← Channels with Peter Kafka
Channels with Peter Kafka
Substack Wants To Become A Social Network; Beehiiv Wants To Stay Invisible
00:42:01
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- [00:01]
A
What does the ideal presidential candidate look like? Donald Trump has shown you that to be not boring, to be a showman, can get you really, really far in this environment. I'm Preet Bharara, and this week the Atlantic staff writer Mark Leibovich joins me to discuss the latest chaos out of Washington and what to expect from the upcoming elections. The episode is out now. Search and Follow Stay tuned with Preet Wherever you get your podcasts. From the Vox Media Podcast network, this is Channels with Peter Kafka. That is me. I'm also chief correspondent at Business Insider, and today we are talking about how to make money writing newsletters and also why making money writing newsletters doesn't necessarily mean Substack. My guest is Tyler Denk. He is the CEO of Beehive, and he would very much like me not to call Beehive a Substack rival. But that is how lots of people in my world think about Beyhive. And that's why we saw a bunch of stories in recent months about prominent Substack writers leaving that company and heading to Beehive. And if you think the world isn't big enough for multiple news platforms, well, I would have thought so too. In fact, I didn't think the world was really big enough for a substack way back in 2017. But turns out there are lots of companies that will help you send emails out. And when it comes to Substack versus Beehive, there's one truly meaningful difference. I think that is that Substack now sees itself as a platform like Twitter or Facebook. It wants you to engage with its content in its own walled garden. Beehive, Denk says, just wants to be your service provider. Doesn't really care if you never realize your favorite newsletter was created using Beehive. There's a lot more in here. Denk talks about the work he did building newsletters at Morning Brew and how that helped him build his new company, why he thinks we're nowhere near peak newsletter, and why he's a startup CEO who is over the moon about what he thinks AI can do for his company. So let's get straight to it. Here is me talking to Beehive CEO Tyler Denk. I'm here with Tyler Denk. He is the co founder and CEO of Beehive. Welcome Tyler.
- [02:18]
B
Thanks for having me on
- [02:21]
A
because you're on channels. I think a larger percentage than normal of any given audience knows what Beehive is or has heard of Beehive. I still think the majority of my audience and most People in the world don't know what beehive is. What is a one sentence summary of beehive? Can you do one sentence?
- [02:38]
B
Me? Yeah. It's hard. This actually might be the hardest question of the entire interview, to be honest. We are building the operating system for content creators.
- [02:48]
A
Okay, I'm going to try translating.
- [02:50]
B
Yeah, try to poke at that, because I did that right off the cuff. I saw it differently.
- [02:55]
A
It was good. I would say you're in the newsletter business, and if I had two sentences like substack, you're trying to provide creators with a way to send emails and monetize them. Is that fair?
- [03:09]
B
If you were to ask me that question three or two years ago, I would typically answer with, we are a newsletter platform. My background. I was the second employee at Morning Brew. My co founders were early employees at Morning Brew. Our initial product was to be able to create, distribute and monetize newsletters. And I still think we do that better than anyone. We have since, though, launched podcasts, we launched community, we launched digital products, and so we are evolving beyond just the newsletter. I'd say newsletter is still our bread and butter and the court of everything that we do, but that's why I think we have matured to more of a operating system for content creators. Is what I threw out there. Off the cuff.
- [03:48]
A
Yeah, and that part makes sense because just like, I'm not going to compare you to Substack for the entire entirety of this interview, but just like they started with newsletters and they've expanded and they want to do more stuff that makes sense, it also makes sense. I think you guys have raised like 50 million bucks in venture capital, which on the one hand is nothing these days in the AI days of 2026, but it's still money. And presumably the people who gave you that money are expecting you to do than just build a newsletter platform. You started to get to a question I didn't ask you, which is to explain how you got here. So let's go there now. You founded this company in 2021. What were you doing prior to that?
- [04:25]
B
Yeah, so, yeah, I alluded to this a little bit earlier. I joined morning brew in 2017 as the second employee and that was everything. Morning Brew is a daily email newsletter, typically covering business news, but they now have different verticals and I think they would actually be upset for me calling them a newsletter business now as well. They've also expanded into a bun of different media.
