Sam Parr on Launching and Growing Hampton

Jacob Cohen Donnelly: All right. Let’s jump right in and talk about your new project Hampton. What is it and where did the idea come from to do it?

Sam Parr: The new project? It’s called Hampton. We couldn’t buy hampton.com, so it’s joinhampton.com. That was the hotel chain that had it. The new project, it’s a highly vetted community for founders, which basically just means it’s kind of a group therapy for CEOs, but there’s also a wider community. Basically, when members sign up, we interview all of them, we vet them and we check the revenue and all the stats that they say on the interview, and then you join and we hand curate it.

We place you into an eight-person core group that meets once a month with the facilitator. That’s the group therapy for business people kind of analogy. Then we also have a digital community where we have hundreds of members who are in there constantly asking questions like when the Silicon Valley Bank thing all went down. There is people help one another. Then we have dinners throughout the country and adventures and retreats happening all the time. It’s our take on YPO, which is an organization that’s been around for 60 or 70 years. I got the idea because I had this company called The Hustle, and we owned this thing called Trends.

I liked it. Trends, it was a weekly email on interesting trends that were popping up. We created a Facebook group as an afterthought, but the Facebook group was the best part of the product. We only charged $300 a year, so we couldn’t provide that high quality of a service. You need to charge more money in order to do a lot of these events and things like that. I saw a few of the mistakes that I made with Trends, and this time I really wanted to nail it.

Jacob: Let’s dig into that. I know Trends was one of your first community projects. What were the mistakes that you learned from that you’re not making with Hampton?

Sam: I had a bunch of communities before that. I’ve had a bunch of communities actually. Trends was successful. It was doing many, many millions of dollars in recurring revenue when we sold it, but it was a little bit too broad. I made a mistake that a lot of people make with community as well as entrepreneurs, is they charge too little money and therefore you need a whole lot of customers in order to make it a substantial-sized business.

You want it to be a substantially sized business so you can provide more services and better service to your customer. We only charged $300 a year, which was dumb. I couldn’t provide this awesome quality service that I wanted to. That’s the mistake we made. It was also a fairly broad thing, which is good for the newsletter that we had. I found out that they wanted the community more and I couldn’t make it that tailored of a group because we couldn’t justify hiring all these people. I screwed up with the pricing big time and making it pretty broad.

Jacob: You mentioned YPO, they’re actually a nonprofits, so I was able to look up their revenue. They did $110 million in revenue back in 2020. I don’t think they’ve had to file their taxes because of COVID and stuff. I don’t know. You target a somewhat similar type of audience. I think they might have a slightly higher requirement of revenue for– a bit lower?

Sam: Their requirements vary chapter by chapter, city by city. Sometimes it’s lower, sometimes it’s higher. They also have a lot of members who aren’t necessarily the CEOs or the founders. In our group, you can’t be given a business. In their group, it’s okay if you inherit a company or inherit different things, but there are differences. Sorry, go ahead with your question.

Jacob: My broad question is how do you match up with YPO and what’s the differentiator for Hampton compared to YPO? Why does someone join you versus YPO?

Sam: What’s interesting is a lot of people know YPO– you don’t even know some of the bigger players in the space. There’s Vistage, which sold recently for $1.5 billion and they do $400 million a year in revenue. They do over $100 million a year in profit. There’s them. Chief got pretty big pretty fast. They’re doing north of a hundred million in revenue. There’s actually a bunch more businesses in the space. Informa owns a handful of these community businesses that are doing huge numbers.

It’s a pretty big space. The difference between us and YPO, YPO is cool. My co-founder is part of YPO as well, is that it’s a much older audience. It’s also you’ll meet people who inherited eight apartment buildings in South Florida who are part of YPO. Those people need a space, but we’re probably not for them. Our folks are mostly digital first. Definitely a lot of people on Twitter, a lot of the people on Hacker News, a lot of people who live in New York, San Francisco, LA, Chicago.

We also have tons of people. We have a guy in Kentucky that has a software company that you’ve never heard of that he bootstrapped at $8 million a year in revenue. We have a lot of people like that all over the country. It’s a digital-first approach. Sometimes we say tech companies, but would you call Casper a tech company? Maybe not, but you would to your mom if you’re describing it to your mom.

In that regard, it’s tech companies, but not all hard tech, but it’s all digital first mostly.

Jacob: That makes a lot of sense. I guess going back to your concept around, it’s almost like therapy for founders. A person who inherited eight buildings down in Miami is not going to need the same team support conversation as someone who’s building a company from the scratch. It’s just a different need.

