Recently our Lean Startup Co. Faculty Lead Marilyn Gorman spoke Foundr CEO Nathan Chan about using Lean Startup to build a media company. In an era where everyone from legacy newspapers to new digital destinations are rethinking revenue streams, Nathan’s insights are invaluable.
If you’d like to read the full transcript of Marilyn Gorman’s conversation with Nathan Chan, you may download it.
How to Bootstrap & Scale a Lean Media Company
“The most successful media companies [don’t] rely just on magazine subscriptions or advertising,” Nathan says. “They use other forms of monetization and really create products that their audience wants.”
Foundr is a prime example of how Lean Startup can be used to discover and build new audiences in the media sector. Nathan used the methodology to turn his side hustle into a company that he says has “hundreds of thousands of people in our email database, millions of people that follow us on social media, [and] tens of millions of people that know our brand.” He’s published material from both grassroots entrepreneurs and such world-renowned leaders as Richard Branson. Not bad for a young startup in a struggling industry.
Longevity Depends Upon Listening to Customers
Market research hasn’t completely lost its value. It can help you form hypotheses to test. But you can’t rest your entire business model on static intel, says Nathan. You have to get out of the building—constantly speak to your audience, listen to customers, and discover how you can better serve them. This is especially true if you’re an online media company. “Your landscape can change so extremely fast,” Nathan says. “I started Foundr four years ago, and things are so different now compared to back then.”“Market research hasn’t completely lost its value. It can help you form hypotheses to test.”[email protected] Click To Tweet
Launching & Growing a New Media MVP
Nathan started Foundr as a way to share stories of grassroots entrepreneurs, a niche he says was lost among profiles of industry heavies. He tested consumer interest in this content gap very simply—by launching digitally on the Google Play app store, allowing him to prove his hypothesis based on the number of subscriptions sold. “It started to grow quite fast,” he says. Foundr became one of the top magazines in the iTunes business and investing section. From there, he says, he used Instagram to rapidly expand his subscription base.
Using social media also helped Nathan focus on specific customer needs. When he blogged about his experience using Instagram to grow his audience, the post went viral, and people requested his services as a social media consultant. Nathan’s audience was showing their willingness to commit money to his ideas. He expanded Foundr’s entrepreneurial lessons by creating an education space dedicated to the founder community. “I launched this [first] course, just put it out there. I sold out the course before it even existed,” Nathan says, “I validated it.”
The validation process is key, he says, in understanding whether there’s a need for your product before you build it. “If a decent amount of people are willing to pay for it and it doesn’t exist, a big part of your job [is] done.”
Nathan continued talking to his audience to further shape Foundr’s offerings. “I started to find out what topics are they interested in,” he says. “Who are the entrepreneurs that they follow? Who should we try and get on the magazine covers to attract people?”
Creating Content That People Will Pay For
Nathan says Foundr shares stories about “the greatest entrepreneurs of our generation,” but, he adds, “the content doesn’t just live as profiles.” Based on his own masterclass MVP, Foundr invites entrepreneurs to teach courses once they’ve pre-sold and validated the need for a particular topic.
“We could sell a course six months before that person even gets [to take] it,” Nathan says of the company’s sales approach. “We actually openly say, ‘Hey, we’ve got 20 different courses we’re thinking of creating. You can buy any of them at an extreme early-bird discount.” The courses aren’t fully fleshed out at this stage, Nathan says. They’re simply descriptive headlines, three bullet points about the class, and the price point.
Foundr runs a special promo to their email database with the trial offerings, and the results show his team which courses are the most in-demand. “So, let’s say we launch 20 [courses],” Nathan says, “and out of those 20 we might find maybe eight or 10, and those are our top ones that we will produce. The rest we will refund [customers] for or give them a credit to any of the courses we’re going to produce.” Nathan’s team also uses the presale intel to shape future offerings, allowing the revenue stream to double as a customer-feedback loop.
Nathan has had other successful tests with Foundr, including one that involved giving away a print copy of the popular Richard Branson issue, charging customers only for shipping & handling. The offer came with two optional upgrades for online courses. His team tested the idea first with their existing customer base, and when that test proved successful in generating sales, they moved into a Facebook test, serving ads “to people that are not in our audience [and] are interested in entrepreneurship.” By using the social media/simple upgrade combo, Nathan says, his team acquired customers at scale and profitably.
Ensuring Your Offerings Stay Focused
“I’ve learned that just because you can launch something, and it can generate money, doesn’t mean you should necessarily do it,” Nathan says. Experiments should ultimately align with your company’s overall vision to prevent burning out your team and your customers.
Nathan came to this realization when sales for a Foundr coffee table book exceeded expectations, leading him to consider creating more tangential products. “I was like, ‘Oh, we should do more of these Kickstarter campaigns. We can do a journal for founders. This is really hot. I think this will do really well.’ And then I just decided, it’s too much stuff. We need to hone it back. We had this other product, a membership site. We shut it down about two weeks ago because it was a distraction.” He says it was difficult to grow the memberships—the churn rate was high.
In the end Nathan decided the company should spend its energy on magazines and courses. “We just had to let [the other ideas] go because we can only be the best at a couple of things,” he says.“Just because you can launch something, and it can generate money, doesn't mean you should necessarily do it. Experiments should align w/ your company’s overall vision to prevent burning out your team & customers.” [email protected] Click To Tweet
Move at Lean Speed as You Grow
Speed is Foundr’s competitive advantage, says Nathan, who encourages teams to generate and test ideas quickly. “I always say, “Let’s move as fast as possible. If you make a mistake, if you break things, I’m always open.”
Nathan’s use of Lean Startup to successfully grow Foundr shows how following the methodology doesn’t just lead to individual success stories—it can help reshape an industry as a whole.
“I’m trying to challenge the status quo of what a traditional media publication looks like,” Nathan says, “by following what our audience wants.”@nathanhchan’s use of Lean Startup to successfully grow @Foundr shows how following the methodology doesn’t just lead to individual success stories—it can help reshape an industry as a whole. Click To Tweet
Thank you to Jennifer Maerz for contributing this blog. Give us a shout out on Twitter @leanstartup and let us know what you thought of our non-traditional Lean Startup piece.