By Eric Lam
Introduction
In December 2022, I found myself wanting a new challenge.
At the time I was working as a portfolio manager at a venture capital firm and day-to-day I had the opportunity to interact with a bunch of founders, watching them create some really interesting startups.
One thing that became really clear to me during that period was that building a successful business isn’t reserved for a select few insiders. Instead, anyone with a clear vision, an understanding of the market, self-awareness, industry knowledge, and the determination to overcome obstacles can do it.
Drawing from this experience I decided to experiment with my own businesses, applying the principles I was learning. I learned pretty quickly during this experimentation phase that you don’t need to raise money to build something that can change your life. The reality was actually quite different. I learned that if you bypass raising money in the early days and get to profitability, you have more scaling options and you can even tilt investor power dynamics in your favor if in the future you do decide to raise.
Through experimenting and building a couple online businesses, I quickly became obsessed with market research. In my opinion, it’s the most important component of business building, right alongside execution. This led to my venture ExplodingIdeas.co.
In order to get great market research I subscribed to online publications that would give me trend signals and then I’d supplement with my own manual research. It was honestly a pain, I wished that they would just send me the research so i didn’t need to spend so much time doing it myself. So Exploding Ideas was born.
The concept for Exploding Ideas was to share my extensive market research I was doing to build my own businesses. There were competitor newsletters on the market that did something similar, but they were all written through a journalistic lens and were so high level that they were essentially unusable. I decided to create a newsletter that was more longform, one that had deeper data and market insights into opportunities.
At the time there was nothing like this on the market. I was unsure if there was a reason for that and I wanted to make sure this wasn’t a tarpit newsletter idea that seemed compelling on the outside, but was realistically destined for failure. So I hired Matt McGarry as a consultant (the newsletter king) to gut check me on whether he also thought this could be a viable opportunity.
After getting some validation from our meeting, I decided that Exploding Ideas could be viable. I decided it would be a weekly newsletter uncovering emerging trends and gaps in developing markets and providing readers with insights and ideas to capitalize on them. The motivation behind this project was twofold: to empower others to build their own online businesses, and to fill a gap in the market I wanted for myself.
Looking for Tailwinds
After stewing on the idea for a bit, in January 2023, the success of niche newsletters like Milk Road and TheRundown.ai caught my attention. I saw that with the emergence of the newsletter platform Beehiiv, it was now becoming extremely cheap to write newsletters.
Prior to Beehiiv, writing a daily newsletter was far too expensive as there was nothing in the market that catered to media businesses. Substack didn’t have enough features and ConvertKit was too expensive for newsletter-first media businesses. Beehiiv sat in the middle. It offered great pricing and robust features. This made way for a whole new wave of newsletter businesses. This made daily newsletters like Milk Road and Rundown possible.
So I decided to jump in.
At the time, tech firms were laying off workers and economic instability was looming. This made people increasingly concerned about job security and financial stability. This was a key insight for my newsletter growth strategy.
This is because during times of uncertainty, people prioritize securing their basic needs. So I shaped Exploding Ideas to address these concerns by offering in-depth insights into trending online business ideas that could serve as side hustles, providing a sense of security and a potential source of income.
I tried to position my newsletter so that if you got laid off or you wanted to diversify your income, you would want to subscribe to Exploding Ideas.
Finding the Launch Channel
Building the initial audience organically was a critical first step.
My belief is that if you want to build a profitable media business, you need to build a foundation of followers organically. In other words, you want to build an initial following through virality and natural market momentum – not through advertising.
This is because media businesses historically don’t make a ton of money and churn on their products can be relatively high – unlike SaaS or B2B.
Therefore to indicate true product-market fit and longevity, you need to be able to lean into organic market momentum around your media business.
So to test my idea I needed to find an organic traffic channel I could leverage to get initial subscribers.
Choosing Reddit
I thought hard about what channel I could use. I had 0 social media presence and didn’t have much understanding about how social media channels worked.
But, I had been a Reddit user for 5 years.
So I decided to lean into Reddit as an acquisition channel.
After some trial and error, I learned that by engaging with communities like r/Entrepreneur and offering valuable advice and linking my newsletter as a resource, I could gain some quick subscribers.
This worked because at the time, people were asking publicly what new side hustles they could do. Some of these people were getting laid off or dealing with uncertainty which made income diversification imperative for them. So Exploding Ideas tapped these readers’ interests.
Ultimately, posting on Reddit was highly effective, it allowed me to reach 1,000 subscribers in 12 days without spending a dime on advertising.
So I doubled down on this strategy and built up thousands of subscribers over the next few months.
Monetizing the Newsletter
I didn’t make any revenue for the first 4 months, so my next challenge was monetization.
If you’re building a newsletter, my belief is that you always want to build a monetization strategy around it. This is because if your newsletter is free and you’re not earning any money from it, you’ll give up at some point and thus will give up on your readers. So in order to hold my feet to the fire and continue serving my readers, I needed to figure out a revenue model.
After reaching 5,000 subscribers, I decided to introduce a paid plan with two tiers: a freemium option with high-level business idea research and a premium tier offering in-depth insights, SEO opportunities, and case studies.
I wasn’t sure if this would catch on, so I decided to diversify my potential revenue streams by offering one-on-one consultations and newsletter sponsorships, to further increase my chances of making consistent revenue.
The idea was to place a bunch of monetization bets to see what people would latch onto and let the market decide what had value.
Interestingly enough, I got a bit of everything. Some people went the consulting route, some went the paid subscription route, I attracted advertisers, and I even launched a paid course that people paid for.
Key Takeaways
One of the crucial lessons I learned was the importance of market research. In the newsletter industry, creators often lead with what they want to write about, but the real opportunity lies in what the audience wants to read. Adopting a market-first perspective can significantly drive organic growth. By tapping into changes in market dynamics, such as a bear market or bull market, you can tailor content to address current market needs. For example, during economic downturns, offering insights on diversifying income can be highly valuable.
To achieve real growth, you must have an edge in the market. If you’re not an expert, it will show in your writing, and people won’t subscribe. However, if you offer real, differentiated value, readers with an interest in your content will recognize it as providing them an advantage in the market. This perceived advantage will drive subscriptions and give your newsletter momentum. Providing content that resonates with current market conditions and offers unique insights can set your newsletter apart and attract a dedicated audience.