Sam: Yes. Look, we’re going to eventually– I just have this wedge into the founder market and CEO market. We’re going to expand. We haven’t confirmed that we’re going to do this, but very likely, we’re going to likely have other titles. CTO, CFO, who knows what titles we’ll have, but we’re going to expand to other titles. We wanted it so to where–

When I was running my company, The Hustle, I was lonely, man. There was so many nights where I was with my wife and I would be laying on the floor and I’m like, “I’m going to quit. This sucks. I can’t figure this out. I’m so sad.” Then there’s other days I was super pumped where we thought we were going to take over the world, but it’s pretty lonely because you have to look cool and calm to your employees because that fear spreads.

There’s stuff you don’t even know. Let’s say you got to lay people off or let’s say you’re selling your company, who are you going to ask? I’m like, “Hey, how do I maneuver this so I don’t look desperate when I’m selling my company? What’s the appropriate right way to lay people off that’s respectful, but also you don’t give too much severance, but you give the right amount of severance?” Things like that.

You can’t tweet about that. I formed my own group and it was life-changing. We just wanted to make it so other people could have these types of group because when you have access to people, which I had, because we had these events called Hustle Con. We would get the founders of WeWork, Away, Casper, all these amazing companies. I would sit backstage and I was like way insignificant compared to them. I would just listen and I’m like, “Man, that’s not like an Illuminati. That’s not real,” but seeing how the big dogs talk, this is a leg up and it definitely matters a bit who you know and also having others who have been there, done that helped so much emotionally and strategically.

Jacob: Let’s dig into the business. I’ve got a few questions here. One, walk me through the business model. How much does it cost? What’s the term of the– I assume it’s a subscription, like walk me through the business model.

Sam: It’s very simple right now. $8,500 for one year. That’s all it is. It’s a very simple business model at the moment. We pay for– we have a headquarter staff who interviews everyone. We have a concierge, so someone on staff who talks to every member, and a member can message that person and be like, “Hey, I’m struggling with the Silicon Valley Bank thing. Can you introduce me to five people who are also struggling so I could help figure this out,” or, “I need to be introduced to someone who could do X, Y, Z. Can you help?”

We have a concierge and we have people interviewing all the potential members. We have a CEO, we have the HQ staff, and then we also have our facilitators who we pay a lot of money for. That’s our biggest cost. Then it’s $8,500 a year. Maybe eventually, we’ll have ads or sponsors or something like that for the dinners, but right now it’s a very, very, very simple straightforward business model.

Jacob: I want to understand a little bit more about these facilitators because you say they’re the most expensive part. Who are they? What is the makeup of a good facilitator that you would hire them and pay them what seems like a lot of money to do this?

Sam: It’s a ton of money. It’s basically, I don’t know if you’ve ever had an executive coach, but I had an executive coach before. It was 50 grand a year. These people are expensive. They’re basically glorified therapists, but very glorified. It’s hard to deal with some of these problems. A good facilitator, we used to call them coaches and then we called them facilitators because we would train them to guide a conversation and they can participate in the conversation. A lot of them are ex-entrepreneurs. Like my facilitator is a woman named Ashley who had a nine-figure exit and she’ll guide the conversation and she’ll also participate.

A lot of times what they’ll– They’re almost in one sense like content curators, like a podcast host. They have to figure out who’s got the interesting content, but they’re also like, “Oh, hey, this particular person is having a huge problem. That’s actually a big problem. They’re going to about to sell and their board’s trying to block it. I know that’s a big problem because I know about business. We need to focus on that today.” They do things like that where they do logistical stuff of making sure everyone’s there, but also knowing which content and which person’s problem is important, and then the therapist part is pulling that out of them and then getting everyone else to give opinions on it. You know what I mean?

Jacob: Yes, I know. That makes a lot of sense. It’s obviously somebody– It’s a unique type of person who’s able to do that. A founder is not going to take seriously someone who hasn’t at least been in their shoes a little bit–

Sam: I think that’s wrong actually. I thought that was the case. I was like that too. Then I started meeting with some of the facilitators and I’m like, “Man, a really good facilitator, sometimes you don’t even know that they’re there.” I don’t need necessarily a podcast host to know all about business in order to get good interviews. Sometimes it helps, sometimes it doesn’t but not necessarily that– it helps in a lot of cases but not always.

Jacob: What’s the technology that you’re using to power this? Is it all custom-built or did you piece it together from other things?

