Into the Hive: Danielle Lay Goes Behind the Buzz with beehiiv’s Tyler Denk

Amidst all of the noise in today’s AI-fueled startup landscape, NEA partner Danielle Lay noticed a growing buzz from an unlikely source:  an email newsletter publishing platform. Yet beehiiv has done something remarkable in a massive market that many view as a necessary evil: they have delighted senders everywhere with a tool that helps newsletter writers grow and monetize one-to-many email communications. Less than three years after launching, beehiiv’s platform is as busy as a, well, you know, with its users sending over one billion emails every month.

DL: Tyler, thanks for joining me today. I’d like to begin with a question about how beehiiv got started. You were at Morning Brew and obviously did some really cool things there—including building the email infrastructure from scratch. Is that when you started thinking about building beehiiv? What was the opportunity you saw to build a business in the space?

TD:  There were a few things that jumped out at me like, “hey, there's something to be built here." We sent emails to two million readers every morning at Morning Brew, and we would always get dozens or even hundreds of replies asking about the referral program or how we got our emails to look and feel a certain way in the inbox. The fact that our readers, who either had their own newsletters or worked at a company that was sending newsletters, were reaching out about our software really showed me that there was something missing in the market—something that we were doing really well that wasn't available to others.

As we dug in deeper into the landscape, we realized that there were massive media publications that were still copying and pasting content from WordPress into Mailchimp to send out their newsletters. It was a very archaic and clunky process for some of the biggest names in media. And then we saw Substack raise a series B round at a $650 million valuation. Their platform has gotten a lot better since, but at the time they were routinely dragged on Twitter for product shortcomings. I felt like what we had built at Morning Brew, as a small engineering team with just a handful of people, was so much more effective and powerful. At that point it just became really clear that we had a big opportunity.

DL:  beehiiv was initially branded as a platform “created by creators for creators.” Of course, you’re serving a much larger audience than just creators today, but why was that important? What sort of advantage did that focus confer, especially early on? 

TD:  As a startup, you’re looking to carve out competitive advantages wherever you can. And I think our competitive advantages have been one, the ability to ship product and features that people want very quickly and two, really leaning into user feedback and building whatever serves the purpose of serving them.

We’re very focused on being user-friendly in terms of the business economics. We charge a SaaS fee because it is expensive to do what we do—we have to store the data, and we have to hire engineers to build the software so it works. But there are certain things like taking a subscription cut that I think are really mismatched with who we are trying to serve and how we are trying to serve them. I think it’s important to understand that our business only grows and works because a user chooses our product among a sea of competitors. We win when they grow and succeed. That means building software at an affordable price point that doesn’t take advantage of their revenue opportunities.

We also launched a community for our users, so we get immediate feedback on new features and can iterate on that very quickly. Social media provides similar value. I don't spend a ton of time on Twitter, but when I do, it's very intentional. It's engaging with all of our users, seeing what they're complaining about. If four or five people are complaining about the same thing, there's probably room for improvement. I also have my own personal newsletter on the platform. So does more than half of our team. They’re creating content, using the features, and trying to grow on the platform—and many of them are monetizing successfully. They are very vocal about things that they can't do that they want to do, which is super helpful as well.

DL:  beehiiv is growing fast and it’s clearly working—more than ten billion emails have been sent on your platform. How do you prioritize different initiatives for continued growth?

TD:  A lot of it stems from just knowing who our users are and what they want, and then prioritizing the things that are really differentiated compared to what’s in the market today. So it’s very much product-led growth. We entered a very competitive industry as the least developed platform among dozens of providers, many of which have been around for decades. The only way to win customers over is to show that we are serious players by building things and launching things. And then do it over and over again.

It’s also been to our advantage that a lot of those incumbents’ products lack more modern UI and UX features. Before beehiiv, I think very few people would have said, “I love publishing my newsletter, it's such a joy to be able to write and grow and do all of these different things." That generates a lot of growth through word of mouth.

Danielle, you’ve obviously seen a ton of companies in your position. What made beehiiv stand out to you as a potential investment? And how did you get conviction around that?

DL:  I mean, we weren’t unique in beehiiv having caught our attention. I think a lot of investors have paid close attention to beehiiv. It was clear to us very early on that you were grabbing a lot of mind share, which typically means taking market share as well. The customer love was a huge factor—your customers are so vocal about loving the product and they did a lot of the work for us, because they were all over the Internet talking about how much they love beehiiv. I also read a lot of newsletters, and over time I was seeing more and more newsletters in my inbox with that little beehiiv logo at the bottom. All of those signs helped me gain conviction about your vision, the product, and the business model.

The final piece is that when our team backs companies, we really are backing people. And there were certain things that I saw in you and others on the team that just really pulled me in, and pulled our partnership in. You have a hunger to win, a willingness to do things differently, a lot of discipline, and you dog food the product like very few entrepreneurs that I know. You also have such a strong sense of responsibility for your customers and your team. It’s a style that resonates a lot with me, because I believe that caring about people is how you build really excellent teams and pull in really fantastic people to build for the long term.

I’ll turn the question back to you—I know you had a lot of interest from investors, which gave me a bit of a heart attack at the time. What made you decide to partner with NEA?

TD:  By the time you’re raising series A and B rounds, you have a product, you have users, and you have traction. So there’s kind of an ‘it’ factor during the process–you can see if the team is bought in, if they believe in what you’re building.

