Welcome to episode 447 of The Food Blogger Pro Podcast! This week on the podcast, Bjork interviews Ewen Finser.
Last week on the podcast, Bjork chatted with Erin Jeanne McDowell. To go back and listen to that episode, click here.
How to Diversify Your Traffic and Income
The last few years have brought big changes to the online content creation world — AI, Google algorithm changes, you name it! As an entrepreneur, these changes can feel overwhelming, discouraging, and even scary. So… what can you do about it?
That’s why we asked Ewen Finser back on the podcast! He knows a lot about the importance of diversifying your business — from traffic sources to income and everything in between.
Bjork and Ewen chat about how to diversify your traffic sources and income, how to approach risk, and different strategies and tools for managing your finances. Don’t miss this interview!
In this episode, you’ll learn:
- About some of the changes happening in the world of search.
- More about search generative experience on Google.
- How to approach risk on search, email, and social media platforms to help create a stable foundation for your business.
- How to think about the income you’re creating from your business as an investor.
- The importance of diversifying your income.
- How to approach scaling your business and managing risk.
- About Ewen’s favorite tools and apps for money management.
- Venture 4th Media
- 243: Best-in-Class Content – Keyword Research, Creating Value, and Authority with Ewen Finser
- Tiny Bites: Understanding and Reacting to Google Algorithm Updates
- Niche Media Publishing
- Google September 2023 Helpful Content Update – Changes To The Algorithm
- Future PLC
- 443: Why David Lebovitz Switched from Blogging to Substack
- Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine
- American Deposit Management Co.
- Max My Interest
- Monarch Money
- Follow Ewen on LinkedIn
- Join the Food Blogger Pro Podcast Facebook Group
Thank you to our sponsors!
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If you have any comments, questions, or suggestions for interviews, be sure to email them to [email protected].
Transcript (click to expand):
Bjork Ostrom: This episode is sponsored by Memberful. Looking to find sustainable sources of income from your blog this year that don’t include fighting against changing search engines and social media algorithms? With exclusive membership content, you can create a new source of income by turning your food blog into a membership business while creating the content you’re passionate about.
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By using Memberful, you’ll have access to a world-class support team ready to help you set up your membership and grow your revenue. They’re passionate about your success and you’ll always have access to a real human when you need help.
Food creators are already using Memberful to foster community within their audiences and monetize their content. And listeners to the Food Blogger Pro Podcast can go to memberful.com/food to learn more about Memberful solutions for food creators and create an account for free. That’s M-E-M-B-E-R-F-U-L.com/food. Thanks again to Memberful for sponsoring this episode.
Emily Walker: Hey, there. This is Emily from the Food Blogger Pro team and you are listening to the Food Blogger Pro podcast. This week on the podcast, Bjork is interviewing Ewen Finser. He is back on the podcast again this week to chat about the importance of diversifying your traffic sources as well as your income.
Given all of the changes in the online content creation space in the last few years, I’m thinking about AI, Google algorithms, all that good stuff, it makes sense that you might be feeling a little risk-averse or just kind of overwhelmed by all of these changes. So what can you do about it?
That’s why we asked Ewen back onto the podcast. He knows a lot about the importance of diversifying your business and shares more of his tips and strategies for diversifying his traffic sources for his various websites, as well as why you might want to consider diversifying your income from those businesses.
He shares more about how you can go about diversifying your income and some of the tools and sites he uses to help him do that. It’s a really great interview for any entrepreneur. I know you’ll get a lot out of it, so I’m just going to let Bjork take it away.
Bjork Ostrom: Ewen, welcome back to the podcast.
Ewen Finser: Great to be here, Bjork. Thanks for having me back.
Bjork Ostrom: We’re going to be talking about two things that people love to talk about who listen to this podcast, Search Engine Optimization and money. Those are the two things we hear people coming back to quite a bit, and it’s two things that you have experience with. As a operator of online businesses, we’re going to talk about that a little bit, a bit of your background. And also as somebody who’s just strategic in thinking about finances and being a business owner and investments and things like that.
So you’ve been on a couple podcasts for people who maybe have missed those. Can you give a little bit of background of who you are and what you’ve been up to over the last few years as you’ve been in this world of full-time entrepreneurship?
Ewen Finser: Yeah. So I’ll keep it short because some people might be tired of hearing it, but I started this as a lifestyle business back in 2013, 2014 when I was in my early 20s after just being exposed to the corporate cubicle life and realizing it wasn’t for me and working nights and weekends to get the business off the ground. And this is pre kids and everything, but it was like a side hustle, and I picked up how to throw together websites in college, I’ll say for beer money, but I don’t drink beer anymore.
Bjork Ostrom: You and I both, yeah. For tea money for my evening.
Ewen Finser: For tea money, yeah.
Bjork Ostrom: Goodnight tea money.
Ewen Finser: Yes. So we did that and then got us to a point where it could replace the day job. This was probably in 2015 and was able to quit the day job and go full-time online. And the types of businesses we were operating were media businesses. They were called niche sites really back in the day, affiliate sites. And fairly simple. We had one of our first sites was in the home robotics and automation space, which is partly just good timing, but over some consistent effort, writing all the content myself and then slowly adding some freelance writers and adding some managers and things like that.
