Sam Parr hosts a year-by-year post-mortem with Morning Brew co-founders Alex Lieberman and Austin Rief, comparing the parallel growth of Morning Brew and The Hustle from 2015 through their respective sales in 2020. The conversation covers subscriber growth, revenue milestones, hiring, fundraising decisions, the COVID acquisition rollercoaster, and hard-won lessons about content quality, paid acquisition, and what newsletter founders get wrong today. They close with their perspectives on where the real opportunities in media still lie.
Speakers: Sam Parr (host, founder of The Hustle), Shaan Puri (host, MFM co-host), Alex Lieberman (co-founder, Morning Brew), Austin Rief (co-founder, Morning Brew)
The Rivalry That Wasn’t — Sam and Morning Brew’s Origin Story [00:00:00]
Sam: I still think the big opportunity in the media space, if someone wants to take a big swing, someone wants to go build a billion-dollar company — it’s— wait, so say what were you saying earlier? How you hated me or — no, you didn’t hate me.
Alex: No, I didn’t hate you.
Sam: Like, I hated you. Just to be clear, I hated you.
Alex: I did not hate you. I feel like part of my shtick has always been I don’t hate anyone. I try to kill people with kindness. People have to feel like douchebags for hating me because there’s no way to hate me. That was my MO for a while. But I remember — yeah, I remember being on the phone with Tim Shah, and he was an investor in The Hustle also.
Sam: Right. Yeah.
Alex: I was so mad at him for investing in both of our companies. I was so angry. And I remember being on the phone with him and he was like, “We’re talking about you for some reason.” And I was like, “Yeah, I would love to talk to Sam, but I don’t know if he wants to talk to me.” And Tim was just like, “Yeah, I don’t think he likes you guys very much.”
Anyway, I didn’t hate you, but I was jealous of certain things at The Hustle. And one of the things I was most jealous of was the welcome email. I remember reading it and being like, “This is so freaking good. I’m so angry that we don’t have one as good as this.” I would have traded you the welcome email for your ability to be financially disciplined. You were far more competent than I was. So the envy went both ways.
Sam: All right. So here’s what I want to do for this show. Wait — did you guys say what you sold for? Is that public?
Alex: Yeah, we could say $75 million, I think, is the public number.
Sam: So collectively — The Hustle and Morning Brew — we sold for hundreds of millions of dollars. We were sort of the graduating class of like 2020. We were early in the newsletter game. We didn’t invent it, but we helped pioneer what’s popular today. And as of a couple weeks ago, all three of us are officially out of our companies.
Alex: To be clear, Sam, I’m technically executive chairman, so I’m no longer day-to-day — but I am still executive chairman of Morning Brew.
Sam: You’re no longer operating. But do you still have equity?
Alex: No, we’re both way up.
Sam: All right, that’s what I mean. So what I wanted to do was go year by year — when we each started, what our revenue and profit was, what our subscriber growth was, things we learned, and things we would do differently if we were starting again today. Does that sound good?
Austin: Yeah, sounds good. And I’m excited because at the time I didn’t know any of your numbers. So this is kind of the first time I actually see your numbers as we were going through it.
Alex: The cool thing about having a data room is you have all the information accessible so you can go back and look. But this is the first time it’s all been in one place. We’ve piecemealed it, but I think it’ll be fun to side-by-side it.
2015: The Beginning — Morning Brew as a PDF, The Hustle as a Conference [00:04:00]
Sam: So you guys started in 2015. What was the original premise? And weren’t you both in college?
Alex: Yeah. I was a senior at Michigan, Austin was a sophomore. We were both kind of on the finance track. The general premise — and it’s so funny because we’ve told this story so many times I don’t know if it’s actually the truth, it’s just what I remember — but basically I was helping students prep for job interviews. I’d ask them, “How do you keep up with the business world?” Every single student would say, “I read the Wall Street Journal, but it’s dry. I can’t get through the whole thing. My parents told me I have to read it.” At some point I was like, these kids are about to spend their whole careers in business, yet they don’t have something they enjoy reading.
So I started putting together the OG version of Morning Brew, which was called Market Corner — a PDF I’d attach to an email listserv every day. Austin was one of my readers.
Sam: Can I tell you what I think the real story was? Because it’s probably the same as mine. You saw the success of The Skimm and you just said, I’m going to do this for finance people. In my case, tech guys.
Alex: Definitely possible. Yeah. I do think Alex started the PDF version. But the evolution into Morning Brew was totally inspired by — wow, if these two women in New York City could get millions of people reading, why can’t we do the same for business?
Sam: Did you have any revenue in year one?
Austin: No. Which, by the way, I’ll say was a huge advantage for us that I don’t think you had with The Hustle — Austin and I were still in school. So we basically had a year and a half to two years of fake runway where we didn’t have to worry about revenue.
Sam: In 2015, I was 25. It wasn’t The Hustle yet — it was just an event called HustleCon. That year I think it made around $400,000 in revenue and $200,000 in profit. It was like a good event, a TED talk for entrepreneurs. But I was so scrappy — one of my biggest regrets in life is buying supplies for that event at Costco and returning the stuff we didn’t use. I didn’t realize Costco throws returned things away. That was the most shame I’d ever felt.
