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TL;DR ME 🙄

• Swapstack’s inception: How Swapstack, a platform designed to monetize newsletters by facilitating ads and sponsorships was born.

• Challenges and reevaluation: As growth and revenue plateaued, the founders contemplated selling Swapstack. A retreat led to the decision to either find a buyer or scale down.

• Acquisition by beehiiv: After early talks with several platforms, beehiiv emerged as the best fit, leading to its acquisition of Swapstack.

• Looking ahead: Post-acquisition, beehiiv has scaled rapidly, with the technology that Swapstack integrated playing a major role in that growth.

GUEST POST 💄

The Acquisition Mechanics: beehiiv + Swapstack

Want to know what it takes to get acquired by one of the fastest startups in the world? Hope so, because you are about to find out. Today we are hosting beehiiv’s Jake Schonberger, who co-founded newsletter advertising marketplace, Swapstack, before it would acquired by beehiiv.

This is the first of four pieces this year that the team at beehiiv will be guest posting on this year, as a new initiative we are rolling out where we are partnering with a number of fast-moving startups, taking a peek under the hood, to see what makes them tick.

In case you are unaware, beehiiv are the ESP (email-service-provider) that powers this newsletter, and are one of the fastest growing startups in the world today, raising a $33M Series B round early last year. Anyway, I am sure you are going to love getting to know them better in 2025. Over to you Jacob my good man.

From zero to newsletter

In late 2020, I had just finished a graduate program and headed smack bang into a global pandemic. During this time, I had also been scouting for two early-stage venture funds: Amplifyher Ventures and Tiny Capital. Scouting relied heavily on in-person networking, which the pandemic all but ruined. At the same time, newsletters were emerging as a popular medium, with everyone and their tech bro launching a newsletter.

The real kicker? I could actually monetize this. With premium subscriptions at $50/month and solid advertising partnerships, it was clear this could be more than just a side hustle. Owning my audience provided a direct, powerful way to engage, unlike algorithm-driven platforms.

Fun fact: about six months down the line, I ended up funding nearly half of Swapstack’s pre-seed round through contacts I made via the newsletter. During that time, I also connected with a bunch of other writers. Turns out, I wasn’t the only one wrestling with how to grow and make money from our content.

From newsletter to Swapstack

One of the writers I met in the early days of Premoney was Jake Singer. We were both part of Erik Torenberg’s On Deck, Jake had just left his PM job at Amazon and had also started his own newsletter, The Flywheel.

Around that time, I was toying with an idea to help newsletter creators boost their audiences by swapping subscription links. Think of it as a matchmaking service for newsletters— I’d pair up similar writers, hand them a Bitly link, and they’d promote each other's work in their upcoming editions. This little experiment evolved into what’s now known as Swapstack.

Jake was one of the pioneering ‘Swappers.’ We both shared a interest in the creator economy and soon realized that focusing on monetization rather than just growth was not only more fun but also more appealing to other publishers. It was about adding value in a way that was measurable and, frankly, more exciting.

Since both of us were deep into the newsletter game, we quickly noticed a common pain point for many writers: monetization. It seemed like there were tens of thousands of niche email newsletters out there—kind of like when Craigslist or Reddit gets broken down into more focused fragments. If there was a subreddit for a topic, you bet there were at least a hundred newsletters about it too. The market potential of monetizing all of those newsletters was massive.

_{*Below you can see the behind-the-scenes of how the sausage was made pre-platform.}

We started by brokering deals between brands and publishers to learn the dynamics of the space, and built an MVP of what a sponsorship marketplace might look like consisting of a Carrd landing page, a Slack channel and a bunch of Zapier automations.

Some initial advisors asked why newsletter writers would use a platform like ours, versus doing it themselves. Jake summarized it well.

Swapstack was a simple concept. For publishers, we built tools for monetization through sponsorships and access to affiliate deals, and partnerships for publishers of all sizes. For brands, we gave access to a consolidated network of newsletters, enabling bulk sponsorships with minimal effort. I’ve never taken candy from a baby, but I feel like this was what it would feel like.

Our initial long-term vision was clear: leverage monetization and advertising to foster meaningful collaborations between brands and publishers. We saw the key monetization strategies that aligned with both writers' and brands' needs as; paid growth, content creation, and earned media. Swapstack could facilitate those needs by giving them access to the right publishers and support not only advertising, but content creation and content partnerships.

