Accidental Entrepreneur

Reflecting on a year of writing

It’s time to come clean.

I know nothing about writing.

Until recently, I thought Ogilvy was just a cheap stock that Buffett bought back in the 70’s. I didn’t know he was a real guy.

Like most of my career, discovering writing was a complete accident. I started a twitter page back in 2019. I used it to post about cheap, illiquid stocks.

In college someone had given me a copy of "The Snowball”. I became obsessed with Buffett. Specifically, I was obsessed with what he was doing when he was college-aged.

I learned that he was buying extremely cheap stocks. Knowing nothing, I figured I’d go try to find some cheap stocks for myself.

I went through every single stock on the OTC. Thousands of companies.

And I found a couple that were cheap.

I didn’t even know there was an ecosystem of microcap investors. I thought I was the only person looking at these things (sometimes I was).

For some reason, I felt compelled to start a twitter page. I figured maybe I could shout into the internet void, and someone would shout back.

And they did.

Early on I found this little business trading for 2.7x earnings and less than net cash. It was paying a 17% dividend.

I bought some shares and tweeted about it a few days later.

A couple weeks after that tweet, some guy DM’d me and said he’d bought 4% of the company after he saw my post.

It was some fund manager I’d never heard of. But the fact that someone bought a big slug of a company simply from reading my tweets was pretty cool.

A few months after that I found a business selling for 40% of net cash and ~4x earnings. Its market cap was valued at a fraction of the value of its owned real estate.

I sent out a tweet. And this time the price went up… a lot.

I was confused. This stock had been drifting down and all the sudden it spiked. There must have been some event?

I didn’t realize I was the event.

I… knew… nothing…

In time, I got a little wiser. I started to meet other investors. These were incredible people that I’d never have come in contact with otherwise. I learned a TON.

Somehow - and I still have no idea how or why - my twitter audience grew. I would maybe tweet once a week at most. But people kept finding it. Which was cool, because that led to so many opportunities.

This presented a problem after a certain point, though.

I didn’t think it would be responsible to talk about small companies in front of 25,000 people. There’s nothing immoral, illegal or unethical about it. I just didn’t like doing it.

But I loved writing.

And so, one year ago, I started writing on Substack.

The Business of Dirt

To keep my audience small, I’d put up a paywall on articles where I discussed current/actionable stocks. I didn’t want to create twitter 2.0.

I don’t expect people to believe me, but that really is what happened.

I just wanted a smaller outlet to discuss the companies I found interesting.

You learn a lot when you say things publicly. A former owner of the stock might reach out and help you better understand the situation or point out a missing piece of data. Also, it gets your chops up.

Writing something for a public audience makes you work harder.

Anyway, once again, to my complete surprise - people showed up and listened to what I had to say.

First a few, then a dozen, then tens and now hundreds.

Here’s my annual recurring revenue at present.

This still strikes me as totally insane.

There isn’t a day that goes by where I feel like this is a justified sum for me to be paid for simply writing.

The whole endeavor maybe takes a few hours a week.

Truth be told, I was already doing the work anyway. I just save my notes, clean them up a touch, and hit send.

A few other stats:

• 9,285 total subscribers.

• 4.5% of my free Substack subscribers convert to paid.

• Email open rate is ~53%.

Churn

When we look at churn, you almost have to throw it in two buckets.

1. Paying subscribers with a fund domain have almost no churn. They tend to set it and forget it. This makes sense as these folks have several thousand (sometimes millions) of dollars to invest in research.

2. Paying subscribers with a personal email address. These people churn like crazy. But you have to understand, a lot of these folks don’t view my writing as a Saas product. They want to read a single article, or maybe a couple. So they pay for a month and leave. A decent chunk of these people return a couple months later to read another article.

I don’t take the time to calculate exact churn. Honestly, I don’t really consider this a business. I looked at a lot of these metrics for the first time today, as I prepped for this article.

Growth Initiatives

I don’t have any.

I haven’t done any podcasts. I don’t advertise. I don’t even know if you can advertise.

In the beginning, most of the readers migrated from twitter. Now I have no idea where they come from.

I don’t even really know that much about the Substack platform.

Is there like a feed? Or does Substack bump me for some reason? I don’t know.

Now that I’m writing this all down, it’s really embarrassing how little I understand.

