How to build a $100M+ newsletter business

Key Concepts

Newsletter businesses, media landscape, revenue generation, subscriber growth, content strategy, advertising, acquisitions, competition, business models, organic growth, paid acquisition, niche markets, direct monetization, company culture, core values, entrepreneurial operating system (EOS), alternative investments, the importance of content.

Year-by-Year Breakdown and Key Learnings

2015: Inception and Early Stages

• Morning Brew: Started as "Market Corner," a PDF email newsletter providing business news to students preparing for job interviews. The premise was to make business news more engaging and accessible. No revenue was generated in this year.
  • Key Point: Advantage of being in school allowed for a focus on product development without immediate revenue pressure.
• The Hustle: Primarily an event called HustleCon, generating $400,000 in revenue and $200,000 in profit.
  • Key Point: Early profitability through events, but a regret over being overly frugal (returning used Costco supplies).

2016: Newsletter Launch and Initial Growth

• Morning Brew: Alex was working full-time at Morgan Stanley while developing the newsletter in the evenings. September 2016, he quit his job. Faced concerns from Morgan Stanley about potential insider trading. Raised a small funding round.
  • Key Point: "IQ arbitrage" - moving from a highly technical environment to media provided a competitive advantage.
• The Hustle: Launched the newsletter on 4/2016. Revenue of $400,000 with 100,000 subscribers by year-end. Strategy focused on writing blog posts to drive website traffic.
  • Key Point: Early growth driven by content marketing and website traffic.
• Shared Experience: Both Morning Brew and The Hustle had similar experiences with John Steinberg (Cheddar) and Ben Leer (Thrillist), who initially seemed interested in investment or acquisition but instead offered job opportunities.
  • Key Point: Importance of conviction and irrational confidence in one's own vision.

2017: Full-Time Focus and Team Building

• Morning Brew: Both founders were full-time (or half for one of the founders). Ended the year with 100,000 subscribers and $300,000 in revenue. Hired key personnel, including Tyler Denk (now CEO of Beehive) and Neil Fryman.
  • Key Point: Importance of non-traditional hires and identifying undiscovered talent.
• The Hustle: Ended the year with 250,000 subscribers, $2.2 million in revenue ($400K from events, $1.8M from advertising).
  • Key Point: Learning the importance of hiring a sales team.
• Shared Learning: Both companies emphasized the importance of content quality and a maniacal focus on improving it.
  • Key Point: The standard of your business is what you allow.

2018: Subscriber Growth and Paid Acquisition

• Morning Brew: Grew from 100,000 to 1 million subscribers. $3.1 million in revenue with 10 employees.
  • Key Point: Aggressive paid acquisition strategy, spending every available dollar on Facebook ads.
• The Hustle: Ended the year with 500,000 subscribers, $5.1 million in revenue (about $1 million from events). $160,000 in profit. Started spending on advertising.
  • Key Point: Realization of the power of paid acquisition and the need to shift from a scarcity mindset.
• Shared Learning: The importance of codifying values early on and sticking to them.

2019: Maturation and Diversification

• Morning Brew: Grew to 1.8 million subscribers. $8 million in revenue ($640K from events). $200,000 in profit, but $1.6 million in cash flow.
  • Key Point: Started to see the plateau of newsletter growth and the need to diversify into industry verticals.
• The Hustle: $13.1 million in revenue, $3 million in profit. Launched the "My First Million" podcast and the "Trends" subscription product.
  • Key Point: Realization that user growth is the most important metric if revenue per user is known.
• Shared Learning: The importance of implementing a structured operating system (EOS) to scale the business.

2020: Acquisition Year

• Morning Brew: $12 million in revenue, 1.5 million subscribers.
• The Hustle: $20 million in revenue, $6 million in profit.
• Shared Experience: Both companies were acquired. Morning Brew was acquired by Axel Springer. The Hustle was acquired by HubSpot.
  • Key Point: The emotional rollercoaster of the acquisition process and the challenges of dealing with various stakeholders.

Post-Acquisition Numbers (Morning Brew)

• 2021: $46 million in revenue, $10 million in profit
• 2022: $70 million in revenue, $10 million in profit
• 2023: Similar numbers to 2022

Opportunities and Advice for New Newsletter Businesses

• Content is King: Focus on creating exceptional content. The value of a subscriber is lower than it used to be due to market saturation.
• Niche Down: The more niche, the better. Niche markets offer higher CPMs and clearer paths to direct monetization.
• Direct Monetization: Explore ways to directly monetize the audience, but stay within the company's core competency of content.
• Location Matters: New York is beneficial for media and content companies due to the presence of ad agencies.
• Physical Newsletters/Magazines: Quarterly or monthly hardcover magazines could be an interesting opportunity.
• Disrupt News: There's an opportunity to disrupt traditional news with an upstart approach.
• Alternative Investments Media: A media company focused on alternative investments could be successful.
• Retail Investor Support: A media company that supports retail investors in a way that makes them smarter about not losing money could be a massive opportunity.
• Content-Driven Product: Use content to build something like a trend, but do it to the extreme.

Key Arguments and Perspectives

• The Importance of Content: Content quality is paramount for success in the newsletter business.
• Niche Markets: Focusing on niche markets is crucial for higher CPMs and direct monetization.
• Organic Growth vs. Paid Acquisition: Organic growth is essential for building a great product and understanding the audience before investing in paid acquisition.
• Values and Culture: Codifying values early on is important for building a strong company culture.
• The Role of Competition: Having an enemy (real or fake) can be a powerful motivator.

Notable Quotes

• "The standard of your business is what you allow."
• "IQ arbitrage" - moving from a highly technical environment to media provided a competitive advantage.

Technical Terms and Concepts

• CPM (Cost Per Mille): The cost an advertiser pays for one thousand views or impressions of an advertisement.
• EOS (Entrepreneurial Operating System): A framework for running a company based on the book "Traction."
• Vertical Integration: Acquiring companies in the same supply chain to control costs and increase efficiency.
• Alternative Investments: Investments that are not traditional stocks, bonds, or cash, such as real estate, private equity, and venture capital.

Logical Connections

The conversation flows chronologically, starting with the origins of each company and progressing through key milestones, revenue figures, and strategic decisions. Each year builds upon the previous one, illustrating the evolution of the businesses and the lessons learned along the way. The discussion also highlights the shared experiences and contrasting approaches of the two companies, providing a comprehensive overview of the newsletter landscape during that period.

Synthesis/Conclusion

The discussion provides a detailed and insightful look into the journeys of Morning Brew and The Hustle, two successful newsletter businesses. It emphasizes the importance of content quality, niche markets, organic growth, and a strong company culture. The conversation also highlights the challenges and opportunities in the media landscape, offering valuable advice for aspiring entrepreneurs in the newsletter space. The key takeaway is that while the market has become more saturated, there are still opportunities for success for those who focus on creating exceptional content and building a strong connection with their audience.