The word “Creator” is fairly new, but as far as online business goes, email's always been king.
Jay Clouse put in the time. Six years into his Creator journey, his business Creator Science - which helps you become a smarter creator through its newsletter, podcast, membership, and YouTube channel - is hitting an inflection point. 2023 is looking like it will be a banner $500,000 year, with more growth appearing on the horizon!
Jay, however, isn’t your average metacreator; his approach and teachings are informed by real, deep experience building communities, memberships, and course programs for other successful businesses - most recently, leading the Community Experience team that designed the paid membership community and cohort-based course programs for Pat Flynn and Smart Passive Income.
Jay is a Creator I really look up to. He’s a thoughtful, deliberate, and generous human who really wants to help other succeed; all of these traits of his are is expressed through his deeply customer-centric approach. I think you’re going to get a lot out of our discussion, so I’m making this week’s full interview - including The Stack - completely free!
In the creator landscape, I put things into two camps (and it's more of a Venn diagram): I think there's the Entertainment side of things, which a lot of YouTubers fall on, and there's the Education side of things.
Most of my work and my customers are on the Creator Educator side.
Graphic courtesy of Jay Clouse
My content helps creators become creators.
The business is called Creator Science, and historically that's been a newsletter that is twice weekly. We have a podcast that is once a week, both audio and YouTube, and then I'm a public loudmouth on Twitter and LinkedIn and other social media platforms. That's the big parts of it. I do have a private membership community that has become a big part of my business in the last year, and I spend a lot of time in there, but it's a pretty small community relatively speaking, so it's not usually part of the opening pitch. But if it's useful to talk about, that's called The Lab.
On the surface, Jay’s strategy appears familiar:
Below the surface, however, he turns conventional wisdom on its head.
I think about these in Owned Distribution versus Discovery Distribution, or you can think about it as Internal versus External.
Historically I focused a lot on Owned Distribution with email and the podcast.
What I've put a lot more time and effort into over the last six to twelve months are Discovery platforms - namely Twitter, LinkedIn, and YouTube.
Starting a creator business by focusing on Owned Distribution is really hard.
It's never as big as social platforms because there's just a higher barrier to entry. There's higher friction. There's no third party that's incentivized to help people discover your email list the way that they're incentivized to discover your social content. So it's it's never going to be as big, but I focused too much on email for too long, without paying more respect to discovery platforms like Twitter, LinkedIn, and YouTube.
For most of his time as a creator, Jay labored over building an email list and a podcast. It was slow-going, but the audience that he built was disproportionately valuable.
I would probably rank the podcast and email audiences above Twitter and LinkedIn. The absolute size may be smaller, but there’s a deeper level of trust in the relationship that I have with those people. So I weigh those numbers differently
I think email is historically the strongest revenue driver for a lot of businesses in this vein. The word “Creator” is fairly new, but as far as online business goes, email's always been king.
Over the last year, as he’s refocused his efforts towards discovery, he’s finding that the early work put into building what most other businesses would consider “mid-funnel” - i.e. the stage in the sales cycle below the Discovery phase and above the Purchase phase - is paying dividends.
Now that I'm going in reverse, because I have such a strong foundation, all the work that I'm doing on social is being really effective right now because the backend is really built out.
What does that mean? Consider the stages of a (simple) Creator funnel:
DISCOVERY- Audience discovers you, usually through some algorithmically-driven feed (social) or via word-of-mouth.
TRUST- Some of the audience that discovers you on Discovery platforms might really like your content, and start to consume more of it; the more they consume, the more they trust you - and the more content they want. This creates willingness to move from their usual algorithmically-driven social feeds to your Owned Distribution channels (email, podcast, free community), where they know they can get deeper content more directly.
CONVERSION - Some audience members may eventually trust you so much that they may be willing to pay you for something they deem to be more valuable than what they’re getting for free - usually exclusive content and/or community offerings.