Sam: We use a lot of Zoom and then we built our own portal using Bubble. My co-founder Joe is like our CTO, Chief Product Officer, and using him and a couple of Devs, we built some awesome technology. We have a portal where you can log in and you can see on a map where all the members are. You can see a calendar, so you know which events are upcoming. You can scroll through and look at all the members and get introductions to them. We’ve got some good tech but I wouldn’t exactly say it’s a tech company, but we built a lot of good stuff.

Jacob: Built what you needed to get the thing going.

Sam: Dude, listen to this. We got to hundreds of thousands of dollars a month in revenue with just a tight form and no website. The first six– so we started working on it in June. We got our first customers in July. We hit seven figures in the first month and it was no website, just a Typeform. Me and Joe, my partner, would get on the phone with every single person to vet them, to hear them out. Then we just used HubSpot, because I get a free HubSpot subscription, to send them emails and to place them into groups and it was all done by hand. There was no technology at first but we had seven figures in revenue before we even had a website.

Jacob: Well, I think this is something that you push on. I think I saw you tweet the other day about this. Before you worry about buying a fancy domain name or building a fancy website, just get someone to pay you, and that’s what you did here.

Sam: Yes. We did a few things here. Partially, it was driven by ego because I wanted to prove that I can do it and partially it was practicality which was, we didn’t tell anyone that we are launching this. We launched on March 28th, like publicly telling the world about it but prior to then, we built a great business without talking about it publicly because I wanted to prove that we can do it. Also, we didn’t have a fancy– our domain name now is joinhampton.com. Before it was hampton.squarespace.com, that was our first website but it wasn’t really a site, it was just a placeholder for the Typeform, but we did it all just with Zoom and me calling them on their phone and then sending a Stripe link.

Jacob: All right. You had people paying you, you said you were getting to hundreds of thousands in monthly revenue. Now it’s your big public launch. At your big public launch though, how many paying members do you have? How much money is Hampton making thus far?

Sam: I don’t even know if I want to say exactly. We have over 300 members, so we have hundreds of members.

Jacob: I can do the math though. 8,500 times 300, that’s a couple of million bucks in AR if everyone’s paying book.

Sam: Yes, we don’t give discounts.

Jacob: Then the math’s very easy.

Sam: The math’s very easy. I think that will be– we’re going to get north of a thousand members I think before the year’s over.

Jacob: All right. Which is an $8.5 million run rate.

Sam: Yes. I think we’ll have a hundred million dollar a year business by year five. I think we can get 10,000 people to join. I don’t know if it’s going to be like 3000 founders, 3000 CFOs, 3000 CTOs, I don’t know exactly what the breakdown’s going to be, but it’s going to be a large business, I think.

Jacob: I want to come back to the scale of it because I wrote a piece a couple of weeks ago about the curation of communities and all that. I want to come back to that. I want to dig in on this notion of these monthly core groups. On the site, you’ve got the Hampton five, which is the five benefits that you get as a member. One of them is these monthly core groups, which you’ve talked about, which is eight founders, experienced executive facilitator. In your opinion, we talked about the facilitator, but what makes a good strong core group? What are you looking for when you start to form these people together?

Sam: We match people by traction and then by industry and then by region, so that figures out people’s experience level, if they have similar problems, and then industry’s important because sometimes people will be talking about– like they’re having an issue with their sales team but then if you’re a consumer good company, you maybe don’t have a sales team. We want to make sure that it’s a B2B or B2C, so that’s important. Another good thing with the group is vulnerability.

Some people, particularly men, they’re not used to therapy and they’re like, “I don’t know how to talk about this stuff.” Then they start talking about it and we have so many people who cry in the meetings and they’re having all these revelations and it’s like, “Yes, man, this is what therapy is like.” It’s pretty wild and you have to be vulnerable. There’s a huge component of confidentiality. We make everyone sign a confidentiality agreement and if you break that, you’re out.

Confidentiality, vulnerability, the ability to give. We do this thing where people do business breakdowns once every session, so someone will create this document, and “here’s exactly how our business works. Here’s the strengths, the weaknesses.” They do a SWAT analysis of the company and they explain all their financials. A lot of times they’ll do a portfolio breakdown of their net worth and where all their money is. We talk about these really confidential stuff. Confidentiality’s important, vulnerability, transparency, and then giving to the community.

You’re constantly saying, “Here’s my experience,” so other people can learn from it because the idea here is like a lot of businesses make the same mistakes over and over again, and a lot of CEOs make the same mistakes that other people have already made. It’s like, “Well, instead of making that particular mistake, just learn from them and don’t do it and just do what works.” That’s the goal, so you have to be able to share a lot of information.

