.

yeah, I, I bet if I check this morning, it's, it'll be whatever, 270, 000, cause we, we go in and we purge it every once in a while to, you

And then 40, 000, and you converted 40 something thousand of those to paid, what, what am I, like, what is the, what's, what percentage is that?

15 percent of our, email lists are paid.

And then what is that on?

Has that remained consistent?

It has,

Because that's a really good conversion, I think.

Like, so I mean, that's the, that's the part that I wonder about the wall, right?

you know, do you need to fill, is, is the lever the top of the funnel?

Is it the middle of the funnel?

Or, I mean, you have to like work all levels, right?

you, you have to do all the optimization stuff to, to convert people who are already in your funnel.

I think a lot of times people go to that because it has the immediate impact.

But if you don't tend to the top and the middle of the funnel, You're going to, there's going to be not much to optimize because like the reality is, you know, nobody is opt, is no, very few people are going to convert 50 percent of their, you know, email list to, to paid.

yeah, I, it is the top of the funnel that we're, we're most worried about, you know, the, the like last conversion point, there are just, there are profiles of people now that, where we're like, okay, this is the type of person who, you know, only comes back when there's a deal.

Well, we're not going to be always on discount, but we know who we're targeting there.

You know, these are people who.

Turned off because of X, Y reason.

And when you, you know, send them a win back campaign, you know, these are people who are new subscribers and are likely to churn.

And so we have to get the engagement newsletter going and get them, you know, building a habit.

So that's like people who are near in.

We feel like we have a good grasp on it.

It's just like the, the true top of the funnel.

And I also say, to be totally honest, I don't think this is in the, in the annual report is we have a relatively older audience and so we, you know, not like Whatever, 50 somethings, but you know, the bulk of people

Hey,

turning 52 next month, Jasper.

look, I, I think the bulk of our people are 30 to 49.

Right.

So it's like, that's the, that's the sweet spot of people who can pay for, for, for media and have a good habits around that.

And, you know, like our shit.

but like, are we increasing the number of people who are in their twenties coming to the site and.

who are hopefully in a couple of years, you know, can afford to, to pay and, and buy into what we're doing.

I wouldn't say we're doing a great job of that.

Right.

And so how do you solve that?

I think that is largely a question of, the type of people we hire and the type of topics we ask them to, to, write about, but certainly there's a distribution question there of like meeting them where they are, where they're going to encounter our stuff.

And I don't have a well articulated strategy for how we're going to go about that.

Yeah.

I mean, is it, is it, but do you think like you need new audience segments, with new types of content or.

I mean, it's hard to understand what the sort of TAM is of a publication like this because, you know, I mean, you're not like, I mean, I think that's the whole thing of why it started.

Right?

I mean, it's not like, quote unquote, just sports.

Yeah, exactly.

And it might be the thing where like, it's a little bit muddled and we have to like figure out who we're trying to attract and get that message a little bit cleaner.

but yeah, you know, I think as an example, a place where we are getting some success and we need more success, is our normal gossip podcast audience.

So normal gossip, was started by Kelsey McKinney, one of our staff writers.

And the audience is largely 20 something young women who are not traditionally one of our core audiences on the website.

And this last year, it was like, how do we bring them into the fold?

and it's not as, you know, you don't want to be like, so simplistic to the point of insulting of like, ah, we have to like, get our whatever bachelor content in front of them.

Right.

Like, that's not, it's not the one to one, but it is like, okay, you like us for our podcast.

We'd like you to get into a habit of reading our stuff, you know, Kelsey, and Alex, our producer, our talented writers also.

So you might like their stuff and you know, how do we just do the hard work of bring you into the fold?

And we've done a pretty good job of that compared to what we were doing previously, which is nothing of, you know, getting them engaged with the newsletter, getting them to come visit the site.

and it's just, you know, sort of like building that habit with a different audience.

Yeah, so Normal Gossip is a very popular podcast.

right?

So what is the mix of monetization there?

Because podcasts, I like, obviously I'm doing, I do too, but, man, they can be a bear, they, they can be a bear to monetize, I've found, or maybe it's me cause it's super niche.

So I think it's big enough where it is the, the podcast ad machine.

Like it just fits in really cleanly.

