Memo: Hot Luggage Summer

Away is about to launch a travel accessories capsule in the midst of lingering pandemic. Is co-founder Jen Rubio on to something? The answer lies in the macroeconomic statistics.

On March 16, 2020, domestic air travel reached a notable point in its crash: slow at first, and then all at once. Daily traveler throughput fell to under 1 million. Just a month later and certain days saw only 90,000 Americans travel the country’s airports. Over a year later, as travel returns, so will the brands, marketplaces, and other businesses that serve the industry. It’s shaping up to become a hot luggage summer.

One day last April at Chicago’s Midway Airport, I stood in a terminal that spanned three football fields. I was an hour early to my evening flight and the only customer in the entire terminal. A month later, I returned. Little had changed as the national throughput number climbed to just 190,477. That number wouldn’t return to 1 million or more until Thanksgiving 2020.

Over the pandemic period of March 2020 and March 2021, I safely flew nearly 40 flights between cities like New York, Miami, Chicago, Austin, San Francisco, and Los Angeles. During the months of April through June, it seemed as though air travel may never rebound to its former self. According to Rafat Ali, the founder and CEO of Skift, there will be lingering reminders of the pandemic in the air travel industry well into 2022. Ali:

Even when we’re vaccinated to a certain point, even when we reach herd immunity, we will be wearing masks [on airplanes]. We can expect that this will last for at least through the year.

Even so, the return of domestic air travel seems to be on its way. In March 2021, a group of six entrepreneurs recently organized a business retreat. The air travel date was planned for June 16 and the destination was set for Montauk, New York. In the month of June, there are close to zero available properties on Airbnb and local fixture Gurney’s Montauk Resort is at capacity. These weren’t the only signs of density in New York’s Long Island region. The data proves that domestic travel is in for a leisure boom. Ali later added:

Domestic is in for a leisure boom. Summer is going to be frantic.

The numbers add up. Domestic travel is already back to 60% of 2019’s numbers and hotel occupancy has finally exceeded 60% for the first time since March 2020. Kayak searches are rising 27% week-over-week. Short term rentals are facing a shortage in availability in many of the travel hotspots around the country. Airbnb is reflecting the highest property rental prices in the company’s history. Ali noted that both the United States and the United Kingdom have done well with vaccination rollouts. He anticipates a travel corridor between the two countries. With travel data beginning to reflect a hopeful conclusion to the global pandemic, there is one company who may serve as the bellwether.

Commerce Follows Travel

In February of 2020, Away‘s website was ranked 16,500 on the internet according to the web traffic that it received. By July, that number fell to a ranking of 52,836, but climbed to a hopeful ranking of 24,882 around Christmas thanks to savvy marketing and promotion by new CEO Jen Rubio and her team. Today, Away has steadied around a 30,000 ranking according to data provided to us by Charm.io, representing a 20% drop in web traffic over the previous three months. This may be a lot of information to chew on but consider the implications: Away is perhaps the largest luggage seller in the United States by gross merchandising volume (though Samsonite likely sells more units of luggage and accessories).

Away’s trailing 12 months. More data at 2pml.com/dnvb

In similar fashion, German luggage manufacturer (and LVMH subsidiary) Rimowa followed a nearly identical trajectory of digital foot traffic, though its volume does not yet compare to Away’s and its target market differs. In the conversation with Rafat Ali, we compared notes between the industry-at-large and the consumer companies impacted by the overarching trends. Thanks to a once in a one-hundred year event, Away’s traffic fell.

But given its current position as a market leader, its social reach, employee count, and relative sales metrics (see more here: 2pml.com/dnvb), 2021 may be Away’s year to far-exceed even its highest former expectations.

Prior to the COVID-19 crisis, the travel brand grossed well into the nine-figures in annual revenue. With the decision to release Away’s new travel collection, Rubio’s marketing and consumer investment in this reemergence of domestic travel is significant enough of a decision to serve as a public interpretation of the positive private industry data mentioned above. The travel industry’s trends more than justify her decision to bet on this summer. Like Peloton, Mirror, Tonal, and Rogue dominated the direct-to-consumer fitness narratives of the previous year, I suspect that Away (and other travel consumer companies) will have similar trajectory narratives, finding their way to the top 100 fastest growing digitally native brands that 2PM tracks.