Jacob: Someone joins a group, how do you ensure that they stay consistently active because, obviously, if people start to fall off from the group, the rest of the group suffers? How do you ensure that the eight-person unit is consistently all engaged?

Sam: We have a person on the team who just talks to the facilitators constantly. After every meeting, they’ll do a catch-up with them and figure out what’s going on, how’s the group, what do you need to make this more cohesive? Then we also get survey results from the attendees after each meeting and they let us know how’s the coach doing, how’s the members doing. Who’s lacking. It’s like a school and we’re the principal, so we know what’s going on.

Jacob: We talked a little bit about the type of members you’re looking for and that these groups are by industry, where they are in their business by their geography, but when somebody wants to join, how are you, is it like an open rolling basis of people joining Hampton or do you wait until you’ve reached, “We’ve got eight people who fit the right profile. Now we’ll let all eight in at once”?

Sam: We turn down 90% of people who apply. We turn down most people who apply. We interview a whole bunch of people and then we still turn down more people and then we say, “All right, we think you’re a good fit, you may join.” Then they sign up and then we– we have enough customers coming in, so there’s groups forming at any given time that might fit that person’s wants and needs and sometimes they’ll have to wait 30 days until we place them.

Jacob: I know that you’ve been doing this in what we’ll call it beta or in–

Sam: Not beta, stealth.

Jacob: Not beta, stealth.

Sam: Not even stealth. Look, I’ve got a really big audience and I just haven’t talked about it one time.

Jacob: All right. What is going to be the marketing plan going forward though? Is it going to be, “Hey, you know me as Sam Parr, so sign up for this,” or are you going to try to distance yourself a little bit from this?

Sam: This company is not the Sam Parr Show. I have hired a CEO who’s awesome. They run the business. I’m a customer and I’m in the core group. I have my own group but we’re going to use my name, for sure, to get the brand out there, but if you go to the website, you’ll see a picture of me but that’s just at a core group dinner but no, my name is not the main factor on here. I think my name will get us the first 1 to 3000 customers but then it’s very easily going to outgrow me just like The Hustle did. That’s why we hired a CEO because we were like, “This is definitely going to outgrow both my partner and I.” we needed someone who could manage it but no, it’s not going to be the Sam Parr Show, that’s for sure.

Jacob: Let’s talk a little bit about these. There’s two other features. One, you talked about the events and then also the exclusive perks. I know right now the business model is purely subscriptions but these events, like what size are you thinking about? Are you thinking that it’s like a hundred people together? Are you thinking it’s like a big trade show type of thing? Maybe not with booths and all that, but what are you thinking from a size perspective?

Sam: We have a couple of different types of events. The first one that we do, we call them Adventures. For example, 15 members are doing a rally car class together this month or next month. They’re coming down to Texas. We rented out this track and it’s like a race car lesson. There’s like 8 or 10 or 15, I forget the exact number doing that tonight. It’s Friday. Right now, there’s a dinner that I’m going to and there’s going to be probably 12 people there. We have adventures where we go– we’ve gone fishing, we’ve gone to rally class, we do all types of stuff, and then anyone can sign up, although we typically invite certain people, so it’s curated.

The second thing is retreats, so that’s usually two or three core groups together doing a retreat. We’ll get like 24 people who have similar-sized businesses or in similar size core groups. They’re going to do their retreat together. Then we have dinners and cocktail parties, and those are typically– that’s like what I’m going to tonight. We have chairs in each city and they’re organizing these. There was one in Chicago the other day, and I think maybe 10 people came. We had one during South by Southwest and we had 50 people who came. We do things like that, and then eventually we’re going to have a conference.

Jacob: I want to go back to the team for a second because in many respects, it seems a legitimately mature business from what you bring to the table, but you’re only– you started in June.

Sam: Yes. We move fast. That’s my thing. My partner Joe and I– Joe’s the only person I’ve ever worked with where I’m like, “Man, you’re moving too fast. I can’t keep up.” We move quickly.

Jacob: How much money did it cost to start this thing? Are there investors or is this just you and Joe?

Sam: No, we own it all. We are both fortunate to have exits and we committed to not raising any money. I’m not a type of person who never says never, but I would say there’s a very, very, very, very high likelihood that we never raise money for this and we self-fund it. That’s our goal.

Jacob: An $8,500 a person, that seems you can give them really good value. I think that’s goes to your point about operators not charging enough. If you charge enough, you can give good value and not need to go outside for so much money.

