011: Grow a Side Business into a Thriving Membership Site
🗓 August 18, 2019
Ward chats with Braden Dennis, Founder of Stratosphere Investing about the importance of growing an email list, understanding your competition to determine pricing, and the challenges of time management while growing a side business with a full time job.
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Ward: [00:00:00] Hi, I'm Ward Sandler the CEO and co-founder of member space. I'm here with Braden Dennis the founder of Stratosphere investing.com. Hey Braden, how you doing?
Braden: [00:00:10] Hey Ward happy to be on the show.
Ward: [00:00:13] Awesome, man. So let's start with what's your background both professionally and personally to give the audience some context about who you are.
Braden: [00:00:21] Yeah. Sure for the most part. I'm in New graduate from engineering graduated just a little over a year ago, which is completely separate to what Stratosphere investing is and what it's about we can get into that personally what I like to do. I like to, I like to Cottage get up north as much as possible. I'm from Toronto get up north enjoy the lake snowboard the whole bit Sports.
Ward: [00:00:53] Very cool that you're an active kind of guy. You're not just sitting behind a computer all day every day.
Braden: [00:00:57] No. No, I'm playing playing hockey and football once a week each. So keeping pretty busy.
Ward: [00:01:05] Awesome. So I want to give folks a little bit of context about what Stratosphere investing is just they have an idea what we're talking about it.
Braden: [00:01:14] Yeah. Sure. So Stratosphere investing is a membership type business. Obviously that's on the show and what it's really based around is. Over the last several years. I developed a quantitative model for analyzing in specific equities traded on the Toronto Stock Exchange for for Canadians, and I realized that this is very useful information. And that people are paying exuberant fees for money managers, especially here in Canada paying the highest fees in the world for people to manage manage their money, which is fine as I don't expect it to be free but providing very very little value. So a new wave of investors have come about with. What is called DIY investing and taking your own investing portfolio into your own hands and by doing this you're eliminating all the fees and probably doing a better job of managing your portfolio because you actually care about it more than someone who has fifty to a hundred different clients at the minimum or a mutual fund which you know, they. They pay exuberant fees on and and really you're not getting a whole lot of value and here in Canada. They're just doing something called just mimicking the bark the market by closet indexing. So I'm trying to bring light to all of these things. The finance industry has gotten away with for, you know decades upon decades.
Ward: [00:02:51] Right, so not and I don't want to nerd out too much on the financial stuff because some people this might be a little over their head or they just don't care but I'm just curious because I used to have it a financial advisor. I'm in the United States and I realized how much of a fee I was paying and then I switched to using something like Vanguard, which is very very low funds I've my parents using something called betterment which is one of those kind of Robo advisors also, really? Yeah. Yeah, really really low fees. So I'm just curious. Why is there a particular reason why Canada has the highest fees in the world?
Braden: [00:03:24] To answer that question on why can't has some of the highest fees in the world. I don't know for sure. I'm talking about a couple like, you know point two percent higher than you'd expect in the US which adds up to it an insane amount over lifetime, but I don't know for sure the exact reason why Canadian advisers got I've gotten away with the highest fees, but I'm like what you're doing and what you're what you said. You've got your parents do. Is an amazing idea to get market returns in terms of equities with extremely low fees like vanguards fees or Black Rock Caesar almost free. Like it's right. It's basically almost free. So you're there for you providing a huge. Huge benefit the average person.
Ward: [00:04:14] And yeah, so so then I guess along that line of thinking. What is it that stratosphere is providing to customers that they couldn't get by just doing one of those Robo services like a betterment?
Braden: [00:04:24] Yeah good question. So. So doing something like betterment and I don't want to get too into the numbers here. But essentially you can pay one-sixth of the fees if you spend 15 minutes a year to get to do what betterment does. So what they're doing is they're they're basically automating. Buying exchange-traded index funds for you. Now, you can actually do this on a discount broker. If you're in Canada like Wes Trader if you're in the u.s. Like Robin Hood or Ally invest and you can do it in a few clicks of a button. So anyone with an internet connection can basically drop their fees compared to a better Mentor or other Robo advisors in 15 minutes a year essentially.