The reason it’s thought of as a funnel is that it gets narrower the lower you go. If 1000 people see your LinkedIn post, 200 may eventually subscribe to your newsletter and, if you’re lucky, 50 may purchase a digital product.
If you can increase the conversions at each step (making your funnel “wider”), you can end up with a more efficient business - so that perhaps from 1000 LinkedIn impressions, you get 300 email subs and 75 sales.
Most creators start out by building Discovery Distribution, and once they’ve built a substantial audience, they move on to figure out and build Owned Distribution, and then Purchase infrastructure. As a result, the funnel is usually pretty inefficient for a long time.
Since Jay started out by building and refining his Owned Distribution and Purchase infrastructure, his funnel is already very efficient - and now that he’s putting the effort into discovery, he’s seeing those efforts yield results very quickly!
Compounding is a magical thing. Even beyond finances, compounding of attention and engagement is a very real thing. So now that I've put several months of really concerted effort into LinkedIn, I'm seeing the fruits of that in terms of relationships that are built on that platform directly, and that propels the content further and gets me in front of new people and those people join the email list.
I wouldn’t recommend this approach for most Creators, as Jay has a unique professional background building and growing communities and digital products.
Instead, my suggestion for most creators would simply be to start thinking about, exploring, and even executing on mid-funnel initiatives earlier, and with a smaller audience, so that once you have content-market fit, you’re in a position to take advantage of it quickly.
Jay is, for the most part, in the Creator education business. About a quarter of his revenue comes from selling products and courses, including royalties on courses produced for third parties like LinkedIn Learning; however, the increasing majority of his revenues come from a “big-ticket” offering - membership in his Creator community, The Lab. The annual cost of membership in The Lab ranges from $1999 to $2999 (a lower $699 offering includes access to his course library, but not the community), and more and more Creators are putting enough trust in Jay to pay that cost.
The beauty of a big-ticket offering is that you don’t need a lot of sales to make great money. Jay recently posted about tracking to hit $500k in revenue for 2023; if The Lab is 50% of that, that means he’s sold between 83 and 125 community memberships. Compare that to how many paying annual subscribers to my $99.99 premium newsletter subscription I’d need to sell to make the same amount - 2500 - and you can see the appeal, especially for Creators who provide a very valuable offering to a small niche rather than the mass market.
So how is he converting those big-ticket sales?
I would say that for The Lab, about 50% of that is from the email list, somewhere around 40% is directly from Twitter, and then about 10% is probably from the podcast. The podcast is the hardest thing to attribute to and all these things are really interconnected, so typically people have experience with the podcast and social media but they may make the actual purchase decision from email, because it's more direct to get there.
…So really, my model is I use Twitter and LinkedIn to try to get people to email, and once they're in email, I try to get them to listen to the podcast, and if I have them listening to the podcast, reading my emails, then I'm going to have a pretty strong relationship with these people.
It’s a deceptively simple-yet-sophisticated funnel. The more an audience member consumes, the more likely they are to find something new to consume, until eventually they become a customer. If they don’t become customers of The Lab, there are always his affiliates and digital products…and, if for some reason, they don’t become paying customers of any of it, their attention is still monetized through sponsorships. While those aren’t his preferred source of revenue, they are meaningful.
I focus a lot more on the direct relationships to the people that I serve, and earning from them through affiliates, through digital products, or the membership, and sponsorship is kind of this byproduct that felt like:
“Well, I might as well do this because I'm capturing the attention. Let's monetize that and make hey while the sun is shining.”
But it's never been a priority for me.
#1 tool to save time and money?
It's a tough tie between Notion and SavvyCal because truly SavvyCal is basically my virtual assistant when it comes to scheduling. I put in a little bit of work up front to set rules on when people can and can't schedule with me, and as long as I only book by sending that link, or using someone else's scheduling link and using my own rules, then my days look the way that I want them to look and that saves me a lot of time.
