📶 Confluence.VC Year in Review

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Good morning 👋

You’ll probably read a lot of annual updates over the next few days.

Hopefully, this one is the best one you read.

Here’s everything that went right and wrong for us in 2023 plus the best things we shared over the year and our outlook and plan going into 2024.

We hope you enjoy.

P.S. This is longer than most of our other content, and the bottom half might get clipped by Gmail. To read the entire update online, follow the link below.

TL;DR:

• 📈 Pros

• 📉 Cons

• 👀 Outlook

• ⭐️ Most Popular

PROS
What went right 📈

Passed 2,000 members: There aren’t a lot of private venture capital communities, but this is a big milestone. Women in VC is the only other private VC community I know that has hit this mark. If you’re a full-time investor and haven’t applied yet, here’s how to do that.

Revamped membership with new features and a lifetime pricing option: As a reminder, all accepted members get access to our resource library for free. If they want more out of their membership (member directory, private Slack, investment memos, software discounts, talent collective access, and automated intros to other members), we have a paid tier. Up until this quarter, the paid version was only offered as a subscription cost, but we listened to feedback and now have a lifetime (one-time) payment option. Here’s how to access it.

Hired Raegan as a talent partner: Venture capital hiring is funny; everybody thinks they can do it themselves until it actually comes time to hire. We have previously helped funds hire through our job board and talent collective, but those are somewhat hands-off approaches. We decided to create a recruiting business earlier this year, and we brought on Raegan to spearhead it. She’s been awesome to work with and has helped us cover a lot of ground already. If you’re looking for help building out your investment team, she’d love to help put together a game plan for you.

Built an affiliate program for community membership and digital products: We’ve been lucky that most of our growth has come through word-of-mouth, so we built a way to reward people for telling their friends and co-workers about us. We built a community referral system through Rewardful so that members are incentivized to add other team members. If you’ve already been accepted, here’s how to get paid as an affiliate. We also added affiliates to each of our digital products through Gumroad so that any paying customer can earn if they tell their friends too. Here’s how anybody can become an affiliate on Gumroad.

Site traffic is up 225% YoY: If you’ve followed these updates, you know we’ve spent a TON of time and effort boosting our site traffic. The first six months of learning SEO was a brutal process, but we’re now just starting to reap some of the rewards.

Newsletter subscribers is up 85% YoY: We shared 96 posts this year and have upped our cadence to 2-3 times per week. The overall writing quality has improved (hopefully you have noticed), and beehiiv has made it easier to create aesthetically pleasing newsletters that warrant high open and click-through rates. We want to grow this number our subscriber base 250% in 2024.

Redesigned newsletter, website, and Commonapp.VC: We took a deep look in the mirror earlier this year, and decided that all of our homepages could use a design update. It’s impossible to impress a stranger when your first impression doesn’t wow them, so we spent a lot of time making sure that that changes. If you’re looking to roast our new designs, here’s the refurbished website, here’s the newsletter home page, and here’s the new Commonapp home.

Expanded the newsletter referral system: You’ll see at the bottom of this email that we’ve added more to the newsletter referral program. We want to make it a no-brainer for you to share us with your friends, family, and co-workers, and we’ve added some rewards to incentivize some of that. 

CONS
What went wrong 📉

Creating demand for recruiting is harder than we thought: We started our recruiting business earlier this year. We underestimated how hard it is to create demand for a new service offering. The biggest lesson we’ve learned is that trigger events matter more than anything else for this type of offering. We’re defining a trigger event as any new fund being raised (more AUM = more investors needed to deploy), and we’re sending automatic outbound campaigns to the person we deem as the right contact. If you want to trade notes, shoot me a note.

Spent thousands redesigning our website: Looking pretty ain’t easy, and we have spent a ton to get our site and newsletter looking how they do now. The best advice I have for anybody starting a similar process is to find inspiration from another existing site and copy that. No need to recreate the wheel. If you’re looking for help with designing a newsletter, I’ve gone deep on that and would love to help - just shoot me a note or reply to this email.

 Word-of-mouth growth is slowing: We decided this year that we can’t be entirely reliant on word-of-mouth. Up until Q2, we had not spent any money on advertising. We’ve tested different channels, but we’ve found the most success with Twitter and Facebook ads for lead magnets (currently averaging $0.25 - $0.30 CPC). We’ll keep pouring into this and will share what we’ve learned with anybody looking for help.

Had a fund abandon us on payment for a placement: Not going to name names, but this sucked. We’ve learned to require some sort of buy-in now from funds (originally we pitched our recruiting service as no retainer so funds only paid after we made a placement) so that there is more skin in the game and we attract the right types of clients.

Syndicate deal flow has slowed down (but we think that’s changing): The past few years have been slow for all funds, but syndicate deal flow has been especially tight. We did not run any new deals in 2023 despite looking at hundreds because we were not able to find any that we loved. We think that’s changing as we’re starting to see more buying opportunities. If you’re accredited and want to invest in our best deal flow, here’s how to join our syndicate.

OUTLOOK
Looking ahead to 2024 👀 

We’ve tried a lot of things over the past three years. In 2024, we’re narrowing down where to focus.

There are three pillars where we are investing our time and attention: audience, income, and equity.

Here’s how we are investing in each.

