Today is January 4th. I didn’t publish a blog post or send an email last week because I was too exhausted. I needed a break. I also needed some time to think about 2020, which was, mostly, brutal. From beginning to end.
It was also euphoric at times. Because that’s how those things tend to happen. Low lows signal high highs, or so the thinking goes.
And, right now, Readup is bigger and stronger than it has ever been at any point in the past.
But, as we reflect on 2020, the unavoidable reality is that the year was a failure for one reason and one reason only: Readup still doesn’t make money.
Until Readup starts making money, we can’t call it a business. And if we haven’t been building a business for the last five years, what have we been doing?!
The answer: We have been building a product that we want for ourselves and for our community. Along the way, we’ve been exploring various business angles and improving the reading experience. Our path to profitability and sustainability won’t look like other startups. We’ll have bootstrapped our way to meaningful revenue before fundraising a penny.
Early in the year, we failed to get into Y Combinator. Actually, we couldn’t even get an interview. And that was our third time applying! It feels like ancient history now, but it was rough at the time.
We were also rejected by Mozilla Builders and ghosted by New Media Ventures and Reset.tech. The latter might still get back to us (and they seem like a really great match!) but we’ve learned that we can’t hold our breath for this kind of institutional or organizational funding. We need a deeper form of long-term security.
At exactly the wrong time, we tried to fundraise on our own. That didn’t work. I can (and often do) blame COVID, but I think the deeper truth is that investors looked at Readup (and me) and thought, “This isn’t a business.” And they were right. Lots of misalignment. Wrong energies all over the place.
It was hellish, but we were boosted by the fact that Readup kept growing.
Throughout an otherwise dark year, Readup itself was a bright light. Day after day, Readup served up a combination of high-quality, reliable information about COVID, and necessary entertainment and distraction from all things COVID.
In April, an Australian designer and writer named Kai Brach wrote about Readup in Dense Discovery, his newsletter, and Readup got hundreds of new signups in a relative instant.
So the roller coaster soared up, but then it crashed back down again. After each surge, we were forced to confront some harsh realities: Growth wasn’t endemic to the platform. (It still isn’t.) We could fan the flames, manually, but there was no reinforcing loop, no “product-market fit.”
At the end of a distracted summer, I went to New Jersey so that Jeff and I could spend a few weeks together in person and come up with a plan to get things going in the right direction.
We resolved to get to revenue as quickly as possible, and before fundraising. We knew that it would be hard, especially given the ongoing challenges we were already having with growth. But we also reasoned that revenue would dramatically accelerate conversations with investors. And finally, revenue would put the company in the most secure overall position, an important consideration during an unfathomably tumultuous year.
By that time, it had already been a busy year in terms of product development. We connected to Apple for easier sign up and sign in, created an orientation for new Readers, article issue flagging, a Twitter integration, Writer pages & leaderboards, Discover, and Dark Mode. We also overhauled the blog, launched the Firefox, Safari and Edge extensions and a Mac app.
By December, Jeff and I were feeling pretty solid about the proposed business model, and nearly to the point of implementing it. But on Christmas Eve, Jeff told me that he thought we would be shooting ourselves in the foot if we went with the 50/50 split.
On this topic, the feedback from the community was lukewarm at best, nowhere near the excitement we were experiencing internally. Most people just didn’t see why it mattered that we were keeping fifty percent, or they thought that that sounded high. From our perspective, the innovation was the transparency itself, but that point kept getting lost.
So, in reponse to your feedback, we ended 2020 by making some pretty big changes to the business plan and distribution strategy.
Here’s the new plan:
When Readup is reborn as a platform that you pay to use, you will see — immediately and viscerally — that Readup is a marketplace: Your contributions get distributed to the writers you read. Totally transparent. Totally private.
Now, a big reversal: Readup isn’t going to take a 50% cut of the revenue.
Readup is only going to take a 5% cut. Our growth hypothesis revolves around Writer evangelization. Think: “Read me on Readup so I can make money!” Writer excitement about big payouts will drive them to evangelize Readup. That will further increase the payouts which will further increase the evangelizing… and so on and so forth.
Even if we decided to take a larger share of revenue, we’d want to pour it back into advertising and promotion. This move allows us to decentralize that growth machinery. Rather than be responsible for growing Readup, we’re strengthening the incentive for Writers to do the growing for us.
In 2020, while the world grappled with COVID, Readup grappled with money. We’re moving a bit slower than we anticipated, but that’s never a deal-breaker for us.
2020 is the year that we figured out what we need to be. 2021 is the year we make it happen.
CEO & co-founder of Readup
P.S. Next week we announce Readup’s Top Reads of 2020.