And if so, we may see the public offering that the team and its investors have long-earned. Either way, domestic air travel and the industries that support it are on their way to fuller terminals. That means more carry-ons, more Airbnbs, and everything in between for this hot luggage summer.

By Web Smith | Editor: Hilary Milnes | Art: Alex Remy

Memo: The Pompliano Skillset

The power of third-party data has diminished. With more restrictions, data collected from external sources with no connection to the consumer is becoming harder to acquire. Newsletter audiences may fill that void.

The importance of first-party identifiers has steadily risen over the years as web browsers evolved to emphasize consumer privacy. Then, Apple rolled out an iOS 14 update that requires all apps to earn explicit permission from users to track their data, bringing marketers’ fears to a fever pitch. IDFA, or identifiers for advertisers, are used to measure and target advertising efficacy on a user level across any mobile device. Marketing performance agencies like Tinuiti estimate that IDFA will drop from 70% to 10% in light of Apple’s new privacy measures.

In a January interview with trade publication Luxury Daily, Tinuiti’s senior director of mobile app strategy explained:

Things aren’t going to fully go away; things are just going to be powered a lot differently. I think it really just increases the need for a strong first-party data strategy and infrastructure.

First-party data will define the next wave of advertising and sales. American businesses are now in a race: They’ll build, acquire, or market to the audiences that have it. The independent media industry is quick to discuss outcomes but rarely do we dissect the early steps. As more pursue first-party data, audience development will become one of the most coveted skills on the market.

To acquire targeted customers, first-party audiences are replacing third-party collections. An early indicator of things to come: Over the past six months, two major newsletters were acquired by much larger companies.

Business Insider’s parent company acquired a controlling stake of Morning Brew in an all-cash deal. Just five months later, Hubspot acquired The Hustle, a smaller competitor to Morning Brew. The value of that acquisition has been disputed, but the impact on Hubspot’s marketing operation is likely invaluable. Both launched in 2015 and amassed large, dueling audiences of loyal fans. Two of the best sources of first-party data out there were acquired leading up to the iOS 14 update due to impact advertisers. But while we spend plenty of time discussing the acquisitions or revenues of these businesses, their ideals of scale may be more instructive.

We overestimate the value of distribution and underestimate the value of quality. Before Morning Brew maintained an audience of millions, its content captivated thousands. Over six years of independence, the quality and consistency of the content developed and retained the growing audience. I studied the work of Anthony Pompliano, owner of the Pomp Letter.

Everyone focuses on distribution because that’s the easiest thing to see. Distribution only gets them to the front door; the quality makes them stick around. The key is to write great content consistently. In a conversation with Alex Lieberman, CEO of Morning Brew, he suggested the same:

Very simply, when we started the Brew all we focused on was a three-step process to turn newsletter-as-a-hobby into newsletter-as-a-business: Create the best daily business read for millennials bar none, get the right eyeballs in front of that daily read, and convince brands to tell their story in front of these quality eyeballs.

Lieberman, along with co-founder Austin Rief and team, focused on quality and impact before monetization. I call this “the ideals of scale,” and it contends with many of the trends that we see today in the creator economy. We see Bleeple’s $69 million NFT sale but we forget that he drew daily for five years. We see Li Jin sell a .gif for $25,000 but we forget that she researched and wrote incessantly for years, quietly building a reputation for her work. To explore this topic further, I spoke with the co-chairs of one of the most successful families in newsletter audience development: Anthony Pompliano and Polina Marinova Pompliano.