Tracking Ideas

If you’re reading this, and considering becoming a paying subscriber, keep these points in mind:

• This is not a stock picking service.

• I write about unknown, illiquid businesses.

• I don’t have a model portfolio for you to follow.

• I don’t regularly provide updates on the securities I’ve discussed.

There is no way to stop folks from subscribing who are looking to make a quick buck. But I try my best.

I’m not looking for more paid subscribers. I simply want a curious, level-headed audience.

With that said, I’ll provide a very high-level overview of the companies discussed this year. This commentary is unaudited:

• I talked about 15 companies over the last year. 12 of them are profitable (current stock price + dividends are higher than purchase price). Of the three that aren’t, two of them are down less than 5%. The final one was an almost complete wipeout. Although, when I wrote the article, I mentioned in extreme detail that this was a reasonably likely outcome, and I was therefore risking 1% of my capital on the position.

You can’t learn much from investing for a year. Especially in a year where markets ripped upward.

Gratitude and Future Plans

My “business” has 87% pretax margins. I pay 10% to Substack, and 3% to stripe.

It costs $0 to start doing this. It’s incredible, really. There is almost no incremental cost to distribute writings and collect payments from readers.

Never, in the history of man, has a person been able to leverage his brain and grow his network with such little effort.

The internet created the strongest lever our species has ever known. I’m grateful to be alive and healthy in a time when humanity is this advanced.

As to future plans - I don’t have any.

It’s like Heath Ledger said in The Dark Knight: “I’m a dog chasing cars. I wouldn’t know what to do with one if I caught it.”

I’m just going to keep at it, and see where this thing goes.

I love investing. I’d pay to do it.

The fact that you can make a living from it is incredible to me. It’s an endless game that can be played 100 different ways.

The aggregate AUM between the folks who read this article will be 10’s of billions of dollars. It’s insane. I’m consistently amazed at the people I see subscribe. I’d never be able to get in a room with some of these folks.

There is almost certainly money to be made from working your way into the inboxes of these people. I don’t know what that is, exactly. And I’m likely not going to be the one to capitalize on it.

People reach out on a regular basis asking if I would consider managing their money. I’m flattered every single time. I count 5 such offers in the last month. I’m not managing money and I don’t have plans to at this time.

This article feels like it’s bordering on “chest pounding”. But that isn’t what I want.

What I do want is this:

I want some young, hungry investor with insatiable curiosity to start writing publicly. Do it for free, or charge a fee. I don’t care. Just start sharing. Shatter your self-imposed ceiling. This is the internet. It doesn’t matter where you went to school. It doesn’t matter what you look like. The only thing that matters is the quality of your ideas.

A certain subset of folks on the internet will give you a hard time.

• “If you were really good, you’d manage money.”

• “This stock is subscale, it doesn’t count.”

• “Your last idea sucked. Why would anyone listen to you?”

FUCK THEM.

I am rooting for you. I promise, I am rooting for you.

The value of writing is in the conversations you have in private. Real players don’t post public comments. But if you’re good, they will find you.

Signing Off

Before I leave, I want to tell one more story.

Remember, at the beginning of the article when I talked about that fund manager who read my tweet back in 2019? The one who went out and bought a 4% stake in that little business.

His name was Dave Waters.

Dave grew up in a town with zero stop lights. He knew nothing about finance and had zero connections.

Back in 2012, Dave started writing a weird blog about weird companies. One day a reader contacted him, asking if Dave might like to manage a few bucks.

Then another reader asked the same. Then a third. And the snowball started rolling.

Dave manages $66 million today.

Get to writing.

Who knows what can happen?

DISCLAIMER: THIS IS NOT INVESTMENT ADVICE. I MAY OWN SECURITIES DISCUSSED. I MAY BUY OR SELL THESE OR ANY OTHER SECURITIES AT ANY TIME. I MAY NOT TELL YOU IF AND WHEN I BUY OR SELL. THESE STOCKS MAY BE ILLIQUID AND YOU SHOULD UNDERSTAND THE IMPLICATIONS OF THAT IF YOU BUY THEM. THIS IS NOT TAX, LEGAL OR FINANCIAL ADVICE. I AM NOT YOUR FIDUCIARY. THIS IS THE INTERNET AND YOU’RE LISTENING TO A GUY NAMED DIRT.