At the time of publication, November 19th, HackerNoon had raised $628K of a $1.07M Max Goal.
If you follow the startup and tech scene at all, you’ve likely heard of HackerNoon. With some of the best content in tech and over 7,000 contributors, reading HackerNoon is like having an inside purview into every corner of the tech world.
HackerNoon is run by husband and wife, David and Linh Dao Smooke. Both of these individuals are amazing and I had the best time connecting with them. When you think about investing in entrepreneurs it is so crucial to invest in people you genuinely believe in.
Linh and David make that easy. With a long term vision for HackerNoon and a scrappy, capital efficient mindset, we at KingsCrowd think HackerNoon is one of the best investment opportunities that has been made available for investment via equity crowdfunding.
Don’t believe us, hear from the founders themselves below.
David and Linh, how did you both decide to found HackerNoon?
David: I founded HackerNoon and 15 other publications in January of 2016. HackerNoon quickly took off as a league of its own above all the other publications. We didn’t set out to be the premier tech blog or one of the most trusted cryptocurrency publications, it just resonated and we kept feeding it. And we trust our instinct: publish what the community wants, growth first then money will come later.
Linh: I joined the company in August 2017. At the time, HackerNoon had 3.8M monthly pageviews and barely any revenue (most revenue was derived from David’s marketing clients). Since I joined, traffic grows 2.5x and revenue grows 2.7x, 90% of which is from the HackerNoon’s Top Navigation sponsorship package. My job was to look at this as an interesting business challenge and ask myself “how can traffic turn into revenue?” It was going pretty well until of course September of this year, which we will elaborate later.
People in the tech community most likely know who you are, but for those that don’t know, what is HackerNoon?
David: my name is David Smooke and I run one of the internet’s most popular tech sites HackerNoon – how hackers start their afternoon. I’m quite relentless in my pursuit of the story and begin my every morning reviewing HackerNoon’s submissions from around the net (which is great cause I wanted to create a site that will be my go-to reading destination everyday). I grew the company from a boutique marketing agency (ArtMap Inc) into a publishing powerhouse (AMI Publications) in 3 years – and for most of that time I was the only full time employee. Previously, I worked at SmartRecruiters, the talent acquisition suite. While I was there the company grew from 6 to 120+ employees.
Linh: my name is Linh Dao Smooke and I co-run HackerNoon with my husban d & partner in crime David. I care about community, decentralization & collaboration, a lot of what HackerNoon is about. Previously, I was head of Asia Marketing at Minerva Project ($100M in funding). I also founded the first creativity camp in Vietnam, CKP, which continues to empower Viet students 7 years in. My experience in education has been instrumental in how HackerNoon onboards, nurtures, and serves its community of writers and sponsors.
If you had to break it down what do you think is the key differentiator of HackerNoon to other tech publications aka why do people come to you rather than anywhere else?
Linh: Sure. HackerNoon is community-driven & independently-owned. We have 7k writers and 200k daily readers. Our community drives not just our traffic but also our editorial. In HackerNoon 2.0, we will empower the contributing writers even more by introducing embeddable call-to-actions, replacing the “follow” button with the “give email” button, and incentivizing certain behaviors with points & potentially coins.
Since we have never taken any outside investment, our integrity as a publication has never been compromised because of outside interests. One day we can say great things about Ripple and the next day come in strong with a critique of XRP. We strive to be the best place for tech professionals to read & publish, and that should come first & foremost from a trust that our articles have high quality and reflect honest, unfettered opinions by the makers & builders in tech.
What does your core demographic reader look like?
David: Our audience is primarily tech professionals – software engineers, tech startup founders, data analysts, hackers and more recently crypto traders & blockchain enthusiasts. Our audience is younger, more educated & wealthier than the internet’s average. While most readers are based in the US, we have a strong international community particularly in the UK, India & Brazil.
You very quickly built a vast user base through what appears to be viral growth, but can you talk about what channels you use to grow your readership?
