theSkimm is not an email newsletter. It’s a brand built around helping female millennials get smarter. The distinction matters. For a company that has a growing employee family, potential acquirers (and fidgety VC investors), and ambitious founders, there needs to be more than just a newsletter.

But a newsletter was a great place to start. The early days of theSkimm were nothing like failed startups and theSkimm is one of the better entrepreneurial cases someone could study.

Let’s do just that.

Our outline

        1.        Notice poor product-market fit.

        2.        Build something small using your current skills.

        3.        Test, experiment, refine.

        4.        Encamp, build the brand.

        5.        Expand, don’t break the brand.

One programming note. Because founders Carly Zakin and Danielle Weisberg give podcast interviews together, it’s sometimes hard to know who is talking. You’ll see “Zakin & Weisberg” where I couldn’t tell who was who.

Carly Zakin and Danielle Weisberg left their jobs at NBC to start theSkimm because their friends kept asking them about the news. ‘Why are smart people asking us?’ they wondered. They had their, hmmm, that’s interesting. moment.

“We both grew up news junkies. We started interning at NBC News as soon as we could. We loved our jobs but saw that the industry was changing and our career paths may not look the same in the next 5-10 years. But we didn’t want to leave news. So we started to think about our friends — smart, educated women who have great jobs and went to great schools. They’re all really busy. They could tell us everything about their industry but didn’t necessarily have the time or the interest to venture outside of it. We saw a void in the market when it came to a news product for this audience, which didn’t make sense to us.”

Autonomously in the garage is not how to start a startup. Understand ‘who your customer is, what they want, how they want it, what they’ll pay and how much’ are crucial questions. Zakin & Weisberg had a deep understanding of their customers because it was people just like them.

“When we think about talking to this demographic, we don’t think about it as necessarily talking to an average female millennial out there who likes to hear X, Y, and Z. We just think about it as having a conversation with our friends.”

“I think the key is that we don’t research. We did research about them from an economic perspective and researched in order determine if this was the demographic that we should focus on because we saw how much money they were influencing and how badly advertisers wanted to reach them. So that kind of confirmed our thought that there should be a news source that’s geared towards this audience because they’re certainly not connecting with morning television in the same way, nor are they waking up and jumping out of bed to go to CNN.com, for instance.”

What Zakin & Weisberg understood (or came to understand) about their customers was that emails were better than text messages. Mornings were better than evenings. Accurate was better than initial. Conversational was better than didactical.

“We went after that audience but we went after them at a very specific point in their day. We focus on their morning, which also is a differentiator for us. Most importantly, we don’t worry about being first. We’re really not a place for people to go to see breaking news and that’s been a luxury.”

Knowing what your customers want isn’t easy. Designers at IDEO and VC Steve Vassallo encourage us to find latent needs. These are problems that people don’t even realize they have. Professor Bill Burnett at Stanford said, “Users can’t tell you what they need but they can show you what they’re frustrated with.” The first iPhone proved that apps, touchscreens, and clean UIs were latent needs.

Before David Ogilvy was an advertising titan, he was a door-to-door stove salesman. Common to each job was a customer connection.

Ogilvy did so well selling stoves he penned a guide for his fellow salesmen. Ogilvy wrote, “Find out all you can about your prospects before you call on them; their general living conditions, wealth, profession, hobbies, friends, and so on. Every hour spent in this kind of research will help you and impress your prospect.”

Among other tells, Ogilvy advised to “Learn to recognize vegetarians on sight.” Know that a doctor might favor the health aspects of the cooker and an octogenarian might favor the simplicity.

Adopting the customer’s point-of-view was something that came up often in his writings. In a 1965 note to Cliff Field, Creative Head of Ogilvy & Mather, David wrote:

“Cliff: (So-and-So) thinks that this is a great advertisement. I don’t. It lacks charm. It plods. Heavy as lead. The models – most of them – look like automobile dealers from South Dakota. Not the way to capture the affections of the people who read The New Yorker.”

The key wasn’t, do I like this advertisement but do people who read The New Yorker like this advertisement? Right from the start Zakin & Weisberg got this right. They had an awareness of this opportunity. But why start a company? Zakin explained:

“A lot of people ask us, ‘Why didn’t you just bring this to NBC? Why didn’t you get this in front of Steve Burke?’ There is no way that NBC would have allowed two associate producers to not only run the editorial but to run the business side of what we were doing.”

NBC’s theSkimm makes sense only in the sense that each is a news brand built on trust. In the Moats and Allocators podcast episode, we noted that brands in certain industries should change slowly.

