Hello! Who are you and what business did you start?
My name is Alex Morris, and I run the TSOH Investment Research service. Before launch, I spent a decade working in the investment advisory (RIA) business as an equities research analyst. Years of experience in the RIA business helped me to see, firsthand, how much of finance is shrouded with a somewhat false sense of expertise, as well as the overwhelming influence of the advisors’ / investment managers’ incentives (retaining / growing AUM and sustaining a large recurring fee base), which leads to questionable long-term decision-making. With my service, I provide complete transparency into the investment philosophy, research process, and long-term outcomes of an experienced equities analyst and CFA Charterholder.
In April 2021, I left the industry and launched the TSOH Investment Research service. For $49 per month or $349 per year, subscribers receive deep dive equity research on new companies (long-term investment ideas), updates on current holdings and names on the watchlist, investment philosophy discussions, and periodic portfolio updates (with the disclosure of all changes before they’re implemented). The goal is to transparently show how a full-time investor with a decade of experience invests for the long-term (the portfolio disclosed to subscribers accounts for all of my assets, outside of a checking account for day-to-day expenses).
The research service has grown steadily over the past 13 months; as of May 2022, it now generates ~$17,000 per month in subscription revenues (after accounting for Substack’s cut).
What's your backstory and how did you come up with the idea?
I’ve been writing online about the world of investing for more than ten years. It started as a way to bolster my resume when I was still in college, but over time it became a great way to build my network while generating some supplemental income. The idea to leave the finance industry and pursue writing as a full-time job was inspired by the success of others who had pursued this business model, most notably Ben Thompson of Stratechery and David Kim of Scuttleblurb.
Of course, the internet is littered with websites where people can share stock ideas. In my opinion, the key feature missing from the majority of these websites and blogs is that they lack long-term accountability. Early on, I decided that I would try to differentiate the service by pushing the level of transparency to 11. Even the best investors in the world make mistakes, and I thought that it would be refreshing and insightful to be open and honest with subscribers about the lessons learned during my investment journey. That idea also served as the inspiration for complete portfolio transparency - the disclosure of all changes before they’re executed, quarterly returns, etc. To date, I’ve found this has really resonated with readers. (By the way, their willingness to provide direct and thoughtful feedback is additive to the output.)
Ensure that you truly love what you're doing (the “work”) before you leap. In addition, establish a set of realistic goals (financial, deliverables, etc.) for yourself and your customers.
From a financial perspective, leaving my full-time job was a difficult decision. I gave up a nice salary (plus health insurance!) to start a “job” that paid $0 a year on day one. That said, I had reasons to believe the bet would pay off; I had spent the prior decade building a name for myself online, and I was confident that I could eventually convince a few hundred people to subscribe. At the outset, my financial goal was simply to keep the lights on. Today, I can thankfully say that the service has run rate revenues that exceed my former salary (and growing). It has surpassed my initial expectations by a wide margin, both professionally and personally.
Take us through the process of designing the initial version of your newsletter.
The first iteration of my service was going to be on my own blog/website, which meant I would need to figure out website design, billing, etc. I quickly realized that trying to do these things on my own was going to be a major headache (and one that I assumed would pop up at times even after the initial build was completed). When I stumbled across Substack, it seemed like the perfect tool for my needs. I could spend ~99% of my time focused on investment research and writing, with Substack taking responsibility for all of the behind-the-scenes work (in exchange for a 10% cut). For me, that seemed like a reasonable trade-off (and that’s true to this day).
The first post that I shared with subscribers (with limited access to the free email list) was a complete portfolio review. The objective was to be very clear, right out of the gates, about what subscribers should expect from this service (100% transparency from an experienced analyst). That required a lot of time and effort (it took a few weeks to complete that write-up), but the output ultimately lived up to my expectations and got the job done (a big splash at launch).
Being open and honest about your process/investments/performance leaves you exposed to criticism (often constructive, but sometimes not). When times are tough, I always remind myself that this business, just like my investment process, is focused on the long-term.
Another key decision in the early days was pricing. Most online investment-related research services charge ~$10 per month or ~$100 per year. (By comparison, similar services from traditional vendors in finance will typically cost thousands of dollars per year.) I wanted to ensure that my pricing reflected my own belief, and one I expected to be demanded of by subscribers, that this was a higher value offering. This was the entire output of an experienced equities analyst who would be working tirelessly with his sole focus on this research service. I wanted to set the clear expectation that every single post sent to subscribers would be worth 10-15 minutes of their day (time is the key consideration/resource for my target customer, not the $349 per year). Pricing was a signal, and in my mind reflective, of the value offered.