So we're with Radiotopia PRX.

They sell our ads on that.

So that's just a check that shows up every month.

Okay.

I mean, it's a minimum revenue guarantee, so I don't even like read the check, like it's just, it's the same amount on the check.

Okay.

and, and so that just plugs in, you know, at a certain scale.

Hundreds of thousands of listeners.

It's just, you know, there's the, there's a well oiled machine there on, you know, getting good CPMs in the 20 range and, and, you know, whatever, just going forward with that, with all the ad, you know, we love progressive, and, and all the other things that you hear on podcasts.

So we're in that game.

and then it is like, how do we bring them to the website?

We do have a subscription product.

That is, you know, bonus episodes of, of the, the podcast, and that's 5 a month, so it's a little bit cheaper than our, our regular subscriptions.

and so, yeah, we've got a couple thousand subscribers on that front as well, and there, there's some upside there too,

But it seems like you're trying to, like, it seems like this was almost like a different, a different product.

Right?

And you're trying to build the connective tissue between, it's a successful product.

Right?

But like, you, you want to build the connective tissue to the main product that is making the majority of the money.

yes, that's right.

sort of a happenstance.

I mean, you know, like Kelsey was a, one of our staff writers and a co owner in the business.

And she said she wanted to work on this podcast and we said, sure, take a little bit of money and, and make a couple episodes.

And it, it just took off and you know, we got lucky.

You make your own luck.

You, you let people, you know, chase good ideas that they have, but yeah, it is.

If you were to build a sports and culture website from scratch, you would not say, This is the next adjacency that you would go into.

So it

But is,

it attracted a different audience segment?

I mean, I don't know what, like, how do you describe your, your, I don't know if it's a demographic, psychographic, I don't know what graphic it is.

yeah, I mean, the, our, our core subscription audience is 30 to 40 something largely men, largely white men, largely sort of like coastal, left leaning men.

who we love and we're glad to have them.

And the, this podcast audience is like 20 something young women, who are not necessarily interested in sports.

So you're, you're sort of building that connective tissue using what we already have of like, just the stuff that gets written on the website, you know, we're also hoping to launch more podcasts that sort of sit in the middle there.

like you, you take guests who are very popular on the podcast.

Yeah.

And you try to spin them out and give them some topic that they can have a podcast on and then introduce the audience to their writing.

And so, you know, you sort of see what the next step is.

We're just often limited by just, you know, like the heads that, like taking somebody off the field from blogging and then asking them to do a podcast is, you know, Yeah,

to build an audience and to monetize it.

And if you're bootstrapping again, that's a trade off because you want to have a, you want to basically have a podcast network because it spreads the cost.

There's just so much more advantages doing, doing just one podcast is really inefficient.

you know, and so you want to basically be able to have multiple just from everything.

I see.

there's just so many advantages in that.

But how did that did that inform, you know, talk to me about the ads.

I mean, I remember, you know, You and I talking and you're like, I'm not selling ads.

I'm not doing that.

You know, I love it personally.

Um, so you're going with buy sell ads to, you know, basically like, you know, outsourcing, you know, the ad sales and talk to me about that.

so we've previously occasionally had ads on the site.

We launched with Warby Parker in 2020 as our big site sponsor.

We've had a couple along the way, largely inbound.

I think there's, there were just two problems with this.

One is, we did not have like normal display ad.

just dimensions.

So we weren't like plugged into a network.

So you talk to a brand, you know, they have to do special creative for you.

You're not already given the analytics are used to.

So that was always a problem.

And then second is just like me personally.

And, the other member of our operations team, Sean, not naturally good at sales and don't have a lot of bandwidth to be out there.

Do like, you have to respect the expertise on that, right?

You can't like be a 10 percent sales guy and expect to, To, to get good outcomes.

And so I think this year is just, we're at a point where, again, we want to do more hiring.

We want to expand the audience.

We want to expand the ambitions of the journalism that we can produce, and it's just not going to come from the subscription revenue, right?

So let's just actually give it a go.

Let's find the right partner in the same way that we.

Have the right partner on basically everything else, you know, tech, legal, HR, like everything is outsourced, like find a good outsourced partner that can handle this for us.