Was HustleCon profitable that first year?
Sam: Yeah, because it was just me and my buddy John. So the next year, in 2016, I started The Hustle, because I was like, conferences suck, I want to create a newsletter. I’d seen The Skimm, I’d read about Thrillist on Mixergy, a bunch of other newsletter businesses. When I started, I had $500,000 in the bank, all from conferences.
2016: Morning Brew Leaves Wall Street, The Hustle Launches [00:09:30]
Alex: I think what you said is interesting about the math. At the time and we have a funny story we can tell now — about John Steinberg and our first interaction with him — so many people came to us and said, “This is so stupid. Why are you doing a newsletter?” But Austin and I would sit there every night going through a spreadsheet. Newsletter subscribers grow five to ten percent a month, CPMs stay flat, and over time you can get to hundreds of thousands or millions of dollars of revenue a month. It was really that simple.
Sam: I had the exact same spreadsheet. I listened to every interview with Ben Lerer. “Tell me what the CPMs are.” I met with Business Insider reporters. “Tell me how many people visit your tech section. 80 million.” Okay, now I have some numbers to triangulate.
At the time, everyone was spending millions putting video on Facebook. I don’t think we were actually that smart. I just think the people around us were really dumb.
Alex: I think one of the big advantages — they say at a poker table, if you look around and can’t find the sucker, you’re the sucker. Well, I think we picked the industry with a lot of suckers. There were people who started five or ten years before us who weren’t smart. They were doing the same thing they’d done for ten years. And even in 2015 to 2017, we were like — BuzzFeed just doesn’t make sense. It’s not worth a billion dollars. For five years, people didn’t believe us. And over time, we proved that our model, while it seems silly, actually works.
The John Steinberg Story [00:14:00]
Sam: So we’re in 2016. So this guy named John Steinberg — at the time I’m 26, just a guy in a shitty apartment trying to do this newsletter, and John Steinberg is the president or CEO of BuzzFeed, about to start a new company called Cheddar. He was at BuzzFeed, then CEO of Daily Mail North America, then he stepped down and sent Austin and Alex an email.
Austin: Awesome. What was the subject line?
Alex: Yeah. It was from his Gmail. We had no idea who John Steinberg was. We didn’t know the media industry. We get an email — subject line: “Intro to founders.” Body of the email: “Like what you’re doing.” Period. That was the whole email. We looked the guy up on LinkedIn and were like, “Holy shit, this guy’s a big deal.” So we give him a call, and he flips it on us, makes us think he’s excited about us, going to invest in us. Then he brings Alex to his office.
Alex: So I go to John’s office, which was a tiny closet of a WeWork, and it was him and Peter Gorenstein, his co-founder. I get there thinking the conversation is going to be about John investing in Morning Brew, or maybe a segment on Cheddar that would give us distribution. Instead, he starts interviewing me. Because he wanted me to work there.
So he starts interviewing me. “Okay, Fitbit earnings come out. You need to get an expert on the story. Who are you talking to? How are you finding them? Let’s go.” And at some point I said, “To be honest, I’m not interested in a job at Cheddar. I thought we were going to be talking about a partnership with Morning Brew. Are you investing in us?” And I will never forget this line — he said, “To be totally honest, the cost of the legal fees to do this deal would be more than what I’d pay for you guys.”
Sam: And he was right. He was right at the time.
Alex: He was right at the time.
Sam: I have a very similar story. I just found an old Facebook message from him. His opening two lines: “Have we met? We should meet.” He’s done it like four or five times. That guy’s motor just runs.
So we’re in 2016. I get an email from Ben Lerer — started Thrillist, which became Group Nine, like a billion-dollar company, then co-founded Lerer Hippeau, one of the most prominent VCs in New York. We start talking and I think he’s going to buy The Hustle right out of the gate. And he brings in the president of the company and it turns into an interview — the exact same thing. And I was like, “Oh, I thought you were going to buy us.” He said, “Brother, this is a newsletter. This will never make more than like $2 million a year.” And I was like, “Well, if you do the math—” He’s like, “No, you should come join our company.”
And it has forever been a chip on my shoulder. Think about how valuable it was that we all had conviction and were irrationally confident in what we were doing. Because you can see so many other scenarios where someone goes googly-eyed by someone successful and joins their thing — and that cuts all of the possible upside we ended up experiencing.
2016 Revenue Numbers: $25K vs. $400K [00:19:30]
Sam: So we’re in 2016. The Hustle launched April 4, 2016. That year we did $400K in revenue. I think we had around 100,000 subscribers at the end of the year. I was writing these crazy blog posts and getting 500,000 to a million people a month to the website. Of the $400K, I think $100,000 was advertising revenue. And it was four of us.
Austin: Where were we? So in 2016, we did our first ad deal. It was a watch brand called Emil Hart, I believe. It was about a $3,000 deal — we used to call them “ad exposures.” We were so naive. It was three of us. We had a writer — ironically we poached someone from Business Insider — but I think he made it like 70 days. He quit because we wanted him to work more than a nine-to-five. We did $25,000 that year.