We were able to scale that. We were able to have in 2017, we sold that for a nice little exit. That was my first taste. But I realized at the time, probably around 2017 that there’s some legs here. If we could build more of an infrastructure around incubating, launching, managing, even acquiring media properties or websites, we might be hitting on something. At the time, I just remember this is back five, six years ago, but e-commerce penetration was maybe like 8, 9% of all total retail commerce. So this was very early innings for that. And so we started scaling the team. Amy, who’s also a great producer. You should probably have her on as well.
Bjork Ostrom: Yeah, we should.
Ewen Finser: Our COO, she, at the time brought her on, she was just doing consulting, helping us with all various projects. And we kind of built the team from there, location dependent, no office anywhere, people all over the world and really started scaling the writing teams.
I would kind of come to market with a thesis around I see a gap with a search landscape or just something I see that’s interesting, affiliate opportunity in a certain vertical and kind put together a scope. And then we’d have kind of in effect, it was like a go to market strategy at the time, which is us doing our own little version of that and then hiring experts, hiring writers to fulfill against the requirement for articles and content.
We did a bunch of that. So we grew the core portfolio of Venture 4th Media. Today probably has like 40, 50 websites in that, kind of the mothership, and that’s like the operations entity. And then we have a couple portfolio companies where we either work with investors or work with strategic small family offices, private equity to acquire and manage primarily websites. We have some digital products, e-commerce elements, some courses here and there, but it all kind of funnels from the media side of things.
And then, fast-forward to today, and we do have some services, we have a content recruiting service for writers, content teams in a box where if there’s brands that want to do content marketing but don’t really want to do all the legwork to find the experts, maybe know what they’re looking for, and manage those writers and manage the production, we can do the headhunting for them, present them with a team and get them onboarded and then move on to the next client.
And we have more recently, my evolution is like we’ve acquired a couple newsletters and we’re building out email lists. So we’re kind of still in that media. I think the media ecosphere is where we are, but definitely evolving a little bit in terms of our thinking around list building and things like that. I guess the one place where I’m personally publishing that I spend a lot of time in is nichemediapublishing.com, which is our little industry trade mag for our people who operate smaller media businesses, whether it’s email, newsletter, social media, video, whatever it is.
Bjork Ostrom: I don’t subscribe to a lot of newsletters. That’s one that I do subscribe to. And one of the things I appreciate about it is it’s squarely in the category of what we are, which is thinking strategically about things that are happening within search, how that’s changing.
But beyond just SEO, it’s also talking about what are the strategies for content creators in general. So you’re creating content and the content you’re creating is going online. How do you think about that strategically? What is the value of a newsletter? How does that look like? What does it look like for these trends and shifts that are changing within the industry?
So for those who haven’t yet signed up, I would really encourage people to check it out, nichemediapublishing.com, is that right?
Ewen Finser: Correct.
Bjork Ostrom: Yep. And it’s one of the things that’s so great about talking to anybody like you who has multiple touchpoints across a broad market. So an example is we’ll have a conversation with a CPA who works with creators. They see a hundred different tax returns, a hundred different best practices. And for you, having 40, 50, 60 plus sites that you’re managing, you also have this kind of holistic, or is a different understanding of the landscape than we would where we have three or four sites, two of which are really SEO focused.
And really focusing on the food space, you kind of have this across the board. You’re seeing all of these different sites. So with your portfolio and also with your broader knowledge of the market, what are some of the changes or shifts that you’re seeing happen specifically in the world of search? And maybe you can talk about your own portfolio.
Ewen Finser: Yeah, for sure. I think the last 10 years has been a generally very favorable context for doing anything online with media. I think certainly during Covid, we saw the Covid bump, and then we have this confluence of things happening right now, which is the post-pandemic return to normal slack I guess from everything digital. So even e-commerce companies are feeling this. Not everyone’s using Zoom as much as they used to, so people are coming back to work, that whole like or getting out the house, whatever. And so there’s that trend, which is kind of a little bit of a headwind for anything digital to be honest.
And then there’s the macroeconomic, which is another kind of contributor where there was a period maybe a year or two ago, are we in a recession? We’re technically in a recession, but maybe a soft landing. Either way, we’re certainly not in the environment of 2% interest rates and free money for anything you want to do.
The trio then effects of that, speaking personally, it’s like in that environment, there’s a lot of companies that just are willing to spend a lot of money on things. So we were doing consulting. People were knocking down our door to get services. Just that environment certainly shifted. A lot of the people we work with now, they’re a little bit more conscious of that. They have limitations on-
Bjork Ostrom: Yeah, kind of austerity measures around spending and budget.
Ewen Finser: For sure.
Bjork Ostrom: Yeah.
Ewen Finser: And then you layer on the third thing, which is probably the … Well, it’s kind of two things in the search landscape specifically, but within search you have two trends. One is the AI kind of apocalypse, which is obviously people creating content using AI or just using AI to do things in an automated fashion, which is both creating opportunities and risk at the same time.
And actually, to be honest, that was what I was preparing for this last year. I was like, okay, sometime around 2023, 2024 end of the year, there’s going to be a switch where Google may turn on search generative experience and search as we know it may be different.
Bjork Ostrom: Can you explain what that means for people who don’t understand what is turning on SGE or search generative experience mean in the Google interface when you’re googling something?