Sam: I think we’re underpriced. Vistage charges $25,000 a year. YPO, their pricing determines– I think it’s determined by which city you’re in and sometimes it’s 15 grand a year. I think that $8,500 is actually middle in terms of pricing, and I’m not going to act tough. I’m bad at pricing and I was afraid to charge that at first. I was like, “Oh my gosh, that’s a lot of money. We have to make this tip-top the best service that we could ever provide.” Then we charged it and we started looking at the results and the feedback. People were like, “This is amazing.” I was like, “All right, we’ve nailed it so far.”

Jacob: If you got your first paying customer in July, it’s now end of March, what are the metrics you’re looking for when you start thinking about retention? You’re going to want them to pay again next year. What are you looking for specifically to know that you have a business that’s definitely going to repeat?

Sam: That’s scary. I don’t know. I don’t have a lot of data. I just talk to our customers. I’m in our community every single day just talking like, “Hey, how are you? Is there anything I can do today to improve your service?” Just talking to them constantly. We have results every single day from people because we have core groups happening all the time, and we’re just looking at what did they rank it out of 10? If someone has a bad experience, anything below an eight, we message them and be like, “Hey, what happened? Why was this not good?”

Then we act really quickly in order to make it awesome. Right now, it’s just very, very customer service-heavy in order to make it great. We’re not going to know until I guess June and July if that works. Which is scary. That’s very scary. Fingers crossed.

Jacob: Fingers crossed. All right, so your big statement I think it’s what got me excited to talk to you was this is going to be a multi-hundreds of millions in revenue.

Sam: I think it can, yes. Everything is there for us, but we could screw it up.

Jacob: Sure. Let’s assume that you don’t screw it up and you’ll know pretty quickly whether you are or aren’t. If your retention rate is 10%, you know you’ve got a failed product. If your retention rate’s 95%, you know you’ve got a good product, right?

Sam: Yes, keep in mind, dude, a lot of these companies that are in the space that have done well have been around– like Vistage has been around I think since the ’50s. EO has been around since the ’50s or ’60s. When has YPO launched? I think also in the ’60s. Decades. It might take us some time to truly hone it in, but they’ve done a good job of creating a playbook for us. I think it’s going to be big.

Jacob: This is where I think curation comes into the conversation because on the website you say Hampton is a private highly vetted community, but to get to $120, $100 plus million dollars, you need 12,000, 13,000 members. How can you have a highly vetted private community while also letting in tens of thousands of people? At some point, does it not feel exclusive?

Sam: That’s why I suggested those different job titles. Right now for the founder community, we’re limiting it to a thousand people. Maybe we’ll expand that to 2000, I’m not sure. We don’t have a plan. All we’ve said is let’s get to a thousand and then we’ll reassess what we want to do. That’s why I think we’ll potentially go after new job titles in order to keep it exclusive. You could do a bunch of things. There are ways to make it so like the CTO group has no idea that the CEO group exists.

There’s no intermingling. I think that’s what we could do. I’ve talked to a bunch of people at Chief, at Vistage and they’ve expressed– I think Chief has 25,000 members. Sometimes people say it doesn’t feel exclusive anymore. A lot of people have said that their community is still popping and awesome. I think there are ways to solve for that. I actually don’t know what those ways are yet, but I don’t have to solve for it today. I have some guesses, and one of those guesses is different job titles.

Jacob: Why did you decide to do this next? You could have done anything after The Hustle. Why this?

Sam: Because I had a group like this and it changed my life. My partner and I, Joe, he has had multiple nine-figure exits and we would talk every day. I know everything about relationship issues. If he’s having any in his marriage, with his old co-founder, we know our portfolios, we know each other’s net worth. I would trust him with my bank account pin. When I had a person who I could trust and when I was selling my company or when I was thinking of proposing to my wife, when I was not sure if I could be the CEO of the company, having someone to turn to who I knew had been there done that, and who I trusted with my life, it changed the game for me.

I felt that it was a little bit unfair that if you’re a guy in Iowa, in Des Moines and you have this killer business making $20 million a year, you’re like a freak in your town maybe. I wanted to make it so others could do that. That’s the mission, but also it’s dope. It’s awesome. I get to hang out with badass people all the time. We have a guy in the community who took a company public and I’m inspired by that person and I make money hanging out with him. That’s the dream.

Jacob: What is a question I should have asked you about Hampton that I didn’t ask you? What would make my readers and listeners smarter about communities?

Sam: Probably why more people aren’t doing this and also where people are failing in community. I think that I have got very strong opinions about community and the vast majority of everyone in the “community game”, I think is using the word community when they should be using the word audience.

Jacob: I agree.

