Jacob Wolinsky, Founder and CEO of Valuewalk: It wasn’t actually a planned company. I started a blog around 2009, which was the financial crash. Before that, I had been somewhat of a lucky investor. I remember buying AOL in 1999 and making a lot of money. I thought I was a genius. But then I started to lose money. Now nothing serious, but I saw an ad for what Warren Buffett calls the best book on investing. I just Googled it and I found The Intelligent Investor by Ben Graham and it really sounded like it was written for me. I read it four times. It really changed my investing process. I started blogging about my investing journey. I got some nice feedback and people started reading, and I then decided to make my own blog. When I was freelancing, I got an email from a really famous investing author. And I was really excited because I had just started writing and I got an email from this famous author. It showed the power of the Internet.
You were still in professional investing, right? But then you started publishing on the side.
Jacob: When I was in investing, there wasn't much room to grow there. And so, I was deciding what to do next, and it was a tough job market. I was doing some freelance work related to hedge fund development, and around that time my employer didn't have the funds to pay me. I had a couple of job offers, but my site was already making some money and I had almost no expenses. I told my wife, “you know, I think I'm going to try this full time.” She tried to dissuade me; she said, “you're crazy” and maybe she was right about that, but around 2012 I decided to start off full time. And yeah, the rest is history.
I just wanted to emphasize that point where you said you were writing about things that you were passionate about and then you got this response to something that you wrote.
Jacob: Yeah, I want to protect their privacy, but they wrote a very famous investing book, and I got an email from them. It was the second or third article I wrote, ever. I thought, you know, people are really reading this.
│ Successes and challenges
What were some of the successes and the challenges at that early phase?
Jacob: I would say that the problem was that I didn't know what I was doing. I was kind of just winging it, seeing where things went, and I got lucky. But because things grew very quickly in the beginning, I didn't realize what I was doing, and I didn't put any structures in place to grow properly and effectively. I'll give you an example: in the beginning, I was working a crazy amount of hours. I had people who helped me, but there was a lot of stuff that I didn't like to delegate and [so] I didn't. And that was foolish because I have some great employees who could have helped me with all this stuff, and I could have saved myself so much hardship and frustration. And even though I could do it myself, to have everything on your plate is too much and it makes you less effective. It's worth hiring out.
What's the good part about publishing?
Jacob: It's great to be able to get my guys out there and present them to the world. It's exciting also when I get good feedback. You know what's interesting: I don't even like writing, but when I found something I was passionate about, it really brought something out.
What's frustrating is when you get a great idea, you don't write it down and you can't remember it. Sometimes I'll figure it out a few days later, and it will just hit me, and it'll still be newsworthy. Other times you might just be too late.
Let's get into the mechanics of this. You said that you were writing some stories, but I assume you've got other sources. You have people that write for you, or you have guest contributors to Valuewalk. How does it all work?
Jacob: In the beginning, [Valuewalk] was all value-investing oriented. Then as the site grew, we tried to do a little bit more general news for our content. We have a premium site and we developed great contacts in the hedge-fund industry. We have people sending us information on what's going on there. You know, this new report on the industry or what these famous investors are saying, things like that. What I like is personal finance; I think that's something that's very important to have the foundations of before you even get into investing. And honestly, if I could, I would spend 90 percent of my time writing personal finance and 10 percent writing about investing, because it's just so important to have the basics down first. But now we have a nice network of contributors. So besides having our own staff, we also cover news and some reports. We also have some outside contributors in different fields such as personal finance, investing, fintech, stuff like that. So that's been a nice addition.
Are they freelancers? Do you have some kind of standard agreement that you use? How did you actually figure all that out?
Jacob: We have some full-time staff. We have some freelancers, but we also have people who will contribute to us because they want to get their name out there. Sometimes they'll write it on their own site first; sometimes they'll just realize that it doesn’t really move the needle if they publish on Valuewalk again. Also, sometimes [we’re] syndicated onto other sites which are even bigger than us, and they can really get their name out there. It could be someone's an expert in the field of, you know, private equity. They might work at a private equity firm or a consulting firm, and they’re not looking for money or anything. They just want to get the idea out there or build themselves as an expert in that field.
As far as the day-to-day of running the business goes, where do you find motivation or inspiration? What keeps you going?
Jacob: Well, you know, reader feedback definitely is an important aspect. I think in general, you tend to get mean comments more than nice ones, just because those types of people probably send a lot and it's just their nature. Sometimes, I get emails that have tons of praise. “I love your site. It's so insightful. I read it every day.” Those are worth a lot; a thousand times more than any negative ones. So getting those from readers is always super nice.
