Capital Letter

28/03/2023

Top F1 driver Max Verstappen will earn $55M this year...

But the real winner is Liberty Media, the strategic force behind F1, who turned its $4.4B investment in 2017 into a $17B empire.

Before unpacking the Liberty Media Playbook - here's how F1 makes money today:

1) Race Promotion: In 2022, F1 secured 23 annual circuit contracts. Each pays an annual fee. For example - Saudi Arabia pays $55m/yr to host its race.

2) Media Rights: Broadcasters pay up for exclusive partnership deals with F1.

- Sky Sports paid £1B to extend its exclusive contract with F1 from 2019-24 to viewers in the UK and Ireland.
- ESPN pays $90m/yr a year for its US TV rights.

3) Sponsorships: The stickers you see on the cars & tracks are expensive. Advertisers like Rolex, DHL, Heineken, and Crypto .com paid F1 a total of $650M in 2022.

Next, we dig into Liberty Media's 3-step playbook that ~4x'd this 73 y/o business. It worked so well that PGA is copying it...

See the playbook here https://www.capitalletter.com/p/formula-one

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17/01/2023

I just learned that Jasper.ai scaled to $45m ARR in 12 months...with a team of 8. Here's how it happened...

Jasper is one of the fastest-growing companies ever. Growing from $0 to $45m ARR in 12 months before raising $125m at a $1.5b valuation.

8 years of work left them with a string of startups that never quite made it:
- 2 failed software businesses (couldn't make money)
- A SMB marketing agency (maxed out at $25k/mo)
- An online course company (hard to get big)

In December 2020, Dave Rogenmoser and his co-founders were on the brink of shutting down their business. They'd spent 3+ years building a conversion optimization software called Proof...and it was flatlining.

In January 2021, they had an idea to use Chat GPT-3, the generative AI model released 6 months earlier, to write high-converting Facebook ads.

Within 30 days, they launched the business.

With the skeleton crew remaining from the last startup, they scaled the business to $45m ARR and 70,000+ customers without hiring a single new person.

Soon after, they raised $125m at a $1.5b valuation.

Here are 3 lessons from the CEO:
- Right Skill, Wrong Vehicle: 8 years of building marketing businesses gave this team the knowledge and confidence to spend $1m/mo on sales and marketing to scale the business to $45m ARR in year 1.
- Launch Fast & Iterate Quickly: The team agreed that if the business didn't work in 30 days, they'd shut it down. Dave says, "If you have been working on a problem for more than 18 months and haven't found Product market fit (PMF), odds are you won't...Make the hard pivot."
- Ride A Big Wave: Generative AI technology is a new technology that is changing the way we work. But it's not just text. It's images, voice, etc. Identify new customer segments (e.g., Municipalities, Banks, Lawyers, etc.), learn their problems, and apply this novel technology to solve them.

I meet interesting founders 2x per week and share the learnings here. https://www.capitalletter.com/p/jasper

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10/01/2023

Just 12 months after launch, Workweek, a collective of industry-specific newsletters, is making $833,000/month ($10m run-rate).

Considering Industry Dive sold for $525m, doing ~$100m in revenue. With a few years of sustained growth, Workweek has the potential to scale the brand to an even larger outcome.

The Numbers Are Impressive!
- Revenue: $833,000/month (~$10m run-rate)
- Newsletter Subscribers: 350,000
- Creator Partnerships: 21
- Growth: 4% WoW, with 43% being organic (e.g., Twitter)

It raised $6m in VC funding but became profitable (Huh! profit!?) in October of 2022.

So What’s The Innovation?

1) Workweek partners with writers: Traditional media co’s like Morning Brew (4m+ readers) rely on writers to churn out content under their brand for a fixed salary - essentially arbitrage.

Workweek does it differently. You may never see the name "Workweek," but you might know its creators:
- Trung Phan, a business writer with 500,000 Twitter followers.
- Nicole Casperson, a fintech writer with 50,000 email subscribers.
- Nik Sharma, a marketer with 144,000 Twitter followers.

In this model, the writers (aka creators) become the highest-paid people in the company and are incentivized to continue to grow their newsletters via profit-sharing.

2) The Newsletter Operating System: When creators plug into the Workweek system, they grow faster, make more money, and work far less. How? Because Workweek has ghostwriters to power social media, advertising sales to earn the most money, and operations teams to run it like clockwork.

This can effectively 10x the output of any single creator.

Get the full story and convo with Adam here: https://www.capitalletter.com/p/future-of-media

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06/12/2022

This couple is worth $3 Billion!

05/12/2022

05/12/2022

05/12/2022