Going Paid: How Edwin Dorsey launched and grew The Bear Cave

We invited Edwin Dorsey, author of The Bear Cave, to share his insights on launching a paid newsletter. Edwin is an individual investor who writes analysis and commentary in the world of short selling. 

Edwin discusses when he decided to launch paid subscriptions, how he drives conversions from people who are on the fence, and how he engages with the finance community on Substack.

This transcript has been lightly edited for readability. You can watch Edwin’s talk in the video below.

Takeaways

  • Write high-quality paid posts to grow your audience. When you’re known for producing quality paid posts, new readers will sign up for your free list to understand who you are.

  • Establish a sense of urgency with readers. Build anticipation by emphasizing the time to your next post or launch.

  • Get to know other writers in your community. Edwin talked to other Substack writers in his field, offering them paid subscriptions for free and giving shoutouts in his newsletter.


How I started a newsletter

I started writing about this world of activist short selling in March when I was still in college. My first goal with The Bear Cave was to aggregate all the new market data from the week that'd be relevant for short sellers or short selling analysts at hedge funds. 

The way I got my first few people to sign up – and this is common among a lot of Substack writers – is by tweeting out to my Twitter audience, “Hey, I'm launching this newsletter for hedge fund analysts. If you're interested, you can join the list here.”

That's how I built my following to start. I didn't even do it with a profit motive from the beginning. I just did it as a product I knew I wanted. I thought it would be helpful to other people, and maybe a good way to network and just keep in touch with the short community. But that's how it started, and that's how it grew with Twitter at first and then word-of-mouth afterwards.

I didn't [start my newsletter] with a profit motive from the beginning. I just did it as a product I knew I wanted.

The first week I had about 300 people sign up, so that was pretty encouraging. Then it grew slowly over time. It was about a hundred a week for the first 20 weeks or so. I don't think it ever really hit me that it was big until I noticed that sometimes if I really criticized a company, the stock would drop in response – and then it kind of hit me that, “Oh, this thing has a little bit of influence.”

Start with a strong first paid post

I didn't start this to turn it into a paid newsletter. I started it because it was interesting, but as it grew more and more, I thought, “If 5% or 10% convert and I charge $30 a month, this is going to be a really profitable endeavor.” About four months in, when I saw I was growing, I decided, “I'm going to launch paid eventually.” 

For me, I kept delaying when I was going to launch paid subscriptions because I felt it wasn't the right time. I thought it'd be better just to grow the free list because growth would stall once I launched paid. That ended up not being true. I launched it when I had a really good idea for my first paid report.

I kept delaying when I was going to launch paid subscriptions because I felt it wasn't the right time. I thought growth would stall once I launched paid. That ended up not being true.

I'm a little different from most Substack authors. The paid subscribers for The Bear Cave only get two deep dive reports on public companies every month. I know most Substack authors give a lot more content, so for me the delay in starting was waiting to have a really good first report. After I put out a good first report, there was a lot of growth.

I know Substack gives guidelines that 5-10% of people will convert from free to pay. It's been a little lower than that for me, but if you do the mental math and it’s profitable when about 5% convert, then it might be worth starting.

Paid posts can grow your free list, too

A lot of people criticize me for having too much stuff free and not enough behind the paywall. Basically, my weekly recaps I've been doing since the beginning of March are free and always will be. This is never going to be really in-depth research on a company – it's more aggregating stories or pointing out things that I find interesting. I think that does a good job at growing the email list. 

The deep dive research on specific companies, which might be part of an investment thesis for a fund, is what's behind the paywall. People tend to want that type of stuff more exclusively. They don't want it out in the world where everybody can see it, because then it loses its value.

I think it's important to keep a lot of stuff not behind the paywall to keep growing. One thing I've noticed is that after I launched paid, the growth for my free list has actually been increasing, which is kind of counterintuitive. I thought some people would be upset and unsubscribe, and I'm sure some did, but a lot of people signed up for the free list too.

After I launched paid, the growth for my free list has actually been increasing, which is kind of counterintuitive.

When you put out a really good paid report, if it gets immediate attention or gets forwarded around, a lot of people will sign up for the free list just to see what you're doing and who you are. I announced paid with a Twitter thread explaining what I was doing and why I wanted everyone to sign up, and after that spread around, a lot of people signed up for the free list. 

I thought promotional emails would be seen as spammy and people wouldn't want them, but it's had the opposite effect.

If I have a big paid report coming up, I'll tease it. The day before, I'll say, “To all my free subscribers, sign up for paid. You really don't want to miss this new report. It's going to be really good.” I thought promotional emails would be seen as spammy and people wouldn't want them, but it's had the opposite effect. People forward them around, try to guess the company, and are interested. If you send 10 emails to people saying, “Sign up for my paid offering,” that will probably piss them off and they'll unsubscribe, but I’ve found that one good marketing email every two weeks grows the free list.

Be clear about what your readers get

I have this Monday newsletter that’s always free. One week, I said, “Hey, I'm launching paid subscriptions for this newsletter. It's $34 a month.” I was clear about what you’d get: deep dive reports on public companies every month. The thing I've consistently heard from other paid authors is you’ve got to be really, really clear about what you offer. It shouldn't be wishy-washy. It shouldn't be “I'll figure it out later.”

One thing I did is make the tone a little too informal, like, “You'd really be helping me out. You're going to help a recent college grad make income and do this full-time.” I don't think people responded well to that. Because I didn't speak to [my readers’] interests, I [only] got the equivalent of like $15,000 a year in subscriptions the first day after launch.

