This personal finance blog bootstrapped its way to $20 million in revenue

The Penny Hoarder staff. Photo credit: Samantha Dumbscombe / The Penny Hoarder

The Penny Hoarder staff. Photo credit: Samantha Dumbscombe / The Penny Hoarder

Kyle Taylor knew almost nothing about blogging when, in 2010, he opened up a free Blogspot account. He just wanted a place to write about his attempts to make and save money.

Not long prior to that Taylor had dropped out of the University of Colorado, where he had been pursuing a political science degree, so he could work directly on political campaigns. “The thing about campaigns is you’re out of a job every few months,” he told me. “I didn’t have a lot of money and I had a lot of student loan debt, and I was finding little side jobs to get me through.” At one point, shortly before launching the blog, he hit a particularly bad rough patch and was on the verge of eviction. The blog, in its own way, was a form of therapy.

But though Taylor’s technical knowledge of the blogosphere was fairly thin, he had a near-instant knack for the bloggy “voice” that can make the medium so engaging. His first-person, almost stream-of-consciousness posts walked readers through his attempts to make money. Traffic to the blog, at first, was nonexistent. “But I was personally having fun,” he said. “It was kind of motivating to have this public place to share my debt and the struggle I was having, because it was certainly something I didn’t feel comfortable sharing with my friends and family.”

As he continued to write, however, Taylor began networking with other personal finance bloggers and learning what it took to build an actual audience. He would leave comments on other blogs, offer to write guest posts, and send cold emails to other writers asking them to link to him. At the end of the first year, The Penny Hoarder, as his blog was called, was receiving an average of 100 pageviews a day, and after he installed Google Adsense it started generating between $100 and $200 in revenue per month (that amount increased rapidly; by the end of the second year it had brought in $55,000). It wasn’t quite enough to live on, but enough to get him thinking that The Penny Hoarder could be a legitimate business.

By the time Taylor was about a year and a half into writing for the blog, he had regular readers who were leaving comments and subscribing by email and RSS. He decided that it was time to add a professional veneer by migrating from Blogspot to his own domain and designing a logo in Microsoft Paint. This was also around the time that brands started approaching him about writing sponsored posts, and he generated additional revenue through an early version of native advertising. “It probably took two and a half years before it became a salary,” he said. “I would work on it all day and then I would go mystery shop or do these other side jobs over the weekend to pay the rent. I probably did like a hundred of these.” Complete transparency was inherent in all his posts. “I would tell them exactly how much money I was making at each of these jobs.”

Kyle Taylor

Kyle Taylor. Photo credit: Samantha Dumbscombe / The Penny Hoarder

By the fourth year Taylor was making what he called “serious money” — $3.2 million — and he knew it was time to expand his team. That’s when Alexis Grant entered the scene.

For most of her early career, Grant had assumed she’d follow the traditional journalism route. After graduating with a masters in journalism in 2005, she went on to secure a number of reporting jobs at traditional newspapers and magazines, first as a reporter at the Houston Chronicle, and then later as a careers editor at US News & World Report. She lived and breathed journalism. “I remember years ago when I was at a writer’s colony retreat, and there were other writers who predicted that, at some point, I’m not going to want to be a journalist anymore because I’ll want to do something more creative,” she told me. “And I was like, no way, that’s not going to happen. I love journalism.”

But at the same time, Grant was growing disillusioned with traditional media companies. They didn’t seem to be adapting to the web quickly enough and were resistant to change. In 2011, she left US News & World Report to work full time on Socialexis, a content marketing agency she’d launched a year earlier that applied a journalism mindset to corporate clients’ blogs and social platforms. As she took on more clients she began to expand her team, and once her company was on a firm footing she was able to consider more carefully what kind of work it would take on. “Kyle came to us at an interesting time because we had just finished working with someone who really wasn’t a fit,” she said. “We didn’t really like the client and we didn’t love the content he had asked us to produce. It was right around this time that I said, OK, we’re only going to work with people we really like and enjoy working with. And that was when Kyle happened to get in touch.”

