How We Created A $2M/Month Subscription-Based Mystery Games Business
Hello! Who are you and what business did you start?
Hello, my name is Ryan Hogan and I am the Co-founder and CEO of Hunt A Killer, an innovative entertainment company that delivers clues, items and correspondence to your doorstep each month, which immerses Members in an interactive story. We have a total of four brands: Hunt A Killer, our murder mystery for true crime fans; Empty Faces, our paranormal investigation for horror fanatics; Escape The Invasion, our science fiction thriller for those looking to survive an alien apocalypse; and Team Building Kits, our business-to-business product that brings corporate teams together and improves company culture through quarterly experiences that create a fun and challenging environment.
Hunt A Killer started with 146 subscribers in October 2016. In August 2019, we shipped our one-millionth episode and continue to see signs of massive growth in the immersive entertainment space.
What's your backstory and how did you come up with the idea?
I’ve spent the last 17 years serving in the United States Navy – separating from active service in 2017 to pursue entrepreneurship full-time while entering the Navy Reserves. A big part of separating from active service five years before retirement was my life-long passion for entrepreneurship. In 3rd grade it was hawking creepy crawlers for $0.25, at 12 years old it was snow removal and lawn mowing, then it was going to auctions and reselling on eBay… there was always something.
In 2009, my wife, Cherice, and I launched the activewear apparel company for service members, Warwear. This was my first dose of: “if you build it, they [don’t necessarily] come.” After acquiring more inventory than I’m comfortable sharing, we had a major problem: it wasn’t moving off the shelves. In 2010, I approached my good friend Derrick Smith with an idea: let’s create an adventure race so we could move Warwear apparel via ‘free’ participant shirts. After opening up a Men’s Health magazine and seeing a Warrior Dash ad (and knowing full-pagers were north of $150,000), I knew there had to be an opportunity in the space; and the new obstacle race company could reimburse for the apparel in exchange for seed capital.
Go with data, not your gut. The amount of time invested in data collection and analysis should be commensurate with the impact of the decision across the organization.
Derrick and I created the first-ever 5k obstacle course race where participants donned a flag foot belt with three flags (or, “life”) and were chased by… zombies! Run For Your Lives scaled from $0 to $10M in 48 months, but was plagued with first-timer business mistakes, a saturating market, and a plethora of alternative activities. In 2013, the company bankrupted.
Fast forward to 2016, Derrick and I used the same methodology for the creation of Hunt A Killer. We first analyzed the live experience industry for common trends and themes. A few years ago, escape rooms were quickly entering the U.S. market, the interactive theater scene was becoming a ‘thing’ (think: Sleep No More), and obstacle races were still hanging around. Hunt A Killer v1 was a live event where we transformed a 200-acre campground into a living crime scene. We quickly sold out the event and threw participants into a 3-hour immersive experience. But there was one problem: the model didn’t scale. The game design was specific to the venue and we were constricted on the number of participants we could put through at one time. Six months of work and $60k of gross revenue could never become a sustainable business.
So, we pivoted. Armed with a product-market fit, we shipped our first subscription box three weeks later that built a community around entertainment and immersed Members in a world created by a world-class team of writers, editors, game designers, and graphic artists. Today, we ship tens of thousands of episodes each week all across the globe.
Take us through the process of designing, prototyping, and manufacturing your first product.
Our first Hunt A Killer episode was very much trial and error. We had only two writers (including our Cofounder, Derrick Smith) and a graphic designer. And we were completing the development of episodes a week before they shipped – lead time for sourcing items was extremely limited.
We created partnerships with local printers to ensure we could achieve the authenticity of the documents. For instance, our early Hunt A Killer seasons were based on a Hanibbal Lecter-style character who wrote to our Members from a medical institution. Since he was using a typewriter, we sourced and mass-produced using an antique letterpress so the letters would be slightly indented, as if each letter were individually typed.
Our item selection was at the mercy of traditional sourcing on sites like Amazon. To convey some of the settings in the story, we would send paper pill cups – and it got to the point where we were ordering 10,000 in bulk each month. There was even a time where alligator teeth were a part of the story, and they were actually sourced domestically!
Today, we have a team of over 20 writers, graphic designers, editors and sources that are developing, designing, editing and sourcing items for the immersive stories. Six episode seasons are now created in 2-3 months, from inception to having kitted episodes on shelves.
Describe the process of launching the business.
