I’m Tyler, CEO and co-founder of beehiiv. 

I was the second employee at Morning Brew and built a lot of the product and the growth tools that led to the success of Morning Brew.

beehiiv is an all-in-one platform for newsletters. It’s a creator-friendly newsletter platform that makes it easy to design, write, send, promote, monetize, and track the ROI of your newsletter.

When I was 27 and my co-founders were 24, we didn’t have much capital to fund the business ourselves. 

We raised a seed round of $2.6M. About 8 months later we achieved what I considered product-market fit and were around $15-20k in monthly revenue.

We raised a $1.6M seed extension to cover expenses, but eventually needed more.

By mid-2020, we raised a Series A of $12.5M from Lightspeed. 

At that point, our team was burnt out, and I was handling support tickets at midnight. 

We had strong growth but I realized it wasn’t sustainable. 

I drafted a plan envisioning what we’d do with $10M, and it became clear that raising more capital was necessary to ensure stability and mitigate risks, such as maintaining consistent growth and avoiding potential outages.

We eventually raised a $33M Series B from NEA and other investors to continue scaling. 

Given the competitive market, the choice was between staying lean or going all-in to capture more market share. 

I opted for the latter, understanding the risks, but also the potential for significant growth.

We needed upfront contracts for services like Heroku and AWS, but we weren’t in a financial position to cover those costs. That’s actually a big part of why we did the seed round.

I made a classic founder mistake of thinking that a seed round of $2.6M was a large amount, especially with only 2 co-founders and minimal expenses. 

But to be competitive, we had to offer benefits like 401(k)s and health insurance. 

Top engineers cost over $200k and our runway quickly shortened. That’s when we raised our seed extension.

We looked for angel investors who could also be early adopters. For example, Houck invested.

When entering a very competitive market, I was fully aware that we had the least polished product on the market by nature, being a few weeks old.

But when we raised our seed round we actually raised from different strategic angels who had a newsletter on a competing platform.  

A very simple ask in the early days to build momentum was to have those angel investors move their newsletter over to beehiiv. 

One of those angels was using another competitor and had 100k subscribers at the time.

I didn't even know that we could handle 100k emails being sent at once, but they moved over without hesitation and gave us a ton of credibility.

My 2 co-founders and I were also software engineers at Morning Brew. 

In the early days, when the product wasn't up to snuff with the competition, we were selling a vision that we already did this, and that we’d built this at Morning Brew.

We said we're building the same tools but better. And maybe it wasn’t all built out at the time, but if you follow the success of Morning Brew, you're selling a narrative and the vision of what's to come.

I’d also pitched the ad network knowing that we were never going to write a single line of code for the ad network for probably a year and a half to two years.

We were building different dashboards and queries and structured our database around data that would eventually be used for optimizing ads at some point in the future. We showed we had a long-term plan.

The legacy platforms that have been around for 10 or 15 years would have to work through so much tech debt to retrofit their platform to be hyper optimized for ads.

It’s a massive bet. There aren’t that many super large ad networks and it hasn’t been done well in email anywhere.

By building in public and openly sharing our growth metrics we create a narrative that everyone is moving to beehiiv, which reassures potential customers and builds credibility.

It also attracts investor interest. Whenever we hit milestones like $100k or $500k MRR, I receive numerous inquiries from investors wanting to lead future rounds. 

I don’t waste time nurturing every potential investor relationship. Instead I focus on building the product. If our growth metrics are strong, investors will find us.

We raised our Series A in 7 days and Series B in 10, thanks to this approach. 

I include potential investors in our monthly updates, which detail everything from what went well to our strategies and upcoming launches. 

By the time we’re ready to raise funds, these investors are already well-informed and ready to engage, making the fundraising process much more effective and efficient.

For the seed round it was tough. 

Substack was venture-backed. They started 3 years before us. Their Series B had a $650M valuation.

Substack already had a multi year lead with probably at that point $80-90M of funding already secured.

Mailchimp's massive, they've exited and have multi billion dollars in revenue. 

You could list two dozen other email providers and then at the exact time that we went out in the market, Twitter had just acquired Revue and Facebook just launched Bulletin.

It was established legacy players along with a new wave of VC-backed players that already had head starts on us.

Faraz from Lightspeed had reached out to me on Twitter, LinkedIn, and email countless times, but I ignored all of them. I didn’t even read the emails; I just marked them as done. 

Then they got creative. For any VCs, here’s a tip: they invited me to a founder's dinner in LA. At the time we were a remote company and I was spending 14 hours a day working alone. 

I thought, “you know what? Meeting some other founders in LA sounds nice.”

After I agreed to attend, they suggested meeting for coffee first. I realized I’d been tricked, but I decided to go along with it since I was already planning to go to the dinner. 

The call went well, and I did my usual thing — I added them to our investor update list. 

I didn’t want to keep giving them personalized updates, so I told them they’d get the same monthly update everyone else received, which would provide more detail than any 30-minute call could.

They stayed on that update list for 3 to 4 months. When I decided to raise a Series A, Lightspeed was on my shortlist since they had already shown a lot of interest. 

I sent them an email, and because they had 4 months of context from those updates, they were ready to commit immediately. We had a term sheet within 4 to 5 days.

Having leverage is so important as a founder.

Our Series A was the closest to “needing” to raise we’ve dealt with yet.

There was a perfectly fine path forward of cutting our marketing spend and stretching it out until we turned it around or had better revenue before we ramped up.

For our Series B, we had over $10M in the bank and when we got our term sheet I said this isn't even close to what we're looking for and I have 0 urgency to take any deal in this situation.

We had $10M in the bank. We were totally good. 

I knew the fork in the road where we could have accelerated and I did prefer that route.

That’s why we eventually got the terms that we liked and took a deal. But having leverage is the name of the game as a founder.

Sasha from Creator Ventures. He participated in our seed, and when the market turned during our seed extension round, no one was investing.

Sasha stuck his neck out and told me he’d put together our seed extension round. He got his LPs involved and led the charge there.

Also, when we were hiring a VP of Finance, I had not hired one of these before, and Sasha inserted himself into our hiring process and told me to send him all the resumes and ran the interview process himself.

He’s punched well above his weight, Sasha is a legend.

Thinking Fast and Slow. It’s more of a psychology book, but I think everything in the world comes down to understanding human psychology. 

As a founder, having a good understanding of how to leverage that to your advantage is super powerful.

Also, sign up for Big Desk Energy, my newsletter! 

Lastly sending investor updates is so powerful (even before you have investors).

There are so many things happening at once. For me, the investor update is the way to get all my thoughts on paper.

Forcing yourself to be accountable and write that every month is both extremely clarifying for you and the team, but it’s also an opportunity to show investors how you think about the business. 

This will do so much more than a pitch deck can do.

I think there are so many fallacies that companies use as accepted truths that I don't think are real. 

They’ll say things like, now that we are 80 people, we need to hire that VP, and then we need to implement a process and now we need to add this new process that didn't exist before.

There's a lot of accepted things that companies think they should do as they get larger.

One of those is that we have $40M in the bank so any problem that we have we can be solved by hiring someone to tackle that problem. I reject that.

I'm on the other end of the spectrum which is maybe too extreme. I prefer no managers and just having a flat org where everyone knows what they're responsible for.

I don't want to fall into the trap of having money, and thinking that we can do things that larger companies do. I want to continue to ship and operate as if we're a 5 person startup.