As far as saving me money, I'm more about time savings than money savings at this point, and that's the biggest time savings.
Having this custom Notion build out to control everything in my business because there are so many different aspects of it, that's been really really powerful as well. And that's gotten just better and better over the last six months.
With free money, who would you hire?
I would probably continue hiring on the video side. It's it's still quite an investment at this point, because I don't make much direct revenue from video yet. We became a YouTube Partner in December, we have small amounts of AdSense coming in now and yes, we are starting to sell advertising directly on the videos, but it's going to be a while until that breaks even. That being said, I'm so bullish on the upside opportunity of creating a big catalog of really great video content and the bottleneck is video editing capacity. So I'd probably continue to invest in more editors. We'd probably invest in more iterations of thumbnails to test things even more rigorously. That's probably where to put it.
Biggest risk to the business?
At this point I feel pretty de-risked, like I don't have much platform risk. I guess the biggest risk is if people don't want to do this pathway anymore and my content becomes irrelevant. But I think we're going the opposite direction, like I think there's going to be more and more people that want to become a Creator. I mean, competition is a risk I suppose - I don't know how many people need to be teaching the same things that we're teaching.
Time management is the biggest risk to me personally, like am I allocating my time in the right places to get the the most out of my effort, because with the the revenue breakdown I shared with you, the biggest revenue driver is the membership. I’ve got to be making that worthwhile for members and putting a lot of time and effort into that that comes at the expense of creating really great content that grows the audience. It's a constant balancing act.
So I would say the biggest risk is probably me failing to prioritize time in the most effective way.
What’s contributing most to your growth?
I spent some time really focusing more on the quality of my work as opposed to volume. So just like writing better threads, writing better essays, making better episodes, making better videos - even if it came at the expense of making fewer of those things. And once I improved the quality of my work, now I can spend a season going the opposite direction to say “okay, how can I now take this level of quality and try to toggle up the volume.”
Because now, when somebody discovers really any part of my platform, any part of my my world, the feedback I get constantly is “I can't believe I didn't find your stuff sooner. This is so good.”
That's what I'm trying to get because to me, the highest returns are at the very top end of the spectrum - like the number one result is twice as much traffic as the number 2 result on Google, the number one result is 3 times as much traffic as the number 3 result on Google - that type of power law applies to a lot of things in the attention economy. So I really try to be at the top end of things, because the better my work is, the more remarkable it is, the more you get word of mouth and sharing with an increase in content.
It's not really enough to be good, you have to be the favorite of a lot of people. You need people who legitimately look at your work and say “This is my favorite creator. This is my favorite, most trusted source of this type of thing,” and if you're not that, you're going to become irrelevant.
So I think it's that mixture of really focusing in on the quality of the work and now building systems that support a higher volume on these discovery platforms.
The next section, The Stack, is usually only available to paying subscribers to Superlogic, the premium subscription for Creator Logic.
This week I’m making it available to all Creator Logic and Creator Science readers.
A big throughline in Jay’s operating stack is that he overwhelmingly prioritizes the ease and quality of the customer experience over his own convenience.
A lot of people don't want to do the work that I do to make those tools play nicely together and I get that, and I think that all-in-one tools are a great option for those people. It kind of comes down to your customer and what they need and what they expect. My customer is a very tech-savvy, discerning creative person and so the more that I can meet them with a wonderful experience using design in all senses of the word, they're going to have a better feeling about me.
There are a ton of companies now offering all-in-one creator funnels, like Kajabi, Stan, Topmate, etc. The pitch these companies give to creators is that they let creators do all the things - sell services, courses, bookings, digital products, etc. - and do it with simple interfaces, intelligent analytics, and powerful growth tools.
The end customer experience isn’t really a core part of any of their pitches, and, in Jay’s view, they’re all a mile wide and an inch deep.