Sam: You did $400K, we did $25K — but yours were events, not advertising.
Austin: Still. We did $25K total.
Sam: I started advertising in June, I think. I looked up my first deal — $4,600. I cold-emailed a guy named Chris Martinez at Wealthfront. If you look at my LinkedIn DMs from the last ten years, I’ve basically DM’d every human being who’s worked in growth marketing or media. I probably emailed Chris twelve times that year to get him to do a deal. I don’t know who Chris is anymore, but if you’re listening — thank you.
Alex: The things I would do differently from 2016: we raised a little bit of funding. I would not have done that. I tried to raise way more but no one invested, which ended up being a blessing because I owned the majority of the company. So if you’re starting today — I would not raise funding at all. Would you agree?
Austin: I think raising funding is all about your business needs. I wouldn’t have raised more than we did, but we did need the $750,000.
I specifically remember — this is fast-forwarding to 2017 — it was December 27th, and I didn’t realize that payroll goes out early if New Year’s Eve falls on a holiday. I had a check in my hand to make payroll and I had to sprint to JP Morgan because they were closing at five. It was 4:55. I was literally two minutes away from missing payroll. Media companies can have 30-, 60-, 90-, or 120-day accounts receivable. So we did need the money.
But yeah, for a media venture — raise as little as humanly possible. One big lesson from that period: we had 28 individual investors. I would have way fewer. I would also sus out whether these people are going to be difficult — and we’ll get to this when we talk about the sale process. There were some very difficult investors when we sold.
The second thing: time is a crazy thing in startups. We had a slide in our investor deck showing our one-year plan. That slide took us nine years to execute. We tried everything on that slide and most things did not work. It took nine years to accomplish our one-year plan.
2017: First Real Hires, The Traction Book, Finding Voice [00:25:00]
Sam: All right, so now we’re in 2017. I tell the story that we went from 100,000 to 500,000 subscribers. But going back, I think I’m a year off — in 2017 we ended at 250,000 subscribers. We had $2.2 million in revenue, $400K was events, $1.8 million was advertising. My big learning that year was hiring a sales team. I did the first year of ad sales myself and I was horrible at it. I didn’t realize how buttoned-up you had to be. I didn’t understand it.
Where were you guys at the end of 2017?
Austin: 2017 was the year I was only full-time for half the year. We ended at 100,000 subscribers. We did $300,000 in revenue. We finally started taking a salary — 60K each. That was the first real year. We hired Tyler Denk, who is now the CEO of Beehive. And he was transformational for us.
Sam: What was his job?
Austin: Everything.
Alex: Do you remember his first title, Austin?
Austin: No.
Alex: Growth engineer. He did everything. And between him and Michael Schwarz, who was our first writer — and then Tyler brought on Neil Fryman, who still works at Morning Brew today — I mean, look, Alex was the visionary of the Morning Brew voice, but Neil was really the executor. He did what Alex and I couldn’t do, which was take this idea in our head and put it on paper every single day, 365 days a year, for now 10-plus years.
Sam: Neil is a great example of what both of you did well at the Brew and what I did well at The Hustle — finding undiscovered talent and seeing potential that other people didn’t realize. Your first three writing hires, Neil, Michael Schwarz, and Nikki — none of them were traditional media hires.
I tried to recruit media people and they laughed at me. I emailed this one famous journalist and she said, “That’s cute. Thank you.” The only people I could afford and convince to do this stuff were people like Lindsay Quinn — she was a blogger at like a procurement startup. She was not a writer, but she could write and wanted to write, and you sell them on the dream of, wouldn’t it be fun to do this hobby all the time and make money?
Austin: She was my writing hero. The number of times in my career I’ve tried to poach her is very nonzero.
Alex: And this fast-forwards to 2018, but Austin isn’t kidding. We knew every single writer you had. We knew every story, who wrote them. And we would come to work the first two to three hours of every day, print out Morning Brew, print out Axios, print out The Hustle, print out The Skimm, and with a paper and pen, Alex led the charge — go through every single story, circle what he liked, exile what he didn’t like.
And look, Alex is the most likable person on the planet. The only person I know who didn’t like Alex is our first writer, because Alex would cross out half the words he put in the newsletter and say, “Look, Lindsay Quinn wrote this same story better than you did. Be better.” We were maniacal.
Sam: And for the record, I didn’t do that. And that’s a regret. Now that I understand how company-building works, I would tell you guys you’re insane. Just have fun, do what feels good. But once you get past, I don’t know, $5 million in revenue — meaning you probably have some product-market fit — you can absolutely iterate your way from a B or C+ to an A+. The standard of your business is what you allow. If you allow suboptimal content to be written, that is the new standard.
Alex: Exactly. And to me, my biggest fear was that if I said okay to things that weren’t exceptional content, that would become the new standard of the business.
How old were you guys then? In 2018?
Austin: I was 22, 23.
Alex: And I was a year and a half older. So 24.