Sam: There’s a massive difference. Like The Hustle, we had an audience that had community components. Morning Brew, you guys have an audience with some community attributes, but the difference between the two is creating content at Morning Brew and tell me, are you going to grow? I bet you won’t. That is proof that you have an audience. With a community, it’s many to many. Audience, one to many. Both are awesome. Both serve a great purpose. I think community is more valuable and I think community is harder to build.

Once you nail it, it lasts. Well, no, a media brand could last hundreds of years. Look at New York Times, but a community can last a much longer time and you’re more so nurturing it as opposed to creating it. I think a lot of people don’t know how to do that. I think they fail because they don’t treat people like people. They’ll treat their friends differently than their customers and that’s not always the right approach. They’re too professional a lot of times with them.

A good community has attributes of a cult. You have some rituals, you have a clear leader, you have an us versus them mentality, you have shared experiences, things like that. It’s pretty hard to pull off, there’s definitely a playbook. I think a lot of people, particularly in your world, my old world media, they use the word community so poorly.

Jacob: I’ve softly developed a framework for deciding whether something is or isn’t a community. If you’re pushing something to someone, that’s an audience, it’s not a community. If somebody can reply to you, and I think this is like the email thing, you’ve got a one-to-one relationship at least, it’s a little bit of a community [crosstalk] really maybe–

Sam: [crosstalk] [unintelligible 00:29:42] has to be attributes.

Jacob: The only way something is a community is if you’re connecting people together. If you’re connecting to events or natural communities. Once you have an events business, this is why I think, especially in the B2B world where I come from, events are such a natural thing. We use our content to build an audience and then we bring that audience together at our community events, which we just happen to charge a lot of money for. That’s how I think about these communities at a different level.

Sam: A community needs a physical space, not exactly physical, it could be digital, but you know what I mean. It needs a time and a place that people communicate. Otherwise, that’s not really a community. A lot of people forget that and they– Dude, I’ve got so much to say about the media world because I love it and I hate it at the same time. I think everyone in that world does, it’s a love-hate relationship. They use this word community, it’s like, stop trying to act you are when you aren’t.

It’s not insulting to not have a community. It’s not necessarily good or bad, it just it is what it is. Embrace that this is an audience, this is not a community because they aren’t the same. I think that terminology, it sounds like I’m being nitpicky, but I actually think it matters because it dictates the strategy that you use when doing this stuff.

Jacob: Absolutely matters. Call it what it is, and don’t get distracted. I don’t want to spend a lot of time talking about The Hustle because I’m sure you’ve beaten the ever-living daylights out of this topic.

Sam: Dude, I would love to talk about media with you though. I’d never talked to people who’ve actually been there, done that. Me, Austin, Alex, the folks at The Skimm, and then our teams, we were all somewhat separately creating something that we– none of us invented this thing, but we are this new-ish wave that was pioneering it. It’s really cool.

There’s only hundreds of us if you look at all of our employees and the people who were really part of it that were actually innovating and creating this thing. I love talking about it, at least, with the very few people who know what they’re talking about like you.

Jacob: Let’s do a little thought experiment. It’s March 2023 when we’re recording this episode. If you had to start The Hustle over today, would you, and do you even think it could work?

Sam: Yes and yes. I’m not going to hate on you for asking that, but people– because your intentions are different. On our podcast, people constantly ask me, “If you were going to start over, what would you do?” Really what they want is like, “Just tell me how to make money.” That’s a fine question, but just say that. They say that all the time and they’re looking for like, “Just tell me to go into AI or crypto.” I’m like, “Yes, I would start the exact same thing and I would do it almost the same way. I think it’s harder now but it does work.” The proof that it works is Sean, the co-host on my pod.

He did the same thing and he had a nice exit in six months. Could I start The Hustle again? Yes, I could, I probably would’ve changed some things, but in general, it mostly would’ve been the same. Now it’s definitely harder. I don’t know how much it costs. We grew to a hundred thousand subscribers in the first year just through me blogging. Then after that, we did pay marketing. Then after that, we did the whole referral scheme that all of us did, where it’s like merch.

That was somewhat novel-e so it caught on. Now you’d have to come up with a new shtick, a new fun thing. In general, yes, it would work again if you still did the same thing. Then after a hundred thousand, then we started doing paid marketing. Back then, on Facebook– I’m saying like it was forever ago. It was five years ago, four years ago.

Jacob: That is forever ago on the internet. [laughs]

Sam: I know, but even three years ago maybe when I was running the company, I think we’re buying customers for $1.50 to $2.50 on Facebook. I don’t know what it is now, but I bet you it’s a lot more, maybe it’s not because of the economy right now, but for a minute, I heard people saying it was like $5, $6, $7. That’s like prohibitively expensive.