And so we are really friendly with the folks at four Oh four media.

I think their journalism is fantastic.

I think, you know, the way they think about their business is also, just, you know, really rigorous and really sensible.

And.

They've had a really good experience with buy, sell ads.

And so that sort of recommendation in the independent media space is really important.

And so we started a conversation with them and yeah, we're going to go forward with them.

yeah.

This is like a big, I think, white space, if you will, opportunity because, yeah, I think about the, the original blogging days.

I mean, you guys are keeping the blog flame alive, right?

But in the original blogging days, there was, there was federated media.

Right?

And that's, that's how Mashable and TechCrunch, and GigaOM at the time, that's how they really got to, the escape philosophy.

Now they ended up all taking like venture capital and we can argue whether that was the right, decision, but like, you know, FM was really critical to, to those publications getting over the hump.

because they took, they took over not just the ad sales, but a lot of the publishing functions.

I think nowadays it's just a more mature, you know, ecosystem of people.

Like you can, you have partners, like who are, you've got Allie, which does lead, I guess it's lead by Allie, but you know, they do all your tech.

So you have no tech people, right.

And then you've got, some sort of PEO, but you have someone, you've got an HR

Yeah.

We have a outside PEO.

We have an outside HR partner.

We have outside bookkeepers, outside

Yeah.

and that's the like, you know, you have to, yeah, I don't know.

I just feel like the new, the new model is like it's going to be leaner, right?

And it's going to involve more outsourcing and, and fractional.

I don't see why people need to, you know, I always said in my last place, I'm like, we, seven people in finance do we really like really like this is not that big of a business.

I like them all but there's a lot of inefficiencies to small businesses that you.

You take on with the idea that, okay, well, we're going to grow into making this efficient.

And I always found that a strange thing because you're, you're taking on more costs because you can't spread them across a larger, you're just, you're fighting with two hands tied behind your back.

a hundred percent.

And I think the other part of this that there's a real cost to is just management.

So if I brought in an HR person and a bookkeeper, like they report to me, I am in charge of making sure they spend their time well and their work product, et cetera, in my relationship now with these outside partners, they're, they're positive relationships.

It's not like I'm just, you know, whatever, pointing at them and saying, just do that thing.

But like, ultimately I am not in charge of like, Their health insurance and, you know, their annual review, et cetera, et cetera.

I just email them and I say, I would like this please.

And if I don't get it, I email their boss and I say, Hey, I'm not getting it.

Like that's a much less, mentally taxing framework for me of working on that function.

And this, this, these are kind of like, I'm glad you guys addressed this in the, in the, in the report because they are quote unquote boring things, but they're incredibly important because they can become, they can overwhelm, you know, parts of the organization and, and keep you away from like, what, you What you're there doing, you know, I mean, I find this like just with myself.

I'm like, what am I doing here?

This has nothing to do with what I thought I was doing.

I recognize that you have to, you know, eat your vegetables and stuff.

But I'm like, if you're spending so much time, focus, and energy on these things that are not core functions of the business, well, you gotta, you gotta come up with a different approach.

no, I think that's right.

And so the, the, the ad side, in some ways, this is even better than the other outsource parts because, you know, ad people know to work on commission.

And so I don't have to pay them a monthly retainer.

I just, you know, they, they.

Get what they, they

And they're aligned, you know, they're aligned with the growth of the, the, of the business.

And I think that is, important, but just to stay on the boring thing, because I mean, you, you went into some you know, things like, you know, healthcare, insanity, tax, insanity.

Compliance, insanity.

I mean, running a small business will be the first, is the first step to like getting to becoming a hardcore Republican, you know, like this government's too big, I don't know.

I get these notices from Stripe that like, I may have exceeded a tax threshold in

Oh my God.

They started sending that last year.

If the Finns find me, I don't, I'm just, I'll just plead ignorance.

I'm like, I am not dealing with the Finnish tax and regulatory.

it's so funny you bring that up.

Cause that was definitely an independent media moment of crisis.

When Stripe decided they were going to start sending those emails where over the

I just pretend I didn't see them.

I pretend I didn't see them.

And that's what everybody has agreed to actually.

And, you know, I've asked, I've actually asked lawyers about it.

