The Leverage Investor Update

Oh boy, did I get some things wrong with the launch.

Author’s Note: Founder’s Tier members of The Leverage get access to my monthly investor updates. In each letter, I write about what I’m seeing in the media, the performance of The Leverage, and opportunities I’m excited about. As a celebration of the first month of The Leverage, I’m opening this post to all my readers, and offering a 20% off coupon for those who want to support independent writing. The coupon is good for the next 72 hours, so act quickly.

Investors,

The mission of The Leverage is to bring more truth, beauty, and rigor to tech market coverage. This matters because we are in the midst of the most consequential period of change in human history, and this period of extreme opportunity and challenge deserves a new publication.

So far, I would say we are doing just an okay job in achieving that mission. There are some positive signals, but there is so, so much more to do. I have already made many mistakes, and look forward to correcting those in month two.

The good

1. Revenue has happened much quicker than expected! While the business still does less than what I would make managing an In-N-Out, I’m not out on the streets yet. I sold a two-month exclusive launch package to Mercury, have sold an additional sponsored post for an upcoming essay, and have been surprised at how naturally advertising has slotted into the business model. Readers seem to really engage with companies I recommend.

2. My open rate is 55%. This is considered excellent in the newsletter space. Readers are consistently engaged by my work.

3. My month-one cohort of paid subscribers have a 99% retention rate. I have true fans, and they aren’t going anywhere.

4. I brought on two incredible freelance editors who are better than I deserve. Great writing takes a village and my village is filled with over-qualified geniuses. Thanks to meghna rao and Annaliese Griffin.

5. I had a viral post to cap off the month titled “In Defense of Bad Business,” which drove tens of thousands of views. This isn’t that large on the scale of the internet, but is really good for a long-form essay from a brand new publication. The people love it when I rant.

The unexpected

1. I planned on readers wanting to pay for my analysis and that all the little tricks of prose and construction would merely be tolerated. This was incorrect, maybe even completely backwards. My more viral moments have come from the sentences that I labor over. Readers delight when I crack jokes about how OpenAI names their models by sprinkling the blood of an intern into a bag of Scrabble tiles. They like when I make grand statements like “when God gives you a blank canvas, why do you choose to paint B2B SaaS?”

2. I now think of the business like this: Craft drives growth, insights improve retention. It is worth spending extra time on sentence structure, graphics, and moments of whimsy for pieces I’m hoping will increase list size. There need to be delightful sentences that readers can easily share on social media.

3. You’ll note that neither craft nor insights drive paid conversions. This was also unexpected. More on this in a second.

The bad:

1. While I brought over roughly 31K of my most active readers from Every and have added a few thousand more over the past month, I remain deeply concerned about growth. Over 60% of my growth has come from the Substack referral network. This is the point of me giving them 10% of my revenue, but it’s still uncomfortable to rely so much on a single platform.

2. My top-of-funnel game is quite weak. Social media is not something that comes naturally to me. I am aiming to fix this in June, but my continued inability to enjoy the hellscape that is X, Notes, LinkedIn, etc. is becoming a serious impediment to business performance.

3. Paid conversion is baffling low. A newsletter at my price point and open rate should be in the 2-4% conversion range based on my conversations with other media operators. Mine is below 1%. Frankly, I don’t quite know how to interpret this data. Is it price? Unclear value proposition? Subscription fatigue? I did not expect to hit 4% out of the gate, but I thought this would be much higher. Open to any and all suggestions on how to improve this. My instincts tell me it is a question of editorial mix/volume, but much more to be tested here.

4. The most serious long-term headwind is that text as a medium continues to decrease in its importance. Every advertiser and fan I talk to asks for short-form video, long-form video, and a podcast. The current plan is to invest in short-form this summer to build “video muscle” and then spin up long-form/podcast in the fall.

5. I have no advertising sales process. While I was able to secure a launch sponsor, it was through pre-existing relationships. I have no idea how to do ad sales for a media company. B2B SaaS sales, where I learned my craft, is soooo much easier compared to this. I’m working with an agency, but so far they haven’t brought any deals to the table. I need to figure out a way to confidently forecast pipeline and deal size so I can better allocate my time and resources.

The changes I’m going to make

1. This business is only working if my life is working. As such, we are starting my daughter in daycare next week so my wife and I can put more hours into our respective careers. It is nerve wracking to sign up for another $40K in yearly expenses, but neither of us can get enough done in the current situation. Sacrificing time with my daughter for my career feels terrible, but it had to happen at some point. Plus, she has some health concerns and extra income will allow us to ensure she has the medical care that she needs. That income only happens if I have the time to make it happen.

2. Hiring a part-time short-form editor. To help solve top-of-funnel, I want to turn the Weekend Leverage product into a near daily habit. When news drops, I write the blurb for Sunday, record video, have an editor chop it up with captions/graphics, and then post the video on socials.

3. Cross-posting with other creators. I have two guest posts on newsletters that are larger than mine coming up that I’m excited for as top-of-funnel events.

4. I’m going to up my volume. To better understand why my conversion rate is so low, I need more data on conversion rates across formats and styles. To get that data, I’m going to publish twice a week, plus the free weekend digest.

5. I’m going to add one more editorial cycle to my writing process. Typically, my essays will go through a substantive pass and then a final copy edit pass. I’m going to add a third read I’m calling the “craft cycle” where I parse through each sentence and see how I can make it better.

6. Ad sales are something I’ll devote more time to. My best method is currently contacting the true believers among my subscribers and seeing if they have any recommendations in their networks for advertisers. This has worked for my first two deals, and hopefully it can keep going. (If you want to advertise with us, send me an email at team@gettheleverage.com)

If I can do all six of these in June, I’m optimistic I’ll see an increase in volume throughout the funnel. It’ll be hard, but with focus, excessive caffeine consumption, and a little luck, it will happen. If you want to support independent, beautiful, and rigorous internet writing, you can sign up with the coupon below for 20% off for the next 72 hours.