When Shane Parrish started his blog in July 2009, with a post entitled, “The Present Mess,” he wanted to collect his thoughts and lessons from self-teaching. He was dissatisfied with his MBA education, so he spent less time doing homework and more of it reading academic journals, books, and all types of literature. Farnam Street was originally known as 68131.blogger.com — a URL based on Berkshire Hathaway’s zip code. Parrish hadn’t meant for other people to see it, so he saw no need to make it memorable.
“It was all about chronicling my personal journey of learning and life, and it’s become so much more,” he said. “A lot of people think that we’ve set out to do exactly what we’ve done today, but that isn’t the case at all.”
Parrish eventually changed the name to Farnam Street (after Berkshire Hathaway’s street address), and moved his blog to WordPress. Farnam Street unexpectedly broke out of obscurity in 2013, and Parrish stumbled upon the opportunity to explore all the topics he was curious about. In order to do so, he would have to grow Farnam Street less as an archive and more as a business with a loyal audience. Today, Parrish still reads, writes, and synthesizes information like he used to, but he has hired a full-time writer to share some editorial control. Parrish allocates more of his time to travelling, speaking, and serving as a brand ambassador for Farnam Street and fostering the community.
Building a successful online community around a blog might sound simple enough, but it has not been an easy task. Parrish saw the flaws in the large-scale pageview economy, built on advertising and clickbait headlines. He summarized what he observed in a post entitled, “10 Ways to Get Smarter, Be More Productive, and Do Everything with Zero Effort”. To Parrish, “The best way to be more productive, generally speaking, is to stop clicking on headlines like this one.”
In the long run, blogs — and really, media companies of any size — will not build a strong, loyal core of readers purely chasing pageviews. “They’re not building any sustainable relationships with people. [The relationship] becomes transitory and transactional, instead of based on reciprocation, value, and trust,” Parrish said. “There is the value you create and the value you capture. Most people focus on the value they capture and not the value they create.”
Since the mass adoption of the internet, most media companies have struggled with metrics and building loyal audiences. In a conversation with Felix Salmon, Buzzfeed founder and former co-founder of Huffington Post Jonah Peretti observed that everyone is looking for that “God metric” of content and attempting to cross thresholds of higher shares, unique hits, and more time spent on a website. “I love metrics and I love thinking about optimization, but I think that the optimal state is being slightly suboptimal because as soon as you try to actually optimize, particularly for a single metric, you end up finding that the best way to optimize for that metric ends up perverting the metric and making the metric mean the opposite of what it used to mean.”
Parrish understood this. He explored alternative models of revenue that wouldn’t make Farnam Street’s business model driven purely by pageviews. He would still keep track of overall pageviews (over a million pageviews, between 350,000 — 700,000 unique visitors per month), but he also kept other heuristics in mind. For example, with a mailing list of around 80,000 free subscribers at the time of writing, the Farnam Street Newsletter consistently reaches more than 50 per cent open rate — making for a higher effective number of readers than standard mailing lists with 250,000 subscribers. Parrish’s goal was for Farnam Street’s products to hit a 90 per cent renewal rate amongst the membership program.
“The membership program is going well, I think that [it’s] ultimately something that we want to keep a close eye on to see what kind of value we can deliver for members,” said Parrish. “One of the things that we make explicit is that by purchasing a membership on the website, you’re also supporting free content.” The membership program was started last year, so only time will confirm whether or not he succeeded.
“You are supporting better free content for everybody, not just yourself,” Parrish said about the membership program. “The type of people we’re trying to collect as readers tend to be focused on giving back. They tend to be focused on supporting something that they love. I think we’re looking for the same thing in sponsors.”
In 2013, The Cook & Bynum Fund came on as Farnam Street’s first sponsor. As it turned out, the Cook & Bynum Fund were readers of Farnam Street, and discovered the opportunity to hold a nine-month sponsorship with the site through one of Parrish’s tweets. The sponsorship enabled Parrish to expand beyond Amazon Affiliates, his sole source of revenue at the time (which covered Farnam Street’s operating costs).
Since then, Parrish has had no problems getting interest from sponsors. Today, he is stringent with evaluating sponsors and making sure they’re a fit for readers. Sponsorship has grown along with the site.
Parrish also launched Farnam Street’s first product, a course called, “How to Read a Book,” in early 2016. So far, the return rate for Farnam Street’s first-ever “definitive course to reading for insight and understanding”, is below 4 per cent, falling well under the industry’s average return rate of 20 to 30 per cent. Parrish has been adamant on taking a different route from the typical information product. Rather than churning readers and using advertising to find new ones, he intends to retain as many core readers as possible and grow organically. “[The course’s low return rate] tells me that we’re doing something that helps people, that’s lasting [and] that’s meaningful,” Parrish said. “They’re satisfied that what we’re promising is what we’re delivering.”
Parrish dived deeper into revenue, highlighting quality of revenue. “Running an event is a great source of revenue, but it also comes with a lot of expenses,” he said. “The operating costs for the site, the books, and the travel, and the conferences, are way more than people would ever expect” he said. “It’s not cheap to hire people, it’s not cheap to travel places. We did a think week event in Hawaii, and this is an example of an event that we lost money on.”
“But that was a great experience, a phenomenal experience, for the people that were involved, something new and something that had never been done before,” he continued. “We want to experiment a little more with stuff like that.”
Parrish’s passion for experimentation is rooted in his care for Farnam Street’s readers, in which he is unwilling to compromise. Parrish still makes money from advising and speaking, but has yet to personally profit from Farnam Street. “In 2014, I think we actually lost money. In 2015, we didn’t lose money, which was good,” he laughed. “I will say that I’ve never actually personally made a penny off Farnam Street. It’s all been reinvested back into content, experience, trying new things, and that’s the way that hopefully I foresee the future.”
“We’re not as worried about keeping the lights on now, but I don’t want to leave people with the wrong impression,” Parrish said. “We’re not hurting, but there’s a different reality now. We have full-time employees who depend on the success of Farnam Street. With that comes responsibility on my part, owning and running a company, to make sure that they can pay their bills and don’t ever have to worry about next week’s payroll. I think that’s important.”
One of the most interesting, and crucial, differences in smaller, independent, companies like Farnam Street is their ability to not compromise their quality and integrity. Instead, they stand to generate a reasonable stream of revenue, and still profit off the experience of the journey. “It’s a work in progress,” Parrish said. “We’re adapting the business model to what we think works best. The world will change and we’re pragmatic about it. We’re not against making money but we want to ensure that we’re capturing only a small part of the value we create.”
Farnam Street, as a company, is Parrish’s experiment into living a meaningful life in changing times and circumstances. Given that he has taken on the jaunt for almost seven years now, Parrish has proven longevity is met in part with patience and planning, but also with passion. Not bad for a blog that started off as a zip code.
Image: The Leeds Library by Michael D Beckwith.