- Local businesses need local promotion channels. Some startups have started creating platforms for this purpose, connecting local businesses with local influencers. But it’s quite a hassle ☹️
- It turns out there’s a simpler way to solve this problem. And most importantly — it’s more scalable! Moreover, in a very good sense, as scaling occurs through the repeated replication of the same thing 😉
- Considering that there are so many local businesses — it’s a large market. And right now, you can enter it with a model like this startup’s:
Project Essence
The motto of 6AM City is “we are everywhere.” The startup sends out newsletters with local news to its subscribers every day at 6 a.m. In each city, there is a curated selection of news related to local events.
The startup currently gathers and distributes news in 26 cities across the USA.
The total number of newsletter subscribers across all cities is 1.3 million people. 1 million people are subscribed to local 6AM City accounts on social media — however, some of them likely overlap with the newsletter subscribers. The majority of subscribers are women. This audience generates 50 million views of editorial content per month.
Subscribing to the newsletter is free. However, there is an option to pay for it — by supporting the publication and becoming a member of the privileged subscriber club.
There will be no exclusive news added to the newsletter. However, local club members’ birthdays will be congratulated in the local newsletter, and they can also receive discounts from the startup’s partners and other perks that the startup promises to introduce in the future.
Anyone willing to support the publication can become a club member for $50, $100, $150, $200, or $500 per year. The amount depends solely on the desire 😉
The startup’s website also features a marketplace where local newsletter readers can buy locally made goods. This marketplace is called Six&Main — however, it seems to be their own brand under which they generate additional revenue. Their main source of income is advertising in newsletters.
In 2023, the startup’s revenue amounted to $8 million, which is a significant increase compared to $6.3 million in 2022 and even more so compared to $3.6 million in 2021.
The startup has now raised new investments totaling $10 million, which were added to the previously received $11.5 million, of which $2.5 million came from “friends and family,” and $7.5 million in the form of regular and convertible loans.
What’s interesting
Here we have another example of a “hyperlocal” business. A hyperlocal business is one that targets a local audience but scales by replicating the same model in many locations.
This is a great scaling strategy because it allows starting with a very narrow audience, where you can fine-tune the process of achieving good conversion rates with minimal expenses — and then transferring the accumulated experience to other similar narrow audiences. It’s about not inventing anything new to expand your business, but simply repeating what already works 😉
By the way, some businesses that have become global developed along similar lines. For example, Facebook and Tinder started by targeting audiences at one university campus, then moved on to the next, and so on. Only after accumulating a critical mass of total audience did they begin to apply more mass promotion methods.
However, hyperlocal businesses don’t necessarily have to become global. Often, their strength lies precisely in remaining local — but in many places.
6AM City is among them. They don’t need to become a global publication with global news. Their potential lies precisely in remaining local.
The thing is, a huge number of businesses in any country are local businesses. These are convenience stores, local restaurants, beauty salons, workshops, and other offline businesses. Such businesses may even be networks, but usually, they are small networks represented in only a limited number of locations.
It doesn’t make sense for such businesses to spend big money on advertising in national magazines or with celebrity influencers — because they are only interested in the local audience in the places where they operate, which can potentially turn into their customers.
Against this backdrop, startups have emerged that create platforms through which local businesses can attract local influencers to promote their local products and services.
One such platform is made by the startup Hummingbirds, which I wrote about in December. Local businesses from 14 US cities can already promote themselves on it, and by the end of this year, the startup plans to expand to another 45 “medium-sized” American cities, as emphasized by the co-founder of the startup. Hummingbirds raised $4.4 million.
Another example is the SnapAds app, which I wrote about last summer. It allows local businesses to pay their local customers for writing advertising posts about their business. Users can then spend the money they earn on purchases from this business or other local businesses connected to SnapAds. SnapAds raised $1.2 million in investments.
The social network Claim has started implementing an interesting model, which I wrote about in December. It currently focuses on college students in Boston to encourage them to shop in stores and visit cafes near their campuses.
The essence of the model is that network participants see what and where their acquaintances buy — and can ask them for bonuses received for these purchases to buy or try something in that place themselves. The model has begun to show good results, and Claim has raised $6 million in investments.
The problem with such platforms is that local businesses need to put in effort to use the promotion channels offered by them through influencers — because they have to contact influencers, engage them, and control the results for each of them, and so on.
6AM City offers a simpler and more familiar channel for these same purposes — bring in advertising, pay money, get a response. Plus, the publication is not an individual influencer who may disappoint now or may not be relied upon in the future for some reason. The publication is an editorial team of interchangeable people who must perform their tasks now and in the future, despite anything.
As a result, 6AM City may turn out to be a simpler, more reliable, and long-term partner for local advertisers than influencers. This, coupled with the ability to replicate the same thing multiple times in different locations, makes their business model competitive and scalable.
Where to Run
News is an eternal business. In the past, even small towns had their own newspapers. Then these newspapers transformed or were replaced by city internet portals. Then local bloggers rushed into this niche.
Bloggers are great, of course — their individual perspective, beautiful photos of themselves against everything else, you name it 😉 But blogging is blogging, and news is news, they’re still different things.
Although they have now become much closer to each other than before. It’s no coincidence that 6AM City talks about their task as “building local communities by creating new ways to deliver, consume, and share local content.” For this purpose, they try to “maintain a conversational communication style but filter it through the editorial process.”
Thus, in the niche of local news, a new model emerges, positioned between officialdom and subjectivity — which can be called a “curatorial” blogger, capable of consistently delivering high-quality content and being a reliable partner for advertisers.
The beauty of it is that this model can actually be replicated in every city. Combining local actions and centralized business processes — which allows, on the one hand, adapting to local conditions, and on the other hand, scaling.
Surprisingly, on a conceptual level, this reminded me of a startup from a completely different sphere. This startup — Platform Accounting Group, delivers a set of centralized services for small local companies engaged in accounting and financial management.
The approach of this startup is based on the fact that local companies are better at attracting and retaining customers. However, centralizing business processes allows for cost reduction, ensuring a high level of quality, and expanding the range of services that these small companies can offer their clients.
So, the direction of movement remains the same — to continue the search for topics where gains can be achieved through a combination of local marketing and customer service, centralized business processes, and hyperlocal scalability.
As we can see from today’s example, such options — like a network of local news newsletters following the example of 6AM City — can be quite unexpected but no less interesting 😉
About the Company
6AM City
Website: 6amcity.com
Latest Round: $10M, 02.02.2024
Total Investments: $21.5M, Rounds: 4