👋 Hi friends -
Welcome to The Newsletter Growth Memo. Twice a month, I share short reflections with my newsletter clients + other operators.
Zero formality, ads, or affiliate links - just a guy sharing learnings from working with media operators doing $25-500k+ / month with newsletters.
New reader highlights: Welcome to Rob, Founder @TechnologyAdvice | Louis, Co-founder @ Dupple | Jesse, Co-founder @ WhoSponsorsStuff & The Newsletter Conference
Yesterday morning The Neuron announced it has been acquired by TechnologyAdvice.
More on that here.
For those who don’t know, a TLDR on the Neuron:
Started in Jan ‘23 and hit 500k readers, making it one of the fastest-growing bootstrapped newsletters of all time
By revenue, is the 3rd largest AI newsletter after The Rundown/Superhuman
Is A++ on editorial content - most of the long-tail AI newsletters look to a handful of teams for their stories, and this is one of them
What makes this even more interesting is that TechnologyAdvice beat out another bidder:
Me.
It’s really hard to find transparency around M&A processes.
And so I want to share a bit about my experience in case it’s useful for you.
Two quick ground rules - a few things are off-limits:
The purchase price
What the buyer’s plans are for the newsletter
Can’t say - sorry.
What I can do is talk about my shoulda woulda coulda - the things I would have done after spending > 50% of my net worth on a newsletter.
But first - what does it feel like to lose a deal like this?
The first few weeks after the deal were, well, a bummer.
Don’t get me wrong - deals fall through all the time.
I used to run a portfolio of ~20 acquired mobile apps and have been through my fair share of M&A processes.
But this was a little different.
I've worked with The Neuron for a year and a half + know as much about the business as the founders do.
It was a once-in-a-lifetime opportunity to be the steward of an awesome brand.
Now I’m just the guy who almost bought The Neuron… and that’s not super sexy!
There's a quote I love from Naval: "Ideas fail, founders don't."
I’ve made a few big bets in my life.
Some worked, others didn’t.
And that’s okay. TA won fair and square - they have a better funnel than I do for this kind of business and can pay more. That’s life!
The far more important thing - in my opinion - is to keep betting.
Be risk-on, do great work, and you virtually guarantee the train will come back around.
Alright, enough of that - let’s get to the main course.
It’s a hypothetical February 20th, 2025. I’ve just announced I acquired the neuron yesterday.
What plans am I kicking off starting today?
The #1 underwriting mistake people make in SMB M&A is worrying about growth levers.
In nearly every case, you want to buy a business at a 3-4x multiple where you know stability alone will drive an acceptable IRR.
Most small deals that go underwater do NOT do so because a growth lever didn’t work - they do so because you took for granted KPIs you thought would be stable.
Optimizing paid ads to users who click, not just open, is a huge unlock for sponsorship performance.
And that would give me full confidence that, even in a scenario with a shakey ad market, I could maintain the business where it’s at in year 1.
I know, I know - partnering with The Neuron’s biggest competitor sounds crazy.
But Rowan’s been a buddy for a while and we had a handshake deal to build out a partnership (which the seller was aware of).
The Rundown has a killer $100/month AI community.
Perfect for the Neuron’s 500k subscribers.
We’ve built very strong email funnels and I estimated we would have done $200-400k in the first 6-12 months using that playbook to convert readers into University members.
And therein lies another lesson I’ve learned: Too many people look at markets as zero-sum.
I would have been able to add a 100% EBITDA margin business line to The Neuron by bringing together two groups that were historically competitors.
Collaborate, don’t compete!
One of my favorite media friendship stories is Sam Parr and Austin Rief/Alex Lieberman.
The Hustle vs. Morning Brew competition was fierce - these guys hated each other.
Now they’re best friends.
And I love that - life is way more fun when you find people you enjoy playing the same game you are and work with them as much as you can.
The best media companies aren't marketing channels.
They're marketing partners.
Industry Dive's playbook is the gold standard of partnership:
Laser-focus on an ICP of niche, B2B decision-makers
High-end webinars, white papers, and co-branded lead magnets that turn readers into buyers
I’ll be real with you - I’d feel a lot cooler building an AI community vs. webinar playbook.
But you have to know your lane.
I’m not going to go outcompete Rowan on community… that’s asking to get crushed.
I’m better at the boring stuff and I’ve learned to be cool with it.
I was a BCG consultant. I went to some fancy undergrad.
I don’t think any of that stuff is important - in fact, many of you reading this are far better entrepreneurs than I am and didn’t need any of it.
However, it is handy to come from a background where the product is 7-figure PowerPoints when you want to work with B2B brands on high-end content.
My team did a commissioned exec report project earlier last year. It went great (added $500k+ to the client’s pipeline).
I was pretty confident we could roll out a co-branded report with at least 2 existing sponsors and kickstart webinars with a company like BCG in the first 6 months.
I would’ve been happy selling $100-200k worth of custom content - under monetizing to overdeliver - and scaling this up in year 2 at market standard rates.
Another great philosophy: Make your free stuff better than everyone else’s paid stuff.
I love how open Tyler Denk is with financials of beehiiv (how much more transparent can you get than this?).
And so my first move would’ve been open-sourcing The Neuron’s financials for you here in the newsletter, followed by quarterly updates on what we were doing.
Having The Neuron as a fully transparent playground for the work we do would have been great for the agency and a huge asset for thousands of people starting or growing a newsletter.
In all likelihood that would have led to some kind of newsletter education play for beginner/intermediate operators later this year.
But truthfully, I didn’t have a plan there yet.
#1-3 is already a lot and it’s far better to do a few things well vs. many things just average.
So, there it is - that’s the plan.
Unfortunately, I only almost bought The Neuron. For now, it’s back to work. :)
We're continuing to push the envelope.
And if you've got a newsletter for sale doing $1M+, shoot me an email, let’s boogie.
That's the letter.
Nathan May
Find me on LinkedIn
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