How Hey Email Used Controversy and Careful Curation to Launch Successfully
In June 2020, Basecamp launched Hey, a premium email service priced at $99 per year in a market dominated by free alternatives.
Through a combination of strategic controversy, careful curation, and innovative waitlist management, Hey achieved remarkable success: 50,000 paying customers within three weeks and over 100,000 waitlist signups in their first month.
This case study looks at how Hey managed to create A LOT OF demand for a premium email service.
Key results:
- $5 million in annual recurring revenue within three weeks
- 75% conversion rate from waitlist to paid users
- 200,000+ invitation requests in first 48 hours
- Widespread tech media coverage and industry recognition
The Power of Controversy
Hey's launch coincided with a high-profile dispute with Apple over App Store policies. Rather than shy away from the conflict, Hey's founders turned it into a marketing opportunity that captured tech media attention worldwide.
This controversy helped Hey achieve what most startups dream of:
- Massive press coverage
- Strong social media engagement
- Clear positioning as a challenger brand
- Instant name recognition
But the controversy alone wasn't enough. Hey needed a system to convert this attention into committed users.
The Two-Tier Invite System
Hey's founders, Jason Fried and David Heinemeier Hansson, knew that launching yet another email service would require something special. Their solution? A cleverly designed two-tier invite system that turned exclusivity into virality.
Tier 1: The Coveted Hey.com Addresses
The first tier was built around the prestigious @hey.com email addresses. Unlike many traditional waitlists where everyone eventually gets the same thing, Hey created a genuine hierarchy of access.
First, founders personally invited top tech figures. These initial users could then nominate others, but had to explain why each nominee deserved an address. This caused a chain reaction where every new user felt specially chosen and invested in the community's quality.
The nominator screening process worked like this:
- Submit detailed nomination explaining the person's potential value
- Wait for Hey's review and approval
- If approved, nominee gets a personal invite
- New member can then nominate others
- Bad nominations reflected poorly on the nominator
Quality spread naturally because nobody wanted to waste their nomination on someone who wouldn't contribute.
Tier 2: The Preview System
Called the "preview" system, the second tier allowed Hey to capture the wave of interest their launch generated without diluting their premium tier.
Users could sign up to test Hey's features using their existing email address, but with a catch: the preview only lasted 14 days. This time limit created urgency while giving users enough time to experience the product's value. Most importantly, Hey made the path to requesting a permanent @hey.com address clear and achievable, turning the preview into a journey rather than just a trial.
What made this approach particularly effective was its daily education program. Hey sent daily emails to preview users highlighting different aspects of the service, such as the "Reply Later" feature. This product education helped build anticipation and users to understand why Hey was worth its premium price point.
The preview system's success came from solving four critical challenges.
- Demand management: Effectively handled the massive initial user interest without overwhelming the system
- User education: Created a structured learning period where users could truly understand Hey's value
- Community building: Nurtured discussions and shared experiences among preview users
- Premium positioning: Maintained the exclusivity of @hey.com addresses while still giving everyone a chance to experience the product
Strategic Scarcity
Hey's waitlist was an important part of their product strategy. The company weaponized scarcity to create both desire and perceived value through three clever mechanisms.
First, Hey gave users just one shot at a @hey.com address. Want "john"? Better be first or it's gone forever. And unlike other email services that would add numbers to taken names, Hey made each address truly clean and unique. This created instant pressure to get in early or risk losing your preferred username forever.
Second, Hey rolled out invites slowly which made each batch feel like a rare drop. People who get exclusive access are likely to talk about it, which creates a ripple effect of desire among those still waiting.
Finally, they publicly displayed their waitlist count (over 100k in month one) and showcased their high-profile users — tech celebrities, founders, journalists. This transparency helped create FOMO because people saw both how many others wanted in and who was already using the product. In particular, seeing industry leaders actively using @hey.com addresses made everyone else want one too.
Premium Positioning
Hey made a bold bet: charging $99/year for email in a market dominated by free services.
The key to make this work was their approach to price anchoring. Instead of hiding their price point, Hey announced it upfront, even before launch. This transparency attracted users who valued privacy and quality over free services.
During the waiting period, Hey educated users about their unique approach to email. They shared detailed explanations of features like "The Screener" and "Reply Later," along with the philosophy behind each one. By the time users gained access, they understood why Hey was worth the premium price.
The Results
Hey's unconventional launch strategy delivered great results.
Within just three weeks, they converted 50,000 paying customers — translating to $5 million in annual recurring revenue.
Their waitlist grew to over 100,000 sign-ups in the first month, with a remarkable 75% conversion rate from waitlist to paid users. The viral nature of their launch led to over 200,000 invitation requests in the first 48 hours alone.
Their users became advocates, their brand gained industry-wide recognition, and their premium positioning stuck. They had also proved their thesis: people would pay for email if you gave them enough reasons to care.
Key Takeaways from Hey's Launch
Hey's launch provides a masterclass in turning conventional wisdom on its head. Through their carefully orchestrated rollout, they showed that premium products don't need to apologize for being premium.
The power of their approach lay in controlled controversy. When Apple challenged their App Store presence, instead of backing down, Hey turned it into a story about innovation versus incumbency. This was a calculated risk that aligned perfectly with being an email rebel.
Their two-tier access system proved particularly brilliant. By separating @hey.com addresses from general access, they created a hierarchy of desire while still letting everyone experience the product. This balanced exclusivity with accessibility in a way that drove both growth and prestige.
Hey demonstrated that launch timing is not only about the product, but also it's about customer understanding. They used their waiting period strategically, educating users about email's hidden costs and Hey's unique solutions. By the time users got access, they were investing in a new way of doing email.
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