Sam: Dude. You guys were — I’m like what you were when you were 22 today. I completely would have laughed at you back then. But it’s 100% the right way. It’s crazy how mature you guys were at such a young age.
Alex: When we sat down to set our core values — at the time I thought core values were fluffy, and in hindsight I regret we didn’t write them in stone and keep them — two really mattered. One: have an ownership mentality. Act like you’re an owner. And two: underdog mentality. We came into work every day a group of misfits who had no idea what they were doing in media, and we acted like underdogs. You see how underdogs show up in March Madness — they’re loose. They don’t have this weight on their shoulders. Every day we came in like, screw it, we are going to kick the ass of all these legacy media companies who raised a hundred million dollars. And what they did was burn it and flush it down the toilet.
Sam: I also just think Austin and Alex had such a fire. And for Austin, similar to me, Austin creates an opponent in his head and that is enough to create an insatiable drive to win.
Alex: For me it was different. The things that compensated were my dad dying and feeling like I needed to provide for my family. And me being bullied from fifth grade through twelfth grade and feeling like I needed to prove I was worthy. Even when the Brew was small, Austin and I had this deep-in-our-bones feeling that we were going to succeed. The business would ultimately sell. It was just a matter of time.
Sam: What I’ve always admired about you guys was this really cool combination of optimism and pessimism. Austin is afraid all the time yet logical enough to say, I’m going to do this, this, this, and the likely outcomes are A, B, and C. I didn’t feel that way. I was a scarcity mindset.
2018: Going to a Million Subscribers, The Paid Ads Flywheel [00:35:00]
Sam: So in 2018, you did 3.1 million in revenue, 10 employees. How many subscribers?
Austin: In 2018, we went from 100,000 to one million subscribers. We ended the year at about 500,000.
Sam: We had 5.1 million in revenue. About a million was from events. And we had $160,000 in profit. That was the first year we spent on advertising. We got to about 200,000 organically, then spent money on ads. I spent a million that year.
Did you guys spend on ads to get to a million?
Austin: We spent every penny we possibly could. I’d track daily cash flow to make sure we had enough money to keep buying. There were days in 2018 we were growing 20,000 subscribers a day. We’d do these MacBook giveaways and grow 25,000 subscribers in a day. My only regret is we couldn’t figure out a way to find more money to put into Facebook ads. By the end of that year, we were spending like $500K a month on ads.
Sam: At least. That’s crazy. I had such a poor mindset. You guys, because of the finance background and just naturally, had the mentality of — I will spend a dollar if it turns into $1.10. For me it was like, $80,000 a month — that’s astronomical. It doesn’t matter what the return is. That was an immature mindset.
Alex: I think part of it was Austin and I were younger than you. And at the time we were only making 60K — I think we upped to 120K that year. I don’t think Austin and I were thinking about monetizing the business for ourselves the same way you were. You had a profit threshold. You’d say, I want to profit this much every month. And I said, well, that means Sam’s taking his foot off the gas. So I’m going to do the opposite.
Sam: Which is funny because I didn’t actually make a lot of profit. I grew revenue about 50% most years but I did not profit much. And I think values-wise — I wish I would have codified them earlier. I started the company when I was 24-25 and I evolved to where I am today around 31. You guys were kind of 31-year-old Sam when you were 21.
Also, a lot of people now buy ads early because it’s so commonplace. Back then there weren’t many experts. But I actually think buying ads too early is a mistake.
Austin: Totally. We didn’t do paid acquisition until 2017 really. So in 2015 and 2016, getting to 100,000 subscribers was entirely organic. By the time we were actually paying for subscribers, we knew we had a great product. We knew how long subscribers were staying. And we knew how to work within scarcity — finding ways to grow without money. That muscle, if you skip over it, is a really bad thing.
2019: Hitting the Newsletter Ceiling, The Traction Moment [00:43:00]
Sam: So in 2019, you did $13.1 million in revenue and $3 million in profit. We did about $8 million in revenue — $640K from events, $200,000 in profit but $1.6 million in cash flow. I’ll explain why. At that point I switched the business to caring about cash flow. We had about 1.2 million subscribers. And that year we launched My First Million under the Hustle name.
The thing I learned that year — you know how social media companies say, who cares about revenue, just grow your users? This was the year I learned that was true. If you know how much revenue you make per user via advertising or subscription, that’s the only thing that matters. Just get more users. I wish I’d understood that earlier.
Alex: What we learned in 2019 was we started to see the plateau — not just of newsletter growth, but of the economics of newsletters. Morning Brew got to a point where we started asking, how much can you make on a single newsletter? I think it was $18 per subscriber per year. Something like 50 cents a month for advertising.
Sam: That sounds right.
Austin: Yeah, 75 cents — something like that.
Alex: And we started spending $6 to $7 million on paid acquisition that year. We spent nearly what you did in revenue just pumping growth back in. And we started to ask, does this make sense? And that’s where we learned about industry verticals. Our audience works in retail, marketing, finance, as CFOs. What if we took that path? Higher CPMs, don’t need to grow as fast, it’s not a race to the bottom, it’s an engagement play. That’s when we went into industry verticals.