- [04:45]
A
Yeah, yeah. They are owned by Axel Springer, which owns Business Insider, which I work for. And if you want to get an Axel Springer executive excited, ask them about Morning Brew. They love this business. That's so.
- [04:58]
B
Yeah.
- [04:59]
A
Or maybe a tip for other budding or for other media reporters, look into the Morning Brew business. People are very excited about it here. But back to your story.
- [05:07]
B
Yeah. So back then I joined as the only engineer and I ran growth and basically built the internal infrastructure. So what that means is the writers were before me copy and pasting the emails into an HTML template that's not very scalable. We built our own content management system that the writers used to create the newsletter. We monetize with ads. And rather than dealing with the 40 or 50 different ad placements that go live on any given week, we built our own proprietary ad management platform that would interface with advertisers, integrate with the newsletter. Kind of made that one well oiled machine. And then I built all of the different funnels. I ran Facebook ads for us. I helped scale us to 4 million readers. Long story short, I was there for three and a half years and we took the newsletter from 100,000 subscribers to over 4 million.
- [05:54]
A
And so you left that company and you said a lot of people do this, right? They work on one thing, one place, and they go, I want to do a better, bigger version of this for my next thing. Which kind of makes sense. But in this case I would think that it's one thing to build a successful email product for a company, another thing to say, I think there's a business building email products for lots of people. And just to put my cards on the table, I said I wouldn't do all substack references here, but I wrote either the first or one of the first articles about Substack when they launched back in 2017. And my thought was, oh, it seems cool that they've built this service that allows you to build your own newsletter service like Ben Thompson does, but there can't be that many people who want to use a service like that and there can't be many people who want to subscribe to newsletters. And I was clearly wrong on both counts. But what was your thinking going into this?
- [06:48]
B
Yeah, you and all of our seed investors, our would be seed investors who turned us down, had the same hypothesis. So yeah, I think that was probably pretty commonly held opinion at the time and still maybe to this day, I think from our pov as engineers, me, my two co founders, it's cool to build internal tech for the 40 employees that we had. I think most engineers want people, millions of people to touch the software that we're building. So I think that there was a drive to want to take what we've built and apply it much larger scale. The thing about email is we were sending to 4 million people every day. We'd probably receive a few hundred responses every week, specifically about the referral program, the email template, the design, the growth strategy. Basically people that were either journalists at other orgs, newsletter operators at another company, or had a newsletter company of some sort and they wanted to know how was Morning Brew achieving? The style, the growth, the success, the revenue. And a lot of those emails got forwarded to me and anything tech related, the answer is like, I knew exactly how to build it, I'm the one who built it, but I can't explain everything, but there was a large enough of a volume of those requests coming in where that really was the impetus for what we had built at Morning Brew is clearly special. It solves a problem.
- [08:06]
A
Our market research is showing up in our inbox, people saying, I want to
- [08:09]
B
use your product totally. And so I actually pitched it to Alex and Austin. I didn't know that they were talking to Business Insider about an acquisition. And I was like, I think what we are already have the distribution of this 4 million person email list to say you can use the same software that we are using. So I kind of pitched Beehive back within the Morning Brew days. And they to their credit, said no, because I think it would have been a distraction from what they were doing or maybe not to their credit.
- [08:33]
A
We already have a successful business. We don't need to build a tools business.
- [08:36]
B
Totally. And so that was really the impetus before for me to see that this was a need in the market. And then, yeah, I mean that's really kind of what set the stage for continuing to build this on our own.
- [08:47]
A
So you launched in 2021?
- [08:49]
B
Yeah, I did a quick like 10 month stint at YouTube in between leaving Morning Brew and launching Beehive full time.
- [08:55]
A
Good platform experience. So when you launched in 2021, who did you think your customers were going to be? And in 2026, how has that changed from your original conception?
- [09:07]
B
Yeah, it's a great question. At that time it was newsletter, native media company, is there there was a Morning Brew for X, Morning Brew for Crypto, Morning Brew for AI, Morning Brew for politics. Like had the brand reputation in the early days when we didn't have that sophisticated of a product. It was the credibility that this was the Early Morning Brew team that was on all of our marketing web pages. So it was Anyone who tried to emulate the Morning Brew success and build a newsletter, whether it was an internal newsletter at a company or a hyperscale newsletter that wanted to be like the Hustle, the skim Axios Morning Brew. That's where we started.