Ewen Finser: Yeah, so you may have opted in, some people may have already been seeing it pop up in search where you get this generated chatbot type response at the top of Google. Basically that’s just using AI to answer the question, pulling from what’s already out there in the universe. So at a very simple level, it’s like putting a chatbot into search as one of the first touch points as opposed to just the search bar and the organic results.
I mean that’s been tested. It turns out though, that it seems like Google’s kind of walking that back. It’s not quite ready for prime time. There’s all sorts of issues with it. But really what the biggest impact has been Google’s helpful content update in September, end of September and some subsequent updates from that. But that actually ended up shaking up the search landscape more than AI has so far, at least in my estimation and experience.
And so that kind of rolled out in September and you might see it in search looking like, oh, there’s tons of Reddit forum posts showing up where there used to be a lot of content brands and editorial sites. Search might not be the same experience you’ve had in the past. Just a lot of flux, a lot of turmoil. We can get into those details, but I think the overall picture right now is headwinds. Headwinds for media brands. A lot of the big companies that I look to, and I do this in my newsletter, kind of breaking down their earnings reports, Future PLC, Dotdash, which is part of IAC, you probably recognize some of the brands like Healthline, some of those. Red Ventures is another one.
All of those big media conglomerates are going through changes and have some negative stories now about it’s the growth isn’t holding up and I think they’re kind of projecting, if I were to summarize it, 10% month-over-month decline into the future for search because they don’t really know. Even in Future PLC’s earning statement, they said something like, “We’re going to try to call the turn in 2024,” which to me is the least optimistic way of putting lipstick on it.
Bjork Ostrom: Call the turn meaning?
Ewen Finser: Yeah, like we’re trying. We want to call a turn in the market back in our favor, but. We’re trying. We don’t even know.
Bjork Ostrom: Yeah, yeah. Essentially saying things have taken a turn in not a good way. And in 2024, we’re going to try to turn them back towards a good way.
Ewen Finser: Yeah. And call it, like we’re going to be call it. I don’t know. I don’t know what that means even.
Bjork Ostrom: And so just to kind of recap so people can follow along, these companies are kind of big versions of … really big versions of the companies you or I might have where there’s multiple owned brands within the larger company. One of them you referenced was Future PLC, which you can just go to futureplc.com and they have Tom’s Guide where I guess Tom probably started that 15 years ago, built it up into this massive site. It was acquired by a company or Marie Claire or PC Gamer or Homes and Gardens, Cycling News, space.com. So they have all these content sites and what you’re saying is these sites are these conglomerates, these big companies are saying publicly we notice a decline in search. We’re experiencing that and just calling that out.
And what you’re saying is there are these headwinds, headwinds meaning if you’re in a ship and kind of like you said, for the past 10 years maybe we had this kind of the wind at our back and it was suddenly like, “Oh, this is really great. It feels good to create content.” And now it’s headwinds, meaning, okay, it’s kind of coming at us when we’re trying to go forward. The wind’s not going the right way.
And so as, for these companies, part of it is we kind of need to figure out what to do. And that’s part of what you’re exploring within your newsletter is like, “Hey, what are the other ways to do this?” Maybe it’s for you, you talk about a newsletter, which is interesting. We’ve had a podcast with another creator, David Lebovitz, and he talks about a shift from thinking of himself as a blog centric person to a newsletter centric person on Substack. And just the shift that that was in his mindset around content creating didn’t have to be as search optimization oriented, which I think feels good for a lot of creators to not have to be robotic in their content creation, which maybe sometimes feels like that.
So what does that mean then? We’re kind of in this in-between where we’re figuring out what’s next or what is your take on it? It’s kind of the experimental chapter that you’re in to find out what we do? Or do you just keep grinding on content and say we’re maybe going to still be able to make progress, but not as much as we could previously?
Ewen Finser: Yeah, no, it’s a tricky one. And I try to balance. It’s like F Scott Fitzgerald hold two things to be true at the same time, two opposing ideas and still retain the ability to function. And I kind of just keep that front of mind.
It’s tempting. I see a lot of creators kind of jumping from thing to thing. “Oh, it’s over. Google’s over. Don’t do SEO.” It’s like, “No. Google is still an amazing traffic source.” And even the sites that we’ve had that have been hit are still getting traffic from Google. And that’s super valuable.
And in some ways you can even think of it in the sense of if all the media brands are playing with the arm behind their back, there’s more demand than ever for eyeballs because it’s not just the media players that are being disrupted, it’s the whole food chain from the advertisers, the media buyers, the brands trying to look where to put ad dollars. And so there’s this flux.
And I think change always feels kind of negative when it first hits you and then it takes a little bit, but then at least for me, I start to see the opportunities then on the other side. And it’s really what it becomes as an exercise in navigation as opposed to this good, that bad, let’s shift everything over here or everything over there. It’s like, no, we got to navigate this ship in a slightly different tack to get the right, to get the wind where we want it. We do have that ability to control it. Sometimes it’s like turning the Titanic. If your business is entirely wired a certain way, it can be effort even to pivot it a little bit. So I’ll just say that as a general caveat.
But then some of the things that I’m interested in, one, I’ve looked at all the other platforms very deeply, Pinterest, Facebook, Instagram, YouTube, you name it, TikTok. And what I see with all of these platforms is diversification and a similar risk profile. TikTok could be banned tomorrow. The government might be like, “Nope, we’re done with you.” And it’s an algorithm and it changes.
