In recent years, newsletters have emerged as a powerful tool for writers and content creators to connect with their audience. Substack was one of the foremost newsletter platform that gained traction and demonstrated the potential of this medium. Now we have a player in the scene called beehiiv. beehiiv platform enables writers to write, monetize, and distribute newsletters effectively.
Tyler Denk, the co-founder and CEO of beehiiv, believes that while social media platforms have been instrumental in establishing the reputation of writers and creators, email remains the most lucrative channel for communication and audience building. With an estimated 4.4 billion users worldwide, email provides the tools for better curation, making newsletters thrive. Despite the presence of established players like Mailchimp and rising stars like Substack, Denk sees a significant opportunity for innovative approaches in advertising, paywalls, and more within the newsletter space.
“It’s very early days for what is a massive opportunity,” says Denk.
The confidence stems from Denk’s experience in the industry. Alongside co-founders Benjamin Hargett and Jake Hurd, Denk cut his teeth at Morning Brew, where they built a highly successful newsletter business. Leveraging their expertise, beehiiv was launched in October 2021 in New York City. Since then, the platform has attracted 7,500 active newsletters with a collective readership of 35 million, generating 350 million monthly impressions. With a revenue run rate of $4 million and an annual recurring revenue (ARR) of $3 million, beehiiv has demonstrated its profitability, although this latest funding round has altered the profitability timeline.
With the recent Series A funding round of $12.5 million led by Lightspeed Venture Partners, beehiiv plans to expand its product, onboard more writers, and enhance its revenue streams.
Comparatively, beehiiv’s primary rival, Substack, claims to have 35 million active subscribers, including 2 million paid subscriptions. Substack’s business model focuses on newsletter subscriptions, taking a 10% cut from the revenue generated. To entice writers who can attract paid subscribers, Substack has offered advances to authors, even turning the concept into a product. While Substack is renowned for its newsletters and the high-profile writers associated with the platform, it has expanded its offerings to include podcasts and even a Twitter competitor.
beehiiv, on the other hand, is currently focused on newsletters, although Denk does not rule out the possibility of diversifying into other media formats in the future. Unlike Substack, beehiiv does not offer advances to writers and does not intend to take a cut from subscriptions if creators decide to implement paywalls (excluding Stripe fees). Instead, beehiiv’s growth is primarily driven by product enhancements and community engagement. Denk emphasizes that beehiiv did not spend any money on acquisition during its initial 12 months, and even now, approximately 90% of its monthly growth is organic.
beehiiv boasts a diverse mix of large newsletter publishers that have grown organically on the platform, including crypto-focused publication Milk Road and a collection of AI-focused newsletters. Additionally, beehiiv has successfully attracted writers from other platforms, allowing them to bring their existing audiences along. Prominent examples include Matthew Berry’s Fantasy Life and Daily Drop.
beehiiv’s future plans revolve around advertising, with an ambition to build a programmatic ad network for newsletters. Currently, the platform relies on ad content provided by advertisers. However, beehiiv is developing a system to better match brands and advertisers with relevant newsletter topics. Additionally, the platform aims to introduce various ad formats, leveraging AI to personalize content and create seamless reader experiences by adapting to different authors’ voices.
Despite the immense potential of newsletters, challenges persist within the industry. While some newsletters have emerged as alternatives to traditional media formats such as newspapers, magazines, blogs, and podcasts, the majority still revolve around marketing content. Users often receive unsolicited emails from e-commerce sites and other businesses, making it challenging to differentiate between valuable newsletters and spam. Transforming consumers’ perception of newsletters and encouraging them to engage beyond marketing updates remains an ongoing task.
Furthermore, the newsletter landscape risks becoming saturated, leading to reader fatigue. As the number of newsletters covering various topics continues to grow, recipients may struggle to keep up with the influx of emails. Additionally, many newsletters are managed by individual writers, raising concerns about their ability to consistently produce high-quality content over time.
Another critical question revolves around the sustainability of email-based audiences. Younger generations already exhibit reduced usage of email compared to older demographics. Will the popularity of newsletters reinvigorate email usage, or will the decline of email eventually lead to the demise of newsletters?
beehiiv has faced its fair share of challenges, including skepticism from potential investors when it initially sought funding. At the time, Substack was dominant in the market, and Twitter had recently acquired Revue, while Facebook had launched Bulletin. However, the efforts of these social media giants failed to live up to expectations, leaving an opportunity for beehiiv to thrive. Despite the continued presence of Substack and other competitors, beehiiv has achieved remarkable growth with significantly less funding.
beehiiv’s distinctive approach, combined with its solid foundation, growth potential, and the increasing importance of newsletters in the media landscape, sets the stage for a promising future. With its ongoing efforts to innovate and redefine the newsletter experience, beehiiv aims to cement its position as a major player in the industry, shaping the future of email-based communication and content distribution.