But when things get tough, I try to think of my grandparents, especially my grandfather. He had a really hard life. His whole family was murdered, and he was sent to a prison camp in the Soviet Union. And then he was in the Soviet army, and he had a really, really bad life. And he never complained. He had a smile. He tried to live his life like that, so I try to think of him. That's definitely an inspiration for myself.
What about the technology side of things? If you could magically rebuild your tech stack, how would it look, ideally?
Jacob: That's a good question. Accounting, tech, and legal are three areas where I always think it's worth paying a premium if they're good. I'll give you an example. There's a really big difference between a good developer and a bad developer. It's like a cheap used car and a Ferrari. [With a bad developer] you could have a developer that you hire to build a plug-in and then a year or two later, it totally destroys the site. It crashes it.
I did a job a few years ago with our memberships. AndI did it with someone good. But he wasn't amazing. And then we switched plug-ins for our membership, and we still have some problems from that. If I had spent another thousand on the first job, I might not have had these problems. But because this developer didn't do it in such a smart way, five years later, I sometimes still have to deal with problems because of that. In terms of specifics, I would say that I wish we had everything logged on GitHub and something like that. I think it's important so that all contractors and employees know what changes were made. Also, email deliverability is a very important one. There are a lot of services out there, but to meet very specific requirements if you have a bigger newsletter list, there are very few. I wish we had built our own in the beginning. It might have been worth it because it is so important, I think, for businesses of any size.
You mean actually building your own optimization software from scratch, basically.
Jacob: Or just having a proper strategy in mind for which service to use. How to optimize deliverability. Making sure that the IP you're on is good, things like that. It's very important to have a set structure in place.
That's a really great tip. I'm sure people will appreciate that one because it's something people overlook so easily.
Jacob: Even if you're a very small business and you just have a few hundred people on your list, it still makes sense to really try to optimize it.
Let's start talking about marketing. What kind of marketing strategies have you used?
Jacob: My brother-in-law does Facebook marketing and about eight years ago, he said, “listen, Jacob, what you want to do is build an email list.” When you have an email list, you own that--they don't ever take it away from you. You decide how to interact with your audience. The downside is that you have to pay for it. But with Facebook or Twitter, if someone leaves Twitter or Facebook, you don't have them. That's it. But if your account gets flagged, and it could happen even for automated copyright violations which could be totally false, you could lose everything. If your Facebook page gets lost. That's it, you have no way to contact your social media followers. Email is the best medium of communication. You control it. You don't have limitations placed on length like Twitter's 280 characters. On the other hand, lot of people try to get a giant email list and they just focus on size. People do this to impress advertisers. ‘Oh, I could reach half a million people,’ but it's not. It's really not worth anything if people aren't engaged. You want to encourage them to leave the email list [if they’re not interested] or even prune them off. And the source makes a difference. People buy lists and stuff, and a lot of those are not only worthless, but it ends up getting your email service provider to flag you because a lot of those addresses are bots or spam traps.
It sounds like it's better when you're first starting out to keep your audience small if you have to, because the whole point is you want engagement more than just reach. Even if it's a smaller group, that's a better way to go than just reaching as many people as possible.
Jacob: Engagement is much more important than size. And I know it's a cliche answer, but I really think it makes a difference. I don't know the exact formula, but I would say that it's at least like 10 to one. And from a monetization point, it's also true. Our email subscribers are about one percent of our total traffic, but they're about 50 percent of our subscription signups. That's just to give you an example that one percent of the traffic drives 50 percent of the revenue there. I think that email is better than Twitter or Facebook for that type of thing.
│ Charting a course
I think a question a lot of people have is, how do you know that you're on the right track? Or how do you know when maybe you should try something else?
Jacob: This is a really good question, and honestly, I'm not sure I have a great answer. I'd love to hear what other guests say if you ask that. One thing I will say is, you can learn a lot of valuable feedback from your readers and [get] some monetization advice from them. I never expected to do a newsletter for four hedge funds. When I first started the site, it was much more Ben Graham-oriented, and it still is. But I didn't expect to be doing hedge fund coverage; [it] kind of just came about. You should really listen to even negative feedback. If someone's just being a troll, then obviously not. But in general, negative feedback is really valuable. And you know, it's hard to accept. Sometimes, I'll get a negative e-mail and I'll want to send a nasty reply and then I'll just stop myself. And then sometimes I roll my eyes, but when I read it again, it was really good advice. It was just a reader expressing frustration, and I got an idea for something new from there. Now I don't know if you'll get million-dollar ideas this way, but a lot of things start by chance. Valuewalk started by chance. The hedge fund newsletter started by chance. Amazon Web Services, I think, started because they just needed more space, so you never know where opportunity will come from. So, it's good if other people have feedback; sometimes you need a fresh mind. Also, you overlook something you do every day. If someone outside tells you, especially a customer who's interacting but has a different perspective, it could really give you some good ideas that can move the needle.