It's like, you know, you should just pretend you didn't see it.

Yeah.

That was the original approach to GDPR.

I said, I said, listen, we're going to violate the, the, the letter of this law, but we have to make sure that we, Can show that we tried to comply it or at least like, you know, have plausible deniability.

but yeah, no, but talk to me about that because I mean, you're, you're, these, these are things that weigh down these businesses.

I mean, your health care costs went up dramatically and that's like, oh, wasn't really expecting that.

Yeah.

I think, you know, people say that, America is one of the most entrepreneurial countries in the world.

I, I mean, I'm sure that's true.

I, you know, on what basis, I don't know, but I think sometimes people mean it Oh, unlike in other countries where, you know, the local mob is going to come and break your legs.

If you try to start a business, anybody can start a business in America.

And like, that's sort of true, but there are just a lot of hoops to, to jump through.

If you're going to do it right and do it well.

And look, I'm not, I often tell, People who are coming to me of like, Oh, they're so worried about, you know, registrations and whatever.

I'm like, the IRS is not coming after you.

Don't worry.

It's going to take a little bit before they are going to come

I think they, I really think that the government sort of assumes that any business in its first like few years is absolutely going to break the law.

Totally.

Yes.

And I think we, you know, both as a matter of starting with 19 people.

So it's not even necessarily that, like the government, like we're worried about the government.

It's just like, these are 19 people who somebody over the next couple of months is going to, you know, go in to try to get a mortgage or a car loan.

And you have to like have documentation, et cetera.

So we sort of started on a place where you just have to do this documentation.

But, but yeah, it's, it's, there are just some, there are weeks where I get bogged down in a thing that the previous week I had no knowledge that we would even have to do that.

And now I have to chase down all, and, and, you know, it's also the, the, the flip side of having all this outsource stuff, I now have to go.

Ask our HR person to talk to our legal person, to talk to our bookkeeper, to talk to the person who, you know, registered us in New York to figure out what is the ID number that we need in order to go and feed it to Ohio.

and so I, I, I honestly, I do say to people when they're like, Hey, we want to start our own bookkeeping.

Independent media, publication.

I'm like, try to live in as few States as possible.

Like the five of you don't live in five different States.

All right.

Pick five people who live a couple blocks down from you.

You're all in the same municipality.

You only have to file the taxes once.

Yeah, because different states have different requirements, and this is like one of those nuances of when people are like, yeah, work from anywhere.

Well, you're just adding a ton of administrative, costs and costs come in like financial costs, but costs come in just, you know, energy, time, focus, and just headaches.

Yeah.

No, a hundred percent.

I think people, people, when they asked me to describe, my job, sometimes they're like, Oh, it seems so cool.

Like, you know, I hear you on podcasts and, you know, you're negotiating deals and, you know, yes, sometimes that's like 5 percent of my day, like 50 percent of my day is like nitty gritty.

Answering customer service, emails,

I like the call out to the Ohio like, um,

Yeah,

administrative person or whatever

for,

that, that was like a phone call.

I made like three times a week for like six weeks until I got through to somebody who did not just say, you know, you're, you're out of luck.

Like that was a person who actually tried to help me.

Figure out what was wrong that I could not get access to my account.

And so I'm, I'm grateful to her, but you know, that's the sort of thing that just pops up a couple of times a year where I'm like, this is, I can't believe I had to spend my day doing this.

I think it needs to change really, because I mean, if you look at the number of small businesses that have been formed since the pandemic, it's up tremendously.

Right.

And I think that is going to be, it's always like, you know, the, the, the engine of the American economy, but it really is going to be, it's going to be so much more common.

And unfortunately, our great.

System here, despite being supposedly so entrepreneur friendly in quotes, really works against like small businesses.

I mean, first and foremost in the health care,

The health insurance part of it is just like the number of people I've talked to who are like, I really want to start something on my own, but you know, my spouse or my child needs to be on a very good health insurance and I'm not sure I can get it on my state exchange.

I'm like, I don't know.

I think that's right.

And I think that this is not the moment for you.

Like I, I would love to be more supportive and if you decide to do it, I will be supportive, but.

Like that's, that's a dangerous game.

I mean, not to get political, but like the idea that, the employer is responsible for apportioning out health care, it makes zero sense.