A strong indicator of a clear path to product-market fit is when the first customers aren’t from your 1st- or 2nd-degree network. It means real people are finding value in your product or service, and the purchases aren’t sympathetic.
Finding a way to fund the launch was our first step. In the event business, revenues are realized before the expenses for the production start rolling in. Both Run For Your Lives and the inception of Hunt A Killer were live experiences, and ticket sales fueled the initial growth. The launch was a matter of building a website, plugging in a ticketing sales platform like Eventbrite, and telling the world about our events through various social media platforms and event partnerships.
After finding product-market fit, the trick was iterating the concept to a scalable business model. Hunt A Killer didn’t scale as an event, so we pivoted to a subscription box model.
We continued to find creative ways to cash-flow the business without traditional venture capital – at the time, ActiveNetwork (a competitor to Eventbrite), pre-purchased a block of tickets for 2017 Hunt A Killer event we were planning on hosting, and Capital One was gracious enough to approve a credit card with a $50k limit (which we quickly maxed out). Though we never executed a second event, we happily refunded ActiveNetwork’s advance from the subscription sales generated over the holiday season.
The cycle never stopped, and still continues today. We are constantly iterating the business, always striving for the most optimal model while creating ways to remain cash-flow positive.
2016 vs 2019 homepage:
Since launch, what has worked to attract and retain customers?
Our acquisition strategies have evolved over the years, but one thing remains consistent: diversified advertising channels are critically important. A Facebook-only strategy unnecessarily exposes organizations to extraordinary risk.
When we launched, we had two primary growth levers: Facebook and podcasts. Facebook is great for digitally attributing spend against actionable results and retargeting; and while podcasts are harder to track, we’ve been able to consistently break-through spend ceilings (where CAC increases in a certain channel) by layering in more traditional forms of advertising.
We’ve broken the mold on many common e-commerce theories, using strategies like micro-commitments, or small actions that quickly culminate into one final action – purchase in this case. The old adage of “least number of steps possible to checkout” was challenged and tested, and we ultimately landed on an application-based sales funnel that forces website visitors to complete a 15-question survey before being given the opportunity to purchase. This gives us an opportunity to frame the value proposition as prospective Members navigate closer to the point of purchase. Instead of creating long-form landing pages, or 20-page websites with needless information, we can educate the prospect on our service, while also getting a great insight into who they are, what they are looking for, and additional ways to follow-up should they choose that now is not the best time.
Some other ways we’ve improved sales is through strategic partnerships, like Hunt A Killer + Winc. In 2018, we became an affiliate of Winc and were able to offer two free bottles of wine with each Hunt A Killer subscription. Adding additional benefits, or “value stacking”, at the point of purchase was instrumental in increasing our overall conversion rate. There was also an ancillary benefit of the affiliate revenue for every Hunt A Killer Member turned Winc subscriber!
And finally, congruency. If there was one secret sauce that makes it all work, it would be having congruence from top to bottom of the funnel. If creative is what drives traffic to your site, the offer is what converts; but we’ve seen that having a Facebook ad that matches the landing page, with an offer that matches the initial touchpoint, has a significant impact on conversion. It took us a few months to figure out but using the Winc example, our ads would be positioned as “The Ultimate Date Night… wine included”, then go to a landing page that highlighted both the introductory offer and benefits of using the experience as a date night and then the “Choose Your Plan” options would highlight the wine + experience offer. This strategy resulted in over a 50% increase in conversion performance.
How are you doing today and what does the future look like?
Two things that will never disappear from human culture: community and storytelling. And we’re at the forefront of both.
Diversified advertising channels are critically important. A Facebook-only strategy unnecessarily exposes organizations to extraordinary risk.
Our vision is to build communities around innovative and immersive forms of entertainment. Hunt A Killer was the catalyst in discovering both the mechanics of making Members a character in stories and understanding that there is a desire for this unique platform of storytelling.
We’re able to execute on this vision while maintaining gross margins at/or above 60%. The authenticity of the items included in each story is what makes the immersion factor so incredible. Maintaining the balance of physical items and the cost of goods allows us to invest in an incredible team that continues to push the current limitations of entertainment while balancing advertising costs to increase membership as quickly as possible.
Customer Acquisition Cost is variable depending upon seasonality, but ranges in the $50-60, giving us a 2-3x return against contribution margin.
Website traffic ranges from 600k-900k per month depending on the season – with Q4 and Q1 drawing our highest visitor volumes.