Ward: [00:05:09] Gotcha. So what made you decide on this business as a sort of a membership type business as opposed to just taking out one-on-one clients like a lot of financial advisers might do?
Braden: [00:05:22] That's a good question question Ward. Investing is a very long-term game anyone that's trying to make a quick Buck perhaps. I literally have told members who have either even paid or on the verge of paying and asking me if more information about the service that it's just simply not for them because they need to. To follow along for a very long period of time creating wealth by investing in good quality companies or index investing is not something that if you are needing your money within even less than a year or even several years that my service just isn't for you. So I figure how can I capture someone to come along and join this this? Multi-year potentially multi-year decade to gaining wealth and you really using compound interest is being a member of something for a very long time. So I would try to create a bit of a community with all my members in terms. This is something that is going to take a long time. And if it's something that you want just quick information and quickly jump out of then I have lots of free content on the internet on my website on Stratosphere investing.com for those people who just want to get something quick. But as for growing wealth long-term a membership makes the most sense for me.
Ward: [00:06:51] Gotcha, because it sounds like it's not just the financial advice. It's also there's a community aspect which I will touch on in a second. There's also information you're providing along the way and at the end of the day though. It sounds like the goal of this is to really Empower folks that they can be in charge of financial of their own Financial situations that have me to rely on someone like you or a financial advisor every time the have a question.
Braden: [00:07:15] Yeah, cuz every month they are given the information on not only what I am doing, but all of the numbers in the core the quantitative stuff that we talked about they get that delivered almost like an in a newsletter format, but it's all integrated on my Squarespace like on my Squarespace website behind the member space pay wall if you will.
Ward: [00:07:42] Gotcha. So let's talk. Let's take a step back and talk a little bit about how you built up an initial audience. So it sounds like you had this as an idea or a concept in your head. So what was sort of step one as far as okay. I have this as an idea and I want to charge money. How did you get anyone to even know about this?
Braden: [00:08:00] Yeah. Sure. I guess I had been writing blogs and going. And making my own podcast and going on a few other folks as podcast for a little over a year before I realized that that I really wanted to do this. So. Change your question. I always kind of thought that how I would run the business now is how I would do it and it's improved and changed slightly obviously as I went to the execution phase but it's something that I kind of always wanted to do as I was growing an audience on the podcast or on the blog trying to rank little higher on Google as much as possible and coming up with an actual strategy to doing that. But it was really around. How can I get as many people aware of kind of the problem that exists in the financial industry and how can I get as many people to you know, kind of come over to no understanding that this is possible and and joining me if you will on a long-term game of bring wealth into your Investment Portfolio.
Ward: [00:09:09] So to summarize basically you were creating content. So it in creating content exactly right and how frequently where you posting?
Braden: [00:09:19] Not enough I so I work full-time job. I'm an engineer. I've worked in the manufacturing and power generation Industries so far and really around the hours of 6 to 11 on weeknights and on the weekend are the times that you need to work on these kinds of things to create content. These are all the also all the hours that you have to enjoy your life. Do the things you want to do. Like I said, I'm playing sports love Cottage love the outdoors. So you have to really pick sometimes to work on those things and post as much as you can. I was posting a weekly blog sometimes bi-weekly blog bi-weekly podcast. Basically not enough. You need to get those numbers way up, especially if you want to have a social media presence. So these are the kinds of things that I'm working on and trying to automate as much as possible. But yeah, nothing nothing happens overnight, especially when it's just you running the business.
Ward: [00:10:23] Yeah, for sure and I think a lot of people listening it resonates with them the idea that you're doing this on the side. You have a full-time job. I think probably most people listening to this do have some kind of full time job or a part time job and they're trying to build a membership business on the side and with the goal that I will eventually be there full-time job. So it's I think it's good for people to hear about the that's a bit of a struggle right because you there's never enough time to do everything you want to do. It requires sacrifice, right? So maybe instead of going and playing sports, you know, five times a week. You only can do it twice and that just might be part of how it.