It might have made sense when, you know, the whole town was going down to the factory to work.

this makes zero sense.

Not in.

Not in an economy that is moving to being way more flexible, it's going to have, you know, different kinds of working.

you know, there's so many more fractional people out there.

There's just, it doesn't make, it never made sense.

And it is go, I think this is actually going to be the thing that is going to actually change how we, because the exchange is not, it's, it's a And, it's, it, it really does weigh down.

And it keeps businesses, honestly, from expanding.

I mean, I've kind of held off on having full time employees, honestly, for that reason.

because, not just the cost, but just, I'm like, Oh my God, I'm going to be administering, health care.

I don't really want to do this.

So, but talk to me like, and we'll wrap up soon, but I want to talk about some of the tactical things you've done, particularly with driving subscription.

So you talked a lot about the reg wall.

Explain the sort of what you were what you guys have been trying to do with, with the reg wall and your experience

Yeah.

So when we first started in 2010, 2020, 2010, 2020, and for a couple of years after, we just had a very basic, experience.

So you would get two articles, free and clear.

You might get a pop up that says, Hey, consider giving us your email address, but you can just X out of that.

So then you could read two articles.

Then we asked you to give us your actual email address.

And then you got a couple more articles and then you hit the hard wall.

So then you're like, okay, you're done for the month, unless you, you know, go into incognito or whatever.

You can never stop people from getting more

people really want it, they'll, they'll get it.

So that was just what it was.

And, we've always been trying to tweak that, you know, change the messaging, offer a promotion when we're running a promotion, et cetera, of that experience of hitting a wall.

but this year we just experimented more with how many articles you get to see, what is the experience, what do you hit with?

I think part of that is just, you know, it's nice, it's, there's value in just being unpredictable in the same way that like, you know, the New York Times or the Wall Street Journal have a lot of intelligence in their walls of like, What is free, what is not, what gives you a pop up under what message, et

They've like a hundred people in a data science team.

Like, I

Yes, exactly.

So they're, they, they, they get, you know, smart randomness and we get just like random randomness.

people don't know the difference.

exactly.

Right.

So, yeah, we sort of just go between like, all right.

You just get free and clear.

You get no pop ups.

You just, you just read however many blogs you want for a couple of blogs.

And then we'll, we'll alternate that.

And sometimes flip all the way to the other side, which is like hard red wall.

You can't read anything without giving us an email address.

Sometimes you can't read anything without, actually giving us money.

And so just that level of just swinging around, being a little bit more unpredictable, it actually generates 25 percent more emails in a given month, rather than if you were just, Stably doing the same thing for four weeks at a time.

Oh, that's interesting.

that's a good point.

one other thing is, monthly versus annual, right?

This is always, and I don't know how, how much you guys get into like the decoy offers and whatnot, but like, you know, of, of all the optimization things, I find this one sort of the most fun.

interesting, right?

Because, anyone who visits one of, you know, subscription site, it's like, you know, they're, they're always, there's like a basic thing of like, you know, you're gonna, you're gonna make one like bigger and pop out because that's the one you want people to choose.

And sometimes, At least we, in my last job, we found that like, we didn't, we didn't do monthly, because that didn't make sense.

But like, for us, quarterly was actually better than, from an LTV perspective, than annual.

Because, We were converting 85, something like 85 percent of people ended up taking out a, an annual after like one or two cycles.

So the amount of money that we made, particularly the first year was just far higher than if they took a, an annual subscription.

So we were trying to push people into quarterly for a little while, but explain what you're sort of seeing with monthly versus annual.

Yeah.

So our, we'll just use one tier of product.

So it's 8 a month or 79 a year.

So you're saving, if you go annual, you're saving 16%.

However, so we're getting 16 percent less revenue, assuming you were going to pay us 12 times.

However, the 12 times the monthly subscriber.

Ends up having 12 times that they can leave as opposed to one time they can leave at the end.

And Stripe charges 2.

9 percent plus 30 cents per transaction.

So you're getting that 30 cents spread out across 12 times.

So once you factor those two things together, actually an annual subscriber is worth, call it 20 percent more than us, than a monthly subscriber.

yeah.

Okay.

