Email Economics: The Math to a $800k Email [Sam Parr, Nathan Barry]

Sam Parr's Black Friday stunt was sneaky but also extremely effective.

[00:00:00] swyx: Today, we're talking about email from two of its biggest practitioners, Nathan Barry from convert kit and Sam Parr from the hustle and sandbar par recently sends a email that converted into $800,000 worth of sales in one day. And this is.  

[00:00:19] Sam Parr: You want to know something funny that, that tactic of emailing the wrong link and then emailing them again to let people know that you've created. 

[00:00:27] Always gets more sales.  

[00:00:29] Nathan Barry: Oh, it does. Okay. You should tell everyone about your black Friday  

[00:00:33] Sam Parr: promotion. Okay. So I've done this twice. Most people don't know I did this twice. I actually did this in 2014. When we first started, when we only had about 40,000 subscribers. So back then in 14, what I did or 15? Well, no, when did we launch? 

[00:00:46] No, we lost at 16, so I didn't tell him 60. I'll tell you what I did black Friday. And I'll tell you what I did now or back then. So back then I, we accidentally sent, like, it was, the day was Thursday morning. We accidentally sent the previous Wednesday's email on Thursday. And so people got like the same one over and then we immediately send a reply and it was a screenshot of my slack, where it was me slacking to our writers saying. 

[00:01:13] You really screwed up, you know, this right. And then being like, oh my God, I can't believe I did that. It's like, and she's saying like, well, what do I do? And I'm saying, you better fix this or you're out of here. And she was being like, well, you got to give me some suggestions. I go, I don't know, just take a screenshot of this and put it in the email. 

[00:01:29] And if it gets a lot of opens, you're gonna keep your job. If it doesn't you're outta here. And we just screenshot of that and put it in the email and it got the highest open rate. Uh, some people didn't get the joke and they got mad at me, but I was whatever. Um, but the other day we made like $800,000 in one day. 

[00:01:47] And what we did was, um, this, this is like what I'm saying, like you, you convert kit creates the Lego pieces and, and it's fun for us to manipulate it, to create cool stuff. We, um, made an email, which is actually really hard to make an email look like a Gmail email. Um, It's like not intuitive. And you've got to like, kind of do weird stuff, but we made an email look like a Gmail email and we made it look exactly like I was having a conversation with the team and I sent them an email. 

[00:02:17] It said art, everyone are big black Friday sale. It's totally ready. Can you guys please make sure all the links work? Um, this is going to go live and it's actually like our biggest discount ever. I'm kind of think that we're giving too big of a discount, but, uh, whatever, I guess we'll see what happens. 

[00:02:33] Just, uh, let me know if it works and then we'll, and we'll hit send tomorrow morning and then they reply. And so that email was sent to a million plus people or something like. And we made it look like it was, it was an accident. You know, I accidentally sent it to our whole list as opposed to our company. 

[00:02:51] Right. And we got so much traction so much. There was tens of thousands of people on the website buying. And I got literally 10,000 emails and we send it from Sam at the hustle, my personal email. I got so many subscribers people saying, including my friends like Nathan, um, or, uh, Andrew Wilkinson, like smart techie, entrepreneurial friends. 

[00:03:13] They called me and they go, yeah, they go, dude, you just sent this out to your whole list. This was not meant for, this was you were not meaning to send this to me. And my reply was like, oh no, really? And, uh, it just crushed it. Yeah. It was like the biggest sales day ever. I think we, I think we stole that idea by the way. 

[00:03:32] I I'll give credit. I think it was Chubbies who I stole it or Brooklyn and we stole it from someone, but it was really effective. Yeah.  

[00:03:39] Nathan Barry: That's amazing. I just love the idea that someone receiving that email. That like, there's another email address of like entire or whatever, they've you send to that? 

[00:03:49] It, like, I love that someone thinks that's a mistake that could act  

[00:03:53] Sam Parr: the people at HubSpot emailed me. This was during our due diligence and they're like, Hey, like they called me or texted me. They're like, I don't think this meant to go to everyone. And I was like, oh my God. I know it was a joke. It was a hit, it was a huge hit. 

[00:04:07] It was great. That's amazing. I'd  

[00:04:10] Nathan Barry: love to talk to just for a few minutes about monetization and, and any of that since you have this split between sponsored revenue and, and the paid revenue and all that, um, maybe share some of the numbers behind trends, at least at the highest level that you can. And then, um, I'm curious why, why you keep those two models. 

[00:04:30] Sam Parr: So, um, we were, we were probably going to do 20 million in revenue in 2021. Trends has over 15,000 subs. How many of those  

[00:04:41] Nathan Barry: were from, uh, black Friday in particular? I  

[00:04:44] Sam Parr: don't remember exactly. But that day or that like campaign drove, like he got a thousand, uh, probably 3000 customers. 

[00:04:54] That's amazing. Yeah, because 3000 times 300 is nine. Yeah. We, we drove. Yeah, we drove about $800,000 in sales that day. So whatever that divided by, I think it was 200. It was the price, whatever that divided by 200 is how many we got. So what's like,  

[00:05:11] Nathan Barry: what's the breakdown between, um, sponsorship revenue and, you know, the trends revenue as a percentage of  

[00:05:19] Sam Parr: the company. 

[00:05:20] By the time we sold advertising it was over a million a month in sales. Wow. Um, and trends was going to be close to eight figures this year. Um, but we counted our revenue a little bit odd. Like we want it to have like cash in the bank, like 20 to 22 million in 2021. 

[00:05:42] Okay. I think advertising could have been about 14, 15.  

[00:05:47] Nathan Barry: The majority is still at is advertising, but trends.  