Pinterest is an interesting one because it’s probably the closest corollary to Google Search in that people go into the search bar and enter things and follow. It’s kind of a hybrid between pure social media and search. And it’s very interesting and it’s still an algorithm. And if you’ve been around as long as I have with Pinterest, there’s been times where they’ve turned off the switch.
And I think all of these platforms kind of have this incentive to keep you in their walled garden but give you enough kind of breadcrumbs to keep you creating. And so there’s this tension here where building your house of rented land, it’s like I’ve heard that a lot from people and of course you don’t want to build it, but it’s a place to start build your house. You start there because you can’t buy your own land. And then how do you develop a stable foundation that has some durability?
The thing that I’ve settled on is list, the list, the email list as the kind of the DNA. And I think we have a mutual friend, Matt Paulson at MarketBeat. And if you look at his business, how incredible it is, he’s really built it off at the back of an email list. I think he started with SEO as the play, Google News, a lot of different, what I’d call tactics. I’m kind of looking at all these other platforms as there’s a Facebook tactic, there’s a Google tactic, there’s a growth hack here and there.
But we want something solid that we can hang on. And I think the email list like we talked about MarketBeat, I think they’re probably hit a little bit with this recent Google update as well. But with x number million subscribers-
Bjork Ostrom: Yeah, literally-
Ewen Finser: … it’s so immaterial to his business.
That’s I think the North Star for us. It’s like how do we align having the email as being our insurance policy or our very long-term growth, incremental growth strategy. So I’m kind of thinking about all of our businesses like that now. If it’s something that cannot be readily operationalized or synchronized with an email list, it’s probably not a market we want to enter right now.
Bjork Ostrom: Yeah, interesting.
Ewen Finser: So that’s one framework I’m using.
Bjork Ostrom: And point being, like you said, all of these platforms are necessary to some degree or useful maybe is a better way to say it, like Pinterest, Instagram, Facebook, YouTube, your own site, your own blog. But all of those come with some risk, the inherent risk being an algorithm can change, they can flip a switch. Suddenly Pinterest goes public and they need to prioritize ad revenue, so they want to keep people on more. All of these little nuanced shifts and changes or not nuanced, significant in a lot of ways, which resulted in the thing that you had being taken away in that idea of rented land being a platform that you don’t actually own, whereas your site is something that you own, but the traffic source to it for a lot of us isn’t, which is search. And for some of us, we felt that in a really significant way where that drops off.
Your point being email is helpful because for the most part, the deliverability and consistency around email is controlled by you. Now, there’s always the … I remember one of the things being Gmail releasing their tabs. And the tabs come out and it’s like suddenly stuff goes into promotional tab and how you … So there still is some element of that, but for the most part, email being something that you control wholly and that being an important piece of the puzzle.
Ewen Finser: And also with the privacy concerns coming up, all those things. And even with the programmatic advertising, if you have their email list, they’re opted in. It’s like I think a more valuable visitor. I don’t know exactly how it works with Raptive and Mediavine, but there’s something around that.
And it makes sense. I think that’s another kind of concern that we’re looking at. And yeah, it’s not a perfect solution. You point out there’s some great points there, but I think DMARC, there’s a couple of things coming out right now where you have to add certain things, trusted sender if you’re sending more than 5,000 emails, there’s a whole list of things they’re requiring now. So it’s not without some risk. But it is like this almost like a permission structure. So if someone’s opted in, and I always look at it as a trust proxy too, it’s a great KPI for our content quality. If someone is willing to consume our content, come from Google or Pinterest or Facebook consume an article from us and then enter their email, they probably had a good experience.
And so if we can orient around that, it’s also, there’s other benefits than just getting someone’s email. It’s like we’re on the right track if we’re seeing a high opt-in rate, particularly if we don’t have any special offer. It’s just, “Hey, get the latest from our newsletter,” or something like that.
Bjork Ostrom: Yeah, that’s great. And I love that idea of you saying it’s kind of this insurance policy where we want to think as creators, how do we diversify our sources of revenue for our business?
Before we continue, let’s take a moment to hear from our sponsors.
This episode is sponsored by CultivateWP, specifically a new offering they have called Cultivate Go. So CultivateWP, the agency or the company focuses on designing and developing food blogs. And it was founded by Bill Erickson who’s this incredible WordPress developer, we know him because as I’ll share we’ve worked with him, and Duane Smith who’s this incredible designer. And Bill developed a version of Pinch of Yum before we had our own internal team, and it was one of the fastest growing versions of the site that we’ve had.
So as you know in this industry, word spreads quickly about people who do good work, and Bill and Duane have really filled their calendar over the past few years with doing these custom websites for some of the biggest food sites on the web. You can see the list on their website. And they would create these fully custom designs, but they would cost literally multiple tens of thousands of dollars.
And that makes a lot of sense if you’re a site that gets multiple millions of page views. But what they realized is there’s a lot of really successful sites who need the best technology in the world to power them, but can’t justify spending multiple tens of thousands of dollars.
So that’s why they launched Cultivate Go. It’s a semi-custom theme design and white glove site setup. So you choose one of the core themes, they have multiple options, and then their team customizes the logo, the brand colors, the topography so it matches your brand exactly. And then they set it up on a staging environment where you can test it out, get a feel for it, and can launch your site within just one week. And the cost is only $5,000. And here’s the thing, you have the exact same features, functionality and support as the themes that cost up to 10 times as much as a Cultivate Go theme.