Sam: And I would say 2019 was the most important year. Because that was the year Austin and I — I can’t remember what month — had the closest thing to a big fight in the history of the business.
Austin and I were still in the freaking mud — making sure the newsletter went out tomorrow, getting an ad deal for Friday. We could not see a month or a quarter ahead of us.
Alex: And I remember one day we’re at WeWork. I get a message from Austin on Slack. An investor of ours — this guy Scott who created the Snuggie — told Austin, “You need to read this book, Traction, and adopt it in your business.” Austin read it, messaged me on Slack: “Dude, you need to read this book yesterday, and this is what we’re going to do.”
A few days went by and I didn’t read the book. Austin messages me: “Did you read the book?” And I said no. And he said something like, “I don’t understand why you’re not doing the thing that is the most important thing in our business right now.” And I could tell for the first time he was actually pissed at me.
So that day I went to the highest floor of our WeWork and read the entire book. And a few things happened. One: Traction was a game-changer for our business. And two: I think it became the inflection point where Austin really took over as CEO of the business — not in title, but in action.
Sam: I read that book around the same era and it had the exact same impact on me. In fact, just this week I hired an EOS implementer and met with him to implement it into Hampton. For those listening — EOS, the Entrepreneurial Operating System, is a framework for running your company based on the book Traction.
Alex: I’d love for you to do a full episode on how you implemented it — a postmortem. We didn’t hire an implementer. I thought it was a waste of time and money. It’s totally worth it and my biggest regret is not hiring one, because I didn’t want to be the bad guy.
Sam: How much?
Austin: The guy I talked to — $60,000 a year.
Sam: Which is why it’s an unbelievable business. It’s basically a digital franchising business. But it’s worth it. Once you get to the five-to-ten million mark, what you’re doing is mostly working. Now how do I do more of it without killing myself, creating redundancies, transitioning from a business to a company? That’s where that book helps.
Alex: I thought of it as chapters. First chapter of Morning Brew: newsletter as a hobby. Second chapter: newsletter as a business. Third chapter: newsletter business — meaning multiple newsletters. And there was no way we were going to do more than one newsletter unless we figured our stuff out because we were too in the weeds.
Sam: How many subscribers at the end of 2019?
Austin: Probably about two million. We went from one to maybe 1.8.
Sam: And at The Hustle — how was the business actually being run? We launched Trends that year. Trends was basically a $300-a-year subscription where Julie and Steph Smith wrote a weekly email, and then we had a Facebook group to talk about interesting companies. That’s why we started measuring cash flow — I learned the importance of charging $300 upfront versus monthly.
At that point in the company, I just had so many demons I was still getting out of. The issue I had running the company was that my personal demons were transcending into the company. I didn’t have a right-hand person I could confess my fears to. I was running on EOS, and I had Brad on content, Adam on sales, Scott Nixon on growth, someone on events, and Steph Smith on Trends. Five direct reports. And I was starting to get checked out.
Exhaustion kicks in around year four or five. Sean came to me wanting to launch My First Million and I was like, “That’s stupid.” I hated everything. But he said, if you really want to do it, we’ll be the publisher — we own it. He sent me an episode, I said fine, we’ll do it, and I published it the next week. No planning. Nothing. And I was immature for not doing planning, not having longer-term thinking, and for exhausting myself out.
Alex: One thing I’ll add: the level of direct communication Austin and I had as co-founders looked very different from what it would look like today. We started so young that we were afraid to critique each other, give each other feedback. I think a lot of my growth honestly came through therapy or dealing with it on my own. Austin and I as co-founders today would look so different from us in 2016 through 2019.
2020: COVID, The Sale Process, and the Rollercoaster [00:57:00]
Sam: Let’s go to 2020 — the year we both sold. You did $20 million in revenue, $6 million in profit. We did $12 million in revenue, about $3 million in cash, and 1.5 million subs.
I thought we were going out of business. Did you think that?
Alex: Yes. I can remember exactly where I was — pacing back and forth in my now in-laws’ main room talking to Austin. One of our biggest sponsors, a financial services company, had a $75,000 sponsorship coming the next day. The day before COVID started, they canceled it. Then the floodgates opened. In a period of a few weeks, maybe 30% of all revenue we had booked just vanished.
Austin and I were going back and forth: how the hell are we going to make enough money to not fire people? The first lever we pulled was turning paid acquisition down to zero. We brainstormed everything — starting a Patreon, asking people to donate, an education business. We ended up launching an education business at the Brew, which we’ve since shuttered, but the reason it started was short-term cash. The first thing was a partnership with Scott Galloway and Section 4. We did a course and it made $300,000 in one month, and it basically helped save us.
Sam: We did the same thing. We did a course and it made $300,000 in one month. That was the year I learned what the word force majeure meant.
I hope this brings them down. I remember during this era — I remember I had a shared advertiser and I would beg them, “Show me their click-through rate versus our click-through rate.” And it was basically the same. Not significantly different.