With some investors it feels more cat and mouse; it proceeds like a negotiation on terms and price, and they’re careful not to express too much excitement because they don’t want to lose leverage.  But then there are times where you’re dealing with people who truly believe in the vision of what you're building, they are genuinely as excited as you are, and they aren't afraid to show it. That stance also tells you that they are thinking more long-term, because the difference between one valuation and another at this stage isn’t going to be that meaningful five or 10 years down the road.  And the newsletters you wrote, Danielle, with the thorough analysis of how you’ve helped other companies, how you see the market developing, and how you see us winning really showed that one, you got it and two, you were just as excited as we were.

DL:  Well, we're honored and very happy you made that decision. You just closed on more than $30 million in series B funding, you did a $12.5 million series A, and you raised some seed capital as well—it’s a testament to your rapid growth, but also to the ambitious goals that you've set for beehiiv. Why do you think scale is important? And how is raising additional capital and bringing on new advisors shaping the way you're building the company?

TD:  When investors are writing sizable checks, they ask really great questions. They've also seen hundreds of companies go through series A, B, C and beyond. So I actually came away from the fundraising experience very enlightened about what we need to do and what we weren't doing well enough.

For example, we have this massive ambition for our ad network, and investors really pushed on product development and how it's growing and scaling. And I quickly saw that here we are, making a multi-billion dollar bet to build out a Facebook ad manager for email—and we’re all saying that, we all believe it—but we’ve got two engineers building this instead of staffing properly with machine learning engineers and ad tech engineers and all of these people who can actually realize that vision. We also received pushback around what we really needed in terms of impressions for the ad network—they’d say, yes, it’s early and yes, there is good traction, but your target customers are used to seeing tens of billions of impressions per month. And we just hit one billion emails in a month last quarter. That’s a very healthy and strong foundation for a SaaS business, but if we’re layering an ad network on top of that, it’s just a fraction of what we need to do.

So I think the process of fundraising really crystallized that we’re not just raising money to hire great people or have ample cash on hand. There are certain teams and competencies that we are under-investing in. We need to boost acquisition to fuel the ad network as well as the SaaS business in general. Beyond raising capital to achieve scale, we are learning more about how we need to scale.

DL:  That’s awesome. And there is so much to be excited about. What can customers look forward to in the near term?

TD:  A lot. Obviously as a product person I could rattle off a dozen things that I'm really excited about, and there's so much room for optimization. We have a totally new UI, new dashboard, new navigation, new settings all rolling out soon. We’re revamping our referral program. Probably one of the most difficult things we’re doing is building out for power users and enterprise users. That requires really complex functionality on one hand, but it can’t be overwhelming for new or less expert users. Finding that balance is a really difficult thing to do.

The ad network is scaling very quickly and has a lot of new functionality and flexibility. We also just launched a web builder, which is something we never really anticipated but it became clear that having a website to collect emails and archive your content is really advantageous for a lot of users who don't want to manage and build their own website while separately managing an email platform. So while we have no intention of taking on a WordPress or Webflow, offering that type of functionality where you can build a beautiful website without knowing how to code is a huge advantage for many of our non-technical users.

And we are doubling down on what it means to have a paid newsletter on beehiiv. We just launched multiple tiers for premium subscriptions that allow you to offer different perks, different access, and different content at different price points. We’ll be launching multiple payment options soon too. I think we have under-invested in the subscription part of our business historically, but we now have a full team prioritizing it and I think we have a lot of ground to make up there.

What should we be thinking about from your vantage point? What ways do you see opportunities for us to continue to evolve and grow the business?

DL:  I think a few things are going to happen that are going to be really advantageous for beehiiv. With the growing volume of GenAI content coming out, I think there's going to be a real premium on human insight driven content. There's just information overload—it’s easy to get access to information, but it's hard to get access to the right information and insights. So I think that's going to be really positive for beehiiv and also for beehiiv's customers.

The privacy-safe changes underway in advertising bode well for the ad network you’re building. If I put myself in the shoes of an advertiser looking at newsletters as a channel, I don’t necessarily know a lot about the individual user, which is exactly what all the privacy-safe changes are trying to move the industry away from anyway. But with newsletters I do know a lot about what they care about in that moment and the context they’re in. And I think beehiiv actually enables scale for the newsletter channel in a way that nothing really has in the past. It’s also important to note that every single ad unit delivered through beehiiv is delivered to an email address, so you can really close the loop on attribution in a way that’s difficult for most other ad networks. I believe that will really work to beehiiv's benefit.

Which leads me to one last question for you, Tyler. For any company, there are headwinds and tailwinds that you'll have to navigate. But for really great companies there are also opportunities to shape the market. What impact do you think beehiiv can have on the industry moving forward?

TD:  I recently got a DM from one of our users in our community and he said, "Since launching the multiple tier product last week, I've made $15,000 and can pay my salary for the first time in six months.” It can be easy to overlook the impact we're actually having when we’re so focused on building software and launching new features, so being able to screenshot that message and share it with the team is really meaningful. I think stories like that will continue to happen, and that is ultimately what we're doing it for—we are helping people grow their business, grow their influence, grow their revenue, and support their families. That's on the individual level.

On the broader level of media and content and monetization, there hasn't been a player in a while to really innovate content creation for a channel like email—a channel that is so persistent in everyone's life. It hasn't gone away. And it's such an effective medium for people to be able to communicate reliably and own the distribution to their audience. That’s why larger media companies like The New York Times and Vox and The Atlantic are focusing more on email, and it’s why there are email-first companies launching like Puck or Workweek or Punchbowl News. I think email can be so powerful when it’s done right.

DL:  That's the pitch. And that was awesome. Thank you Tyler—we’re so excited about everything beehiiv is doing in a space that continues to bring more than its share of surprises and new opportunities, and really glad to work with you and the team.