- [09:45]
A
Did it. Were you thinking, oh, there's, there are going to be some people who want to build a morning brew for X. You know, a media company built around a newsletter. I think you just said it. And there will also be people who want to create newsletters who aren't trying to create a business out of that. They just need to have a newsletter provider because they need to distribute newsletters for other reasons than making money. How did you think that would, that that that pie chart would split up between like professional email creators versus people who did it as part of something else?
- [10:18]
B
I think we actually approach it from the lens of, from my experience of building on mailchimp and Campaign Monitor and Sail through, it was very clear to me that all of these ESPs were built for marketing and commerce primarily. Like when Sail through would send their updated features of tracking volume of purchase order, I go, that's awesome. That has nothing to do with our business at all. And you aren't building for media or journalism or content creators at large. You're building primarily for e commerce. And when you go down the line from Klaviyo, constant contact, et cetera, I actually viewed the competitive set as there's already billions of dollars in revenue sitting in these ESP platforms that are building software for the right customer for them. But a lot of these media companies, newsletter operators, journalists, were using the wrong tool for them. And so that was really the opportunity. We've obviously had plenty of people who are starting as hobbyists who have grown and built a business or a good side project. But we aren't really in the business of convinc someone to go from 0 to 1. We want people who are already sending on these large platforms that were misclassified that we know we can do media tech better.
- [11:29]
A
So this was always built as what we now call the creator economy. This was for people who want to do this for a living or something close to a living. You'll be that tool set for them.
- [11:38]
B
And over time, with maturation, we've always built enterprise level functionality, right? Like we take a lot of our customers from the campaign monitors and sell throughs of the world. And in doing that and bringing in democratizing enterprise level software for this cohort, we've been able to attract a lot of Newsweek Time techcrunch like larger media companies that I do think fit that bucket of they were using a klaviyo to send content based newsletters from. That doesn't give you any of the audience insights or flexibility that you would expect as a publisher. So yeah, to answer your question, yes, I think we started primarily on like the long tail of content creators. Everyone from hobbyists to starting a side project to wanting to build Morning Brew for Axe and have matured to a place where large publishers actually thrive with our software because we offer enterprise level features at a fraction of the cost with the product velocity and everything else that we're doing, we're really trying to push the boundaries of what's possible with this today.
- [12:39]
A
To explain what your business is today, you tell me if these stats are still right. I saw 40,000 users, meaning people who are using your tools to create newsletters. 15,000 of them them are paying you for help doing that. Those people made $19 million in revenue last year. You think that's going to double this year? Did I get all that right?
- [12:59]
B
I think Directionally we're about 55,000 to 60,000 active users on the platform. These are people who are actively sending about 15 to 20,000 paying customers right now. I think we just surpassed $60 million paid out all time. And so that is from the ad. Basically you can make money one of three, actually more than that now. The ad network primarily. So we have an ad network with premium sponsors. Nike, Netflix, Roku, HubSpot, et cetera. The thesis there that was actually our strongest thesis when we started the company was I saw firsthand how Morning Brew monetized. We had a 20 person brand partnership team that's in market, talking to agencies, talking to different businesses to get them to sponsor the newsletter. I knew that a lot of these content creators and journalists who are going independent, they might be the best in the world at writing about sports or politics, but they have no business or interest building brand partnerships with Nike and HubSpot to monetize their newsletter. I think that's where Substack was very opinionated in saying the proper way to monetize your content on the Internet is paid subscription.
- [13:58]
A
For years that way they were insistent on that.
- [14:01]
B
And I think direction that is a stance to take. But for the past several decades there's been, you know, the tried and true way of generating revenue on the Internet has been ads. And Morning Brew is a success story. Axios was a success story. There's a lot of these businesses. You built very large newsletter first. Businesses that were Ads based. But the gap in the market was most of those content creators didn't have the processes or connections to do brand partnerships. So we have a Beehive ad network. We pay out over a million dollars every single month. That's one of the primary ways that our publishers and content creators get paid. Essentially what YouTube did for video, we want to do for newsletters now and eventually for podcast.