Braden: [00:11:01] Yeah, absolutely. You kind of and at the end of the day you can still do all the things you want to do. Look at the hours you spend doing things that are kind of just useless and and I have these useless hours everywhere. Trust me like I'm still working on. On being you know, that's super productive person. It's not as easy as it easier said than done, of course, but kind of evaluate the hours you spend doing things that don't necessarily bring you happiness yet are causing a lot of time. So those are the hours you want to really focus on if you want to grow a side business.
Ward: [00:11:41] Right. I assume you mean kind of thing like more entertainment type stuff like TV and video or things like that?
Braden: [00:11:46] Yeah, exactly. Yeah, sometimes I'll come home from work and I'll sit on the couch and scroll on my phone for no reason for half hour and I'll just look at the time like what just happened like that was completely useless and I feel worse about doing it. So those are the kinds of things you've dialed back and I'm getting better at it. Once you grow your membership business a little bit and realize how much more rewarding it is to spend your time on your side business. That's when you get really motivating little will jump in your step and your time really changes because this has to be something you love like investing was something that I started nerding out with a lot in University for years before I even started my career and this is it was basically something that I'm already doing. I'm already making all this doing all this research nerding out hard. I'm already writing all these things just because I enjoy it. So I think that's really where a side, I hate the word side Hustle but aside hustle really. Can work for you if it's something you care about something you like and if it's something you're already doing, that's even better.
Ward: [00:13:04] Yeah, I think I'll make a lot of sense to me. And yeah, I call it a side business right because your right side hustles a bit overused. It's a business, right? If you're charging people money and they're paying you money that that is the definition of a business so it's a business but it looks exactly so just get it dive a little bit more to the details there. So you had said you had been creating blog posts a podcast. It sounds like roughly every other week. Obviously you would like to do it more often, but that's you know, you started where you could so from there how are you the audience is being built through an email list. It sounds like?
Braden: [00:13:40] Yeah. I definitely want to touch on the email list because this is the easiest way to automate content my opinion if if you have been blogging for two years or blogging for six months and you have a lot of written words already down you can automate. Email list so that when someone grabs a free offer, you can give them really really high quality content at the bottom of each email say hey, by the way, it is this this resonate with you. This is something that I do in my I'll use my example. This is something that I do already in my own Investment Portfolio. So especially if you're working a side business, that should be a kind of one kpi. To really really work on growing is your email list because you can automate a ton of content to be delivered that's already been created that you've been working on for X number of months X number of years.
Ward: [00:14:40] And for those who don't know what a kpi is that's a key performance indicator. So just a fancy way of saying a number to pay attention to in your business exactly how simple that's all good. It's all good. So and I agree with what you're saying the idea of repurposing or recycling content. You've already done especially when your time constrained like you are and like a lot of folks are where this is a side business. There's not there's not that you don't have all day to work on this. So the fact that you could create one blog post that becomes obviously a permanent asset on your website that people could access forever. It's helping your SEO. You can tweet about it or put it on any social media you want and you can reuse it as something you put into an email. So one piece of content can be used in multiple ways. So that's a really good way in my opinion to be efficient with your time and in the stuff you're putting out there.
Braden: [00:15:33] Yeah, exactly. And if you like I don't write long enough blog posts. I've done the whole like that. Yo research thing you should be putting up blog posts that are several thousand words blah blah blah and I try to get that would count up and provide, you know, the best content possible. So if you're if you're creating, you know big blog post that you really really want to rank for certain keywords that are important to your business. You can recycle That Into You know, three or four or five different emails that can be automated that people will get you know, One day apart 24 hours apart, whatever whatever type of automation sequence you want to go with with the millions of different email services that you can use some of them more expensive than others. You can create an automation automation cycle that when someone lands on your site and you give them that free offer you're going to be in their inbox for. As long as possible and so you can create a very very long email automation sequence with all that content you've created and cut it up.
Ward: [00:16:44] Makes a lot of sense and then yeah and cut it up even further as like micro segments for like for like tweeting for example, exactly. So along those lines so you're building this email list. And by the way, who were you using as your email marketing platform?
