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Who are you and what is your background?
My name is Jacob Wolinsky, and I am an investor and online entrepreneur. I’m best known for the authority website, Value Walk, but now run two investment letter websites and write for Forbes.
I didn’t have much of a defined path initially. I was an accounting major but found it too boring, so I switched to a business administration degree, which turned out to be kind of useless. Eventually, I ended up working as an equity analyst at a small cap company and also got involved in business development for hedge funds.
I get more into this later in the interview.
What is your business and when did you start it?
I run two websites that sell investment newsletter subscriptions: Hedge Fund Alpha and Hidden Value Stocks. I built these up through my success in scaling the financial news site ValueWalk.com, which I recently sold.
Post sale, the two newsletters that constitute the remainder of the business that I retained specializes in providing hedge fund intelligence, information, and unique data on the industry. On Hedge Fund Alpha, we offer a subscription for $400 a year, featuring exclusive insights into the hedge fund world, including a lot of letters and communications that are highly sought after by clients and investors. We gather these in one place, offering access to information that’s difficult to find elsewhere. Initially, we were called ValueWalk Premium but rebranded to Hedge Fund Alpha after selling the main website (Editor’s note: Value Walk Premium is referred to as Hedge Fund Alpha for the remainder of the article as this is what the subscription was rebranded to post sale.).
Hidden Value Stocks provides an investment letter offering a deep dive with top emerging managers and their two favorite stocks (for a total of four stocks) which we publish once a quarter. We find good hedge fund managers who don’t have a lot of assets under management. These managers are really good and nimble because they don’t manage huge pots of money. We see what they think is a good buy and then write about their investment style and send the picks to our readers. I don’t have the exact stats in front of me, but we track the performance of those picks and the returns have been quite good. We charge $800 a year for this.
But we are going to really be building out the Hedge Fund Alpha site a lot more, so if you’re reading this interview especially in 2023 or even in 2024, check out the site because we’re going to be really adding a lot to it and it’s going to offer a lot more value and options.
What was your professional situation right before starting Hedge Fund Alpha?
Before starting the business, I was working as an equity analyst and also doing freelance writing. While my job was interesting, there wasn’t much room for advancement. I was considering taking a journalism job at a larger financial outlet, but I decided to try something different.
Seeing that Value Walk had a very good readership and was making a bit of money with low expenses, I thought it would be worth trying to expand it. I launched it into a full time business in 2012.
How did you get the idea to start Hedge Fund Alpha?
Honestly, I didn’t have a concrete idea initially. It all started with blogging and sometimes asking my boss if I could write up a big report on a stock we researched and he wasn’t interested in. I would sometimes research a stock for weeks and write up a whole report and my boss wasn’t interested so I asked if I could post it on my blog, and he was fine with that. I started to also do freelance writing on the side and build up an audience.
I started getting decent traffic and had some paying ads. By 2012, with minimal site expenses and a decent income from it, I decided to pursue it full-time. That’s how it all began.
What was the major challenge you faced in starting or scaling Hedge Fund Alpha and how did you overcome it?
I had no idea what I was doing, so I actually ended up doing something that was not good when I started the site full-time in 2012. I realized that to get enough views for ad revenue, I needed to focus on more trending topics. So I started covering things like the iPhone 5 or whatever was the latest model at the time, focusing on all the specs, because those did well in Google News searches.
The result was a lot of traffic, but those people would leave in five seconds and they had no interest, for the most part, in investing or hedge funds, so they had no long-term value to the site. Yes, we made a lot of money from those views, but it was all temporary and it kind of diluted the brand.
I really recommend that if you’re starting a business, you should have some way to have enough money on the side or saved up so you’re not forced to rush decisions. Because I needed to make a higher salary, I started chasing after cheaper revenue, and it wasn’t worth it long term.
Also, once we started ranking for those terms in Google, Google said, “Hey, this is not a finance site; this is more tech.” So now when we do keywords for finance, we’re not going to rank as high. Google didn’t actually tell me that, but from what I understand, that’s how it worked. So, I really recommend that you have a better approach. Focus on your niche traffic, not big traffic.
And also, the second thing is, I was very young when I started the site. I didn’t know what I was doing. I got lucky. It’s good to start a business before you have too many obligations in life, but it’s good to have some experience, maybe managing people or dealing in a work environment for many years. On the other hand, don’t wait too long. Now I have five kids, and I can tell you that it’s 100 times easier to build up a business when I had started Value Walk with only one or two kids versus now. I have a lot more obligations in life.