Jacob: It’s gotten a lot more expensive. I run the growth team at Morning Brew, so I know what we’re spending on our [unintelligible 00:33:44]. It has unfortunately gotten more expensive.

Sam: How much is it? How much does it cost to get a B2B customer?

Jacob: Oh, B2B is different because B2B, I can monetize so much more.

Sam: How much?

Jacob: We sometimes spend $10 to acquire a B2B subscriber.

Sam: That’s crazy. Back when I was– [crosstalk]

Jacob: Yes, but I monetize up for $45 is my–

Sam: Per year?

Jacob: Over an 18-month period, I make $45, $50. From that perspective, I’m comfortable with that payback period because they stay super engaged, they stay super retained. Plus then they might refer people and then it really starts to pay off. It’s a lot harder but it’s interesting. What Sean did with Milk Road, if I was starting a newsletter today, I would exactly do it exactly what he did. Pick a super niche topic. Obviously, I come from the crypto space, so that would’ve been– that made sense. Even any niche topic. I don’t know, I think I own the domain name like geneticsreview.com.

Sam: [unintelligible 00:34:42] kill, by the way.

Jacob: Right. It would, and go super niche, but I would never in 2023 try to build the daily newsletter at Morning Brew. Never in a million years.

Sam: No, it would be hard. Morning Brew and The Hustle, at the time, we thought it was niche, but I was like, “Business Insider probably gets 80 million views a month and it’s mostly tech.” It’s big enough. I think The Hustle, we actually had more of a niche thing. You guys are business news. We were one niche down maybe, which is an entrepreneurial or tech slant. Doing a daily, it would be very, very, very hard to start now.

When we started, I pitched, I got us to $40,000 a month in ad revenue. When I was pitching people, they didn’t know what the hell– how to price ads in a newsletter. Now it’s way easier. I remember I just said a number– Wealthfront was my first client and they were like, “How much your charge?” I’m like, “I don’t know, man. How about you just give me 2 grand and you just tell me if that work for you?” We were just making it up. Also when we launched, I told this executive, I’ll tell you off the air who it was, who runs a huge media company.

He was like, “Newsletter? That’s such a small, stupid idea. There’s no way this will make more than $1,000,000 a year.” I remember it bothered me. I was so bummed. I was like, “Oh man, is this really that small of an idea?” Now, we all know that’s not true, but if I had to start over again, I probably would start niche. I remember when Morning Brew launched different verticals, I thought that was a bad idea. Looking back, that was actually a smart idea if you wanted to go further down the ad business, which is a pain in the butt, but also worth it depending on what your skills are.

Anyway, going niche would be better and that’s what I would do differently. I also would’ve created– so at The Hustle, we had The Hustle, the daily thing, and then we had Trends. Instead of Trends, I would’ve done a much higher– I would’ve done Trends, but 30 grand a year and done it a far more tailored high-end service. I think that would be killer and I would’ve launched that way sooner into the business.

Jacob: Like POLITICO Pro?

Sam: Yes. I don’t know entirely how their operation works, but it sounds like it. My friend Jason, you know Jason, at Blockworks, they have a subscription service. I would’ve created a higher-end community that had data earlier on and I would’ve charged more, but when I started the company, I was 25. I didn’t even know that people paid for that and now I do.

Jacob: Isn’t there a joke that the first company people start as a consumer company and the second company, they start as a B2B company because they realize just how much more money is in B2B?

Sam: Yes, there’s so much more money. It’s easier because they’ll tell you what they want. Whereas a consumer, they don’t know what they want. You got to invent something and hope they want it. Yes, I would’ve done some things differently, for sure, but I love the newsletter space. I still think it’s awesome.

Jacob: I love the newsletter space too, but I also get paid to say that I guess.

Sam: I think it’s rewarding to create something and you get feedback every single day or every week. I think it’s awesome. I like the newsletter space. I think that the biggest innovation in email lately was 20 years ago when Google created the promo inbox. As long as they’re slow to innovate, there’s going to be all types of cool opportunities in the space, and then when they finally do innovate and change it, then we’ll see new opportunities. It ain’t changing. The shit that me and you and Austin and Alex did, it’s not going to go away. Maybe some tactics will change, but the strategies won’t.

Jacob: You sold The Hustle to HubSpot and even if I asked, you wouldn’t tell me how much you sold it for.

Sam: I’ll say it was a good exit. Also, keep in mind when we sold, the stock price 3Xed over six months, so–

Jacob: Was it mostly stock?

