Community building is establishing itself as a viable business model. The market is growing with new players, tools, newsletters and resources. Thus M&A news are becoming a routine part of this market.
After a massively successful launch on ProductHunt Yaroslaw enlarged his existing community with acquiring Indiemailer - a community for paid newsletter creators.
While we're quite used to reading about startup acquisitions, community acquisition is fairly news subject. In this article we talked about the acquisition process, metrics and long-term goals with the new community.
Honestly, it's been pretty wild since our conversation. Things have been really picking up for IndieStack and Newsletter Crew. Just a week ago I launched IndieStack on ProductHunt and received Product of the Day! This was really surprising since it's my first ProductHunt launch. It's almost unheard of to reach first on your first launch. I'll be tweeting a long thread about it at some point but with everything going on it's been hard to catch up. I also serendipitously ran into a few acquisitions. The first acquisition is a member/project directory that will be integrated into the IndieStack community. The second was a pretty well known community for newsletter creators called IndieMailer. Which of course was acquired to expand Newsletter Crew.
This is a thought I've been going back and forth for a while now. On one hand one of the main reasons I created the Newsletter Crew podcast was to build an audience in that niche. The problem with a podcast is it's a one-way channel. The audience only hears the content. No other real way to interact other than Twitter or emailing me. I've been thinking for a while now on how to create a streamlined two-way channel that would also benefit the rest of the audience/community. One of the routes I thought to create was a forum/chat. Similar to IndieStack but for newsletter creators. Now on the other hand, there are already a good amount of communities out there for newsletter creators. Newsletter Geeks, Newsletter Creators, IndieMailer, etc. Why create yet another community? This was what was keeping me from really executing it. I honestly wanted to wait to build a bigger audience before really launching a Newsletter Crew official community. I wouldn't say I was ready, but it was on my mind on how I could enlarge the community.
There were a few reasons I acquired IndieMailer. The first and biggest reason is I knew this is the opportunity to expand into actually turning Newsletter Crew into a community. The second reason was the community was already primed and had 100+ members. Just getting it to this point can take months and many hours of hard work. Acquiring IndieMailer would let me streamline this process. The third reason was the price. The price simply made sense to purchase it especially how it’ll fit into the Newsletter Crew. This acquisition has effectively doubled the value of my company. The podcast is such a great fit to acquire members as well as it gives me an audience to do private podcasts. I’ve now efficiently added a whole new revenue stream to my business, memberships. Before it was only sponsorships and affiliate sales.
With the successful ProductHunt launch, acquisition of the member directory, and IndieMailer acquisition. It's changed so much. There's just so much to do to get back to a baseline routine. Once I get there, probably in another week or so. I think it probably wouldn't change much, other than another hour or so per day to upweek the new Newsletter Crew community. The community wasn't as active as I wanted it when I acquired it, so it'll take some work to get it back up to previous heights.
I've heard of IndieMailer before when I first started my journey into the newsletter niche. As usual, I had my random thought on what if I acquired it? I love alternative assets as an investment. But that was just a thought. When I interviewed Terry Godier, founder of IndieMailer, on the Newsletter Crew podcast (episode 15) I got to know him pretty well. We spoke for a while and could have spoken for hours. I was really impressed with his knowledge of newsletters and what he was doing with IndieMailer. This brought me back to my thought that I should really start my own community, similar to IndieMailer. I had an audience of listeners that would join. But after the interview, that though went back into the depths of my mind. The day after my successful ProductHunt launch of IndieStack I had received a response back from Terry. I had emailed him on launch day asking him to check it out and provide support. As we know when you launch on ProductHunt, you need to reach out to everyone in your network. So I reached out to Terry since I mentioned I was running IndieStack in our podcast. He supported the launch which I really appreciate. The really interesting part was in his email response he had asked me if I'd be interested in acquiring IndieMailer. Of course I was interested. Since the beginning of starting the Newsletter Crew podcast I knew I wanted to build a community, I just kept pushing it off. During my podcast with Terry I also did mention to him I was playing around with the idea of starting a forum/chat for Newsletter Crew. I guess in a way, it was being at the "right time and the right place". I'm not sure about Terry, but I wasn't planning on acquiring IndieMailer. It had simply happened after a lot of right steps.
Some of the biggest metrics I was curious on was the number of members, revenue earned thus far, member churn, and engagement. Member numbers and revenue can be used as a base on how to value a community. IndieMailer was also too young to really have effective member churn numbers. It’s less than a year old but the membership is only yearly. So these numbers won’t be apparent until October/November as renewals come around.