- [14:42]
A
The Substack guys have now come around and said, actually, maybe ads aren't a bad thing after all. And they're basically in the process of building up an ad business. You've had one from the start. One other distinction I think is important. There have been a bunch of stories about people leaving Substack to go to Beehive. I think those numbers are probably smaller than those headlines suggest. But there are real differences in your company. I think the biggest one is it seems to me that Substack is more has this notion that they are going to become a platform themselves. That you will come to the Substack app or the equivalent to engage with Substack content, to read articles, to listen to stuff and then they have their own sort of like Twitter like service where you're supposed to comment about that stuff. I understand why they want to build one of those. I understand why some of their creators would want that. I don't understand why a regular person would use it. But you guys do not seem interested in that. You're not trying to build a hub at the moment.
- [15:39]
B
Yeah, I think we're going two totally different directions there. I think you are correct in that they want to be the destination, they want to be the aggregator, they want to be the social platform. We usually liken it to Amazon versus Shopify. Like I very much see them as the Amazon of the industry where Amazon has millions of third party sellers. But you go to the Amazon.com app or website, it shows up in an Amazon box like they are intermediating between the sellers and the customers. We've positioned ourselves very much as the Shopify. We want to be tools and infrastructure that sits in the background mostly invisible. You land on these different content creators or publishers, website or newsletter and have no idea that Beehive is actually the ones powering it. The same way that you would land on different merchant websites and have no idea that Shopify.
- [16:24]
A
You want to be invisible.
- [16:26]
B
Yes.
- [16:26]
A
You want most people who consume Beehive content to not know Beehive exists.
- [16:31]
B
Because we don't even call it Beehive content. Right. Like it is Oliver Darcy at status like we want status to be status. We don't want Oliver to be a beehiver or substacker. Like it's his brand that he's building. And I think that's a really important distinction in terms of philosophically, the types of content creators that we want to have on the platform and the success stories are them building their own brand that stands alone, not us being their distribution or reason for their success outside of providing the tools and infrastructure.
- [17:01]
A
We'll be right back with Tyler Denk. But first, a word from a sponsor.
- [17:08]
B
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- [17:15]
A
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- [17:30]
B
or even your mom. Book directly@ChoiceHotels.com See you on the roof. There's a civil war happening in the Democratic Party. And if there's one place that that's playing out most clearly, it's in Michigan.
- [17:45]
A
A crucial Senate primary battle in Michigan
- [17:47]
B
that could determine control of Congress in November.
- [17:50]
A
Congresswoman Haley Stevens and Abdul El Sayed,
- [17:53]
B
a progressive Democrat and a moderate Democrat. In the end, it all comes down to the dreaded E word electability. But in Michigan, one candidate is trying to turn the electability concept on its head. If we think that voters walk around asking, where do I sit on some theoretical left right spectrum, then in theory, the bulk of the voters are somewhere in the middle. The problem, though, is that that model hasn't really accurately predicted our politics for a very long time. If Michiganers wanted moderate, why would they have elected Donald Trump twice? Dr. Abdul El Sayed is making the progressive case for America first, and he's trying to settle the Democrats ideological battle in the process. This is about the many versus the money. I'm Estad Hernton and this is America. Actually, catch us Every Saturday on YouTube or wherever you get your podcast.
- [18:47]
A
And we're back. You guys do seem to have made a concerted effort to get the Oliver Darcy's and Lachlan Cartwrights. I'm sure I can find other guests from this podcast who are using your platform that people who are starting relatively high profile newsletter businesses these days to come work with you from the get go. How do you source those people? How do you figure out that that's someone who might wanted to create a newsletter? How do you get in front of them? And how do you incent them to use? I can't believe I just used incent As a verb, how do you persuade them to use your service instead of Substack or anybody else?
- [19:22]
B
Yeah. So we have something called the Beehive Media Collective where it's an application process. There's probably about 30 to 35 journalists in it now. And we do everything from provide health insurance to legal review to giving them credits to Getty Images. Basically, a lot of the luxuries that they had while at a larger institution like a New York Times or cnn, going independent removes a lot of those things and like the legal reviews and everything else. So we built a program that would make it easier for them to make that jump. It's honestly all inbound and introductions. We don't have a concerted effort internally.