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I am going to go up a layer because the second thing that I wanted to talk to you about related to some of this stuff is how do we as investors almost think about the income that we’re creating from our businesses?
So on one level we’re diversifying with platforms, traffic sources, maybe sources of revenue within the business. But let’s say there’s a scenario where somebody is building their site and they’re taking all of the income they’re creating from their site, putting it back into their site to continue to grow. They’re hiring people, operating break even, revenue is equal to expenses, and they have this thing that’s really valuable. But let’s say one of these shifts does come, Google algorithm changes, and suddenly this asset that you’ve built that’s really valuable is maybe half as valuable as it was, which is still really valuable. But you’ve just had this, if we think of it like a net worth statement for us as individuals, you’ve had a cut in your net worth, it goes to half. All of your investment was in a very small micro cap stock, which is your own business.
So one of the things that I think is important to talk about and shine a light on as we’re talking about diversification within our businesses is also diversification on a higher level just within our own finances as well. And I’m curious if you have thoughts on how to approach that and how much do we build our own thing knowing that we can control it and maybe there’s some really great upside with it versus thinking about other areas that aren’t our own business to put some of that money into when we are at the point where our sites or business is creating profit?
Ewen Finser: Yeah, no, I spent a lot of time thinking about this. And it’s kind of funny because I feel like there’s conflicting wisdom out there, conventional wisdom on Main Street where it’s put it into your socket, into your 401k and contribute x hundred dollars a month. And it’s kind of like this conservative, for most people, here’s your conservative plan to retirement and you can retire. You’ll have just enough money to live a nice life and go golfing once a week or something.
And then for entrepreneurs, it’s like all this stuff here is invest in yourself. That’s the smartest investment you’re ever going to make. And so it’s double down on yourself, conviction, just go do it, take a risk. And so there’s these conflicting kind of narratives. And I think honestly for entrepreneurs, we probably need a little bit more of that conservative. What makes us great entrepreneurs sometimes is our Achilles heel in that we don’t know when to stop and when to diversify.
One thing I think personally about how I’ve thought about this, I used to never want to sell any of my websites are like my babies and I believed in them, and that’s partly why they worked because without some of that belief, I don’t think they can get off the ground to be honest. There’s times where that’s all you’re running on, is belief.
Bjork Ostrom: Your own belief, yeah.
Ewen Finser: And are they going to figure it out and make it work? And it’s not rational at that point. But I think if we kind of zoom out, there have been some situations where I’ve been, someone offered me a certain number I couldn’t say no to, or I just, for whatever reason, I was like, let me have a forcing function to take some money off.
So I kind of have this internal rule of thumb where every, I call it every two to two and a half years I’m looking to sell a certain percentage of our earnings almost regardless of the climate. Because I think calling timing of things is just very difficult. So I just have my own internal rule where I’m going to take some chips off and then put them into very non-correlated things that are not anything to do with websites. Maybe it’s real estate or just an index fund, something very simple that I don’t have to think about, that’s working in the background and I even set it up so it’s automated even on a monthly basis, certain x percent. And one of the books I read a while ago, it’s like Profit First, I think I forget the name.
Bjork Ostrom: Yeah, it’s a great book.
Ewen Finser: Yeah. And that was also a turning point for me because the point of why we’re doing this is not to just be a venture growth story. We’re doing it most of us for a lifestyle reason. We want a different life. We want a better life. And just being able to say, “You know what? I’m going to pay myself first,” or, “I’m going to think about that at least this year. How is that going to work?”
So yeah, I definitely spent a lot of time thinking about it, but I think we could do more as entrepreneurs to have some sort of framework at least for how we’re investing and taking chips off the table.
Bjork Ostrom: Yeah, that’s great. Profit First, great book. The basic idea, there’s a lot of really great elements with it, but it was a while ago that I read it is like, okay, if you have a business that isn’t profitable, you need to make sure that you are building in profit almost as a line item. So if you’re making $100,000 a year in revenue, but you’re spending $100,000 dollars, then you write in that year in the budget, like $50,000 of profit and then build backwards from there. Is that kind of how you remember the bit basic concept?
Ewen Finser: Yeah, exactly. Yeah.
Bjork Ostrom: And so you did a similar thing conceptually with your businesses to say, I’m going to, as a forcing function, have this percentage that I’m going to take as would it be a distribution out of the business?
Ewen Finser: Yeah, exactly.
Bjork Ostrom: And is that an actual percentage that you’ve set that automatically transfers out?
Ewen Finser: So it’s not always an automatic, it is a target, and I think it’s especially in times like this where things change quickly, all of a sudden you’re on a growth trajectory and then you’re like, “Hold on. We got to stabilize everything.” Of course that factors in. But yeah, one thing is technically speaking, we’re structured as an S corp, which the reason you do that is so you can pay yourself a salary. So that’s part of that percentage.
Bjork Ostrom: And that’s beneficial because then you’re not paying additional taxes on distributions that you might take.
Ewen Finser: Yeah. You’re basically an employee of your own business and there’s tax benefits to that.