What did really well was sending a really good teaser email before I put out the paid report. I said, “You don't want to miss this. I want to expose a billion dollar company that has all of these red flags, and I think that it's significantly overvalued and the market is missing all of these important points. You can get the report tomorrow, and you won't get it unless you sign up.” That doubled the number of subscribers. Then, the day of the report, people found it insightful and forwarded it around a lot. At the bottom of the report, I said, “If this was forwarded to you, you can sign up to get more like it,” and that did really well.

Create a sense of urgency

I've noticed that in my normal free newsletter, if I say, “Sign up for paid. It's really good. Here's what people are saying,” that's very bad at driving subscriptions. I've found no one wants to insert their credit card info for something that they're going to get in two weeks or in one week. But if you say, “Hey, subscribers, get this thing tomorrow,” that's literally 10 times better at driving subscriptions. 

If I send just the template message, “Sign up for premium. This is what you get. People love it. Learn more here. Subscribe,” that might drive one subscription out of 6,000, but if I send it in an promo email the day before to only people on the free email list, that drives like 10 subscriptions. The time to the next paid report is really important.

Sometimes, when you have a free list, there'll be a lot of people who are interested in your paid subscription but just don't pull the trigger. No one likes putting their credit card info in. I haven't done this myself, but I've heard that announcing a price increase after three or four months helps drive subscriptions before the price increases. 

If you say, “Starting January 1st, I'm going to increase prices for anybody new who signs up, but old subscribers will be grandfathered in,” everybody will want to sign up before January 1st before the price increase, and it does an outstanding job of driving conversions from free to paid. I'm $34 a month, and I'm probably raising it to $44 on January 1st. Just based on talking to other people, I have a feeling that if you pre-announce it with two or three weeks notice, you're going to get a lot of people on the free list who've been thinking about it to finally convert.

Get to know your peers

I send promo emails before any paid report, and I try to go on as many podcasts or Zooms as I can. I think those are okay at growing your audience.

Twitter is also really good. If you're posting something that's time-sensitive or really important, putting it on Twitter is good because people will retweet it and see it. They see a stock moving, they'll be like, “Oh, this is what's causing that.” A lot of Substack authors will take their content and put it in a Twitter thread. That tends to be good at getting followers and getting people to check out their website.

One thing I’ve found to be incredibly helpful is giving shout-outs to other Substack authors and people with large Twitter followings. In every 20th, 30th, 40th and 50th edition of the newsletter, I would say, “Here are the best 20 Twitter accounts to follow in the finance world. Here's the best 30, here's the best 40, here's the best 50.” 

I would say who I thought would be the best to follow, but I also named people who I knew read the newsletter or had done a good job of sharing the newsletter in the past. They're happy because they get a lot of Twitter followers. The readers are happy because they get good info on who to follow. And you do really well because people who see themselves on the list of the best Twitter accounts will share it and say, “Oh, I'm honored to be number six on this list.”

I talk to a fair amount of the other finance Substack authors, and there's a good community. When I launched paid, I asked, “Could I add you to paid?” to every other author who I thought might want to be on the paid list, and I added them for free. They felt good about that. They'd either add me back, or if they liked it, they'd share the content to their audiences on Twitter.

Odds are, if you're writing on Substack, there are going to be other people in your niche. Reach out to them before you launch and give them a free version of whatever you're offering.

Odds are, if you're writing on Substack, there are going to be other people in your niche, and I would highly recommend reaching out to them before you launch and giving them a free version of whatever you're offering. At minimum, it's just nice and you might learn something from them. They might like it and share it, and it’s an easy way to collaborate down the road.

Before I launched, I reached out to all of the big Substack authors and asked them for their advice. The big things were to be really clear about what you offer and to charge more. I charge $34 a month or $340 a year. You want to have a little bit of a discount for annual because people do churn. Substack will send a monthly bill like a month after they sign up, and I see about 10% of people unsubscribe after one month. I don't know if that's high or low, but that's why you definitely want to give an annual discount. When people sign up for annual, you get all the cash up front and they're not going to churn.

I reached out to all of the big Substack authors and asked them for their advice. The big things were to be really clear about what you offer and to charge more.

I also give out a lot of free subscriptions. Basically, for any student who asks or any analyst who asks and says they can't afford it, I'll give them a free subscription for six months. I know that if they like it, they're going to forward it to other people, and then those people will subscribe. I am very much in the camp of giving away free subscriptions, and I think it helps drive paid.

A final thing I did that made the first week really good was cold-emailing a bunch of reporters saying, “Hey, I'm going to be putting this really interesting report out at 10:30 on Thursday, so you’ll really want to pay attention. I'll add you to the paid list for free so you'll get it.” Because of that, some reporters put a blurb on the Bloomberg Terminal and wrote about it, and I think that was really good at driving subscriptions.

Sometimes if I talk to one, I'll just say, “Can I add you to the paid list?” and they'll say yes. You want to find people who write the little blurbs that could potentially be shared. I know some [reporters] from the past, so I forwarded it around to them. 

Know what you’re getting out of writing

You can start on Substack for free and just see how it grows. I started it not thinking it’d be a full-time thing. I would say that if it works, it works really well. If you have a newsletter that after a month has an annual revenue run rate of $50,000 a year, it's worth a lot more than that because it's going to grow slowly over time. If you have a newsletter annualizing $100,000 a year, that can be sold for something.

There are a lot of benefits outside of how much you earn. It's an outstanding networking tool, so even if this fails, I'll have met so many people. It's a good way to find a job. Because you're writing online, it's a great networking tool. People will read what you write, and even if you don't end up making a lot of money from it, you might get a job offer from somebody who finds your skills interesting. So in terms of launching it, at some point you just have to do it.