News brands are like Coca Cola, they should change slowly. NBC is built around many filters whereas theSkimm is built by a few fingers. An email newsletter in the conversational tone of theSkimm is the antithesis to NBC. This is disruption theory 101. To conclude his book, The Innovator’s Dilemma, Clayton Christensen summarizes his work with seven insights:

  1. Products that appear unimportant today may address a market tomorrow.
  2. ‘Do as I pay, not as I say.’ Incentives are more powerful than directives.
  3. More and better is fine - Really? another hour of the Today Show - until people want something different.
  4. Organizational skills are more specialized than managers are inclined to believe.
  5. Finding disruption requires experiments, small bets, fast lessons, and room for missteps. Only in a culture of the right incentives (see #2) and culture will this happen.
  6. Some companies should be sustainers rather than disruptors. It’s okay.
  7. Disruptions often appear too small to be worth the effort.

Look at the NBC late night comedy lineup. Jimmy Fallon hosts the same show that Jay Leno hosted and Leno hosted the same show as Johnny Carson. NBC has acted like a good incumbent and used sustaining strategies, like putting clips on YouTube. That’s fine. It works. Disruptions aren’t a panacea as ESPN’s (ABC) learned in their dalliance with Barstool Sports.

To correctly apply Disruption Theory, Zakin & Weisberg needed to get their MBAs. Actually, that’s not at all what happened. Instead, they earned their DIY MBA. This may be the better course because sometimes the naïveté helps. Zakin explained:

“It wasn’t newsletters that we thought about; it was email. There was a beauty in how naïve we were. We didn’t have a tech background. We didn’t have a business background. It helped us not overthink things. We just thought – what’s the best way to get in front of our friends? We went back and forth. Should we text them?

“We were like, ‘No, the very first thing you do in the morning is you turn off your alarm, it’s on your phone, you grab your phone, and you literally open your email to be like, Did someone die? Am I getting fired? or Is my boss yelling at me? and What did my friends send me? And we knew we had to be in that moment. One of our friends worked in finance, and she left for the office at 5:50 in the morning every morning. So we were like, we gotta get it out to her on that commute. So we chose 6 a.m.”

And.

“We weren’t overthinking it. We weren’t like, let’s A/B test this. We didn’t even know what A/B testing was.”

Also.

“We started with an email newsletter and at the time everyone told us that was a really stupid idea, that email was dead. Of course, they would email that back to us which was a really interesting way to make a point.”

How wonderfully simple is that? But we shouldn’t confuse simplicity for ease. As writers confess, if I had more time I’d have written something shorter.

What Zakin & Weisberg were doing was reasoning by analogy, much like Ted Sarandos at Netflix. If it worked over there let’s try it over here. Zakin & Weisberg explained:

“For us, the email was really a way to recreate morning television but when you wake up you don’t necessarily have four hours to look at your TV. You need to get the information you need.  You grab your phone. You read your email. You walk out the door.”

Their model was morning television. Growing up I didn’t even realize there were other morning shows besides NBC’s Today Show. That was the morning routine at my house. Wake up, make breakfast and coffee, and turn on NBC.

Like a find/replace computer function, Zakin & Weisberg created a new routine. Routines are sticky, sticky means stuck, stuck means difficult to switch, difficult to switch means pricing power. In our Moats and Allocators podcast we looked at how strong brands have high switching costs which can mean pricing power. Does theSkimm have that?

Maybe. In one interview, Zakin explains that she likes to take a taxi to work.

“And the reason I do that is because then I can do work calls. So I actually find that it gives me like an extra 20 minutes to be productive for work, because I just am not good walking and talking on the phone. And I also wouldn’t be able to do that on the subway, so for me spending that $7 cab ride in the morning is worth it to be able to just squeeze in a little bit of extra time of work to be more productive.”

A cab ride is a small expense for transportation that saves Zakin time, theSkimm is a small expense for information that saves a reader time. Small, but essential parts, may have the best pricing power of all.

So how did two first-time founders with limited business training do this? “We’re really good and really annoying at asking a lot of questions,” said Zakin & Weisberg, “And I think our strongest asset as founders, honestly, is that we raise our hand whenever we don’t know something and then find out who that person is that can help us know it.”

Humility seems to be another important feature. I don’t know everythingTariq Farid had the same sort of figure-it-out gusto when he started Edible Arrangements. He said, “Humility is never a sign of weakness. Rather, it is a sign of willingness — to learn, collaborate, benefit from experience. Arrogance, on the other hand, is often a sign of insecurity and can be an immediate turn-off when dealing with anyone in a business venture.”

David Heinemeier Hansson too. “I retain the humility of knowing that just because I have hit a homer with Basecamp does not mean that I have some magic voodoo touch that’s going to turn everything else into gold.”