- [19:58]
A
So you're not going through someone's Twitter account saying, oh, they've got a lot of engagement. Maybe they'd be interested in launching a Beehive with us. No.
- [20:05]
B
And we have good. Really. And a lot of the large publishers are also our customers. We don't have an active effort of. I know this is something I think Substacks did in their earliest days was basically, who are those large profile writers that would look better on our platform that we can poach from the New York Times and et cetera? And that's what I think built a lot of their brand reputation in those early days. Because media likes to write about media and if you're poaching all of the best journalists, I think that was their initial growth strategy. We have zero effort of trying to poach talent. Typically, talent, I think, identifies themselves as someone who wants to go independent. We have built a brand reputation that we can serve them really well and they typically come inbound to us or via recommendation. But the pitch is actually, I mean, to your point, with Lachlan and Status going back to the Amazon vs Shopify, you could be a large user on Substack or you could build your own brand. I think when you describe them as high profile, they do want to have their own standalone brand that has their own design, their own revenue streams. They're not tied down by the limitations of a platform and they're not tied to the distribution of a platform. I think it's not for everyone, but I think for the cohorts of independent journalists and creators that we serve best, they value that independence and not being tied to what could be the next Facebook or the next Google, where you're overly dependent on them for distribution and
- [21:23]
A
traffic and you're also selling a different fee structure. Right. I think substack takes a flat 10% or close to of your revenue. And you guys, I think, are paying sort of a flat fee instead.
- [21:35]
B
It's a flat. Yeah, exactly. So we don't take a cut of any revenue generated on the platform. So if you are charging a $10 subscription, minus the stripe fees, which are nominal in the cost of doing business on the Internet, you take 100% of what you're charging for subscription. Same with we launched digital products. And this is different than the independent journalists. But if you are a content creator who is an expert in ChatGPT and you want to build a guide or a template or a course, you can sell that on the Beehive platform. And we don't take a cut of revenue, as opposed to a lot of other creator and product platforms that do take a 10 to 15% cut.
- [22:11]
A
So you've got tens of thousands of people paying you to use your tool to send a newsletter, presumably because they're serious about making a business out of it. What do you think the total universe of, we'll call them creators of people who want to create newsletters for a living or as a meaningful part of their living. How big is that universe?
- [22:32]
B
I always like the Ben Thompson quote of the Internet is so much bigger than people give it credit for. As in, there are so many niches. Like, we have a very successful newsletter that's driving almost six figures in revenue for working magicians. So they write about what it means to be a magician one ahead. And they have a thriving subscription business. I'm sure they do IRL events and some other things, but the subscription business alone is approaching six figures. And where in the world would you imagine to have 10,000 readers about working magicians? But I think that speaks to the niche content that is out there on the Internet and that we should be able to provide the tools and infrastructure. So I don't have an exact figure on how big it is, but I think it is much bigger than most people give it credit. And I'd also take that the flip
- [23:18]
A
side of that is people tend to overestimate, like, oh, YouTube is democratized media, so now everyone can make a movie. And the truth is, we definitely knocked out some gatekeepers through YouTube and that era of the Internet. But it's not an infinite number of people who can make movies or music or whatever or good stuff for people that want to consume. It's bigger than the previous gatekeepers allowed to sort of flourish, but it's not infinite. And you need to sort of think this through as you're building the business. Yeah.
- [23:46]
B
But I would say not everyone needs to be a Mr. Beast for us to be successful either.
- [23:50]
A
Right.