You can have a huge company that's really successful that does an all-in-one tool and has a ton of resources. They’re still not going to put the same amount of resources into one aspect of that product that a company who's dedicated only to that aspect is.
That company is going to have a superior experience and a superior product in that vertical.
As you’ll see below, Jay has optimized each component of his stack around the end-customer experience, and I have no doubt that this has contributed to his ability to build audience trust and convert lots of big-ticket sales.
I think there are generally two camps on this, and that is: “I want the easiest, most intuitive all-in-one solution” on one side of spectrum, and the other side of the spectrum is “I want the best in class experience for all parts of the stack”.
I'm somebody that goes best-in-class experience for all parts of the stack, and I'll do the the hard work of getting them all to play nice together.
Membership - Circle + Ghost
Jay uses Ghost as the payment processor to paywall access to the community
Circle is the actual platform Jay uses for community management
He has it so Ghost sits inside Circle as the paywall
I think that Circle is the best membership tool out there if you want to have people use real identities and if you want them to be able to communicate in a forum-style space, because I think community platforms are on a spectrum between forum-style versus chat-style. I run in the forum-style and for that I think Circle is the best.
We've had a lot of evolution in this space for communities in the last three years. When I started doing online business in 2017 and I was doing some community-based stuff then, there were no options. I had to use Slack or Discourse, and Slack is just not built for community. The economic model doesn't make sense.
Discord is similar to Slack in terms of its UI. There are groups of people who just won't use Discord because it's just out of their world. So if your customer is not accustomed to Discord, it's a tough one to get people into. There’s some really great functionality for people who really are tech-savvy or if they're into the NFT, crypto crowd predominantly.
Any chat-based tool like Discord, like Slack, in my experience if you go north of 100, especially north of 200 members, it's really hard to have the type of closeness in relationship-building in those tools that I like to have in communities because it just gets too noisy. It's unwieldy, it's impossible to manage.
I continued to compare all types of these to each other and they're all getting to be about the same product - like the interfaces look the same. All of them try to start from one different standpoint to make one part of their tool a little bit stronger and better in different ways but I think they're all going to end up in the same place. We'll probably see a lot of consolidation because all of these tools have actually raised venture capital, so they'll either boom or bust. Some of them will probably get collapsed together, right?
I just think Circle is the best.
I wanted my website to be built on a tool that has a really strong CMS because I do take seriously searchability and the way that a website is indexed from Google. So performance was really important to me, and I wanted it to be a true web builder with a CMS, so to me the options were really between WordPress, Webflow, Squarespace, Wix, and Ghost.
Historically I've been a WordPress guy. WordPress, though, to maintain - you have to do a lot of maintenance and updates, and then there's conflicts between plugins and things.
Ghost was much much faster, much less brittle, it performs really well, and it has a memberships payment processor built in. So, to me, that was a really compelling choice.
I think Webflow could be really compelling, but I'm somebody that builds my websites myself, and Webflow has infinite customer customization. I didn't have the skillset for it, and the more you customize a theme and pull in images and things, it typically comes at the cost of performance and speed, and then you have to know how to fight back and improve performance. Ghost is a little bit more rigid in what you can do with it, but the upside of that is it's much more difficult for you to then harm the performance of the website, soo that's why I chose that.
I've never been a huge fan of Squarespace or Wix and that might just be an opinion without base. But that's where I'm at
ConvertKit is my email service provider. It was built for Creators, and it's been following that mission for I don't know how many years - probably close to a decade now. So it was really early to the game for the types of things Creators would want
The real first-mover in the space I think was Infusionsoft, and ConvertKit came in and was lower market, was more accessible, but had a lot of the same powerful features and a lot of the biggest creators that I know use ConvertKit. It's just their tool of choice.
Jay started his Creator journey focused on email, so he’s very sophisticated in his use of email as an Owned Distribution channel and as a driver of sales.