Socialexis’s work for The Penny Hoarder was small at first, but it quickly grew as traffic scaled. Grant’s team immediately started tackling the low hanging fruit of web publishing, working on SEO optimization of the content and building out its social media accounts. Her staff found the informal tone of the blog to be refreshing. “One of the rules that we had for some of the blogs we worked for was don’t start with a personal story, don’t start with an ‘I’ anecdote, because for a lot of our clients that didn’t really work,” said Grant. “And what we found interesting for this particular site is that it does work. We can come in with that personal angle and story, and readers really wanted to hear it.”

Within a year of Alexis’s team joining The Penny Hoarder, the site’s traffic — and revenue — had grown substantially. Taylor attributes its blockbuster success to its conversational approach to content. “There wasn’t anywhere else on the web where people were talking about finance in a fun, personal way,” he said. “Most personal finance sites are about stocks and investing, and we kept this anecdotal and loose writing style that allowed people to relate to it.” In a post titled “How I Stopped Being Broke and Saved My First $1,000 (A Month-by-Month Guide),” for instance, Taylor took readers through his own first-person journey of how he broke the “paycheck-to-paycheck” cycle. The topics were also diverse, ranging from how to start investing with only $100 to how to sell your old iPhone for the most amount of cash.

During this time, Alexis was handling the editorial while Taylor tackled the business side, but it quickly became apparent that the company could only grow so much under the ad-hoc infrastructure it had in place. “When we got to this point, it had scaled to a place where it was either just stay on autopilot, or keep growing,” said Taylor. “We had to make a decision to start building a staff. It was place in the road where we had to start growing, or just stay stuck.”

So Taylor, under the eponymous banner of Taylor Media, announced that he would purchase Grant’s company in 2015. This would allow her to shed all her other clients and focus primarily on producing editorial content for The Penny Hoarder while Taylor built out a more formal business apparatus. “We both flew to New York for a conference, and we just spent two days after it was over sitting in a coffee shop strategizing. A lot of that time was spent building out an employee handbook.” What once had been a company comprising mostly remote freelancers would transform into one with a full-time staff in a physical location: St. Petersburg, Florida, where Taylor was based. His first job, post-acquisition, was to find them office space.

His second was to build out a revenue-focused team, and for that he turned to Vishal Mahtani. Mahtani got his start with digital marketing in the early 2000s, first by building websites for clients, and then he was later asked by those same clients assist in their online customer acquisition efforts. Eventually, this led to him building an early digital ad network in which he would approach popular websites and offer to broker ads so they could focus solely on attracting visitors. From there, he segued to starting a company that used online marketing to sell student loans to larger servicing companies in the secondary market

Mahtani’s most recent startup, a clothing reseller called Kindermint, sold in February 2015 and, while on sabbatical, he was introduced to Kyle by a mutual contact. “A friend of mine told me that I have to meet Kyle,” he recalled. “He introduced us and we hit it off immediately. Right away, [Taylor] said, ‘Look, I need your help building this.’ And I accepted.” He soon signed on as The Penny Hoarder’s VP of business operations.

Mahtani’s initial job was to take all the tasks Taylor had been performing over the years and “decouple” them — taking things that had been loosely managed using a combination of spreadsheets and Taylor’s own memory and giving them an actual structure. He migrated the company onto a CRM system, hired out a sales staff, and began to focus on how he could convert The Penny Hoarder’s now massive traffic into more revenue.

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The key to accomplishing this involved a combination of native advertising and what’s called performance marketing. When most people think of native advertising, they’re imagining the so-called creative agency system built out by companies like BuzzFeed in which the agency side is paid by brands to produce viral content that resembles content from the editorial side. That’s how you end up with videos like BuzzFeed’s “Dear Kitten,” a native ad paid for by Friskies that’s considered the gold standard in the industry. But the problem with this approach is that creating the content is expensive — a brand needs to shell out at least $100,000 to work with BuzzFeed — and your media company’s revenue growth is still dependent on the number of brands you can sign on.

Under the performance marketing model employed by The Penny Hoarder, there is no minimum entry point for an advertiser and the potential number of advertisers is nearly infinite.