The Skillset: Ideals of Scale

The shift away from third-party data has not been a complete surprise. Some entrepreneurs have long anticipated the rising value of niche audience development. In a recent thread by the former president of The Hustle, Adam Ryan riffed on one of the strategies of Anthony Pompliano, an entrepreneur and investor with a penchant for Bitcoin, debate, and audience development. Ryan’s thread on Anthony began:

Newsletters are the highway of a business. [1]

The senior “Pomp” Twitter personality would not agree with Ryan’s assessment. Two of his younger brothers have joined Twitter in the previous months: John and Joe. Joe seems to be following the Twitter-turned-newsletter strategy that has worked so well for Anthony:

  • Twitter: produce meaningful and consistent content
  • Substack: drive readers elsewhere to explore the depth of your thinking
  • Monetization: develop value-add strategies in line with readership expectations

Newsletters aren’t the highway for the Pompliano family. Rather, the highway is a combination of quality and consistency served through Twitter. Anthony, Polina, and Joe are in the business of connecting with like-minded people. They are not in the content business. They are in the “building companies and investing in companies” business. The way to build companies today is to build audiences first.

The first-party approach to business development is alive and well. Joe Pompliano has a thriving media operation at Huddle Up, where he writes on the business of sports. Despite launching his Twitter account and newsletter in the summer of 2020 (amassing 170,000 Twitter followers), Joe is already a partner at Roundhill Investment’s Sports MVP ETF, an innovative means of monetizing his passionate audience of readers. He recently told Forbes:

Professional sports teams and leagues are premium, scarce assets that have a strong record of value appreciation. [2]

In short, Joe launched a monetization strategy in line with readership expectations. Similarly, Anthony has parlayed his near-700,000 Twitter following and his Pomp Letter media brand into a crypto jobs board, a personal investment vehicle (80% crypto investments), a podcast, and the “No. 1 technology newsletter on Substack,” according to Anthony. Twitter may be the highway but quality, consistency, and authenticity form the engine.

No one understands this more thoroughly than Anthony’s much better half, Polina Marinova Pompliano, who left Fortune Magazine in 2020 after three years of building her personal media brand, also on Substack.

With nearly 80,000 followers on Twitter, Polina downplayed the platform as a major factor in the success of The Profile, where she’s covered luminaries such as: Dwayne “The Rock” Johnson, David Goggins, Kris Jenner, Tyler Perry, and Guy Raz. Her husband Anthony cites her as the entrepreneurial family’s “north star” of content, quality, and consistency, making sure to remind me that she has yet to miss a day’s assignment.

When I spoke to her separately she contended that Twitter was part of her success but that a number of other growth channels also contributed to it. Essentially, she is hyper-focused on good content and consistency and has been since 2017. According to her, there is no formula beyond that.

Quality, Quality, Quality

In conversation, Anthony Pompliano denied the idea that he is at the center of his family’s content flywheel, a view that Polina shares. As younger Pompliano brother was developing his audience early on, you’d find the occasional barb made about Joe’s prolific Twitter thread styling or his reliance on his brother’s cosign. Anthony would point to the co-sign of others like Darren Rovell as examples of Joe’s inevitability.

Like Polina’s success, Anthony also credits Joe’s explosion in popularity to quality and time. They work to review content together, patterning the work for audience and algorithms.

In effect, the family often works to structure the content of tweets for the “probability of reach” with the hope that the “audience and the algorithm take over.” Anthony credits the family’s success to three daily actions: they cheer, they help (or amplify), and they hold one another accountable to their schedules and the quality of the work. But while content is what they’re known for, it seems to be the tip of the iceberg for each. Anthony has repeatedly stated that the content business is the first step for Joe, John, and himself.

The creator economy would be better served if mindset changed from “I am a content creator” to “I am an entrepreneur,” he says. This pressure to produce content at the highest level, coupled with authenticity, seems to be the approach that produces a winning combination. In our conversations over the years, he has cited the need to be “super authentic,” a comment that he left in our podcast conversations. This is true, if someone doesn’t enjoy the work, you can see right through it.

There are dozens of high-potential, independent media operators with stories similar to those above. While the strategies will be different between creators, they will share three similarities: quality, consistency, and authenticity. Interested acquisition partners may have to rely on the dozens of other newsletter targets who adopted similar strategies to the Pomplianos.