Audience

Our newsletter is our core asset, and we are investing time and resources to grow our list. Here are the main levers we are pulling in 2024 to hit 15k subscribers by the end of the year:

• Increased guest posts: One of the cooler parts of having an audience is that you can use your platform to help others share their point of view. We’ve tested guest posts (here and here), and we’re doubling down on this in 2024. If you write online and have something to say about venture capital, startups, or something you think other investors will want to hear, let us know.

• Diving into memes: Like it or love it, memes capture attention. Some finance meme accounts started sharing memes and parlayed that into running funds (exhibit A and exhibit B). We think there are plenty of opportunities for this community to build a meme empire to funnel more attention towards this newsletter.

• Paid ads: We started testing ads in the spring, and after burning thousands of dollars, we’re finally starting to find our footing on X and Meta. The goal for these ads is to create new newsletter subscribers, so we’re now testing the best way to decrease the payback period on our ads spend.

• Expanding our YouTube footprint: Ignoring YouTube as long as we have has been one of my biggest regrets. The amount of reach you can get on that platform is insane, and the shelf life of content is much longer than other platforms we’re active on. We’re spending more time, effort, and attention to grow our audience through YouTube this year.

Income

Our income growth is relatively flat compared to last year, so we’ve gone back to the drawing board. Not considering our recurring revenue products, there are three main income drivers for the business: sponsorships, recruiting placement fees, and digital product sales.

Here’s where we are doubling down on each of these to drive more income in 2024:

• Sponsorships: Advertisement has become a part of our business just like any other media company. We have booked sponsors through our sponsor page and also through the beehiiv ad network, but we are working towards more ways to remove friction from booking new sponsors and retaining old ones. One thing we have learned is that sponsors want results-based sponsorships (think CPC campaigns or affiliate structures where you only get paid based on the value you drive). We like the Alts sponsorship page (linked here) where they give sponsors the ability to buy clicks, but we haven’t been able to figure out how to work out the attribution of this type of model. If you have any ideas, we’d love to hear them.

• Talent: We talked about this before, but building demand on the recruiting side is harder than you’d think. We’re testing a few things to get more clients, including expanding our list of lead magnets (think things that would be useful to somebody hiring venture capital investors - JD templates, salary cheat sheets, etc.) and creating dedicated web pages for the talent in our collective to build more domain authority around our offer page. The biggest bottleneck for this line of business is the number of leads, and we already covered some of the outbound methods we are using to drum up demand.

• Owned products: Right now this includes these two digital products. We will run occasional discounts to these two products, and we have set up an automation that teases both of these to subscribers we think could get the most value out of each. We think that these two products are the tip of the iceberg, and we are building more as we speak. The benefit of running a newsletter for the past three years is that you have a lot of data to sift through and use to get a better idea of what your audience actually wants. Stay tuned while we work through our next product launch.

Equity

If we do things right for the first two pillars, this pillar should take care of itself.

Most businesses are evaluated on recurring revenue, and we have three recurring revenue products: premium community memberships, premium newsletter memberships, and talent collectives memberships.

Each of these products has been built for different personas, and growing each has its own unique set of challenges.

• Premium community: The main hurdle has been convincing new members of the ROI since most of it is intangible. We’re testing different pricing models (one-time vs. subscription), and we’re also teasing more features publicly on our site and through the newsletter.

• Premium newsletter: The challenge has been converting free readers to paid readers (who needs a paid newsletter, right?). We’ve started layering in more and more beyond just premium newsletter to make it more and more of a bargain for premium subs. If you want to check out what all is included in the premium newsletter, you can do that here.

• Talent collectives: The main challenge has been putting the offer in front of the right people at the right time (easier said than done). We’re doubling down on events-based sales campaigns through email, and we’re also teasing a 30-day free trial to any fund wants to test it out before they buy a subscription (if that’s you, use the code ‘MONTHONE’ on this page).

The other way to increase the equity value of the business is to expand the amount of equity exposure we have to other businesses. We’ve done this by investing through our syndicate (linked here).

We only invest in early-stage companies (Seed - Series A), we look for non-consensus (ignore B2B SaaS and productivity tools that compete on price and features), and we give companies unfair advantages through media exposure, access to tier-one talent, and downstream capital connections.

If you want to start investing alongside other Confluence members, here’s how to join the syndicate.

MOST POPULAR
The best pieces we shared in 2023 📶

1. 99 brutally honest takeaways from working in venture capital: Our updated list of non-obvious things we've noticed

2. Coolest Things I Learned Over the Past Year: 45 lessons that 2023 taught me on business, investing, and people

3. Things Smart People Have Said: A few quotes that stood out in 2023

4. Annual Community Report: Metrics, insights, and takeaways from running the #1 private investor community this year

5. The modern VC sourcing method: How new school VCs are building their pipeline, finding signal, and lapping their competition

6. How some VCs are winning higher ownership positions: Our thoughts on the incubation model

7. Some power law math: How rare it is to find true winners

8. Does "venture-backed" mean anything anymore? VC-backed businesses are failing at record rates

9. Revisiting the Tiger strategy (2.5 years later): Where Tiger went wrong

10. The VC ecosystem broke the LP ecosystem: Why LPs are pulling back on venture investing

11. 10 things we’ve learned about VC talent: Saying the quiet parts out loud

12. Data is eating VC: Our thoughts on VC becoming data-driven

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- Clay