The future for Hunt A Killer is all about becoming omnichannel. If you look at the most successful subscriptions on the market, they have multiple streams of revenue, with their direct-to-consumer acquisitions being heavily subsidized by traditional brick & mortar. Our growth strategy is three-pronged: (1) leverage big-box retailers to distribute brand awareness, credibility and starter experiences; (2) find and develop auxiliary channels to distribute our intellectual property (in-house technology, audio dramas, television, theaters, novels and live experiences); and (3) source existing franchises with built-in audiences to transform into our format of storytelling.
Through starting the business, have you learned anything particularly helpful or advantageous?
Go with data, not your gut. From hiring to the allocation of resources, to marketing and product strategy, the first step should always be to collect as much data as possible before making a decision. The amount of time invested in data collection and analysis should be commensurate with the impact of the decision across the organization.
For hiring, we initially used our ‘gut’. But the way an applicant makes you feel has little correlation with the success rate – and we saw this through attrition. We explored many hiring strategies and ultimately landed on a hybrid of Who: The A Method For Hiring and our tried and true methods. This created a standardized process that allowed all candidates to be graded on the exact same criteria. It also exposed us to more data points, as we have a minimum on the number of references, strict criteria for who those references are, and template questions that follow the response of the candidate to expose things like self-awareness and transparency. You’ll never bat .1000 (even Jack Welch claimed 50% hiring success at the pinnacle of his career), but you should set your organization up for the highest rate of success by using patience and thoroughness.
Whether hiring or new spending strategies, we start with data to drive the discussion and debate.
In my experience, I’ve also found that startups should find new angles for current trends, not try and start trends bootstrapped. For us, it’s been about identifying emerging themes in the entertainment space and capitalizing by finding innovative ways to distribute content and build communities. In action: The Walking Dead was in its infancy when we launched Run For Your Lives, and true crime podcasts like My Favorite Murder were just getting started when we launched Hunt A Killer.
What platform/tools do you use for your business?
Our tech stack is massive and spread across many platforms. Not the most ideal, but in the beginning, ‘making it work’ is all that matters. Here’s a sample of the systems we use today:
- Front-end: Webflow, Squarespace, WordPress
- Ecommerce: Shopify, Recharge, CrateJoy
- Feedback loop: SurveyMonkey
- Email: Klaviyo
- Application: Typeform
- Analytics: Google Analytics
- Sales Tax: Avalara
- Fulfillment: ShipStation
- Customer Service: Intercom
- API: Zapier
- Live Pop-ups: Fomo
- Internal Communication: Slack
- DNS: Google Domains, CloudFlare
- Productivity: 15Five
- Website Optimization: VWO
- Social Media Management: Hootsuite
- Social Media Interaction Management: AgoraPulse
What have been the most influential books, podcasts, or other resources?
One of my all-time favorite books is The Lean Startup by Eric Reis. It’s a step-by-step guide for employing the Minimal Viable Product (MVP) methodology to quickly find product/market fit. All too often, entrepreneurs find themselves in a constant loop of building features and benefits based on what they believe the end-user wants. And even more often, ideas quickly morph based on initial feedback from customers. Break the cycle, ship the product, and quickly iterate based on direct feedback.
I’m also a fan of the entrepreneurship journey of others, and Steve Jobs by Walter Isaacson comes to mind immediately. Little did I know that Steve Jobs lived on an apple farm, and ate so many carrots that he turned orange. Finding inspiration while your grinding 80-100 hours per week is crucial, and understanding that others like Steve Jobs, Elon Musk, and Phil Knight all went through similar times, helps see past the cloudy days.
Advice for other entrepreneurs who want to get started or are just starting out?
My advice for those on the ledge of starting a company: just take the first step. Throughout my journey, it’s been one step leading to the next. A T-shirt business led to a zombie business led to a murder mystery company. 100% of those companies were started while I had a rigorous full-time job – and I didn’t quit my day job until my third company reached $7M in revenues.
You don’t have to quit your day job, you just need to let the world know about your product. And if it doesn’t sell, ask why… because this will lead to your second product.
Are you looking to hire for certain positions right now?
We’re always on the hunt for incredible talent.
If you’re local to Seattle and a rockstar marketer, email Shawn McGehee at [email protected].
If you’re into writing, graphic design, operations, finance or fulfillment and live in the Baltimore area, we’re always posting new jobs on ZipRecruiter.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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