The strategy in brief: Twitter is the highway and newsletters are the path from “off-ramp to the neighborhood.” And once those neighborly relationships form, monetization amplifies the operation – financing stronger, more authentic, and meaningful work over time. I share this strategy, though not to their degree of success.

For enterprises seeking to circumvent third-party data shortages, the first-party data proffered by niche audience development will grow in popularity.

As the need for first-party data continues to grow, companies will look to entrepreneurial publishers like Polina, Anthony, and Joe for acquisition or partnership. But before I could finish the question to the eldest Pompliano brother, he made it clear. The Pomp family isn’t looking to sell a thing. Anthony has often stated that freedom is priceless to them. I doubt he’ll ever sell his assets. He’s been known to hodl.

By Web Smith | Editor: Hilary Milnes | Art: Alex Remy

Additional listening: Joe Pompliano (2PM Audio), Anthony Pompliano (2PM Audio)

Open Letter: The Downside And The Up

The newsletter began as a hobby and became something greater. I’d do it for free if I could.

My intentional attempts at entrepreneurship were peppered with failure. This one was unintentional – it just sort of happened. For that reason, maybe it would work.

2PM was born out of the desire to understand commerce and how it interacted with other industries and professions. The concept was simple: Understand it well enough to anticipate how it will impact our markets over time. Arguably, there is no greater economic force, art form, or science today than commerce. Our world is being redefined by the intersections of commerce, technology, art, media, and economic policy. NFTs anyone?

Web Smith on Twitter: “Deep generalists are thriving and specialists are working to understand why art, science, media, finance, economic theory, commerce, religion, and software engineering are suddenly converging. / Twitter”

Deep generalists are thriving and specialists are working to understand why art, science, media, finance, economic theory, commerce, religion, and software engineering are suddenly converging.

The goal of the newsletter was to connect ideas and foster new ones. Many readers chime in happy with their heightened ability to replace abstract thoughts with actionable, practical strategy. The niche audience of 2PM is the deep generalist: The type of “beginner mind” who understands the value of finding meaningful connections between unrelated ideas (also called apophenia). At first, I could only find 12 of you who were interested. I sent letter No. 1 to each of them on March 22, 2016.

Today’s essay isn’t about growth hacks, monetization, or the joys of the creator-market fit. Rather, it’s about the mental and emotional cost of doing business as a solo creator.

Nearly two years after I sent the first newsletter in 2016, I still had a day job. I’d just driven my weekly three hours to Pittsburgh for an urgent meeting. My right leg was in a full-length cast following a catastrophic injury and a reconstructive surgery, and had to be propped in the passenger seat for the ride. At the meeting, I was told that my salary would be cut to 50% for the foreseeable future. In an instant, $120,000 became $60,000. The company was struggling and measures needed to be taken. I certainly understood this and I didn’t fight it. The acute problem was that I was on the hook for $37,000 in medical bills.

I was at a turning point. By then, I’d emailed over 200 free issues of 2PM. The writing had improved, the following slowly grew and the production process tightened with repetition. The list was peppered with industry leaders who would have never given me the time of day. Letting 2PM die wasn’t an option. In some ways, it was my best shot at really doing what I wanted: Make an impact on the industry that I love.

I made one call to a former boss of mine named Eric Yang, the founder of Gear Patrol. Over my time there he beat the Japanese concept of kaizen into my consciousness: “continuous improvement.” I knew that he’d have a practical take. His words continue to resonate:

You know that your head is with 2PM. Go all in.

My previous attempt at entrepreneurship had nearly bankrupted me and I had $17,000 in my savings account. While paltry, that figure represented tremendous progress. This made the next decision symbolic in ways. My intentional attempts at entrepreneurship were peppered with failure. This one was unintentional – it just sort of happened. For that reason –  maybe it would work, I thought.