The costs to launch the service were minimal; all I needed was a computer and an internet connection. The “cost” on my end is the time associated with producing the output.
Describe the process of launching the business.
I can remember the launch like it was yesterday.
I’d been doing the behind-the-scenes work for a few months, and finally decided to go live on April 5th, 2021 (a Monday morning). I put together a couple of tweets, hit send, and then my girlfriend and I went to go play tennis. Naturally, the entire time that we were on the court, we were both in a state of excitement and fear. After months of planning, it was finally “real”.
My hope/goal was to attract ~10 subscribers on day one and 25 - 30 subscribers within the first month. Thankfully, the service exceeded those expectations: by the end of the first month, the TSOH Investment Research service had 60 paid subscribers. The next 12 months were a roller coaster, interspersed with periods of optimism and dejection as the subscriber numbers jumped around. But over the long run, it has been a success: today, the TSOH Investment Research service is approaching 600 paid subscribers, with ~30% growth since the start of 2022.
The biggest lesson I learned from the launch was the power of the internet, most notably my community of friends and followers on Twitter. The world has become focused on the downside of the internet / social media in the past few years, but I think that’s a one-sided view. The success of my service is in large part due to the global community on financial Twitter (FinTwit).
Since launch, what has worked to attract and retain customers
Charlie Munger has a saying: “It’s the work on your desk. Do well with what you have, and more will follow.” I take that advice to heart. My primary concern has been, and will always be, ensuring that the next post that I deliver to subscribers is the highest-quality output that I’m capable of. Now I’m living through my first round of annual renewals (the people who signed up in April 2021), I can happily say that retention has been very strong. For me, that’s a good indication that I’ve lived up to my end of the bargain with TSOH subscribers.
My primary growth channel has been Twitter (organic). I tweet frequently, with charts / links that align with the research that I’m currently working on. (Unsurprisingly, if somebody is interested in tweets about a specific company, they’re likely to be interested in my deep dive research as well.) This has helped me to grow my Twitter following by 1,500 - 2,000 people per month as of late, with a pretty consistent trickle down to the service (a low double-digit percentage of Twitter followers on the email list and a low double-digit percentage of the email list converting to paid).
I’ve also ran some tests with paid marketing (Facebook, Twitter, etc.), but I’ve yet to see results that justify continuing to invest in this channel. It’s something I’d like to figure out, but the honest answer is that I don’t think that I have the requisite tools/skills to do it properly at this time. (I’m open to new ideas, so if you have thoughts on how to do this effectively please reach out!)
The other thing that I’ve done to try and grow the service is to always make myself available to other creators (most notably podcasters). For example, in June 2021, I went on “The Pomp Podcast” to talk about my research on Costco (Pomp has ~1.5 million Twitter followers). Slowly but surely, appearances on podcasts like this have also helped to expand the reach of TSOH.
In terms of conversion (trying to convince someone on the email list to trial the paid service), I still struggle with this question. I periodically remove the paywall on older posts, and I also send a short preview of every paid post to the email list. This is another area where I still have room for plenty of improvement; it’s something that I intend to focus on in the back half of 2022.
How are you doing today and what does the future look like?
As mentioned earlier, the service has (thankfully!) exceeded my early financial expectations. . Besides Substack’s cut, my only costs are for a computer, an internet connection, subscriptions to news sources, etc. This is a one-man operation (along with my girlfriend and my dog, Elvis).
In terms of long-term growth / expansion, I remain focused on the work on my desk. One key way that I’ve done this is by expanding the types of companies that I research (to significantly widen my circle of competence over the next 5-10 years). As the scope of the service widens, it attracts new investors/subscribers who may be focused on a certain area in the markets (technology stocks, small caps, etc.). The good news is that I have no constraints with what I can / cannot research; my only limitation is my ability to understand the business. (As an equities analyst for an RIA, you’re often constrained by your PM / CIO, your clients, etc.)
The long-term goal for my business, beyond subscriber/revenue growth, is to ensure that the quality of the offering continuously improves. As a reminder, this service is a direct reflection of my investment portfolio, which accounts for the vast majority of my savings (everything besides a small checking account). The long-term success of the research/ideas that I share with subscribers will be directly linked to the long-term success of my investments.
Through starting the business, have you learned anything particularly helpful or advantageous?