Bjork Ostrom: And so from that you’re saying you have this salary that’s kind of in some ways a profit first mindset of taking that out. And then also thinking about, okay, in seasons where it makes sense, having a target percentage of saying, I want to de-risk some of my anchoring around most of my net worth as an individual being in this business by taking that out and looking for other places to invest in, whether that be an index fund. So for those who aren’t familiar index fund being like a bunch of stocks that are rolled up into one. S&P 500 index fund is one of the most popular. The great thing about index funds is there’s not a lot of fees with them. So kind of a strategy from an investment standpoint.
But essentially taking some of that out and doing so in a way where it’s not like when you feel inspired or when you think of it, but thinking of it as that profit first kind of mindset to say, “I’m going to have this goal of getting this amount out of the businesses and from there investing it in other places.”
And that’s for other people where it’s like, okay, it’s probably up to them or financial advisor that you work with to make a decision on that. But building in and what I like about it is some type of process around how to go about doing that. And you said that that wouldn’t always exist in seasons where maybe you do need to focus on your business a little bit more.
How do you figure out when those seasons are? Obviously in the startup phase you’re probably putting more money in than you’re making, but when do you think the point is when it makes sense to start thinking strategically about diversifying by investing in other areas?
Ewen Finser: Yeah, I think that’s a tricky one depending on the type of business I think you’re running. I think initially for me, the type of business I was running was a lifestyle business where the point was it almost started with profit first by accident. It was like, how much money can I make so I don’t have to work my day job? Which was kind of a similar level of analysis and it was a solo operation. I think there’s probably a lot of people in the audience who maybe they have some VAs, but for the most part they’re doing a lot of the content production. They’re still, it’s their thing.
So from that standpoint, I think it’s actually, it’s pretty easy in that mindset because all you have to think about is kind of yourself and some of your line items. Once we made the pivot from solo business with a couple freelancers to we’re now a media company with processes and systems and scale, that I think for me was the hardest one because then it’s very tempting then to be like, “Well, let’s invest in people. Let’s invest in process. Let’s do more now. We’ve got to scale. Now we have this team. We got to keep them busy. We got to keep moving, keep hiring.” And that I think is a very tricky switch.
In some ways when I was solo, there were a couple of years where I was more profitable than years where I had a company with 15, 20 people, which is kind of odd to think about.
Bjork Ostrom: Right. But point being, you’re scaling, you’re growing, revenues may be growing, but along with that expenses are. And it almost feels like I would be interested in your thoughts on this, that there’s a chasm that you have to cross where you go from this solopreneur kind of on your own, maybe a couple people supporting you, and then you say, “I’m going to attempt to build, scale and grow a thing.” And it’s not like revenue immediately ticks up with expenses ticking up.
So you kind of eat into that profit with the bet that eventually the investments that you’re going to be making are going to pay off. The revenue grows, hopefully then the expenses maybe stay the same, and then it gets to the point where then you maybe have that profit again. But it probably is a consideration that people need to make. Is that something that you want to do is try and cross that chasm?
Ewen Finser: 100%. I think it’s actually one of the most important decisions we can make because depending on what your context is, one might be much more attractive than the other if you really think about it. And sometimes there’s pressure too to, well, got to reinvest. There’s also reinvest in the business. And so you kind of, “Okay, how do we just keep growing?”
You have to really know what you want and you take it from a solo business, it’s like lifestyle freedom and you don’t have to answer to anyone, and you build a team. And the funny thing that happens is then you feel responsible to the team, which is natural, it’s human, it’s the right thing to do once you bring people in. But it’s a whole different shift. You’re not just follow your own kind of selfish desires anymore. You’re having to think about a lot of people and-
Bjork Ostrom: So more responsibility. Yeah.
Ewen Finser: Yeah, more responsibility. And I think, yeah, to your point, in terms of profitability, you probably take a couple steps back to take 10 steps forward, but it doesn’t always work out. That’s the tricky part. I see a lot of companies, particularly now going to market where they’re in between, they’re stuck in the chasm, right? They’re like trying to scale. They’ve tried halfway to scale, they’re like, but now they’re in between and there’s a Google update, and so they have to do a fire sale to get liquidity because … So that’s-
Bjork Ostrom: Can you explain what you mean by that?
Ewen Finser: Yeah. When you’re in a situation where you’re planning, look, if we could predict Google, it would be a lot easier, or Google was consistent, we could build a really good model. But coming into 2021, 2022, you’re kind of going along with, oh, well, I expect this is going to be a little bit better than last year, kind of making your projections. And then Google update hits and you may have allocated-
Bjork Ostrom: Which is the fire. It’s like you have a store. It’s really successful. And then a fire comes through, which is the Google update.
Ewen Finser: A fire comes up. It’s active nature almost. And then you’re kind of in this in-between stage where you’re like, “Okay.” For example, we did invest a lot of money earlier in the year into certain things that we were betting on, and all of a sudden traffic is reduced by 50%. And then we’re like, “Oh, now what do we do? We’ve already allocated. Do we continue to following through and just trust that’s going to get better? Or do we have enough flexibility in how we plan to scale where we can unwind some of these things?”
What that kind of looks like for some companies is letting people go or cutting hours or reducing operations, expenses in other ways. Maybe it’s marketing or paid out or whatever it was pulling back and is there enough left for you to pay yourself?
So I think that’s the key to crossing the chasm so to speak, is making sure you have enough, your home front is taken care of. Ideally, I mean the way it worked for me was I had an exit before I started to really scale this whole thing. So that was helpful to set some sort of benchmark where at least I know I had one successful exit. I wasn’t reinvesting everything. I took some off, bought a house, did some of those life things that I need to do and had some security in that before taking that leap.