- [23:50]
B
Like if five years from now you can compare what Beehive becomes to what YouTube was 10, five years ago, like, I'd be very happy with those comparisons to. I think YouTube probably also started off by like how many people actually want to record videos or who's good at actually creating videos to publish on the Internet. And like, there's obviously a power law and some people are much better than others and some can actually build a real business and others are more hobbyist and get value out of posting videos on YouTube for fun or clout or whatever. Whatever reason you want to post videos. The same way that I think there will be a power law of not everyone's going to be Lachlan and Oliver Darcy on the Beehive platform, but can you stay in touch with your 500 closest friends and colleagues in a seamless way? And that pays US$79 a month. And I think there's a lot of people that would do that all the way up to the higher end of people who are building very successful businesses on the platform. And then to go one step further, I think a lot of these businesses, you see it with the HubSpot Media Network. We see it with a lot of our customers, whether it's ramp or bre. A lot of sophisticated SaaS and software platforms are investing in content marketing, knowing that it is harder to reach your customer in search. It is harder to reach your customer in these algorithmic feeds on social. And by building these funnels and creating content, whether it's newsletter based or some other form, I think a lot of these companies are getting more sophisticated in how they're engaging their potential customers. And newsletters should be a big part of that.
- [25:17]
A
I get why everyone says newsletters are important way of reaching people. Every media company says this and they often say it in that context you just mentioned. You know, as Google and other referral places drops off, we, we need to have other ways to connect with our customers. We want to be able to directly connect with them. But if you're a ramp or just name your random company or actually if you're just a creator, how do you get people to find and your newsletter? One of the major selling points for Solshack that I hear from solustack users is, oh, they've got this sort of referral network at the bottom of their emails. It'll suggest three other people. How does someone find a status or a ramp or anything Else that's using your services out of the gate.
- [26:05]
B
Yeah, I mean we have a similar recommendation network that we actually just relaunched last week. And so similar mechanics to substack. You can as a publisher or creator Recommend up to 4, I, I mean more than 4, but at any given time we cap it at 4. That's driven over 15 million subscriptions to date. So real volume there through the recommendation network. And that's before the most recent updates that we just launched last week. Other stuff is additive. I think RAMP is getting millions of pages to their website anyway. As a business, you can just prioritize where maybe they weren't prioritizing email signups previously. That can be a more important KPI for them. Knowing that if they can get someone's email and they funneled them relevant content over the course of three to four months, likelihood that they actually sign up to create a RAMP account and become a customer becomes much higher. I think that's the bet that HubSpot made in acquiring the hustle and building out the HubSpot Media Network. Most people don't wake up on a Tuesday and decide that they're going to spend $50,000 on a CRM. But if they're getting value from the Hustle every single morning for the past six months and they see the HubSpot advertisements in the hustle's newsletter, I think that one day where they do need a CRM, HubSpot's top of mind and they're kind of playing the long game. So I think it varies per company in terms of how they prioritize growing their subscriber list. But I think more of them are even waking up to the idea of we aren't going to convert this person on this lead gen form in a one shot to spend $50,000 with us, we have a better chance of getting their email for $1.50 and nurturing them over six months knowing that they are more likely to purchase our product at some point in the future. And I think more companies are kind of waking up to that funnel.
- [27:43]
A
We'll be right back. But first, a word from a sponsor.
- [27:45]
B
Sponsor.
- [27:55]
A
And we're back. You mentioned you were Washington Post time. I feel like on the big media side they've gone through a couple waves of we're excited about newsletters, we're worried about newsletters to we're going to kind of move on from newsletters that happened recently. It seems like they are again newly interested in newsletters. And I guess newsletters is sometimes the same as the creator economy and sometimes it's very different. Do you have a sense of why publishers are interested in newsletter business right now? Is it to save their existing business? Do they think they're going to find new talent and new reasons for people to engage with them?
- [28:38]
B
I think it probably came in stages. I think when I think back 10 years ago, I would read TechCrunch all the time, and their daily newsletter was just recapping their eight stories that they personalized to me that they would send. And so I think the newsletter used to act as a vessel just to drive people back to the website, just to get traffic and ad revenue through the banners on the web pages. And then I think they saw Morning Brew Axios the Hustle, the Scam, and was like, wait, we can use this email list to drive actual incremental revenue in addition and outside of the banner ads that are on our website? And so I think that evolution has happened a bit and a lot of these publishers have wakened up to that. And now I think it's a confluence of that and declining search traffic and other ways to be able to capture, reliably capture the attention of your audience with a distribution channel that's reliable and that you control that. It feels like you have more control than LLMs and AEO and GEO and SEO and all of the EOs. So, I mean, I signed up for the Wall Street Journal maybe eight months ago, and I don't open the app daily, but I read their newsletter recap daily, which, one, is a very valuable asset and two, drives me back to their app more than it would otherwise. And so I think it's like back at Morning Brew, we always used to talk about push versus pull. And this was like the early days of really making the case for why newsletters make sense. And if you have to depend on your consumer or your readers going to techcrunch.com in their URL bar to read the latest articles, that's a behavior that has to happen versus, you know, they're going to be opening their inbox and reading their emails and meeting them where they already are. I mean, that's what we would preach all the time at Morning Brew. And I just think that push first pull dynamic is more important ever with this proliferation of content across social and AI and everything else else.
