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ConvertKit at $38M ARR
Jan-Erik Asplund
TL;DR: Subscription SaaS creator economy companies like ConvertKit and Beehiiv with simple business models are growing through the creator contraction as the lines start to blur between creators and SMBs. For more, check out our reports on ConvertKit (dataset) Beehiiv (dataset), and Substack (dataset) and our interview with Nathan Barry, CEO and founder of ConvertKit.
Key points from our report:
- Substack’s model of “investing” in big-name writers to quit their jobs while taking a cut of their upside (and betting on some to be huge wins) returned just 58% growth in 2022 as subscriber churn rose to 50-60% per year, hitting $19M revenue on $82M raised. In 2021, Substack paid out $16.6M to writers like Matt Yglesias and Casey Newton but made only $11.9M from subscriptions, resulting in them reporting negative revenue of roughly $5M.
- On the flip side, pure subscription SaaS companies like ConvertKit ($9-25/month) and Beehiiv ($42-84/month) with a simple model of charging a fixed monthly fee based on list size hit $38M annual recurring revenue (ARR) on zero capital raised (ConvertKit) and $3M ARR on $4.2M raised (Beehiiv). Last month, ConvertKit surpassed 100% net dollar retention thanks to their lowest gross revenue churn month ever (3.1%) and 25% growth in expansion revenue.
- After having dipped to 3% year-over-year growth in October 2021, ConvertKit’s growth re-accelerated to 22% last month with the ad network launches of Creator Network, which lets writers do both free and paid recommendations of other newsletters, and Sponsor Network, which lets businesses sponsor writers. Fellow newsletter SaaS Beehiiv is at $4M ARR, up 500% from $1M in 2022, while creator storefront Stan is at $5M ARR, up 500% from $1.7M in 2022.
- Substack explicitly positioned itself against ads, but now they’re in the position of needing to walk that back and launch their own ad network to stay competitive with ConvertKit and Beehiiv. Substack was a pioneer in helping writers grow through in-network recommendations, ConvertKit copied them and layered on a monetization element, and now Substack has to copy ConvertKit right back.
- Bundling is occurring across subscription SaaS creator economy companies to get more levers for expansion revenue and combat low annual contract value (ACV) and high churn. Paid newsletters (ConvertKit, Beehiiv), storefront (Stan), link-in-bios (Linktree, Beacons), and online courses (Kajabi, Thinkific, Podia), are all coming into competition as all-in-ones
- Businesses are the biggest tailwind for the creator economy now—while corporate spend on social ads is down 6x since 2020, spending on influencer marketing in 2023 hit $5.1B just through Q3, up 82% from $2.8B in 2020. 82% of creators are earning income from sponsored content, with affiliate revenue as the second biggest SKU at 56% and then advertising at 33%.
- Ultimately, the “creator economy” is a head fake—there’s venture-subsidized platform plays like Substack and Clubhouse that are trying to grow and monetize big networks, and then there’s this new flavor of B2B SaaS in ConvertKit and Beehiiv helping individuals and SMBs grow and monetize their own owned audiences. While the mega-platforms like TikTok ($98B revenue in 2022), YouTube, Twitch and OnlyFans ($932M revenue in 2021) continue to grow huge networks and monetize on their biggest hits, tools like ConvertKit and Beehiiv are helping middle class creators monetize through many different products and ad networks layered on top.
For more, check out this other research from our platform:
- ConvertKit (dataset)
- Beehiiv (dataset)
- Substack (dataset)
- Nathan Barry, CEO and founder of ConvertKit, on ConvertKit’s path to $100M in revenue
- Justin Gage, founder of Technically, on how Substack earns its 10% take rate
- Neal Jean, CEO of Beacons, on building vertical SaaS for creators
- C-suite at creator economy company on the competitive dynamics of checkout
- Creator economy marketer and co-founder on building a sustainable business online
- Creator economy entrepreneur on content distribution and monetization
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