So all things being equal, you would push people towards being an annual subscriber.

However.

you can't just compare it, like all things being equal.

There are certain types of people who are never going to pay you annually.

And so you don't want to push the annual in their face such that they're like, well, I'm never going to buy it.

They're

because it's just, it's just right.

It's like, do you want, you might get zero revenue.

I mean, this is always the hard sort of thing.

It's like, yeah, it might be annoying because you're getting far less revenue, but like some people, and it's hard to understand which ones, they just simply will not do the annual.

Yes.

Yes.

Right.

And so the, what we're, what we're musing on in the annual report is that our, we can just pick one as the default versus the other.

And no surprise when you pick.

Like whatever you have as the default that ends up getting more traction, right?

So it's just the, the months where we're, we're pushing the monthly, we get more monthly, the ones that were, were months where we're pushing the annual, we get more annual, the problem of course, being that we don't know the counterfactual of how many people are bouncing off when they see the annual offer, because they wanted a monthly offer.

And so we don't have the ability to AB test that like in this month of like One person goes at one direction and the next person goes in the other direction.

So we're just like the part of the good thing about the annual report is we can just ask questions and have experts reach out to us.

And so actually, yesterday or two days ago, a data scientist from meta from Facebook email to be like, Hey, have you thought about like doing it this way?

And one of the recommendation was like, Oh, well you like build this like technical software.

It's like, okay, well, that's not, It's not what we're doing, but like, thank you for the other suggestions around, like, how do you think about like data that is rigorous and you can actually, take insights from.

And so, yeah, you know, that's cool.

what, what percentage are annual versus like monthly?

I think if you looked across the entire 40 some odd thousand, it's, it's something like 70 percent are all on annual.

So the mix is very strong to be on annual, but yeah, you know, you'd rather have the monthly people who are, if, if they're never going to buy an annual subscription, you'd rather have them here on a monthly subscription.

And so how do we figure out who we're missing from that?

Final thing is on discounting, right?

I mean, I, the way I look at it, it's like, you know, you're going to have your organic conversions and you're, you're, you have to like, the product is going to drive Most of them, right.

And then you get the optimization and you can optimize whether it's the decoy offer, then you have to pull all these levers and it's, it's a very much a details business.

Right.

And then there's what I would call like pulses.

Right.

And those are, those are the cyber Monday, black Friday, whatever.

Like, you know, and.

And it's, they're very tempting, right?

Because they do drive a lot of volume.

And it's nice.

It's nice to see that, right?

But nobody wants to be GAP at the end of the day.

you know, and I, by that I mean GAP's always 50 percent off.

anyone who's paying full, it's like, why?

It's always 50 percent off.

And we've seen like a lot of, you know, A lot of people have gone, a lot of publications have gone down the route of like steep discounting to get credit cards on file and then maybe stay quiet and just hope the sleepers stay on your subscription list.

But talk to me about like what you found with, with discounting and, and sort of your, I don't know, your approach to it.

Yeah.

So we only run discounting about once a year.

It could be two or three times a year and still feel like we're, you know, within what we're trying to accomplish.

But right now we, we do it once a year.

We offer the first month for a dollar, and then we convert you to a regular price.

And, you know, we do, I think we do a pretty decent job of like, it's not just fine print.

You know, this is what you're signing up for really.

And truly, you know, what you're going to get charged the next time you get charged.

And each time we do it.

Yeah.

It's like, you just know, there was a cohort of people out there who will only sign up if they get a deal.

So they get that email and they're like, I'm in, this is what I've been waiting for.

and then some of those people turn out and they wait for the next deal.

You can't help it.

That that's the behavior.

You definitely don't want to be like, to your point about the gap, where it's not even that we're not getting maximized value.

It's that you're off your existing subscribers who pay full price.

Right?

Like you don't want them to feel like suckers.

So it's just this, it's this little dance of, and sometimes people will email us and be like, well, I paid full price.

Like, can I get a, A refund to reflect the discount.

It's like, Oh, that's not really what we're, that's not really how this works.

I just say it's not technically.

Possible.

right.

Yes.

so I think we're accomplishing that of, of yes.

