Workweek Raises $12.5 Million to Expand Into Professional Communities

Workweek, the creator-centric media company, has raised $12.5 million in a Series A round led by Next Coast Ventures to make a big push into niche professional communities.

But don’t suggest that this is a pivot because in CEO Adam Ryan’s words, this is exactly where Workweek intended to be when it launched. In an interview with A Media Operator, he said:

I wrote an 18-page memo when we launched Workweek, and it was shared with every internal hire [when they joined]. I read the intro of that memo back to them this week at our office site, and it sounds exactly like Workweek today. I said:

‘Every business decision today is influenced by content. This hasn’t changed in decades and won’t change for the future. What is changing is the power of individuals and the trust that they have. The modern way to influence business decisions is to intertwine individuals’ powerful personalities with their expertise through culturally relevant content.’

And then our business plan right after that, we had a little funnel and it said free, opt in, consumer paid, prosumer paid, professionally paid, and [had] podcasts, newsletters, merch, conferences, job placements, education programs, and then professionally paid was communities, tools and services and licenses. And what we’re doing is the exact same thing as that.

So, very much not a pivot, but instead, an evolution of the business that the founding team always intended on executing.

Previous investor LightShed Ventures returned in this round and David Rubenstein’s Declaration Capital also participated. While Ryan wouldn’t talk about valuation, he did say that, “most people give up 17-20% of a Series A, so we’re right in there.” That would imply a $62.5 million post-money valuation on the low end, though he wouldn’t confirm.

According to Ryan, this gives the company the runway it needs to invest heavily in the communities. “I think 30ish months is a good place to be between profitability and growth. We don’t want to go high burn, use it in 18 months. I don’t think it’s a good decision for our business,” he said. And while many founders might use this as an opportunity to derisk their personal portfolios and take some secondary, Ryan said, “I actually put more of my money into this round.”

That conviction could very well be due to the fact that the business appears to be hitting its stride after making some concrete decisions last year to trim expenses. As Ryan explained, “we’ve split the company into two divisions. We have our media division and our memberships division. And media is incredibly profitable. It continues to be 28-32% margins.”

But it wasn’t always the case. In November, Ryan talked about needing to narrow the focus of Workweek, so it let go of underperforming creators and now only has eight—a number that he is comfortable with for the time being. In that tweet, he said:

In 2022, we added a new creator every ~three weeks for five months. We also were launching new products and initiatives almost every other week. It was an insane pace. It’s a testament to our team’s work ethic and ability to pull this off.

That was untenable. My big criticism of Workweek when it launched was that it had spread itself far too thin with no real benefits of scale. At the time, I wrote:

This makes growth and advertising sales quite complicated. There are no benefits of scale here. On the growth side, you don’t benefit from one user liking multiple publications. And on the sales side, someone who specializes in selling healthcare ads may not have the same connections as someone who can sell media or fintech.

With a focus on fewer, more scalable creators, the team can dedicate more resources to what works, allowing it to generate the stronger margins on the media side. And yet, it’s still found a way to diversify. “Last year, we generated 35% of our revenue from non-ad sources,” Ryan said.

Ultra-niche professional communities as the model

Over the last couple of years, communities as a business model have become incredibly appealing. Not only does it generate recurring revenue, but if the community starts to take off, the members start to talk with each other versus the creator needing to consistently be the leader of all conversations—something I’ve even noticed happening a little more in the AMO Slack.

But a key part of making these work for Workweek is the ultra-niche nature of them. Take Safe Space, its community for HR professionals. The simple strategy would be to target any HR professional and let them join. However, what Ryan and team found was that not all HR professionals are created equal. He said:

There’s probably a category of HR people that the content is super relevant for and then there’s others that it’s less relevant for. And it doesn’t mean that they can’t read it or even can’t buy it [if they want]. But I don’t believe necessarily the content we have today for HR is what Fortune 500 HR professionals read. She [Hebba Youssef, the creator] tends to write about startup problems and what you have to do from dealing with CEO’s and founders.

And the same is true across any industry. In our conversation, Ryan and I talked about A Media Operator. While I might say that this is a publication for the media industry, the truth is, if Warner Bros. Discovery CEO, David Zaslav, decided to read AMO, he’d likely not find it very helpful. My niche within media is digital-first publications.