Sam: No, there was a lot of cash and then I got a whole lot of HubSpot stock and then that lot of HubSpot stock turned into a whole lot at 3X and then it went back down to normal. I’m still very, very bullish on HubSpot. I love that company. I think it’s a really good company and so I don’t intend to sell any shares anyway.

Jacob: You sold, what was the process like? Did you seek them out? Did they seek you out? How did that all happen? How did it all come together?

Sam: They sent me a cold email. This guy named James sent me this cold email in October and he said, “Hey, I want to partner with you.” I looked him up on LinkedIn and he worked in the M&A department. I replied, I was in a bad mood, but I had been through this enough that I wanted to cut to the point and I go, “I don’t know what partner means, just tell me are you wanting to buy me or not? If yes, we can move faster.” He goes, “Yes, I want to buy you.” Then I replied and I go, “Great, here’s a list of 10 reasons why you don’t want to buy us.” I listed up all the things that they could potentially find that would stink. He goes, “Thanks. None of these are deal breakers.” I go, “Awesome, let’s talk.”

I always thought it would make sense at the time when WeWork before we knew, it was not great. I was like, “A WeWork or a LinkedIn should buy us,” and we had a lot of interest from media companies, but I didn’t want to sell to a media company because I thought it would be way better to monetize elsewhere. When they hollered at us, I was like, “Oh, I forgot about HubSpot. I always thought Salesforce should have done it, but hell, yes. You guys are open-minded.” They’ve been really great about it. They’ve been very open-minded and it’s been a wonderful deal for everyone.

Jacob: Was there anything you would’ve done differently now that you have sold your first company?

Sam: I made the biggest mistake ever, which is I threw out the first number.

Jacob: [laughs]

Sam: That was a big mistake. I didn’t have a lot of money. I didn’t have any money when I started the company. The only regret that I have is, and this is something I can’t address, so it’s not truly a regret, is I wish I would have not needed an exit in order to make money and been able to own it forever. A newsletter’s awesome to own forever, but when you’re poor like I was, and you’re young and you’re just getting started, you need an exit in order to “make it”. I wish I didn’t have to have that. I wish I didn’t have to sell. I guess I didn’t have to, but you know what I mean.

Jacob: Yes, for sure. I want to end with the same two questions that I ask every operator that comes on the show. First, what is a mistake that you’ve made in your career that you wish you hadn’t and what did you learn from it?

Sam: When I started the company, I was in my 20s. Now I’m in my 30s and I have a slightly more evolved worldview. I wish I was a little less dogmatic early on and a little bit more open-minded because it screwed up my culture. The people who I hired early on all represented the 20-something-year-old me whereas as I got a little bit older and my ideals changed, I was screwed. I screwed up my own culture.

What else? I wish I would’ve bootstrapped the whole thing. I gave equity early on to some people. I wish I just would’ve owned 100% of it and paid more in salaries so I could own it for forever because the second you give out a little bit of equity, you owe it to them and everyone else in order to have a return. I wish I was like, “Oh, screw returns. I don’t care about that. Let’s just make this awesome.”

I wish I would’ve done that. I wish I would’ve enjoyed the non-scalable hand-to-hand combat stuff a bit more.

I used to read Paul Graham. I lived in San Francisco when I started. I was like, “Oh, you just got to get big. Who cares?” When it’s like, “No.” We should’ve been sending handwritten letters or we should’ve been doing a lot of that stuff or we should have been doing these small 100% events versus a 3,000-person Hustle Con. I should have done that a little bit better earlier on.

Jacob: Second, what is some advice that you would give operators looking to grow their media or community businesses?

Sam: Don’t treat people like they’re one human being from 9:00 to 5:00 and then another human being from 5:00 to midnight. Think of someone as a holistic person and don’t be afraid to sometimes have typos or just do normal– When I’m talking to my friends or a coworker, I am respectful and I’m courteous and professional. I make jokes and I have fun with them. I think that a lot of people treat the suit customer as one way and then the evening person as another way.

I actually think that you should be a holistic person. I think CB Insights is a member of Hampton and that’s a good way. He sells to banks and stuff. It’s like the most uptight group there is-

Jacob: But then ends his emails with I love you.

Sam: Yes. He is fun. Their tagline for a minute was like, “Without data, you’re just an idiot with an opinion.” They do this fun stuff, but they’re very respectable. I think that more people should do stuff like that because I think that in order to stand out from the crowd, you got to be silly sometimes or whatever it is to get an emotion out of someone.