This is a case study of Thrive Market, a subscription e-commerce business that specializes in delivering natural and organic foods, but at wholesale prices. They recently closed at $111 million dollar series B, and have just passed the $120 million dollar annual revenue mark.
As a student of content and growth, I’ve long admired Thrive Market for the way they’ve used content as a dominant growth channel to achieve unusual, and positive, results.
I recently spoke to Thrive Market’s founder and co-CEO Gunnar Lovelace at a fireside event for 500 Startups in LA about his company’s content-fueled growth, and what content frontiers they’re exploring next.
Table of Contents
1. Introduction: Why content?
2. Thrive Market’s multi-channel content machine
3. How Thrive Market got started
4. “Mission-Driven” content and A-list distribution
5. Rejected by VCs, embraced by 6 million unique visitors
6. Brand content vs Direct Response
7. Should early-stage companies do content marketing?
8. Thrive’s Content Toolkit
9. “Peak Content” & what it means for growth
1. Why Content?
I recently joined Reforge to lead our marketing efforts. Because one of our biggest growth engines is content, that means we’ll be creating a lot of content over the next months — we hope it’s high-quality, thought provoking and teaches you something.
I’ve been creating content online for the past 9 years, starting with a personal blog in which I interviewed any entrepreneur I could get my hands on and published the interviews.
It’s evolved a lot since then, from my days writing launch sequences with Ramit at I Will Teach You to Be Rich to helping create a small content startup that was acquired two years later, to creating courses and daily emails at AppSumo, and most recently using content to attract both founders and LPs at 500 Startups.
In that time, I’ve learned two important lessons about content:
1. It’s not very easy, this content gig. And part of the reason why is because we’re called to be both enormously creative and highly structured. Without a mastery of those two extremes, you won’t succeed. You’ll be talking to the crickets.
2. Most of us make the mistake of conflating content marketing with blogging.
In reality, content is anything and everything we can read, see, hear, watch, or experience live. In a sense, everything is content and that is both exciting and overwhelming to the point of paralysis.
So, in the following series, and as part of my own personal journey to learn continuously (the curve of true expert status is an asymptote), I’ll be looking at living case studies of companies that are innovating, if not mastering, the intersection of content and growth.
I hope this is useful to you, and that we can learn some more lessons together.
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In August I published an essay that outlined some of the non-blog ways you can put content to work.
Each of the 19 examples I presented is just a single tactical arm of a bigger content strategy that only a few companies are executing really well. But, there’s nothing more useful than looking at some living case studies of content in action.
1. Thrive Market's Multi-channel Content Machine
Thrive Market is a subscription e-commerce business that specializes in delivering natural and organic foods, but at wholesale prices. They recently closed at $111 million dollar series B, and have just passed the $120 million dollar annual revenue mark.
Thrive has over 300k paying members on a $60 monthly membership and it's unique because it’s also a mission-driven business that launched with a stable of strategic health celebrity investors ranging from Deepak Chopra to Jillian Michaels to Molly Sims, all the way to influential bloggers like Wellness Mama.
Initially rejected by 50 VC firms, it’s a business seeded by content marketing, not by paid acquisition.
Content continues to drive the company’s reach and revenue through two primary content growth loops, as illustrated below.
We’ll talk more about Direct Response Content versus Brand Content later.
For now, it’s useful to note that the real power of the Direct Response loop is in Steps 1 through 3.
Content created and distributed by people who already have a strong existing relationship with their audiences -- not by a still unknown and faceless "Brand" -- is much more compelling and converting than company-generated content alone.
Thus, Steps 1 through 3 in the Direct Response loop are what make the subsequent conversion steps significantly more effective than in a brand-only loop.
While Thrive Market has mastered these critical early steps in their content loop, this area is exactly where many businesses doing "content marketing" struggle the most. It's not that content doesn't work, it's rather that execution on the early steps isn't strong enough to support the selling "ask" of the later steps. Let’s learn more.
3. How Thrive Market Got Started
Thrive Market was born from Gunnar Lovelace’ working class upbringing with a single mom in a Latino immigrant family. Seeing her work hard to make healthy choices for her kids inspired him as he developed his entrepreneurial career.
Lovelace had been going to natural product expos for about 15 years. Over those many visits, he became friends with the CEOs of the business on exhibition. It was a category that he had been personally passionate about for a long time, he had an innate interest in media, and as he began to think about how he could bring together business technology, media and health, Thrive Market was born.
4. Mission-Driven Content & A-list Distribution
What struck me as unique about Thrive Market is that it’s not only a company with ambitious revenue goals (comparing yourself to Amazon and Whole Foods -- but even better -- is a big thing to say), but also that it’s unapologetically mission-driven.
The company is vocal about its stance on food and income-based access. Few other for-profit organizations take on social benefit endeavors as anything more than a superficial marketing initiative.
But I have nothing against marketing initiatives, whether they’re superficial or otherwise. Everyone has something to sell. Even if you’re not in sales or in a for-profit sector, you still have to sell your ideas.
Under Thrive’s model, customers buy healthier foods at the same price as conventional equivalents. (They don’t sell Doritos, but they do sell these.)