What about monetization? You mentioned your premium subscription. How did that come about?
Jacob: That wasn't feedback, necessarily, but in the beginning we were all ad-based and it was going well. We were getting a lot of traffic and ad rates were very high. Even though we tend to occupy a higher market in the investment industry, the ad rates started to come down and was really frustrating. I would write an article that was thousands of words. It took weeks of research and it'll get a thousand views. Then something about this new iPhone would get tens of thousands of views, and it was just so frustrating.
A company came to me, and they said, “put up a paywall on your old content.” They said, “Listen, you'll make money.” I said, “Yeah, I hear that all the time from advertisers.” They said, “Just try with your old content. That's like less than one percent of your page views and then see how that goes.” So, I did it and actually I was pleasantly surprised. People were really paying. Eventually, I realized that the one percent of the content is what attracts a lot of subscriptions. And it works that way with ad revenue. A few articles usually pull the views and the ad rates. Anyway, I decided to make it a dedicated subscription and to write specifically for that.
It sounds like one of the things that helped you overcome your skepticism was just framing it as a little bit of an experiment, like drawing something out that was lower risk and just seeing how it went. What was your approach around launching the premium content?
Jacob: I think it was a mixture of all factors, and it might have been a necessity because ad rates were so low compared to what they were a few years earlier. But I also think that one good thing, and I wish the big media outlets did this also, is that the good quality content will attract readers. A lot of times it's just sensational news, and even a lot of the major media sites rely on clickbait stuff or at least trending stuff to bring in most of their traffic. If you focus on really good quality in a niche and you're providing good information, you could then focus also on attracting a better audience. It's like a cascade effect. You focus on longer term, more quality stuff. Maybe it ripples through to the whole organization.
That’s kind of a subtle point, but it's powerful: the idea that you get an engaged audience and they actually become the source of the feedback to produce the content itself. In other words, part of having a small group of engaged people is having a way to know what to write. Whereas if you're writing for eyeballs, you might write about many, many different things and you're just sort of seeing what sticks, right? There's sort of a feedback loop that gets put in place when you've got that premium audience that you're focused on. Is that your experience?
Jacob: That is not the exact one, but yeah, you're right. It's like a circular effect. And I think it's partially true. If you just want your writers churning out content, it creates a poor work environment or creates more pressure and also teaches everyone to focus on just short-term stuff. I like the premium model. It's more relaxed and planned out. And the feedback loop from customers is also much more valuable.
But you still have advertising, right? What are the pluses and minuses of that?
Jacob: It annoys people. It also slows down the site, and speed actually is a major factor for how you rank it in Google Search and Bing. A plus of advertising is that, if you could reach a critical mass of people, then you don't need people to pay. You don't need to sell them a product; you're getting money anyway. I think some sites like Wealth Journal and Bloomberg, although they have paywalls, they also have a lot of good quality free content and they're selling space to advertisers on there. And also, you don't need to worry about dealing with customer complaints and problems with payroll processors or a glitch. So there definitely is a big upside to the ad model, even though I don't think it's superior to subscriptions.
│ Advice for beginners
I think this is going to be the final question I ask everyone: for someone who's just starting out with their publication, what's the single most important thing that they should focus on?
Jacob: I just mentioned the loyalty point, but I really think it's so important. If I had a choice between 2,000 people who read the site religiously or 20,000 people just clicking for five seconds, I would definitely pick the first. And this is not just for news sites, this is for any product. I spoke to a business owner who just started an electrolysis place and one thing that's really driving it is they have a good marketing strategy in place. They're just focusing on customers in the area. It's local SEO, but their customers are super happy and then they tell all their friends and he's doing very well. Creating a loyal audience is something that is very valuable and could create a bigger and bigger effect. I would say that basically the point is really to focus more on quality over quantity. It really does make a difference when it comes to business.
Thank you so much, Jacob. I really appreciate your time.
Jacob: I hope the answers are valuable. I really appreciate you taking the opportunity to interview me.
Jacob Wolinsky is the founder of ValueWalk, a popular value investing and hedge fund focused media outlet. Prior to ValueWalk, Jacob worked as an equity analyst with a focus on small caps. Jacob lives with his wife and four kids in Passaic NJ.