- [30:32]
A
And, and the fact that everyone is doing some version of trying to get into my inbox makes me even harder for me to navigate my inbox. What, what is your, what is your thinking around that when everyone is doing the same thing?
- [30:45]
B
Yeah, it's always funny that people claim like peak newsletter, but like no one claims like peak podcast or peak UGC video or peak Netflix, right? Like I think there's always. There's continues to be.
- [30:56]
A
Well, there is a difference, right? Like, like there's a. You can podcasts, you kind of find your podcast and then it's not like other podcasts show up in your podcast player and YouTube and platforms like that are built to sort of move your attention around. Whereas my inbox is my inbox in theory, it should come from people who know me and or I like. And the point is, my point is lots of people are filling up what it is actually a constrained space in my personal inbox.
- [31:24]
B
But I would say that the inbox is probably a bit more flexible than podcast, right? Like for me to get a new podcast recommendation. Like I'm so turned off to the idea of that because podcasts are a 45 to 90 minute endeavor to listen. So like the time commitment on a new podcast episode or working to your rotation, I think it's much more difficult than a three to five minute read in the inbox where you have to be anyway for working the rest of your life. I agree that it is getting more crowded, but I'd also say that's no different than just a rise to the top in terms of quality, where you will churn out of newsletters that are providing you less value or less entertainment for those that provide you more value and more entertainment.
- [32:03]
A
How many people work at beehive?
- [32:06]
B
We're about 120.
- [32:08]
A
And it's all distributed, right?
- [32:10]
B
Totally distributed.
- [32:11]
A
You are podcasting to be from your bedroom. I can see your bed, I can see your Beehive logo. We talked earlier this year and you struck me as one of the people who was very, very enthusiastic about AI in the workplace. And like many people, you say who wants to bring AI into the workplace, that this will allow us to do more, not to strip away employees. Are you still thinking about it that way?
- [32:38]
B
Totally. I mean, we have not had any sort of layoffs because of AI or any sort. In fact, we're just doing more across all of our different teams. I think we have actually deflected future hires. Like we are behind on our hiring roadmap, which is great. It's good for running.
- [32:57]
A
You are intentionally hiring fewer people because you found that AI can do some of the things the new hire would have done.
- [33:03]
B
An example of this is our customer success team which deals with all of our enterprise users. They used to, let's say, manage a book of 40 enterprise users and there's a lot of work and communication and going back and forth. Someone on that team actually built their own dashboard for the team to use that has all of these automations and insights and can do nudges automatically and proactively reach out to customers. And I would say that the size of their book, if it was 40 before, this tool, is now maybe double. And so that's required us to hire less or prevented us from needing to hire more people to scale that team. And I think that's one of a few dozen examples across customer support, across our ad network, across engineering, where we've been able to build internal tools that makes each of our employees call it 20, 30% more productive, which prevents hiring in the future.
- [33:52]
A
Had these tools been around when you started in 2021, would your, would your trajectory look different either in number of people you've hired, amount of money you've raised, different projects you're trying, or do you think it's the same business?
- [34:05]
B
I think it's similar. I don't want to overstate it and be as parabolic as some of the CEOs claiming that AI is going to replace 50% of their workforce and they're never going to have to hire again. We have six open roles right now. We are actively hiring, we're just hiring a lot less than I think we would have otherw. My hunch is if we started the company over today and had these tools available to us, I think we'd probably be smaller than we are now, but not so much that I think there's a massive delta. But yeah, I think where we've seen the most success is the internal tooling has totally transformed how a lot of our teams operate on a day to day basis where they can do so much more. Where that shows up inversely on the customer side is they're getting more attention, they're getting proactive updates, they are getting better customer service, they are not identifying bugs and issues in the software because we can proactively flag that. So it does have a much better and bigger impact, I think, on the customers having a better experience. Meanwhile, we are running so much more operationally efficient. So yeah, I'm still very bullish on AI. I don't think it's a panacea that a lot of these CEOs want to claim, but I do think it's helping us quite a bit.