However, once we started to facilitate paid ads, the simplicity, and clear value of monetization became our focus. As we spoke to brands, we also validated that brands were seeing the costs of paid social CAC’s skyrocket, and they were all looking for new growth channels. No one had yet cracked the newsletter advertising channel. So we set out that that would be us. Over about two years, we grew Swapstack to support thousands of newsletters, facilitating over $2 million in publisher earnings and a vision of becoming the backbone of creator businesses.

Despite our initial success though, the growth began to lag. The revenue didn't quite reflect the value we knew we were creating, nor did it match the scale we wanted. By mid-2023, we sensed a shift in the ecosystem—beehiiv was on the rise, SparkLoop had not only adopted but enhanced some of our strategies and was now part of ConvertKit. It was crunch time: we needed to shit or get off the pot.

From Swapstack to weighing up a sale

In the spring of 2023, Jake and I decided it was time for a serious sit-down about Swapstack' future. We booked ourselves a 3-day founder retreat in NYC to hash things out. Our agenda was clear: either double down and raise more capital, find a buyer for the business, or scale back and run the whole thing as a side project.

After two days cooped up in a WeWork, topped off with a night of New York pizza and some real talk over a few too many drinks, we reached a decision. We were passionate about the business and loved the hustle of entrepreneurship, but the hard truth hit us: our runway was drying up fast, growth was slowing, and frankly, we were burnt out.

With less than six months of cash left and diminishing growth, we saw a narrow window to sell Swapstack—a chance to close this chapter on our terms and with our heads held high. We were ready to take that shot.

Jake would start to focus on simplifying the product to a point where it could more or less run on its own, and could work off the shelf when sold. We’d finish any new initiatives and bail on those that required manual intervention.

Over a year before these acquisition conversations, we had been in talks with both beehiiv and ConvertKit about a platform partnership on our ‘plug & play’ pre-approved affiliate deals product. We’d pipe in affiliate deals to their platforms, which publishers could use to monetize in one click. Neither platform moved forward, but what stuck with me after these failed partnership conversations, was the way that two companies communicated post-deal.

Tyler followed up with a 1,000+ word email detailing his thought process, the research the team had done, and clear & actionable feedback. While we weren’t moving forward, the thoughtfulness and accuracy of his feedback were on point.

The ConvertKit response was a bit more subtle. They launched a competing product, and to be honest, that was on me for not seeing that coming. Plus they ghosted us, except for a note from their EA saying they were really busy.

💡 Doc here: I had a very similar experience partnering with both founders. Tyler, man of his word, other guy—not so much.

The TLDR here is; unless the money was crazy, we wanted to sell to a founder like Tyler, and not a guy who ghosted us. Back to the acquisition. I began pinging partners we knew at the various platforms like ESPs, affiliate platforms that we worked with, and some agencies, so I could strike up conversations about desiring a ‘more intimate partnership’ for the future of Swapstack. A quick breakdown of the direct targets:

The acquisition

A month into our search for potential buyers, we’d caught the attention of a wealthy individual and a few other ESPs who seemed more curious about our insights than actually buying us out. We hadn’t reached out to beehiiv yet, despite having a strong connection and knowing that many of our users operated their newsletters on their platform.

In late August 2023, I decided to shake things up. I sent Preeya, the COO at beehiiv, a cheeky note about teaming up to edge out the competition. She liked it, inviting me for a coffee chat that week. We met in the lobby of the Citizen M hotel and she got straight to the point, asking what it would take for beehiiv to scoop up Swapstack.

I tossed out a number that was a shot in the dark—why not aim high, right? Preeya was quick to ground me: if I could get that figure elsewhere, go for it, but beehiiv wasn’t playing at those stakes. If we were serious about a deal with them, we needed to consider what a realistic acquisition would look like.

beehiiv was in the midst of building an ad network strikingly similar to what we were piecing together at Swapstack. They had the first-party data, a solid platform, and a slew of publications primed for monetization. Meanwhile, Swapstack boasted partnerships with over 100 brands like Masterworks, Morning Brew, and Betterment, and we had a deep understanding of catering to the demand side of an ad network, plus hundreds of publications not yet on beehiiv. It seemed like a natural fit—we could amplify the Swapstack mission aboard a high-flying growth rocket like beehiiv. The pieces just aligned perfectly.