For Workweek, it helps to understand that these sub-niches exist within broader niches because it ensures that the flywheel of audience feedback is properly understood. “If someone reaches out and says that they hate the product, but they’re not the target audience, that’s okay. If you focus on the core group and don’t listen to anyone else, your sell-through rate’s better, your revenue is better, but most importantly, your product’s way better,” Ryan said.

And so far, the audience feels anything but hate for it. Although there are only 300+ people in the HR community—and under 1,000 across the two live communities today—the metrics are strong. “About 71% of members log in weekly,” Ryan said. He went on to explain:

The platform is really only meant to be used during our work week. Most people forget that’s our name. That’s why we’re here. We’re a workweek tool. Everything is around work. We are still tracking our DAU/MAU ratio on a seven-day basis, though. And that’s 45%.

But that first point about the work week is an important one. To calculate your DAU/MAU ratio, you divide the total number of daily active users by the total monthly active users and then multiply by 100. But if two of those days, the platform is intentionally unused—compared to, say, Instagram which would be used every day—it’s easy to see how the DAU/MAU would be compressed.

And Workweek is already finding that there is a core audience that is using the platform very regularly. “They really love it,” Ryan said.

The goal, in Ryan’s mind, is for these communities to become an always-open tab for the members. In a video announcing the new products, a user is shown closing every tab on their browser until they’re left with just Workweek’s community. For example, there’s a business intelligence and dashboarding tool in the HR community that allows members to connect their HR systems and see data points including their turnover ratio, headcount plan, etc.

“We have about 10% so far of users actually already utilizing the dashboarding tools and the HR tools that we have,” he said.

Using TAM to inform price

One potential criticism of Workweek’s membership business is the price. Safe Space is only $399, which is significantly cheaper than other communities. Take the Forbes Human Resources Council. This costs low-to-mid five figures for a membership.

But in Ryan’s mind, the lower price is a feature, not a bug.

We get to reuse 70% to 80% of this product every time [we launch a new community]; there’s an amortization across these. If someone tried to do this [for just] one, it would be incredibly expensive, time intensive, etc. There’s no really, like, compounding nature of that growth.

That’s just not a problem that we have to worry about as much as others. And because of that, we want to give that savings back to the user. Because we don’t have marketing costs, because we can spread these things out, we actually have an opportunity to create a much better business, a better product, and we’re passing that back to the user.

The other thing is that Workweek sees the membership to the community as only the first offering. Once a user is in, they anticipate launching additional upsell opportunities. He compared it to Shopify, which has a lower priced subscription offering, but then has additional down-funnel offerings as well.

But what Ryan also explained is that the total addressable market really impacts what the price should be. Board Room, its community for healthcare strategists, innovators, and investors, is $1,500. But that’s because there are only 30,000 total people who would make sense in that community. Compare that to HR, where there are potentially hundreds of thousands of prospective members. In Ryan’s mind, the addressable market—and Workweek’s ability to capture a large percentage of that—informs the price for the subscription.

It’s about marketing now

With this round of fundraising, Ryan anticipates launching another four communities before the end of the year. And for each community going forward, the price will look different depending on that TAM.

With these products in the world, the goal is to now start marketing them appropriately, something the team hasn’t done at all.

We don’t have a marketing person. We haven’t spent a dollar on marketing. We haven’t started marketing to specific audience segments. We only just launched a community roundup newsletter to the free audience. So, there’s a lot of work to do. But the conversion rate for the core ICP we’re going after, we feel very good about.

But the one thing that Ryan did say was important is that the marketing feel natural. “The best way to sell anything through content is with community,” Ryan said. “There’s this unique desire of ‘oh, I read something that relates to me and now there’s these other people that relate to me.’ That is more natural.”

And in his mind, having spent the last couple of years building these creators up and having them foster a deep and relatable communication with their audiences is what will make these communities successful. “And it feels very natural,” he said.

But there’s a long way between the hardcore readers signing up and acquiring a large percentage of the TAM. So far, though, Workweek has the right strategy to make this work. Whether it works tactically for the long-term, though, will only be determined as the months and years go on.