There’s another phrase for performance marketing you might be more familiar with: affiliate advertising. Basically, because The Penny Hoarder is a personal finance site that often recommends products and services for either making or saving money, it’s able to insert special tags in its links to those products that will ensure it gets a cut of any sales. Many major online retailers already have these affiliate programs set up so all you have to do as a publisher is copy and paste the link. But part of Mahtani’s job is to approach companies that don’t have affiliate programs and convince them to form such a partnership with The Penny Hoarder. “For instance, we might write a piece about the ‘7 brilliant ways to make more money driving for Uber,” he explained. “This is an article that people will find useful and helpful if they want to become a driver. It aligns with our editorial voice, our values, where we’re trying to put more money in people’s pockets. And we’ll go out and break a deal with Uber. Our pitch is that we’re going to send you new drivers — or we might have already been sending you drivers —  so how can we improve this relationship? How can we deliver more traffic to you? And of course they’ll look at traffic and say, ‘Yes we like it, how do we get more?’ And we’ll just have a business development phone call and figure out how to drive more business to them.”

I asked how this process worked with the editorial team. Would the editorial side produce an article and then allow the business team to insert affiliate links, or was the business team proposing articles for the editorial side to write? Mahtani said it’s a mixture of both. Sometimes the business team swoops in after a piece has already been published and adds in affiliate links. Other times it has advance notice that an article is in the works and it has enough lead time to approach business partners. And occasionally it suggests companies that could be featured in posts. “Our  team might find a group of disruptors that then get vetted through our editorial team,” he said. “Editorial will actually do research behind it and determined if it’s aligned with our voice, if there’s negative press against the company, and if there are any upset customers. Once they’re approved and vetted, we’ll approach them for a deal and put something together for a performance basis.”

The Penny Hoarder provided me with a few links to its performance-based posts. The first one it sent me is about a company called Paribus, which alerts you when a product you bought has dropped in price, thereby entitling you to a partial refund for the difference. The second is a list of five companies that will send you coupons. For both pieces, a disclosure is included, and the disclosure for the second post actually details the terms of the arrangement. “General Mills has sponsored the placement of Betty Crocker, Tablespoon, and Pillsbury in this post,” it reads. A spokesperson for The Penny Hoarder pointed out that only 5 percent of the site’s content consists of native ads.  

The performance-based model, said Mahtani, not only widens the number of brands the company can work with because it doesn’t require a minimum buy-in, but it also allows The Penny Hoarder to only work with brands that fit within its editorial vision. This flexibility has made it possible for The Penny Hoarder to grow its revenue to what it claims is a projected $20 million for 2016. Just recently, it was ranked 32nd in the Inc 5000, which tracks the fastest-growing small companies.

And it was all done without any outside investment. With what seems like near-daily announcements about cash infusions in digital media upstarts (most recently: $200 million to BuzzFeed, $200 million to Vox, and $200 million to Vice), I asked Mahtani if working for a bootstrapped company came with any limitations. “Working within those kinds of constraints is kind of natural,” he said. “In fact, if you were to put me in the opposite situation, I would feel like a fish out of water. I would be asking, ‘Do we have to spend this money? Why do we need to spend it?’ In that sense I don’t feel like we’re constrained at all.” When I asked Taylor the same question, he agreed with Mahtani’s sentiment, with one caveat. “Because we don’t have venture capital behind us, we don’t get as much media coverage about the company,” he said. “That makes it more challenging from a recruiting standpoint. We want seasoned professionals, and we want real talents in their field. Some of them may have never heard of us and some might think of us as a startup, and that can be a concern.”

The Penny Hoarder has grown to 42 full-time staffers, and the office space for which it signed a five-year lease is already overcrowded. “We’re out of desks and some people have to work from home,” said Taylor. Soon it’ll have to move to a larger office that will accommodate its growing team, which includes a fledgling video department. It may also require space for future spin-off sites under the Taylor Media umbrella. “We think The Penny Hoarder is the beginning,” he said. “I don’t want to sound cheesy, but the goal is to keep building things that align with our original mission to put money back in our readers’ pockets, and we think there are other niches and opportunities out there for us to achieve that goal.”

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com