What was Hedge Fund Alpha’s growth like over the first couple of years?
It was great. We had paying ads, we would put out good content, and most of it would not get many views, but one or two articles would get a huge amount of views (80/20 rule here also), and that would lead to good revenue. Then we built up our ranking in Google. Everything was going okay until ad revenue started tanking across the industry, and then we had to shift the business model. We started doing Hedge Fund Alpha subscriptions and other monetization options.
What was your specific strategy for growing Hedge Fund Alpha and how did you implement that?
We did not do any paid traffic strategies. All the traffic came basically from Google News and Google Finance. Those were also the days when Google Finance was very popular. We would do an article on some of the hot stocks. I mentioned the iPhone earlier; Apple was a hot stock then. This is like 2012, 2013, 2014. We would do an article on Apple shares, and other hot big tech stocks. I think the acronym everyone used was FAANG or FAMGA. We would just get a lot of traffic.
Most of the articles wouldn’t get a lot of traffic, but then one or two, which would get picked up by Google Finance or Google News, would rank very high, and we would get a ton of traffic.
This was a bad approach, as I mentioned earlier, and this especially would not work for subscriptions. So, I do not recommend it. I recommend really focusing on higher-level traffic and higher-quality traffic. For example, when it comes to our Hedge Fund Alpha subscription product, when we were getting a lot of views on Value Walk, the newsletter was 1% of the traffic and 75% of the sales.
So, if you’re running a business, especially if you’re selling a product, high-quality traffic is key. You don’t want to focus on just getting quick clicks and a lot of visitors, you want to get good visitors.
The best funnel is the email list. It’s the best. You own the email list; you could change email service providers (ESPs), but that’s your list. With Twitter, if they decide, for whatever reason, to suspend your account, those users are gone. Email is the best and it’s also where you have your full attention when they open the email. You’re not at the whims of a social media algorithm.
How much money does Hedge Fund Alpha make now and what is the revenue mix?
So the business mix is different than it was before our Value Walk sale. Right now, it’s almost full subscription revenue. Just to give you an idea, we have 1000 subscribers right now, and we charge $400 a year. But also, a lot of people are grandfathered in at a cheaper rate.
You can do the math and see how much money you can make with a good product. If you got only 1 sale a day at $400 (which is very doable) and didn’t have any churn (hypothetically), you would be making $150,000 plus a year in just 12 months in recurring revenue. That’s very doable and good money. So, if you offer a higher-priced product, you can create a good salary rather quickly. I’ll get more into that in the next question.
If you were advising someone on starting a similar company today, what would you tell them is the key area to focus on and which strategy should they use to address it?
It’s cliché, but I would say to build up a good quality audience over volume. And I would say, specifically, the newsletter. Try to start building up the newsletter right away. Do whatever you can to get people on your newsletter when they come to the site. Yeah, it’s annoying, but do you wonder why all the big sites try to get your email with pop ups and however they can? Because it’s worth so much. When you get on the email list, you could unsubscribe at any time, but a good percentage of people stay for years, and you can get their attention whenever you want. You add value with free content, data, resources, etc. and then you can also do affiliate marketing or sell them your product.
I would say, probably, if I was starting from scratch, my approach would be to offer a service or product that I could justify charging three to $5000 a month, and that would be good for small or medium-sized businesses. Try to sign up a few people. Here’s the math:
If you have a product that’s $5000 a month and you get three clients, which is very doable, that’s over $150,000 a year in revenue. So if you want to start your own business, you could see it’s very viable when you have a higher-level product.
Whereas, if you’re selling a $5 product, you need a mass amount of sales. Then you either need a ton of traffic that you either need to get organically in Google, which takes years to build up, or you need to spend on getting users. And then you need to make sure that you’re making more than you’re spending on those users. And you need to constantly be on top of that.
And then if you need to scale via ads, you also need to constantly monitor that you’re not paying more than you’re earning and figure out how to maintain the paid traffic strategy without spending too much.
What’s next for you and Hedge Fund Alpha?
I am working on really building up Hedge Fund Alpha with new offerings and content and tools. It’s just getting started but I don’t want to announce specifics before it’s close to deployment.
In terms of myself, I’m not big into tech hype, but I really think AI is going to make a huge impact on the world of business. I’ve been taking some courses on prompt engineering, data analytics, and machine learning to further my knowledge of the area and see if it can help me with the site and where that leads.
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