David: Most of it is a grind. But you are right that a lot of viral stories will attract many more story submissions for that topic/genre, which is why we try to establish relationships with top writers who consistently produce quality content. In HackerNoon 2.0, we have a whitelist of 1,000 writers who we believe have gained the right to hit the publish button without having us vet them. They are a lot smarter than I am and I trust their stories. We also nurture our community via different hubs all around the internet, most notably our contributors group on Facebook of 1.5k members and growing.
Linh: it’s funny that you think of it as viral growth – cause I actually think we don’t grow fast enough. Right now we are the bottleneck to these people’s submitting stories. We have about 50 submissions a day and can only have so many hours to review 30. Once writers can self-publish and community editors can curate, our rate of publishing will improve significantly.
Right now you are going through a significant pivot away from being hosted on Medium. Can you talk about this change and what it means for the business?
David: So for the past 2.5 years we’ve built our sites (HackerNoon as well as the other pubs) atop Medium.com’s Content Management System, thinking that this is a great alternative to WordPress, which powers 30% of the internet. It was going great until they decided to change their business model earlier this year; they told us starting September this year, we can’t have “3rd-party advertising” on any of our sites, which are powered by Medium.com’s CMS.
Linh: It’s questionable at best since Medium IS a third-party to us and they run ads on every page of HackerNoon. You can’t even read any article without being prompted to sign-in, which is honestly such an insult to our audience’s hacker ethos (they do not like being tracked).
David: Medium’s latest news actually served as a wake-up call for us. I’ve made a questionable business partnership and we’ve outgrown Medium. It’s time to build our own infrastructure.
Linh: In many ways it’s a blessing in disguise since the current infrastructure left much to be desired. We have to hack our way through the sponsorship package (there’s no clickable banner for example) and there are no tiers of writers: you either have all access to every single page of the site or no access at all. HackerNoon 2.0 will be optimized around our workflow and what our community of readers, writers & sponsors actually want – for that we’re really excited to build it.
You’ve built this massive user base and have been profitable for the past two and half years, but revenues have been relatively small overall even with such a large readership. So how do you plan to monetize this vast set of eyeballs?
David: You are right that a site our size usually has higher revenue, but don’t be too eager to judge without knowing their actual net income is – they might have to pay a team of 20, 30 people instead of just 2-5 like us.
Linh: In fact if you look into all sites that rank in the top 10k (we rank in top 5k), only 14% of them have fewer than 10 employees and there’s not even a category for 5 or fewer cause that’s so rare.
David: In terms of revenue for HackerNoon 2.0, we are excited to increase it manyfold. The current infrastructure actually limits a lot of what we can do with monetizing. In the new site, we will gain more revenue per pageview, with simple things like clickable banners and simultaneously running site wide sponsorships as well as sponsorships by subject matters. Additionally, we just haven’t been doing much offline, and plan increase revenue with events and even a conference.
Linh: In this interim period, we also figured out a variety of new revenue streams that we will continue to grow before & after HackerNoon 2.0 is live, such as podcast sponsorships, job ads & social media promotions. We estimate top nav sponsorships will grow more in raw number but will account for just 75% of total revenue, thanks to these new revenue streams.
I’d imagine one of the challenges you face as creators of what in many ways feels like an “open-source” type publication is that the community is averse to being sold ads, etc. How are you managing experience over the need to make this a sustainable business?
David: First off, we don’t run personalized ads that track the individuals around the net or even our site; we surface sponsors that are relevant to the content being read. I think what our audience is particularly adverse to is if their are sponsors, but if they are being surveilled or tracked.
Linh: Ultimately we can’t make the site free for readers forever without sustainable revenue. Our sponsorships so far are very minimal and non-intrusive – we don’t do any pop-ups, sidebars, auto-play video ads. Our ads are like billboards, people are free to choose to engage with them or not. We believe advertising is totally not evil if done right and our readers are with us on that.