The first half of that year I thought we were going out of business. The second half, everything boomed. Our Trends thing was selling like crazy. People were spending like crazy. We ended up getting some PPP money because our events business got shut down entirely. And then I’m like, damn, I kind of feel bad because we killed it that year.
Austin: The emotional journey of the acquisition was crazy for Austin and me. I don’t know how long your sale process was.
Sam: 90 days. LOI to closing was 90 days, but then there was like 30 to 60 days of flirting.
Austin: Ours looked completely different. End to end was 11 months. The first conversation on the Axel Springer side was November of 2019. First deal terms came — I can’t remember exactly — let’s call it January or February. Then March — the world shuts down. There’s a period of three weeks where Austin and I are like, forget the deal. We don’t even know if we’re going to have a business. Then starting in April, everything ripped. And we went from “We don’t even know if we’re going to have a company” to “We’re way underpriced. We’re doing so well. Are we even being paid appropriately for how much the business is ripping?” That roller coaster in those three or four months was insane.
Sam: The sale process was the most intense part of my life. It was horrible. I was so bummed almost every day for three months.
There was this woman who worked with me, Edie, who I had hired earlier that year. She was maybe 63 or 65. She basically had birthed her daughter in her 40s and said, “Now that my daughter is 20, I’m going back to work to prove to her that young women can kick ass.” I was like, hell yeah, you’re hired. She was our HR and accounting person.
And during the deal process, we’d be in a meeting with HubSpot — like six people — KPMG accountants, six people, six lawyers. A $20,000 meeting. And I see Edie raise her iPhone and take a picture. And I’m like, “Edie, what the hell are you doing?” And she’s like, “I don’t know how to take a screenshot on my computer, and they’re talking about Dropbox, and I don’t know how to use Dropbox, so I’m taking pictures.” I’m like, “Edie, I got to teach you how to use Dropbox.” She was brilliant at her job — just didn’t know some technical stuff. And I’m in this meeting like — I cannot tell them this. This is how scrappy we are.
Did you use a banker?
Sam: I hired a banker the first time I tried to sell. We ended up getting an offer from Vice and it was all stock. Thank God I didn’t take that.
Austin: You’d be working at McDonald’s right now.
Sam: I went to tour the office and no one was there. And they were all in sexual harassment training because incidents were so common. I’m like, you guys suck.
So I hired a banker for that. Then I always thought HubSpot or a company like that should buy us. They reached out to me. And I was like, I don’t need a banker. I’m going to negotiate this. When I started the company, my goal was to make $20 million by 30. As long as I make that, I don’t care. The deal allowed that to happen.
I talked to Kip, the CMO of HubSpot, and he told me he tried buying you guys too. He wanted to buy both of us and own the business newsletter space. But he said they were too far along, and you hadn’t talked to anyone, so he knew he could buy you but not them.
Alex: I don’t know if Kip is totally being truthful there. I think they were interested. But because we did a better job of monetizing each subscriber, we were more expensive. And what’s $10 million of profit to HubSpot? They cared about our users. Classic vertical integration.
I always thought we were going to sell to Fidelity or E-Trade or Robinhood. It made so much sense as an acquisition and retention play. In fact, we pitched SoFi — the CEO at the time was Anthony Noto, formerly the COO of Twitter. He really liked us. We pitched over Zoom, during COVID. And Alex and I are like, this is our moment. We’re going to sell for hundreds of millions, get all this SoFi stock.
We pitched for 15 minutes. And a woman on the call dead-pans, looks at Alex, and goes: “I don’t get it.” And I’m like, which part? She goes, “Why would we buy you guys? I don’t get the whole thing.” And the head of business development flips his background and shows SoFi Stadium. He goes, “300 million eyeballs a year. That’s how many people see this stadium. You think we want 3 million emails? What are we going to do with 3 million emails?”
And that was the entire call.
Sam: What a douche.
Austin: But Alex and Austin, I think you made a good point about incentives there.
Alex: At the end of the day, we were telling the marketing team of a company: we can market your product better than you can. What CMO or head of marketing is going to buy a company unless they have a ton of humility? So she was fearful. That’s why that deal didn’t go through.
And we couldn’t even get in touch with the Fidelities or E-Trades of the world — that wasn’t even a conversation. So that’s when we went to more media buyers like Axel Springer. And we shopped it to everyone. We shot it to all traditional media companies. No one was interested. Hearst wasn’t interested. The New York Times wasn’t interested.
Sam: Frankly, I hate the media industry, so I was kind of happy.
Austin: And that’s part of the reason we sold. A couple of hours before we signed, we were unsure. We were getting all this advice. But we came back to: we own the vast majority of the company and we didn’t get a single offer in writing from anyone else. And that was terrifying. We said, what if Axel Springer goes away and we’re never going to be able to sell this company? Of course in hindsight that’s not true, but at the time you’re scared. We made the decision partly because we were scared.
Sam: All right, I want to rattle off the future numbers and then talk about what people listening can actually learn.
2021: you did $46 million in revenue and $10 million in profit. 2022: $70 million in revenue, $10 million in profit. 2023: same. And I imagine the business is now in the $70-80-90 million range, though you’re no longer owners.