- [35:18]
A
And the flip side of this is you don't feel like either today or in the near future, you're going to lose business. As someone who can say, I Vibe coded my own version of email management software, I'm doing fine.
- [35:31]
B
So what's interesting is I've evolved on this thinking quite a bit. I think when AI a year and a half ago, when you can really start building, when Vibe coding really took off. I think as a founder, the biggest fear is can someone vibe code 80% of what we have with a smaller team, undercut us on price, offer similar things? I actually don't view that as a huge threat. I think there's so much nuance in the data infrastructure, the security, the deliverability, the IP addresses. There's so much complexity in this business that I think even if you could vibe code it 100%, there's something around reputation and brand and some of these other tangential things that make it harder to replicate what we're doing. That's not where I feel the threat. Where I feel the threat and I think where most SaaS businesses would feel the threat is anytime you are making a vendor decision for any piece of software, you're comparing it across like four or five different vendors. None of them have 100% of what you want. Maybe this one has eight out of the 10 things that you want, this one has six out of the 10, but it's half the price and you have to make some informed decision around what's the best vendor to go with based on price and the qualifications. I think we could approach a world where not someone to build a separate beehive hive, but where an individual large enterprise user could say, Instead of paying $300,000, that's going to give us 40 of the 45 things we want. Why don't we build something that will give us 45 of the 45 things that we want, saves us the $250,000 or $300,000 a year. I think that maybe is a bigger threat, but where that loses faith is like to build enterprise level software. And if you were going to be paying us $300,000 anyway, you must have millions of subscribers. And now you need experts in house that are now responsible for doing all the things that we already abstract from you. So proactive deliverability, reporting how the editor works, how the automations work. There's a reason why all these SaaS companies exist. And as someone who has Vibe coded different projects on the weekend just kind of stay up to date on AI, I realize again, I'm probably in the 99% of I am technical, I have a design sense. And to take this Vibe coded project to a full production level. I have to do error handling and I have to set up Sentry. I have to set up Klaviyo. I have to set up all these different things that Beehive just handles for you. And so that's why I think the SaaS apocalypse is totally overblown. I think the more people that are in the weeds, even if I could make the case that I just did, of why someone may want to build their own solution instead of paying us $300,000 a year, when you actually have to staff that project, it will cost you far much more in operational cost and maintenance than it is just to pay someone who specializes in that software.
- [38:14]
A
Tyler, you've been super generous with your time. Give us one more gift before you go. A lot of people on this who listen to this podcast are making their own content or want to go into business for themselves making their own content. What's the one thing they need to think about as they're making that leap?
- [38:29]
B
It's a great question. I think it always starts with the end reader and the value that you're providing. I think far too quickly, and I saw this from the what More Brew did is we hyperscaled very quickly. And I think that created this whole cohort of people who are trying to hyperscale newsletters or podcasts, not focusing on the product itself, but focusing on what are the unit economics of how cheaply can I get a reader into the funnel to scale quicker, to charge advertisers more and just build this flywheel? And to get the hyperscale, you do need that flywheel. But what that ignores is that Morning Brew was so good at creating content and building a differentiated product for the audience that they serve. And it really has to start with the product. And so I think for any content creator listening, it's really nailing the value or entertainment or whatever it is that you're providing to your audience. Making sure you're best in class there before trying to figure out the unit. Economics and hyperscale make stuff people want.
- [39:28]
A
Easy to say, hard to do.
- [39:30]
B
I agree. It's not for everybody.
- [39:32]
A
Tyler Dank, thanks for coming on.
- [39:34]
B
Yeah, thanks for having me.
- [39:36]
A
Thanks again. Tyler Dink, thanks again to Charlotte Silver. Thanks again to our sponsors. We love our sponsors. Thanks to you guys for listening. Talk to you soon.