Would love to understand better how you decide what content to produce and how you manage to keep straight 7,000 contributors with really just two of you working right now?
David: It’s actually a battle. I manage most of submissions once they come in (we have some part-time editorial help that I’m looking to expand), while Linh & her team (she hired an intern) onboard writers. Not all 7k writers submit in a day (thank goodness) – that number is accrued over 2.5 years. We have about 50 submissions a day and a prioritize ones by writers who have written good content before.
Linh: I’m excited to systemize contribute.hackernoon.com in Hacker Noon 2.0 so certain writers can self-publish and our onboarding experience is made smoother.
There’s been talks of utilizing some sort of crypto coin to compensate writers on the platform. Can you elaborate on what that will look like?
David: We publish a lot about cryptocurrencies and blockchain. I can’t comment on the specifics of a future HackerNoon token type or offering, and frankly, we need more help to determine how/if it would actually function. But in the short to mid term, we will make it simple for readers to tip the contributor with fiat and crypto, and for contributors to earn points for their contributions.
All contributors will earn hacker points, and in the future these points could serve as the basis for not only site influence, but also a hacker noon token or hacker noon cryptocurrency. It will be an iterative process to map points to value – it’s a large uphill battle and I’m unsure how it will play out. I am confident that our contributors will help us with this because they already have. Trent Lapinski, who hosts the HackerNoon podcast, is actually the first person to recommend to me that Hacker Noon should become a digital publishing cryptocurrency company.
Why did you decide to raise from the crowd and how has the experience been?
Linh: It’s been so incredible! 10 days in and we’ve reached 570k – 53% of target – from 400+ investors. Most of these are from our own community of readers & writers, proving the power of equity crowdfunding.
David: It’s a powerful concept, an equalizer. Before the Jobs Act of 2015, only wealthy individuals (accredited investors) have access to the best deals. Now any ordinary people can invest in any private company for as little as $100.
Linh: I definitely don’t think this is for every company though. The best performing ones in my opinion are those with existing user base and/or community already. Otherwise it could be a real challenge. But I agree with David that equity crowdfund for a community-driven business like ours is an amazing opportunity to grow.
David: It gives us that rush of adrenaline everytime we hit that refresh button or wake up in the morning to new numbers. 🙂 It’s rewarding to know many others see the value of our company.
How will you utilize the capital raised in this offering to grow the business?
David: The plan starts with a new infrastructure where more revenue opportunities are baked into how it’s made. At a high level, we plan to use approximately half of the funding to build a profitable site without Medium’s Content Management System, and then use the other half of the funding (in addition to interim revenues) to amplify what’s been working.
Linh: Yeah you can visit our page startengine.com/hackernoon where the breakdown is detailed in the section “the budget”. In general we’d always direct anyone interested to that page since it has the fullest information for potential investors to make an informed decision. We spent 2+ months on it and every single fact/number has to be vetted by an independent accounting firm or law firm for it to be submittable to the SEC. Ultimately, we’ve built what you see today with no investment, so I think we can make something much bigger with investment.
Where do you see the business 5 years from now and do you think you will continue to raise future rounds from the crowd?
David: This is our first round of funding. While we don’t plan to make fundraising a habitual exercise, we have plenty of equity available to do another crowdfund or venture raise if we choose. As we publish a lot about cryptocurrencies and blockchains, our contributing writers have given us plenty of ideas about how we could create a HackerNoon token.
Linh: Yeah, in 5 years, it’d be pretty cool to have own our token underlying our own economy…
David: A token raise is the most probable and highest-ceiling route for HackerNoon 3.0. But who knows? We built a business by learning what works and doing it more. So maybe we could do equity crowdfunding again? Or maybe we could do traditional venture capital? Or maybe we’ll never need any outside financing again? What I’m most excited is getting back to putting 110% into growing the actual business.
As you can see this dynamic team is out to build something massive and has found a sweet spot with readers. HackerNoon is creating something of tremendous value and is being rewarded accordingly.