I guess that’s how I would approach it. But that’s what I mean by getting caught in the middle, is you’re kind of in no man’s land.
Bjork Ostrom: One of the things that I’ve been trying to do is get an understanding of, okay, let’s say we have in the next month we have $1,000 and we’re kind of trying to figure out what we do with it. We could invest it into one of the businesses. Maybe you hire somebody or you have a project. $10,000 is probably a little bit easier to play with bigger, more realistic numbers. You could invest it into the businesses. You could invest it into real estate. Maybe you buy a house and it’s a rental house and you have this other thing. You could invest it into the stock market. So index fund.
One of the things that’s hard, if you buy a house, you go to Zillow and you can see what the value is and you can see month to month how much it goes up. Okay, in this area we owned it for a year and it went up 5%. And previously we had a house that was $200,000 and now it’s $210,000. With the stock market, you have really good day-to-day, second-to-second indicators of how much something is worth. It’s a little bit harder with an obscure asset like a website or a blog or a site.
How do you think of the value of the thing that you’re creating, and do you track that in any way to help inform decisions on?
Ewen Finser: Yeah, I mean I’m always curious about what industry multiples are, and only so far as this kind of a band of valuations are low, valuations are high. And kind of what I try to do is when valuations are high, be kind of selling in, selling into that.
Bjork Ostrom: Meaning that would be a season where you’d potentially be open to selling?
Ewen Finser: Yes. And just like and now, and so this is probably another I guess bit of financial wisdom as it relates to business or life in general, but for business expenses, having a reserve so that when things like this happen, what they call the blood on the streets, when there’s people are selling, people need … I’ve seen it all the time this past month. A lot of people selling things at a discount one and a half times earnings, two times earnings, which is historically low for the asset class. The average is probably like 3, 3.5. That’s the norm maybe for a really good asset or business, maybe 4, 4.5x. During the pandemic for if you’re running an Amazon business, there was all these big aggregators raising money, these big conglomerates that were acquiring Amazon brands from mom and pop operators like me and you and multiples got as high as six or seven times.
Bjork Ostrom: When you say six or seven, it’s earnings. So essentially there’s lots of ways you can calculate earnings, SDE, EBITDA. But essentially it’s like profit more or less profit, profit and you add your salary back in if you’re taking a salary.
So right now you’re saying one and a half to two times that you might see that pop up, but normal would be three to three and a half. So if you have a site and it makes profit of 100,000, the value of that could potentially be 300 to 350,000 if it was something you’re … It’s kind of like that’s a stock and you have 100%, usually not always, you have 100% ownership in that stock. And the value of it is that. It is the multiple on earnings, which shifts and changes depending on the market.
Ewen Finser: What I don’t do, I guess is I don’t track my net worth relative to the industry multiples. I think the only thing that’s real to me is the earnings and the revenue really because you can cut expenses, but the revenue, the profit and money in the bank.
I think sometimes there’s games that get played with valuations, and I think famously venture culture celebrates this. You might hear things like, oh, what’s the word when they look at the book value or something, they did a markdown? It’s like, what does it even mean? It’s a theoretical valuation based on what their last raise was, but it’s all kind of made up numbers really.
And then, because really when you find out what the business is worth when you go to sell it, which sounds like duh. But that’s been my experience, because I’ve sold sites at 4x, I’ve sold sites at 2.5x, I’ve sold sites at 3.5x, and they weren’t necessarily better than each other. They were just usually it’s kind of where we were in the market.
Bjork Ostrom: And it’s always what the seller can agree to and what the buyer can agree to.
Ewen Finser: Yes.
Bjork Ostrom: Yeah. And where you don’t have a ton of that data, it’s hard to know what the norm is. Whereas Zillow, it’s like there’s thousands of houses that are sold every year, and so you can kind of aggregate that and …
Ewen Finser: Yeah. And is the value of the land, which I think in the website space would be the domain if you have really brandable domain like, I don’t know, superhero.com-
Bjork Ostrom: … Yeah.
Ewen Finser: That would be worth something intrinsically versus besttennisshoes.com.
Bjork Ostrom: Yeah, right. That’s great. Last question in that category. Do you have any favorite apps or tools or on the money management side of things, anything that you use that you especially like?
Ewen Finser: Yeah, let me think. So for business banking, I really like the Mercury.
Bjork Ostrom: Yep. We just switched accounts over to Mercury with last year, yeah.
Ewen Finser: So I love them. It’s easy to use, simple. The problem is for treasury management, they’re not great unless you have a huge number, unless you’re a venture company with multimillions sitting in the bank. My stack is Mercury for the business checking and multiple business accounts. You could even set up custom workflows. So things are going to different bank accounts. You can set up 10 different bank accounts under one entity. You can add users. It’s really, really easy to use.
For the saving side I like LiveOakBank. They’re business friendly and they were offering the best interest rates and they still do and good CDs, and basically allowing you to park your business money before you take it out the business somewhere safe. And of course, that’s not investment advice, but that’s just what I’m doing. And it has good interest rates. Because that’s another thing we didn’t touch on, but interest rates at 5%, putting money into treasuries.