Though they asked a lot of questions, Zakin & Weisberg didn’t have to figure everything out. “From day one we had the luxury to see what had come before us in the media space, in the newsletter space.” While Zakin & Weisberg we were new to startups, “we knew the newsletter business, we knew marketing.”

Successful startups also need to catch a lucky break (or two). Zakin & Weisberg sent an email to all their friends and colleagues, including those they left behind at NBC. One of them gave the founders a lucky break a few days later.

“Hoda Kotb responded, and she said, “I’ll check it out!” We did not know her. We followed up with her two more times but got no response. Day four of us in business, she said we were one of her favorite things – on air – and it totally changed our lives.”

When asked how much luck played a role in Instagram‘s success, Kevin Systrom & Mike Krieger said:

“I’d say 50%. I have this thesis that the world runs on luck and the question is what you do with it. Everyone gets lucky for some part of their life, the question is ‘are you alert enough you know you are being lucky? Are you talented enough to take that advantage and run with it? Do you have enough grit to stay with it when it gets hard?’”

Sending an email to Hoda Kotb is a good demonstration of what Michael Mauboussin calls the ‘Success Equation’ where ‘outcomes = skill + luck.’ Sending the email was skill, having Kotb read it on national television was luck. Are you talented enough to take that advantage and run with it?

With theSkimm brand growing, Zakin & Weisberg thought about other routines they could improve.

“We started something called Skimm Ahead (an app) about a year and a half ago. The goal there was; can we go into another routine for our audience and will they pay us for that.”

They also started a podcast. They want more ways to deliver the same service. “Audience size doesn’t matter if you don’t have connection…Our proof of trust is engagement.”

Their daily email has a 35% daily open rate. They’re the highest selling affiliate for Casper mattresses. Book publishers have told them they sell more new books than the marketing known as ‘NYT Bestseller.’ Right now the brand is strong, but like a participant in any ecosystem they need to grow. This is where things get dicey. Zakin & Weisberg’s challenge is to expand the brand but not destroy it. To do this they have a well defined Skimm girl.

“We created this character. When we write, when our team writes, we’re writing for a character the same way one writers for Letterman. We built this character that every single person on our team knows. They know Skimm girls relationship history. They know what she’s watching on Netflix, what her favorite app is (that she force quits her apps), what wine she’s drinking. We know everything about her.”

And they created a culture of experimentation. Zakin said, “I tell this to our team all the time: Don’t be afraid to try and fail.”

Charles Koch told Marc Andreessen, “If you never have a failure you’ll never try anything new,” and “When you come up with a theory you want to try to falsify it as fast as you can.”

But should the voice of theSkimm be the Skimm girl or Zakin & Weisberg? In an interview with Zakin & Weisberg, Brit Morin explained why she named her company Brit + Co:

“I saw how people wanted to follow people and not random third-party brands. You wanted to follow Jimmy Fallon more than The Tonight Show…The future of media was largely human-led brands.”

David Perell calls these Naked Brands.

When asked about the best business book they’ve read, Weisberg recommended The Hard Thing About Hard Things by Ben Horowitz. Zakin suggested Steve Jobs by Walter Isaacson.

This simple blog post shouldn’t make the process seem simple. Startups are hard.

Weisberg said, “It’s funny when people ask that, because they’re like, ‘Oh, you decided to bootstrap it.’ And we’re like, “We didn’t ‘decide.’” She added:

“It all happened very quickly, because we had also emailed every news anchor out there, truly. We didn’t know most of them, but we were like, ‘We’re former NBC-ers, thought you would love this, thought you would appreciate the need that we’re solving.’ Most of them didn’t respond.”

Zakin & Weisberg have worked more for less (so far) than they did at NBC. Much like investing on your own rather than buying an index funding, your Competitive Advantage comes from doing something you enjoy. They have a long way to go but are off to a great start.

Sources

https://www.flickr.com/photos/techcrunch/26846435321/

https://www.recode.net/2018/2/14/17014056/watch-full-interview-brit-morin-theskimm-carly-zakin-danielle-weisberg-reach-audience-facebook

http://www.businessinsider.com/how-carly-zakin-danielle-weisberg-founded-theskimm-podcast-interview-2017-4

http://www.businessinsider.com/carly-zakin-and-danielle-weisberg-launch-the-skimm-2012-7

http://farnoosh.tv/oldFiles/wp-content/uploads/2015/08/SM204-TheSkimm-Founders.pdf

https://www.huffingtonpost.com/2014/05/29/theskimm-founders-news-danielle-weisberg-carly-zakin_n_5413314.html

https://www.girlboss.com/girlboss/2016/12/20/the-girlboss-radio-exit-interview-theskimm-founders-think-you-should-take-a-vacation

https://www.huffingtonpost.com/molly-borchers/the-changing-face-of-news_b_6559224.html