With beehiiv's interest now clear, we revisited the guy who'd shown an early curiosity in us. He was stringing together various newsletters to create a sort of media holding company and saw Swapstack as a potential linchpin for this. Honestly, I wasn’t sold—his vision felt a bit disjointed, but we drafted an offer with him anyway, looking to leverage it in our beehiiv negotiations.

Negotiating with beehiiv was like watching Tyler’s Twitter feed—bold and to the point. We ended with three intense rounds of scrutiny of the numbers, various valuations, and countless talks about the deal structure. More than once, we nearly walked away. Swapstack officially accepted the final offer via a voice note that I sent Preeya on the 7th of September 2023.

In the end, the deal we struck was straightforward: beehiiv agreed to buy all of Swapstack's assets, cover any outstanding expenses, and gradually move Swapstack users over to their platform as we wound ours down. As part of the acquisition, I and Mo, one of our sales guys, would join beehiiv full-time. The rest of our team was set up to assist with the transition before moving on to new opportunities—hopefully, bigger and better ones. Jake being one of them, moving on to becoming a professional chef for a few months after the sale.

“With the addition of Swapstack, we are inheriting a killer team, with tremendous product and operational chops, and a wealth of expertise and relationships in the industry,” Tyler would say in his post acquisition announcement. It really was looking like a match made in newsletter-loving-heaven.

My micro-interview with Jake

Hey there, Doc again here. Before wrapping the piece I wanted to share a micro interview I did with Jake on a few of the details I was interested in that weren’t in the piece. I am sure you were wondering a few of these elements, so here they are.

• How much money did you actually make? Enough money to go and start a solid investment portfolio but also a good amount of equity in beehiiv which I’m expecting to be my big exit.

• What did your initial pitch look like in the first meeting? The structure wasn’t a specific dollar amount but I probably quoted her something ten times higher than what we ended up agreeing on, but that was just shot off the hip really. We ended up with something that suited both parties really well by the end.

• Would you found a startup again? Definitely. No plans to do so right now, but when the time is right and I've found another problem that I care deep enough about to drop everything and solve, I'll go for it. I love entrepreneurship because of the feeling of freedom you have to build your company how you want to, and the ability to solve problems that you care about.

• What is one piece of advice for anyone wanting to get acquired? The most important think about the acquisition process is knowing what you want, what your team wants, and building an acquisition plan around those needs. Treat your acquisition in some ways like a product launch. Without proper planning and goal setting, you'll find yourself going out into the market, seeing what offers come your way, and having no barometer to understand if an offer fulfils your wants and needs.

That’s it. I wasn’t lying when I said it was a micro-interview.

Looking towards the future (back to Jake)

It’s been just over a year since beehiiv acquired Swapstack, and the Ad Network has grown about ten times over in revenue. The team is growing as well, with four full time employees on the operations side and six full time employees on the engineering side, including two beehiiv cofounders, Ben and Jake. The best thing about all of this is that means the dollars earned by publishers on the platform in rocketing too.

Every founder might say this, but truly, we're just getting started. The Ad Network is still young, lagging a couple of years behind the rest of the beehiiv platform, but it's budding with potential that matches our billion-dollar vision. Already, we're distributing millions to publishers and drawing in some of the world's top brands like Nike, HubSpot, and Bill.com. It’s quickly becoming a cornerstone of the business.

Starting a company was brutally exhausting, yet here I am, ready to jump in and do it all over again. Sure, part of me wishes I'd sold Swapstack for life-changing money. But do I believe beehiiv is on its way to becoming a decacorn, bringing that big payday? Absolutely. Joining beehiiv was the best move we made, and I’m all in for the ride to unicorn status.

And that's it! You can also find Jake on LinkedIn, or check out beehiiv on their website if you are looking to build a newsletter.

BRAIN FOOD 🧠 

I just listened to an episode from Lenny’s Podcast with Graham Weaver, a Stanford GSB professor who's also the founder of Alpine Investors. I thought this one was really useful since he basically breaks down how to shake off autopilot and consciously create the life you want.

TWEETS OF THE WEEK 🐣 

TOOLS WE USE 🛠️

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See the full set of tools we use inside of Athyna & Open Source CEO here.

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