So on the personal side treasuries, and I think that treasury is direct, whether you can use your business to register, you personally can register, you can invest in US treasuries that yield over a certain period of times, six months, nine months, three months, you can set a term and you get whatever the current interest rate is. You may kind of spread on that if you blend the government your money for a little bit. So that’s one thing I’ve used, I’ve been using, which is helpful on the business side.
On the personal side, I also like to do treasuries right now because it’s just an easy way to park money. I think there’s a couple. I’m trying to think. There’s a couple different places to go. Any bank worth their salt probably has some sort of treasury management system, but you can also do treasuries direct with the government.
And then Wealthfront, I’ve enjoyed my experience there for they’ve automated, they’ve automated bond portfolios and index funds and their checking account I think is close to 5% or a little over 5%. So it’s been consistently one of the higher. Well, certainly that’s not checking. I think it’s a savings vehicle, but you withdraw it when you need to. So yeah, those are the things. I mean something revolutionary.
Bjork Ostrom: That’s super, super helpful. Yeah, similarly, I’ll just share these if it’s helpful for anybody. We use a site called American Deposits for business savings, one called Max My Interest for personal savings, and I just started using for daily budget management. I have one that brings in all of our transactions, business and personal, and then one that’s just personal, Monarch Money, which is really cool.
Last question that I have, and then we can jump, do you shoot for a month percentage or three month savings for the business or do you have anything like that for your businesses that you kind of try and track?
Ewen Finser: Yeah, I have a target. It’s not always perfect. Yeah, I would like to have three to six months. I look at almost like payroll because a lot of the other thing and like hard OpEx, I look at our expenses as investing in new content. That’s more speculative and that’s like you can just not do it this month. But the hard expense of the core team that we need, that we want to keep, because if we let them go, it would cause us more harm in the long run.
And then the hard expense hosting and things like you need to pay for, yeah, having six months of runway is really helpful. Honestly, particularly in times like this where all of a sudden your projection changes based on the reality on the ground and you have to make some hard decisions and it helps to have a little bit of flexibility so the changes aren’t super abrupt. Because the human mind, in my experience, it’s difficult sometimes to … When things are on the decline, your expectations are almost trailing.
Bjork Ostrom: Yeah, right. They’re probably a little bit behind, yeah.
Ewen Finser: Until you catch the floor. And you want to get to that floor either from expectations or, okay, we hit the bottom, this is the trough, and then this is the reality. Confront the brutal facts as Jim Collins says. That’s going to be so much easier to say it out loud, say the ugly part out loud and the hard part out loud, and then from that point, you come up up with a really good plan. So yeah, three to six months. And then of course you want more.
Now I think of it from an investment perspective, the more, the better, to be honest, because there’s time like this where people are getting a lot of inbound from people being like, “Hey. I’m no longer.” It’s always like, “I’m no longer interested in running the business. I want to do something different.” It’s like, “Well, yeah, because the business declined.”
Bjork Ostrom: Yeah, right. Yeah.
Ewen Finser: 60%. That’s not fun for anyone. But there are opportunities. Those will come up when you least expect it, and so having that availability to move on something is really helpful.
Bjork Ostrom: Yeah. That’s great. Ewen, this is all awesome. Anytime we have you on, we could talk for hours.
Ewen Finser: Yeah.
Bjork Ostrom: People are interested in this space, I know, especially interested in some of the things that you’re talking about when it comes to content and building content businesses. Best place to follow along is the newsletter?
Ewen Finser: Yeah, nichemediapublishing.com. Of course, you can connect with me on Twitter, fairly unique name, Twitter and LinkedIn, wherever’s easier, and yeah, that’s probably the best for now. And then, yeah, the newsletter is the latest on my thinking. And there’s other things in the newsletter, there’s kind of things we do and businesses we own and services. So it’s like the central eating my own dog food. It’s the DNA for me. It’s the relationship I have with my audience, the people that are in this industry. So that’s a great place to start.
Bjork Ostrom: Awesome. Thanks so much for coming on, Ewen. Really appreciate it.
Ewen Finser: Awesome. Thanks, Bjork.
Emily Walker: Hey there. This is Emily from the Food Blogger Pro team, and I am coming at you with your February member news update. So every month at the beginning of the month, we love to fill you in on what is going on within the Food Blogger Pro membership. We like to say your membership is always changing because we are always adding new content, having new events, and just new exciting things going on in the forum. So wanted to give you a little sneak peek as to what you can expect this month.
We kicked off the month with a new coaching call with Matthew Duffy, all about being action oriented, allocating resources and branding. Matthew has seen really significant increases in traffic just in the last few months and shares some tips and strategies as to how he kicked that off in this coaching call, which is almost two hours and filled with lots of good tidbits.
Next up on February 8th, we have a live Q&A with Casey Marquez, all about advanced SEO. So this is for members who are looking to dive deeper into advanced SEO strategies and tips, and just take their SEO strategy to the next level. It’ll be a really great and informative Q&A, and we’re excited to have you join us.
Lastly, at the end of the month, we’ll be publishing a brand new course all about Google Web Stories. We’ll be covering how to get started with Google Web Stories, designing and customizing your own Google Web Stories, optimizing them for SEO and just best practices for maintaining them and hoping to see success with them.
So it’s going to be a really great month. It’s a short month, although not as short as usual because it is a leap year. So we have 29 days to make the most of February, and we hope you’ll join us.
Thanks so much for tuning into this episode, and we will see you next week.