1/ "Why are so many people selling subscriptions?"
Because the only cost is opportunity cost. Since some run newsletter as side hustle, there may not even be much opportunity cost for them.
Because the only cost is opportunity cost. Since some run newsletter as side hustle, there may not even be much opportunity cost for them.
2/ It’s extremely high FCF margin (~85-95%) business with potentially a very long runway (if you're really good) and you don’t need to be a rocket scientist to get paid.
So it’s no surprise people want to start one.
So it’s no surprise people want to start one.
3/ "If you're any good, why not just invest and share your knowledge for free?"
Most people don’t have capital. 😊
I’m also not sure whether I’m any good.
You cannot put food on the table if you do it for free. Readers also cannot/won't get consistent output if it's free.
Most people don’t have capital. 😊
I’m also not sure whether I’m any good.
You cannot put food on the table if you do it for free. Readers also cannot/won't get consistent output if it's free.
4/ Maybe people should just invest Other People’s Money (OPM)?
How can you invest OPM without the track record? How do you build track record without much capital and without knowing whether you’re any good?
So, you start a newsletter.
How can you invest OPM without the track record? How do you build track record without much capital and without knowing whether you’re any good?
So, you start a newsletter.
5/ The biggest “risk” for every semi-decent newsletter is not other newsletters, but other funds trying to recruit the author.
My working theory is there are so few wildly successful newsletters out there because most of the good ones get recruited by the industry.
My working theory is there are so few wildly successful newsletters out there because most of the good ones get recruited by the industry.
6/ I know because I have received half a dozen opportunities from my own subscribers without ever hinting I’m looking for a job.
I’m no special; many newsletter writers also have similar experience.
I’m no special; many newsletter writers also have similar experience.
7/ Some of those opportunities simply would not come to me if not for the newsletter.
In investment management industry, an analyst who writes a good newsletter will have 10x easier time to get into a good fund than a typical HBS grad.
In investment management industry, an analyst who writes a good newsletter will have 10x easier time to get into a good fund than a typical HBS grad.
8/ Since the overall industry is shrinking because of passive, every seat is exceptionally competitive.
Finally, if someone keeps saying *NO* to other opportunities, he/she can build exceptionally resilient business over time.
Finally, if someone keeps saying *NO* to other opportunities, he/she can build exceptionally resilient business over time.
9/ People underestimate how resilient a good newsletter is. We are the "taxi drivers" in Taleb's example.
Good ones can join/think about starting a fund (which is less resilient business) or just keep doing what they're doing: writing and investing their subscription money.
Good ones can join/think about starting a fund (which is less resilient business) or just keep doing what they're doing: writing and investing their subscription money.
End/ I have tried to answer the question in a way “finance people” can understand and skipped the non-financial aspects (which are perhaps better reasons) why someone may want to start subscription-based newsletter business.
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