In other words, they sell everything that you would get at a health food store at 25% to 50% off, direct to consumer, with free shipping.
In exchange, they charge a $60 annual membership fee and make money on the membership rather than on the e-commerce transactions themselves.
But the purchase savings wasn’t enough to answer the “access to healthy food” question. Given Lovelace’ personal experience growing up and the goal of their business to “make healthy living affordable and accessible to everybody,” they decided that if you couldn't afford the $60 membership, they would get you one anyway: for every paid membership they give a membership away to a low-income family.
The company also recently ran a campaign to get food stamps online (currently you can only use EBT cards in person at physical locations whether that’s a supermarket or a farmers’ market).
“We used a lot of our content marketing strategies and influencers around this. Food stamps are an $83 billion program that affects 46 million Americans,” explained Lovelace.
Three and a half months ago, the company launched a petition to bring food stamps online.
“We leveraged content marketing, our influencers for added distribution, and ended up generating over 310,000 signatures, hundreds of millions of media impressions, and letters of support from senators and congressional representatives.”
Last month, the USDA announced a pilot program to bring food stamps online. Admittedly, there was already vague language in the 2014 Farm Bill that hinted that at online transactions for recipients of food benefits, but nothing had come of it till the push from Thrive and the companies that joined alongside it.
What’s interesting about this isn’t just that it feels good and it works to further the mission of “more healthy food in more places regardless of your neighborhood rating or your proximity to Whole Foods.”
It also drives growth by motivating celebrities and web influencers to create and, more importantly, distribute content that functions as performance marketing for Thrive. (Imagine those backlinks!)
A-list influencers are likely out of most companies’ price range (even venture backed ones like Thrive), so the challenge is incentive and alignment.
When your brand feels like a reflection of their own values, of their own brand, then powerful players become more willing messengers.
5. Rejected by VCs, Embraced by 6 Million Unique Visitors
Thrive Market was rejected by over 50 VC firms during their LA, San Francisco, New York fundraising roadshow.
In the meantime, the co-founders self-funded the business operating out of Lovelace’ house.
“While that was obviously a pain, it was actually the best thing that happened to us because it forced us to double down on our original intent of influencer marketing and content.”
They ended up bringing in 200 influencers, bloggers, celebrities as equity-holding investors in the business; the first $10 million they raised came from these “strategic investors.”
“The VCs would say to us, why don’t you just go to Whole Foods? They didn't understand the problem or the need for a solution.
On the flip side, we had bloggers like Wellness Mama. At the time, she was a 29 year old mom from Kentucky that also happens to get six million unique visitors a month to her blog. She's in the business of sharing healthy information with our audiences.
She hears from her community “We want to live a lifestyle but we can't afford to do it or we're not near a health food store” and so what we offered made sense to her.
By being forced to capitalize the business in a very unusual way, it caused us to become very good at content and it caused us to develop a competency in content as marketing and marketing as content.”
6. Brand Content vs. Direct Response
I mentioned earlier that one of the greatest challenges with using content for growth is the receding borders of what “content” means. You can be both infinitely creative and, by the same token, infinitely random. Random usually doesn’t hit the numbers.
Instead, it’s critical to break down down “content” into its sub-categories, by intended performance.
At Thrive Market, the team looks at content in terms of two major distinctions: brand content and DR (direct response) content.
What falls into each bucket may surprise you.
To the Thrive team, brand content includes their “content commerce” blog articles that are integrated with purchasing, or things that are shared on their popular social media channels.
“Brand content does drive purchasing behavior, but it's more of an ecosystem play that helps us become synonymous with the lifestyle of healthy living.”
On the direct response side, the company employs myriad strategies and tactics that include leveraging influencers to share content with their audiences or creating recipes and DIY content that leads to specific type of funnel that leads people to a purchase experience.
The difference between brand content and direct response content is in the funnel, not in how it looks to the consumer:
Whereas a piece of brand content might be an interesting update or recipe shared on Facebook or on the Thrive Market blog, a direct response piece will designed specifically to acquire a user into an onboarding funnel -- for example, a course or a free product offer that opts you onto one of their AI-driven email sub-lists that artfully, but assertively, leads you towards subscription.
1. From this email:
2. To this landing page (note the custom-written long-form copy):
3. To this cart reminder a few hours later:
4. To this reminder the next day:
In my own journey with content, I’ve come to think of this distinction as Communicating versus Collecting.
Initially, it might be unclear what a piece of content is meant for, and often it’s a hybrid of both, but the real giveaway is in the call-to-action -- where are you meant to go after you’re all warmed up by that piece of content?
This is also a useful framework for analyzing whether a certain platform, or individual messenger, fits into your content strategy:
Are they helping you more with Communicating? Or with Collecting?
My own experience had previously been biased towards Collecting in such direct-response heavy businesses like I Will Teach You To Be Rich and AppSumo. At 500, I struggled to find purpose in my content, until I realized that brand content was just as important, if not more so, than direct response.
At 500, we grew our email list 4X thanks to content and collectors, but getting our brand in front of the right potential investors at the right time in the right way, could far outweigh any number of emails collected with a given piece.