Braden: [00:16:59] I use a company called send Fox they're still in beta right now. The reason for it is I love the automation sequence and it's incredibly cheap compared to some of the other ones out there especially have a bigger list the cost can go up and I don't I'm not saying I have a huge email list. I wish I could say that but essentially the email automation sequence that they have is amazing. And I personally I mean this is just my opinion based on being someone who subscribes to newsletters. I don't like flashy pictures when I receive emails. I feel like I'm always being sold something. I like simple text and and very easy to understand content as soon as I see a bunch of photos, especially if you're getting it at work. You'll be getting a bunch of photos that are blocked by your company and you'll basically just throw it right in the trash. If it looks like you're getting sold something or some some offer to a brand new pair of shoes from Adidas or with these kind of email marketing. So they have just Bare Bones just text type of email automation sequences. And that's what I personally like that and that's what I use.
Braden: [00:18:16] Yeah, there's that there's actually research to back that up as well as far as inbox deliverability and the chance of something being marked as spam all those things get worse when you are using non plain text emails. So it actually is the best in terms of deliverability and not being spam when it's plain text. There is some logic behind that not just an opinion.
Braden: [00:18:38] Yeah. Okay. That's that's good to hear.
Ward: [00:18:40] Yeah. So regarding the pricing for stratosphere. How does that work? What was the current pricing of so he wants to sign up?
Braden: [00:18:48] Yeah, there are two options to go down basically with either a monthly or an annual subscription. So you're going to get four months for free if you go annual and there's a 14 day trial on either option. I figured I know I'm creating a lot of amazing content. I know this is useful for people so. The conversion on a free trial is amazing. So monthly it is $24 a month or hundreds. This is we're talking about Canadian dollars by the way and a hundred and seventy nine per year. So it works out to being a much better deal. If you go annual and the reason I came up with that number is looking across the industry. There's something very important with investing called a management expense ratio AKA. What is the percentage of fees that your paying in a year, so I've come up with basically. What is the average portfolio worth for people who are using their investment accounts and come up with something that's Rock Bottom in terms of fees one compared to you know, these mutual funds fees that we that I was throwing out your earlier in the episode. So comparatively, stratosphere investing or going down this DIY and letting me help you show you the tools is an extremely affordable way of managing an Investment Portfolio.
Ward: [00:20:22] And also what's nice about that is when it's a flat amount right whether monthly or annual it's a flat amount whereas with traditionally with even the Robo Robo services or with the traditional financial advisor. They're taking a percentage of the portfolio. So as you make more money, they also make more money forever whereas with you again just a fixed fixed amount so that that would be attractive I would imagine to some.
Braden: [00:20:46] It's definitely attractive especially if you have a larger amount of money, I mean, obviously that management expense ratios going to go way way down when you consider a hundred and seventy nine dollars on a hundred thousand dollar portfolio $500,000 portfolio million dollar portfolio. That feel most becomes least negligible when compared to the two and a half percent that is typically paid to money managers and Canada so that which would be $2,500 are on a hundred thousand dollar portfolio. So something to consider.
Ward: [00:21:24] Right so have you always I know that the business hasn't been been around for a super long time. But have you always been 24 month once every 90 years at an evolution?
Braden: [00:21:35] It always has been I've been in business in terms of membership business. For less than a year. So I figure that I will you know up the price annually, or maybe biennially that's that's going to still kind of up in the air in terms of strategically what I want to want to want to do with Stratosphere. I think if you're providing a lot of value and you increase your price a little bit your customers definitely understand that but we haven't got there yet. So. Maybe when we chat again with you we can talk more about that.
Ward: [00:22:16] So do you I guess my question also would be with push back right A lot of people we talked to here either push back or they hear o this price is so great. This is so affordable. Thank you, or you know, this is really expensive. I can't afford it. Have you heard either of those sides or two people seemed generally happy with that price point?
Braden: [00:22:36] I've definitely heard both sides of the coin in terms of feedback. With the pricing overall, I I've basically went across some of my competitors because I'm not the only one that does this and the finance and Equity space online. So I want to I want around and I did basically a survey of my two or three biggest particularly two biggest competitors that I won't say are three times the price Is the low end and the other one is around four and a half times the price of annual subscription. So I'm very confident that my price is rock-bottom in the industry right now. And it really comes down to those super high prices the math falls apart when it when we're talking about that that number of the management expense ratio, which is very important for investors. So I know I'm doing the right thing and when people say that it's a little bit expensive they can't afford the fees. They say no problem. They almost always say it's because of their current situation they're not able to invest right now. So that doesn't make any sense for them, which is completely fair and and they want to come back. Once they get that better job once there, you know, if they're a student once they're making money and and have money to invest there ready to come back on the service.