Capturing the people whose behavior is just different, but not doing it so often that, you know, you're, you're either undercutting yourself or you're pissing off your existing subscribers, but it's much more art than science of.

Of how we're, how we're doing it, you know, for us, the nice thing is we're just not actually giving off up that much value, like giving you a dollar for your first month and then converting you to regular price.

We're actually only losing the 7 on a full year's worth of a subscription.

So we're not undercutting ourselves too much.

we've talked about doing this a little bit more often, you know, pegging it to a holiday or, you know, a sports season that's coming up and just driving more subscriptions that way.

I think you might see us in this next year, run it, you know, a winter sale and a summer sale as opposed to just a summer sale, but.

I don't know that we're going to go, you know, all the way into once a month or once a quarter.

You know, part of this is also just informed by what I hear from other people.

I mean, I remember the dinner that you hosted, at a Loring place, however long ago that was, was it Bloomberg that said, you know, they're just like making a strategy.

They're not doing the thing of like 1 for your first quarter

Well, Bloomberg is awesome.

Yeah.

I think it was Julia who made that point.

Like, I think that's, that's, you know, they have such a, a high end product and also like pricing, you know, like, cause going from a dollar to, to, would you say 8?

You know, going from a dollar to 8, I guess, percentage wise, it's quite a jump, but like, come on, it's in New York, it's a, it's a cup of coffee these days.

but, for Bloomberg going from, you know, a dollar to, you know, their subscription is, is hundreds of dollars is, you know, that's a jolt.

and.

I think, you know, when you're in that, it can send the wrong brand message again.

It doesn't show up in some spreadsheet, right?

But if you're, again, I go back to Gap, you know, it's like when you're hanging that 50 percent discount sign in the window all the time, well, of course people are going to think that you're not high end, you know?

And so, I don't know.

I mean, that's a particular, but it is definitely a risk

Yeah, but you know, it's a sort of, for sure it's not one to one, but those are the sort of conversations where it's like, you know, everyone's just sort of trying to model through together.

I will say, if I will just say one thing that might be actually useful for somebody thinking about this is, We tend, we tend when we're on discount to communicate that via email.

And we try to figure out what are the cohorts that we're actually targeting with what message here.

And the important part of that is you are not putting it on social media and attracting all the people.

By the way, the people who follow you on social media are people who are already your subscribers.

So if you put it on social media.

There's just more of a chance that, you know, you're not actually getting in front of the people you want and people are gonna be pissed off that they didn't get a deal.

So we do try to keep that largely in the, the email marketing part.

I think, and this is not to gas you up, but I think you have the best email marketing.

Because it's like written from like human beings and I hope it I hope you've tested it I hope it works Like I would be it would be terrible if you tested it if you a be tested it and like you found that actually no Just a hard sell email works better than hearing from a writer about why they should subscribe

no, I, I appreciate you saying that.

And I, I, you know, you're a writer, like it's the writerly part of it, but, we, you know, what we do say is like, not every marketing email is for every person.

And so, yeah, sometimes we just send it out and it, it is the like punchy copy of like.

You know, 1 for your first month and that's it.

But then we also will go long where, you know, one time Dave McKenna.

you know, long time Washington, reporter wrote a, I think it was like 600 word story basically as an appeal email of like, you know, when he was, a paper boy, you know, distributing the Washington post and he never could have imagined being here.

And when it got submitted, I was like, this is a lovely story.

I'm going to send it out as a

it work?

Did it work?

Amazing.

Worked

good.

I was a paperboy.

I gotta try this

Yeah.

Like many people who not only did they subscribe, they wrote back to say, I subscribe because of this story and I, I love this story and, and, you know, do your marketing this way.

And I'm sure there were many, many people whose eyes glossed over immediately, but like, it just wasn't for them.

You know, we'll get them with a different marketing message as long as not too many of them unsubscribed after getting that, like that's all fine.

We're all testing and learning.

Got it.

Okay.

Jasper.

Thank you so much.

I thought this was very useful.

There's a lot of really good stuff in there.

I think people are going to find it very valuable,

Good.

I'm glad.

Always good to talk to you.

You know, I appreciate you, you know, pushing my thinking both on Mike and, you know, when we run into each other, otherwise,

All right.

Cool.

Thanks Jasper.

thanks.