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7. Should Early-Stage Companies Do Content Marketing?
The sage advice goes: if you’re an early stage entrepreneur, focus on the acquisition side. You have to get people to show up before you can worry about converting them or retaining them.
In the early days, and with limited time and resources, founding teams should focus on acquisition-oriented content that has measurable and testable steps that you can set up and evaluate quickly.
Thrive Market is busy building an ecosystem and a brand orientation that’s a valuable long term play for a company that hopes to take on the biggest players in the space.
But, in practical terms, the company didn't launch its blog or any other brand content for the first nine months after launching their core e-commerce product.
Instead, in that time, they did nine months of intensive, acquisition-focused content marketing created by and distributed through their blogger-influencer network (some affiliates, others strategic investors in the business).
The name of the game was email acquisition, and a blogger getting 6 million uniques a month with a close relationship with her audience, was much better suited to such a task than a friendly-but-faceless company brand.
That’s not to say it was just fuzzy, feel-good “influencer marketing” without hard metrics to aim for.
“In terms of paid versus organic, on the one side you have classic direct response, paid media strategies which leverage platforms like Facebook or Google or others. But when cash is scarce, you may not be able to take full advantage of those platforms.
I mentioned that we had great success with a broad network of influencers who supported us. These supporters were incentivized by other things besides being paid on flat fees. This gave us an opportunity to grow and acquire without the cash that paid marketing would normally need, even though it is technically paid marketing on a performance basis. It’s important to note that even within paid marketing, we break that up into the two sub-categories of traditional paid media and performance based marketing.
In our case, the success of the business came from a tremendous investment in developing performance based marketing channels.”
8. Thrive Market's Content Toolkit
Everyone’s favorite question tends to be around tools. Despite everything we know about growth being a process not just tactics, we still end up thinking that having the right toolkit might be a decent stand-in for having a functional strategy.
Still, I understand. Once you know what you’re doing (or have a working hypothesis) the right tools versus the wrong ones can make a meaningful difference in execution and velocity.
So, to appease the toolkit gods, I asked Lovelace what they’re currently using at Thrive for content. This short list should also give you an idea of what “content” means beyond blogging.
We build most of our landing pages in house.
We recently started using a tool called FunnelEnvy which allows for rapid funnel development.
We use another tool called Qubit, which integrates with our e-commerce platform. It’s not perfect, but it allows us to do different types of behavioral triggers and split testing.
Email marketing stack?
On the mail delivery side, we love SailThru, which has been fantastic as an ISP. They have an AI engine called Horizon which allows for easy and sophisticated personalization of content. As soon as you start interacting with our content, SailThru and Horizon recognize what you're doing. When we implemented Horizon we saw jumps of 50% to 100% in engagement just through that one piece alone.
9. "Peak Content" and What it Means for Growth
Peak content was a term coined by Erica Berger, a former journalist at The Economist, to describe the super-abundance in the content marketplace that’s making it challenging for journalists as well as marketers to cut through the noise.
There are also the staggering stats that 400 hours of video are being uploaded to Youtube every minute, billions of pieces shared over social media every day, and even traditional newspapers like the WSJ and the NYT who have more than doubled their volume in less than a decade.
Rand Fishkin, like a good content marketer, also wrote about it in terms of what it means for marketers.
For a business built on content, and whose growth is driven by its further creation and distribution, I wanted to know what Peak Content could mean for Thrive.
“I would agree with the assessment on the journalistic side, I think that it's a very unknown time in terms of what happens to journalism and a lot of the traditional media channels. I don't buy that on the commerce side or even the influencer or artist side.
Greatness rises to the top and the beauty of the internet is that we can have direct-to-consumer conversations at scale very quickly. This gives things that interesting and unique a rapid way to rise to the top.
I mentioned before that brand and and direct response are separate. Yet, we're constantly trying to make them one and the same thing.
For us as a business, that's a holy grail if we can get a beautiful branded content to perform as well as click-oriented direct response content. If we can do that, then we've unlocked a huge potential for the business.
Finally, when you ask about content and growth, we are not experts at it -- no one is. It’s still a wild west, and I'm constantly educating myself. Just yesterday I found a new funnel that one of our blogger investors developed. He’s generating 300,000 emails a month just for this quirky little funnel that he developed.
The exciting takeaway for people like us is that if you're nimble, creative, and willing to test, you can discover tremendous advantages over big institutional players that either are scared about covering their brand presence or just don't understand and can't move quick enough to keep up.
Sure there's just a lot of chaos and upheaval in the 21st century media-economy space, but I think we can leverage that to launch our businesses and very efficient ways at scale.
We live in a highly distributed 21st century economy where the brands that we build have to flex for the channel that they're in. To the extent that we can understand the voices of people who’ve already built their audience, and the dynamics of the channel that they are we are operating in, and leverage it a diverse portfolio, it gives us a lot of power.
The era of a monolithic brand is dead.”
If you read this far, then you must be interested in this stuff :)
I’ll be sharing more thoughts on content and growth in the coming weeks.
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