Startup founders who raised $15 million explain why they spent over a year turning down opportunities to make money

TheSkimm Carly Zakin Danielle WeisbergCourtesy of theSkimmSometimes it makes sense in the long-term to turn down money. Pictured: Carly Zakin and Danielle Weisberg, founders of theSkimm.

At 6 a.m. every morning, over 5 million people open their email to find a message from theSkimm, a subscription newsletter that picks and chooses the most important news stories of the day and presents them in casual, bite-sized points.

TheSkimm’s founders, Carly Zakin and Danielle Weisberg, sat down with Business Insider US editor in chief Alyson Shontell for an episode of Business Insider’s podcast “Success! How I Did It,” to talk about “their battle stories, how they eventually got investors on board, and how theSkimm took off.”

When they first started the company in 2012, they told Shontell, investors were turning them down left and right. However, there was someone willing to help them generate revenue: advertisers.

“From truly day one — maybe let’s not be hyperbolic; let’s just say day four — we had brands reaching out to us, like our wish-list brands,” Zakin told Shontell. But, “we knew nothing about how to work with an advertiser,” she continued. “So instead, we said, ‘We’re actually not working with brands right now.’ By doing that, I think we created a little bit of mystery. Our list kept growing. There kept being more press about how big our list was and who the audience was. And we weren’t letting brands in.”

From early on, she explained, they were placing “a long bet on loyalty.”

“What can you do with loyalty?” Zakin said. “How do you develop a community, get people engaged? And from there, you can activate them, and in many ways directly monetise that.”

As their list ballooned to 150,000 subscribers in less than 18 months, some investors started changing their tune. “Once we got that first big check — we raised just over $US1 million — it was life-changing. We took a picture of it in our bank account,” Zakin remembered.

Then, they started considering working with sponsors. “We have a media business,” Zakin said. “We work with sponsors in a really needed capacity, and we’re really great storytellers with that.”

While the founders declined to provide exact numbers, “We’re proud to say that we do very well,” Zakin said. Today, theSkimm:

  • Has raised more than $US15 million from venture capitalists.
  • Launched subscription news product Skimm Ahead ($US2.99 per month), which the founders told Shontell was No. 1 for news apps in its first month, and “continually beats” The New York Times and The Wall Street Journal in highest-grossing news apps every month.
  • Recommends a book and a bottle of wine every Friday, for which they receive affiliate revenue. Publishers have told the company’s founders that a recommendation from theSkimm is the top driver of sales, above even the New York Times.

Beyond revenue, theSkimm was also responsible for spurring 120,000 people to register to vote in the last election, becoming one of the biggest partners nonpartisan group Rock the Vote has ever had.

And it all comes back to reader loyalty, where the founders placed their bets early on.

“We would much rather say we have 5 million people we activate and get to pay for a subscription product,” Weisberg said. “Or we can get them to turn out in the hundreds of thousands to vote, than say ‘We’ve got 20 million of them, but only 2 million of them open us every day.’ That’s not interesting to us.” 

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