What Newsletter Founders Get Wrong Today [01:14:00]
Sam: What do people starting newsletters now get wrong? And where’s the opportunity?
Austin: I think the number one thing people get wrong is they see the arbitrage we had in 2017 and think it exists today. They think the same economics exist because they read a blog post Tyler Denk wrote in 2018. The value of a subscriber is significantly less than it was when we started, because there are so many newsletters now.
And people forget that the most important thing — it goes back to what did we do in 2018? We printed the newsletter out every day and critiqued the content. Every person I see now on Beehive — it’s like, “Here’s an untapped market. Let me write B-minus content and use all these growth hacks, get to a million subscribers, and sell all these ads.” And then they get to half a million subscribers and their ads don’t sell for $50,000, they sell for $3,000. The economics don’t work because there’s not enough engagement because the content’s not good enough.
People aren’t focusing on the content. It’s all about the content. That’d be like selling a SaaS product where the code doesn’t work that well. You have to focus on the content first. Everything else follows.
Alex: I’d add: the more niche the better. The internet is this long tail of millions of niches. The more niche you go, especially if you pick the right niches — not only can you get higher CPMs, but the trouble we had at Morning Brew was we could not figure out how to monetize our audience directly. We tried merch, we tried an education product, we couldn’t crack it. The more niche you go, I think the more clear it becomes how you can directly monetize your audience. Hustle Trends was a really smart product for your audience.
Sam: A big thing to learn: my strategy was partially right, partially wrong. I hated advertising. I remember — do you guys remember how sales guys always wear jeans, plaid shirts, and bright brown shoes? I bought a pair of those brown shoes, wore them to one meeting in New York, took them off at the end, and threw them away. I went home in my socks. I was like, I’m never wearing these things ever again. I hated it.
So I wanted to create products to sell to my audience. And what a lot of people get wrong about that is they go outside their core competency. In order to make a business like this work where you sell stuff to your audience, it almost always has to be within your core competency of content. If the founder is not the kind of person who is a wizard at content — the way Zuckerberg was a tech wizard for Facebook — the business almost always suffers.
So for people listening: if you’re going to build something, go super hard on content. Make money via advertising — that’s the right move. And if you do make money in other ways, you’ll almost always want those ways to fit within the Venn diagram of your company’s core competency and what the world wants — which is some type of content-media thing.
Alex: We see it all the time. People start a media company, try to sell a product, and it’s really hard. You’re pivoting from a content company to a product company. It’s like BuzzFeed doing a cookware brand with Tasty. At the end of the day, you’re just adding massive complexity. Content is the product. The media company is the business. If you then want to create an entirely different business, you now need to figure out: is the product exceptional? Do you have someone who understands it deeply who can run it? Can you keep the media side going? And is there an intersection where your audience not only trusts you, but trusts this new thing you’re selling? That’s so many more moving pieces.
Sam: What about geography? Being based in New York — did that help you?
Alex: I agree it helped us a lot. If you’re an AI company, being in San Francisco is beneficial. If you’re a media or content company, being in New York is beneficial. That was huge for us. If you want to build a big brand in media, you have to be where the ad agencies are. Alex was just grinding — going to ad agencies, meeting people, talking. If he lived in Austin, those people weren’t there. He was never going to be able to meet them in person.
Sam: You’re not in it to win it if you’re not in New York.
Alex: One other thing — I think Sam and I feel differently about newsletters now. Your perspective is like, newsletters are so much harder, you wouldn’t necessarily do it today. My general view is we’re past-early on every media channel on earth. Podcasts are saturated. YouTube is saturated. Newsletters are saturated. Everything is harder. That said, there will always be opportunities, especially in a niche you know a lot about. I’m still bullish on newsletters as a way of owning your audience. You just have to play the game at a higher level than we had to.
One random thought: I used to hate the news business because you need so many people and the economics are horrible. But I actually think — given where we are in society and the general distrust of traditional news — there’s a ton of opportunity to disrupt news as an upstart. We’ve seen that with Bari Weiss and The Free Press. I think we’ll see more of that over the next few years.
Where the Real Opportunities Are in Media [01:25:00]
Sam: Here’s a take on where interesting opportunities are. I would bet my life you guys agree with me. Quarterly or monthly hardcover magazines, or some type of physical newsletter.
Alex: I love that. I almost made that. We did Moneywise — a personal finance podcast for high-net-worth people — and I almost made it a $500 to $2,000 a year thing that shows up quarterly in a manila envelope with really well-written articles, stapled printer paper, to feel like a mom-and-pop underground thing. I still think someone could pull that off.
Have you seen Arena Magazine?
Sam: Yeah. So this guy Max Meyer — I believe he worked at 8VC with Joe Lonsdale — started this quarterly magazine. I can’t tell you if it’s going to be a big business, but they tell the coolest stories and it’s beautiful. High-gloss paper, amazing graphics, you’re probably charging a $7,000 CPM to some beauty brand. Stripe is making these really cool ads, Ramp. It’s awesome. Everyone should check out Arena Magazine.