They have really strong tagging, segmentation, automations within the tool. So based upon certain indicators on any given subscriber's record, you can then tell ConvertKit to take some action. So an example of this would be - somebody subscribes to my newsletter, I could put in my welcome email “hey, I have a free five day email course about how to become a creator, click this link if you want to receive it” and set that. When that link is clicked, that subscriber automatically now gets sent a certain sequence, and all that just happens automatically, so that's really powerful.
ConvertKit has also added this commerce feature which is basically - they've basically built in the things that Gumroad does, but you can do it in your ConvertKit account for next to no incremental fee. So it's really powerful for building an audience, and communicating with that audience intelligently.
It's easy to use as a beginner, but then as you get more and more complex and sophisticated, the tooling supports pretty much anything you'd want to do.
When asked about his thoughts on other email platforms, he had great things to say about Beehiiv in particular.
There are some new tools that, if I were getting started as a Creator, I would consider on the email front. I would look really hard at Beehive, in particular.
That team had a really unique experience of building Morning Brew, they have a lot of experience in newsletter and growth, and they pull in a lot of features mixed with a really great website, a really great design of your email, and the price point is really solid.
So I'd probably look at that today if I was getting started, because there's more opportunity for discoverability using Beehive or Substack or similar products than there is with ConvertKit because ConvertKit is more of a traditional email service provider where, anyone that's subscribing, you've got to drive that traffic yourself.
I personally believe that platforms that combine discoverability with monetization are the holy grails of any given category, so I was curious: is there was some way he could leverage the in the power of Substack and/or Beehiiv’s discovery engines, either by switching or crossposting?
The answer was - it’s not worth it.
I'm in a position now where I already have a fairly sizable audience. I have momentum…that'd be a lot of work. I have thought about, as an experiment since I serve Creators, coming up with some different brand, some different niche, and basically starting from scratch on one of those platforms to document the journey and also get a working knowledge of the tool. But I would not crosspost to those tools, I don't think that's a worthwhile use of my time.
His engine is already built and running efficiently. Why fix what’s not broken?
[DISCLAIMER: Creator Logic is written and distributed via Beehiiv.]
Newsletter Sponsorships - ConvertKit
ConvertKit selling against Jay’s newsletter is the biggest generator of sponsorships, his #2 revenue source after The Lab. He benefits from their treating his newsletter as inventory within a larger pool of media - and it’s probably convenient that they’re his distribution platform as well.
They can go to larger sponsors and sell impressions across a whole catalog of partners, and then come to you with it. They’re not going to say “Hey Squarespace, an ad in Jay's newsletter for this many impressions”. They’re saying “Hey Squarespace, we have this many newsletter operators with these many impressions. Do you want to buy a block of that?” and then they divvy it up amongst those newsletters. So there's just more opportunity and more exposure to different and bigger brands, typically, when you work within a network.
Podcast Distribution - HubSpot Network
Jay prioritized audience alignment for growth purposes over ad sales when selecting his podcast network.
The benefit of joining most networks is that you are incentivized and facilitated with the cross promotion of other shows on the network. HubSpot has an incredible roster of shows for a business audience, which I would say my audience is, and I had data and insight that people who were listening to my show were listening to other shows on the HubSpot Network already. To formalize that and put some process and structure behind it, so that shows on the network were recommending my show to their audience and I could recommend their shows to mine - that seemed like a real win-win all around from a marketing standpoint. Winning from a marketing standpoint means more impressions, more downloads, more ad inventory to sell - so it was a win all around.
I think this strategy makes a lot of sense for him for three reasons:
HubSpot Network’s audience aligning with his means fast, higher quality audience growth.
To sell high-value podcast ads (i.e. host-read direct response ads, which can have $25+ CPMs), most podcast networks need a podcast to have 25k-50k downloads per episode. Jay’s podcast isn’t there yet, so prioritizing growth over ad sales makes a lot of sense.
His primary business model is driving conversions of high-price products (like membership in The Lab), so acquiring highly aligned, highly motivated audience with income to invest in personal development is worth much more than sponsorships sales.