I invested in the technical replatforming of 2PM.inc. The new stack was hosted by WordPress and I selected Mailchimp for email distribution. (Substack hadn’t yet made the waves that it is known for today.) For nearly 10 days straight, and in my spare time, I transferred 200+ email posts to the new site’s archives. A colleague of mine designed the 2PM mark and assets for $4,000. The rest of the savings went to subscription software, additional build outs, and legal documents. At the end, I had $1,026 remaining. It wouldn’t even cover our mortgage. I incorporated, I recruited the services of Memberful, and then I sent the monetization announcement.

The first issue on Mailchimp (No. 252) featured the original, cookie-cutter artwork. By No. 283, my coworker delivered on the brand standards, and the 2PM that you know today was born. By then, I felt that I’d done enough to prepare for the paid membership announcement. The stakes couldn’t have been higher. At my day job, salary cuts had escalated to company-wide layoffs, and I had about four weeks of runway. As a father of two, with depleted savings, I had a newsletter, a self-designed website, and 18,000 Twitter followers to promote them both. I remember looking at my then 10-year-old daughter and promising her that everything was okay. I was saying it for myself. At the time, it was not okay.

But there’s no way else to say it: 2PM actually saved us.

The first member essay published on February 23, 2018, two years after the initial newsletter reached inboxes. I published a short thesis on an idea that I coined Linear Commerce. Within a few weeks, I was covering costs and reinvesting what I could into further professionalizing the platform. By January 2019, I was able to host dinners and other gatherings. Meeting readers in real life became what drove me forward. And then, just one year later, a considerable part of 2PM’s growth engine, our monthly roundtable dinners, halted with the rest of the world’s meetings in February 2020.

Between February 2020 and today, the entire world changed. Customer acquisition strategies had to evolve with the constraints. Newsletters became an industry of its own thanks to Substack’s genius. Industry leaders The Hustle and Morning Brew exited. And outfits like Every, Not Boring, The Plug, and Trapital became forces in their own rights. The power of amateur-run media gave way to the professionalization of the industry. Readers began to expect perfection and consistency. With every letter, I sought to improve on the last. Today’s depth and quality of newsletter is representative of that commitment. But it comes at a cost.

Six amazing, dedicated, and consistently great part-time contractors assist in the creation of what you see. They are a cohesive unit. We’re honest with one another, and I am proud of the work environment. Each week, I read and curate over 40 articles. I write and publish 3,000 to 4,000 words. We send three letters. We manage a community of deep generalists. And with the help of 2PM’s crack team, we commit to 10-15 hours of weekly industry research that enables us to improve the reliability of our top databases. A DTC database that began with 700 cells is now a ranking system spanning 10,000 cells of constantly updating data.

With every email sent comes greater responsibility and greater feedback. Negative responses, trolls, and bad actors rise with every send. As more subscribers become paid members, the more I work to assure the quality of their monthly or annual investment into 2PM.

There is an unspoken truth. The intensity of five years of treading water, taking flight, and handling setbacks takes a toll on the soul. There is a mental and emotional weathering that begins to impact the people who matter most. If I struggle, the team around me is impacted. Over time, I’ve learned how to compartmentalize for their sake. A number of tough lessons litter that path.

If I had to do it again, I would have prioritized balance and superior communication. I would have spent more energy improving as a leader and less as a creator. I would have operationalized the company much faster. I would have delegated better, freeing myself to give more to the business owners and thinkers who email in with questions or requests.

And I would have found the time to take more breaks, at the cost of disgruntled emails or the loss of the precious momentum.

The creator economy needs a conversation around the pressures associated with the joys of the industry. The 2PM that I want to finish building is one that is even better every day, inside and out. What began as a hobby became my life’s professional pursuit. As more novice creators achieve the same, they will need support and empathy. The work is never as easy as it appears. Our oldest daughter was 10 years old when she nodded and gently replied to my promise that everything would be okay, saying “I know, Dad” as if promises always stick the landing. But for all of the strain that comes with building in public, it’s good to know that – at least for now – she was right.

By Web Smith

A special thank you to: Hilary, Andrew, Alex, Brad, Vincenzo, Joe, Katie, Grace, Meghan, and Tracey for your contributions to this first five years.