Ward: [00:24:08] Right as they leave on a high note. They don't they don't leave being angry or feeling like you rip them off or anything like that. So that's smart.
Braden: [00:24:16] No. Yeah, I've had I've had a you know around this year. More than one hand of cancellations and there's a with member spaces like a reason for cancellation and all of them have been like thank you so much. This has been so useful right now. My current situation is a I just lost my job be there's this reason X y&z of why can invest right now never about the quality or the. Or the pricing over all of it being too expensive more so that it doesn't make sense in their personal situation, which I think is that's perfectly acceptable like developing that relationship with your customers is really just a good idea.
Ward: [00:25:02] Yeah. No, I think you're definitely on the right track. And that that's amazing that you've heard that kind of feedback. Like obviously no business is going to have 100 percent retention of all customers. It just vacuum no matter how perfect everything is there's life right people lose jobs. Like you said people, you know, personal things happen that have absolute nothing do with your business and there's obscene nothing the business could have done to prevent it and so cancellations are are part of. So if you're hearing that kind of feedback, those are the best kind of cancellations because you couldn't do anything about it. Anyway, so you're definitely on the right track. Question though so for for the price point that you have you said it's the lowest in the industry or at least in your for your near competitors. One thing I've found is that pricing sends a signal aside from oh, it's affordable. It's not affordable to also sends a signal of the quality. So are you concerned at all that by having the lowest price that people who are kind of looking around and options might be like, okay, it's the cheapest, but maybe it's also the least valuable?
Braden: [00:26:04] Yeah, that's something to consider and I always find it bold when I'm these two particular competitors. No put that price point right on there smack-dab in the middle of their website saying how much it costs. I figured that they they do this full time. They have both of these competitors have teams of. Minimum 10 people each mostly so that they can have eight people right? 4,000 would blog posts a day to boost their SEO, but I think they figure that they provide more they provide something else and at the end of the days I've looked in and I've done and I've dug and it's not true at all. I'm providing very I think I think it's better one because competitors are often delivering their service this newsletter and of investment information in a static form. For one way or another basically you get something delivered to your inbox that is very static. It's not it doesn't feel like it's always being updated or it's not current or this that and the other thing. Having a membership business on your website in this case Squarespace and member space It is constantly being tweaked. I'm constantly updating. It's more of a live. Rendition of what the information is? I think that is in itself is more valuable than the other services on their own. That's just my opinion, but it feels much more live more current. Does that make sense?
Ward: [00:27:50] Yeah, that makes sounds I mean yeah feels it feels more substantial. I guess I would say right because anyone can send an email even though obviously the value of the email can can vary wildly but the idea that okay, I go to the email and then I go to a website where there's content. Maybe there's more Graphics things like that it give it to me just feels a bit more substantial.
Braden: [00:28:11] Yeah, and I can go in and change stuff and add stuff throughout the month to the newsletter like it's not. You know this month May first rolls around I send it out to my customers. They get some PDF or they get some email and then it's kind of gone. It's gone for like that. I can't update it. I can't improve on it. I can't mid-month provide more information without sending the more stuff. It's more just like this is the link and it will always be relevant and always be live and it is something that I constantly keep up to date for my for my members.
Ward: [00:28:50] Awesome. Okay Braden, let's leave it there. Let folks know how they can learn more about you.
Braden: [00:28:56] Yeah, obviously on stratosphere investing.com is somewhere to go if that's too hard to remember. I have another URL that will redirect you. They're called to getstockmarket.com again, that's getstockmarket.com and you can see there. There's lots of ways to contact me get in touch on my website.
Ward: [00:29:16] Great. Well, thanks spending time with us.
Braden: [00:29:17] Thanks for having me Ward.