Calendar Bookings for Consulting - SavvyCal
I was already using Calendly, so basically I had to decide if it was worth switching from Calendly to this, since I was already using Calendly, and I decided that it was. There are a lot of booking tools out there, and I had a really good experience on Calendly to be honest, but with SavvyCal, I liked the interface and the user experience better.
It was also easier to handle multiple types of availability - like there were some time savings that are kind of hard to explain unless you're a power user of one of these tools.
But I also just like the user experience, and a lot of times, I'll make platform choices based on the end user experience because I want people to have a remarkable experience interacting with anything that I make.
I have to admit - after talking to Jay about SavvyCal, I might make the switch myself.
Digital Products / Courses - LinkedIn Learning + Teachable + Circle
LinkedIn Learning approached him in 2017 to do coursework; the deal was structured as a publishing deal with advance and royalty, and that’s where the 10% royalty revenue from his Breakdown above comes from.
For his owned courses, Jay primarily uses Teachable and makes all his course content available to subscribers of The Lab via Circle.
The other course platforms I looked at would have been Thinkific and Kajabi, and a lot of those course platforms are an all-in-one tool that want you to send emails from the tool and do all these things, and because of that, they typically are higher priced. Since I do everything best-in-class, for that stack, I didn't want to send my email through them. I wanted to send my emails through ConvertKit, and so I might as well save on the price as well.
Project Management - Notion
I have a pretty intense dashboard in Notion. Everything in my business is kind of controlled in Notion.
Affiliates - Direct from the companies
It’s important for me to have integrity with the things that I recommend, so that when I have a partner and I say:
“Hey, here's a tool that I recommend.”
It’s a lot easier and better for me to say:
“Here's a tool that I use, and here's what I love about it.”
Basically any of these tools that I've mentioned that I use, I'm an affiliate for them.
Since my customers are Creators, they will ask me “Hey, how did you do this? What tool did you use for this?” I get that constantly, like every day I get somebody asking about some tool that I use, so I want to be an affiliate for all the tools that I use because I'm already advocating for them. This is a way for me to capture some of that value that I'm creating, so I'm a partner.
I looked and in 2022, I received income from 26 different affiliate platforms, but the majority of those came from just a couple. The majority of revenue came from just a couple partners.
Probably unsurprisingly, my biggest affiliate partners are Circle and ConvertKit.
Finances - Chase + Accountant/Bookkeeper + QuickBooks
I'm a big proponent of profit-first accounting, so twice a month I do my target allocation percentages using profit-first. Just recently, I started filing as an S Corp, so now I am a W2 employee of my own company, and I work with a great accountant and bookkeeper.
I basically go in and categorize my expenses once a month, but my accountant will do a final pass over it to make sure everything matches up and works. But I do the first pass of the bookkeeping still, I probably don't need to but I do find that spending an hour a month doing that is really helpful for me to stay on top of my numbers. I have a pretty in-depth dashboard for tracking KPIs on the revenue side, on the audience building side, on the cost side, so I'm really on top of my numbers on a monthly basis, and doing some of these monthly reconciliations is a big part of that.
I was curious on his thoughts about the plethora of Creator Economy finance firms that are emerging.
I'm pretty boring. I bank with Chase. I personally bank with Chase, and having my business in there is pretty easy as well.
I have seen some of these tools, and if I had more cash flow needs…you know, some Creators now, they're investing so much into custom sets and locations and things, and that takes real capital, and I get that. So if I had those needs and I might have to get more sophisticated financial products….
But I don't really, I keep a pretty lean business. My overhead is my cost, some software, the cost of contractors that I work with, and that's about it.
If you enjoyed today’s issue, please forward this email to a friend who may find it valuable. When knowledge is shared, it uplifts us all!
Thanks to Jay Clouse and Creator Science for the wonderful conversation!