[00:05:51] Sam Parr: Uh, kick-ass business. Yeah, because the renewal rates so freaking high. Yeah. Like our renewal it's really high. And I think we're, we undercharged where we're not going to raise the price anymore, but the reason why I'm not sure what 21 would have been is because we had tested raising, like tripling the price and conversion rates for the same. 

[00:06:07] Yeah. What do you think  

[00:06:08] Nathan Barry: about like everyone going with paid newsletters now? You know, so, so it created, let's say you're at 25,000 subscribers or 20,000 of shares.  

[00:06:15] Sam Parr: I think they're making the wrong mistakes. I think there's the sub stack is cool, but I think it's helping people make bad mistakes. Um, I'll give a few examples. 

[00:06:26] The first, the first example is pricing. Most people charge way too little. Um, if you're creating a B2C thing, then I understand why you would want to charge like $5 a month. But if you actually want to make a living at this and provide value, You got to charge more money. Like, um, most traders typically are bad at this. 

[00:06:46] They think that certain information should be free, but it's like, man, how are you gonna make a living? If you, if you're charging $4 a month, like that's really, really hard. So like charge way more. So I think people need to charge a lot more money. Um, yeah. Or I would say, uh, yeah, more yeah, 50 bucks a month. 

[00:07:07] Sure. Like I would say. The difference between a person buying 99 a year and 2 99 a year. I bet you, those rates would be the same and you just made three X more money. Um, and then the difference between 2 99 and 4 99, also probably isn't like that big. So I think you should charge more in not only is charging more good for you as a creator because you get more money and you can, you can put more of into the business, but also people tend to like that stuff. 

[00:07:38] If they paid money for it, they usually appreciate it more. You know, it's like if you worked really hard to buy a car, versus if the car was given to you, you're going to treat one of those differently than the other. So I think people tend to treat higher end stuff nicer. So I think you should charge now. 

[00:07:50] I don't think this isn't like blanket advice for everyone, but I think a lot of people could use that. The second thing is I would actually do annual billing only, not monthly bill. Um, so if you could pull off doing annual only put it as like, you know, 25 bucks a month, but charge it as 2 99 a year. Um, because once you, yeah, I just think that's the better move and you actually would probably have a far more educated opinion on this, but from content, that's what I've seen. 

[00:08:18] Well, the,  

[00:08:19] Nathan Barry: um, I mean, I agree with that because we've seen content on membership sites or sorry, turn on membership sites or content. Being quite a bit higher than software in general, especially when people are implementing it poorly. And so then what happens is, you know, you're just playing this churn game. 

[00:08:36] And especially when you have high churn on a $9, $15 a month products, it's really raw possible. And so I exactly what you're saying of going for a year upfront now, it's interesting. A lot of people go like buy a year for a discount and you're saying like, just don't even offer a monthly.  

[00:08:56] Sam Parr: Yeah. Oh, well, if you're going to awfully offer a monthly price, make it like crazy expensive. 

[00:09:01] So it puts an acre. So it makes the annual a no-brainer so like 50 bucks a month  

[00:09:06] Nathan Barry: and or $250 a year. So it's like double or  

[00:09:10] Sam Parr: yeah, only pretty much. The whole goal though, is to get. Right. And we have never done monthly. And the reason why is I went and talked to the information. I talked to the athletic, I talked to the New York times. 

[00:09:23] I talked to the Motley fool. I talked to like all these companies and, and pretty much across the board, they were like, we only drive people to animal. And I was like, all right, well, I'm not, I'm going to have a monthly, we're just going to get rid of it entirely. Yeah. I'm like, why, why even do that? Then let's just cut. 

[00:09:36] Cut that. Um, the third thing I would say is. Have a long form sales page as your homepage. A lot of people will think that they're the New York times and that they can just make their homepage or the page that they drive all the traffic to make it like a, um, like give a lot, give away a lot of stuff for free and just hope someone will convert, um, that, that will work if you're the New York times and everyone knows to trust you and to get to know you and they know exactly what they're getting themselves into. 

[00:10:02] I think if you're like not them, then you should probably have a pretty hardcore. Um, like sales page and I don't mind, my opinion is not to do freemium. Do you have to pay money to get it? Um, you could do like a one, like we do a $1 trial, which is interesting. Um, but, uh, I would say like, make your homepage a sales page. 

[00:10:24] Like if you go to convert or a sub sub sub stack pages, it's just like a one-liner that. Like doesn't sell the product. Right? So I think you need like a sales page kind of like your book authority, like you had a sales page  

[00:10:41] Nathan Barry: with authority was take the best that I could learn from direct response copywriting, and then bring in design from the startup world and try to merge those two things. 

[00:10:50] Cause like the design startup world, they would be like, no, here's the buy button. You don't need any connection. And the direct response world would be like, it doesn't have to look pretty, but it's going to be 10 pages long convincing you everything about it. Can we just, can we just combine these two things? 

[00:11:06] Sam Parr: That's exactly what I do. I totally agree with that premise. I, 100% agree with you and as exactly what I do. And, um, I completely agree with that.  

[00:11:14] swyx: So to recap, the math for those paying attention, the $20ish million hustle business is broken down into $14 million in advertising. So that. Bit over 1 million a month in sales and then seven to $8 million a year in subscription revenue for trends, which is about 15,000 paying subscribers. 

[00:11:34] I think the actual number is probably higher than that, because if you back out the unit costs, the, that doesn't match up with the list price of what the subscription of revenue is. And he says that he had 3000 subscribers on. Mistake black Friday day, and that drove 800,000 in sales. So that's roughly $260 per subscription. 

[00:11:56] Again, that's a bit of a weird number because I know that I jumped on that sale and I only paid $99. So there's a little bit of funkiness going on with the math. He's not being precise. It doesn't matter. I think the tactics are solid.
2021 Swyx