My suspicion is the churn will be high due to the low engagement of IndieMailer when I had acquired it. Engagement was almost non-existent on the forum with the most earliest post being a week. The chat was livelier but still not up to far. All of this played a big role in valuing the company.
By far the biggest metric for any community is engagement.
How many threads, posts, and Daily Engaged Users is what I want to see. This number should be high and trending upward in the long run. Looking at IndieMailers charts there was a huge burst of threads, posts, and Daily Engaged Users, but over the months it started dropping off and by the time I acquired it, it was pretty much flat. Now, even after just a week, I’ve brought that number up dramatically. With over 20+ members joining Newsletter Crew it’s been more active than it has been in months. I firmly believe this is due to my decently sized email list, Twitter, and podcast listeners. My goal is to keep increasing all of these metrics. I’ll be monitoring them weekly.
Honestly, it was much shorter than expected. Obviously, we’re not taking a huge acquisition here. This wasn’t a 7-figure acquisition. The revenue numbers for IndieMailer are less than 5-figures. So it’s not surprising it was pretty quick. The whole acquisition took roughly a day. Which another day of moving everything over to my name. Overall pretty easy first acquisition for me.
The negotiations were fairly quick. There was some back and forth on the price via email, but again with the revenues not being too large the price was pretty easy to knock-down. I am not open to share the exact number but I will say I was using revenue generated thus far as a big base to make a price.
I didn’t notice churn, I saw the exact opposite. IndieMailer wasn’t as active at the point when I acquired it. I think when the members saw the acquisition email it had sparked an interest on where this will go and perhaps due to that brought some people back from being inactive. I’d think if the community was much more active and bigger we’d probably see churn. That wasn’t the case with this acquisition.
This is a very good question. The short answer is no. I won’t be merging them together. I want Newsletter Crew and it’s brand to be completely separate from IndieStack. I also want Newsletter Crew to stick to one niche (newsletters) and not stray from it. The price points for each membership is quite different so it’d be hard to combine them together anyways. I am looking into some bundling though. I’ve already sold some bundles. Some users joined Newsletter Crew and after getting to know them, they seemed like a great fit for IndieStack too. Obviously I offered a discount for the IndieStack plan. I’m still working on what the best bundle price would be here.
This is a great question too. IndieMailer was $9/year but is now $19/year. This is the price I’ve been using for now. I’m going to keep it at $19/year as a promotion price. I want to keep the barrier low intentionally to get new life into the community. My goal eventually is to increase the price as I come out with the private podcast feed, AMAs, and other interesting community events. I don’t see Newsletter Crew membership being as high as IndieStack. The main reason is the target audience. IndieStack is geared towards serious digital indie entrepreneurs who’ve either already started making money on their projects or are fully independent already. I want the price to be a big barrier of entry into the community and weed out the unserious folks. Plus I want to intentionally keep IndieStack smaller but highly engaged. Newsletter Crew on the other hand will cater to the whole spectrum. I want to keep prices lower to allow people who are serious enough but perhaps they’ve just started and perhaps haven’t yet made any money from their newsletter. That being said I’ll be increasing prices to $25/year soon here. With where this community is going $19/year is simply too low for the value members get. But time will tell on what the ceiling price will be.
Currently the short-term plan is to rebrand IndieMailer into Newsletter Crew. I’ll leave the tech stack pretty much the same. Discourse for the forums on a subdomain of Newsletter Crew. But I will change the chat client to Discord from Slack. Slack is great but the mobile experience is pretty clunky to be honest. Plus it doesn’t integrate with Memberful. How will I manage members that churn? I plan to keep churn low, but there still isn’t an answer. Discord integrates seamlessly with Memberful and you get full chat history too and voice channels. It’s the better choice in my opinion.
Don’t simply look at revenue when valuing the community. Look into engagement and growth as well. Mostly engagement honestly. If that’s low, you’ll need to account for that. Revenue is a great place to start but won’t be where you end up. If you are acquiring a community with low engagement, have a good plan on how you’ll increase engagement for current members and new members. Is that plan sustainable? Acquiring communities is a great way to expand your business if it’s within the same niche.
Newsletter Crew itself will stay in the community/media business model. My plan is to have memberships as the primary revenue stream and sponsorships closely following. I’m not sure exactly if I’ll expand into anything else. I’m thinking of doing courses and ebooks too as part of the membership (or separate). Time will tell. I am working on a newsletter tool called InboxKit (https://inboxkit.co) which but this business is completely separate. Perhaps I could do some bundling too. But overall Newsletter Crew will be primarily a membership based business.
Previously with Yaroslaw we talked about his IndieStack community on Community Finder podcast:
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