Austin: What I would do is the opposite of beautiful. Pick an industry that has a lot of employees — the financial advisory industry, the advertising world — something where there’s a few hundred thousand people and you’re only one or two degrees separated from each person. The whole game would be: name as many names and companies as possible. So you’d want to buy it for all your staff. Rankings like “top this person this quarter.” Because it’s like the difference between Oscar advertising in the subway versus on a computer screen — when you see something out in the physical world, it feels way more legit. I would do that for an industry and name as many names as possible. They’d pay an annual fee just to have their name on paper.
Sam: Like the 30 Under 30. But for like financial advisors. Except I hate financial advisors, so it would be like, “You all suck, but here are the least-sucky ones.”
Any other interesting opportunities?
Alex: I think a media company focused on alternatives — alternative investments. Real estate, private equity, venture. Alternative investments are becoming a bigger part of people’s portfolios. They’re more opaque, harder to understand. But they’re also really interesting ways to monetize people who are investing in alternatives. A company that becomes the go-to source for navigating the complexity of alternative assets is going to make a killing.
The second thing: for a long time Austin and I talked about how an amazing way to monetize our audience would be like our version of Motley Fool. We never did it because the marketing just doesn’t feel good to us. But if someone can figure out how to support retail investors — help them not lose their money in the markets — and media is just the funnel — even at that newsletter conference two weeks ago, James Altucher said on stage he made $120 million a year in revenue on his premium thing. That is still a massive opportunity.
Sam: So here’s what I believe: I still think the big opportunity in the media space, if someone wants to take a big swing and build a billion-dollar company, is to do what The Hustle did — use content to build something like Trends, but take it to the extreme. The best example right now is what Overtime is doing. Dan Porter, who’s been on the show — for the first three years of that business, I didn’t get it at all. I thought it was so stupid. He left all these awesome jobs and all he did was put sports on social. Then next thing you know, he’s doing basketball tournaments. Then he’s running a league trying to compete with college basketball.
If in a couple of years I build another big company, I would think like that — basketball, pickleball, tennis. There are so many interesting niches where you can go take a massive swing and try to compete with the biggest organizations in the world.
Looking Back — and the Hustle’s Real Legacy [01:36:00]
Sam: So my story ends there. In 2020, you guys sold half the company and then later sold the rest. I want to talk about the future, but I also want to say — what do you guys think? You know, now that you’re out, what do you look back on?
Austin: The thing I’ll say is I matured a lot during the sale process. We dealt with so much — so many different stakeholders. Alex and I are really lucky. We grew up with nice families, started this business, and from day one everything took off. No hardship. The hardest part of the business was the sale process.
We had investors who were pissed at us for selling too early — the same investors who six months earlier were begging us to sell. We had employees who felt they didn’t own enough of the company. What you learn is when there’s a huge lump sum on paper, everyone starts thinking, how do I get mine? “I only own 0.25%, but I kind of view myself as a co-founder.” I took that very personally. It was very hard for me.
I was a bull in a china shop. I remember taking these calls, my now-wife was in the other room, and she goes, “Austin, you’re an asshole.” I’m like, “What do you mean?” She goes, “You’re a total asshole.” I’m like, “But I’m right.” She goes, “You’re totally right, but you can be right and not be an asshole.” And I was like, “Oh, I didn’t know that was possible.” So I was just a mess up until then. I’ve matured a little bit since.
Sam: You’re still a bull in a china shop, but in a great way. What I was telling you earlier — I would never want to have an argument with you. You will win a lot of times because you’re so smart and just intense.
So what’s your thing, Austin? Where do people find you?
Austin: You can find it in my Twitter bio.
Sam: And if you Google your name, Austin, by the way, it’s that stupid photo of you guys on the white wall that you’ve been using for like 15 years. And it’s your last episode of My First Million. So it’s funny how we’ve all come together.
For the record — I never hated you guys. I hated the story that I made up about you. And over the past three or four years, Austin and I have become very, very close. Our families hang out on Saturdays. Alex, we did a family hang two weeks ago. I have nothing but love for you guys. I consider you family and some of my closest friends. It’s been fun to get soft instead of wanting to compete — because now that I know you, I don’t ever want to compete against you again. You guys are formidable. Nothing but love from our side.
Alex: Quite the 180 from 2018. It was all a story — which, if you’re listening and you have a company, having that story was so helpful. Having an enemy was so helpful, even if it’s made up.
I will use this time to plug my new newsletter launching soon. One of my first newsletters is about enemies. I think having an enemy — whether real or fake — is really, really important. Beehive has ConvertKit. I know Nathan and he’s the sweetest guy ever. And I know Tyler Denk a little and he seems like a wonderful guy. And I’m not going to tell you guys to stop fighting because I think the fight’s good. And also I know you’re both wonderful people who would love each other in a different world — when it’s all done. But you have to have that.
Sam: Which just means six years from now, one of them is going to have a podcast called My First Email and they’ll both be on it, and it’s going to be all hugs.
Alex: Thanks for doing this. This was like therapy for me. The most therapy I’ve done in my life, I think.
Sam: All right. We appreciate y’all. That’s the pod. Thanks.