One thing I learned early on was that I’d need to start thinking more broadly in operating my own business, which was very different from my life as an employee / analyst (where I spent ~99% of my time focused on equity research). Some of these things were basic - for example, realizing that the default email that Substack sends to people who join the email list was a great chance to market myself / the service. There were several seemingly small things like this (missed opportunities) that I didn’t think about or address for the first few months of the service.
Charlie Munger has a saying: “It’s the work on your desk. Do well with what you have, and more will follow.” I take that advice to heart.
I also had to learn to be okay with people who decided that the service wasn’t right for them. Early on, I would review the unsubscribes, which included a note with the reason why (left my job, too busy right now, etc.). Over time, I decided that this was noise / negative energy that wasn’t helping me in my day-to-day work. While I greatly appreciate feedback from subscribers, particularly when they’re thoughtful suggestions on how to make the service better, being too consumed with the daily subscriber count was something that I needed to wean myself off of. (Today, I review the unsubscribes 1x - 2x a month to ensure I don’t miss any useful feedback.)
I’ve also had to remind myself that this business, just like my investment process, is focused on the long-term. Being transparent about your process / investments / performance leaves you open to criticism. When that coincides with those (inevitable) periods of lackluster performance, it can take a personal toll. Deciding how to react in these periods is critical for investors. (After writing publicly about stocks for 10+ years, I’ve learned to roll with the punches.)
Finally, in terms of the output, I always keep a running list of potential ideas. Throughout the day, as I’m reading and listening to podcasts/interviews, I'm constantly thinking about how I can add to something I’ve been working on, or even become its write-up(at any given time, I’m typically working on 2-3 posts). I’ve also benefited from using my network; I find “editors” who are thoughtful on a given post’s subject matter and can provide feedback for the rough drafts. (My good friend, Francisco Olivera of Arevilo Capital Management, is a huge help.)
What platform/tools do you use for your business?
In terms of my investment research process, I use a variety of sources: corporate documents (10-K, S-1, etc.), corporate events (Investor Days, quarterly calls, etc.), news (WSJ, FT, BBG, etc.), industry-specific publications, research tools (BAMSec), etc. I also use services like Twitter and LinkedIn to find knowledgeable stakeholders (employees, suppliers, customers, etc.), who can often provide a deeper understanding of the company/industry that I’m researching. In my experience, if you reach out to people with thoughtful questions, they are often happy to help.
What have been the most influential books, podcasts, or other resources?
David Kim of Scuttleblurb published a business review in 2020 that greatly influenced my decision to pursue this business opportunity (I also spoke with him on the phone before launch). David’s generosity gave me a lot of clarity on what to expect after launching TSOH.
Note that David also published a 2021 update, which is a worthwhile read as well; he talks about an increasingly competitive business, and his long-term goals for Scuttleblurb, etc.
Advice for other entrepreneurs who want to get started or are just starting out?
My first piece of advice is to set realistic expectations. The grass is always greener, so think about the trade-offs that you’re making if you decide to leave a 9-to-5 job for the allure of being your boss. In my experience, the reality is that you’ll work more / harder than you ever did before. Ensure that you truly love what you're doing (the “work”) before you make the leap.
In addition, set goals that you can realistically hit, particularly in terms of the expectations that you set for your customers. For example, when I launched the service, I published every Monday and every Thursday (eight posts a month). Shortly after launch, I realized that this was an unsustainable workload; I clearly communicated the need for change to subscribers and apologized for having to do so; but in the end, this actually led to a positive impact on my relationship with subscribers, with many writing in to let me know they agreed with the decision (today, I publish six times a month - every Monday and every other Thursday).
I’d also think about your strengths and weaknesses. In the areas where you’re less skilled, how important are they to the long-term success of your business and how can you find a workaround to ensure you’re “good enough”? For example, as noted earlier, I personally think that my marketing muscle needs to be strengthened; given that my marginal cost (in both time and dollars) is effectively zero, the next subscriber is very valuable to me. Finding them is a key unlock for my economics. Expanding beyond Twitter (organic) is imperative for my business. This is something that I probably should’ve appreciated and addressed earlier on in the journey.
Are you looking to hire for certain positions right now?
As highlighted in the prior question, I need to hire someone to help with marketing the service. I’ve also considered ideas for expanding the audience (for example, hiring someone to translate the service into additional languages ). Those are two things I’d like to pursue over the next few years (if you have any thoughts on these ideas, please email [email protected]).
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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