How to build a $100M+ newsletter business

Name: How to build a $100M+ newsletter business
Uploaded: 2025-04-04T13:27:08.000Z
Duration: 2 h 22 min 15 s

The Big Opportunity in Media

Initial Thoughts on Competition

The speaker believes there is a significant opportunity in the media space for someone to build a billion-dollar company.

A light-hearted exchange occurs about personal feelings, emphasizing that the speaker does not hate anyone and prefers kindness over negativity.

Jealousy and Admiration

The speaker expresses jealousy towards the quality of the welcome email from another company, indicating it was exceptionally well-crafted.

They acknowledge mutual envy regarding financial competence between their companies, highlighting a competitive yet respectful relationship.

Company Sales and Industry Insights

Financial Outcomes

The companies involved sold for approximately $775 million collectively, marking a significant milestone in their careers.

Both parties reflect on being part of the early newsletter game, contributing to its popularity today.

Transitioning Roles

One speaker clarifies they are now an executive chairman but no longer involved in day-to-day operations, while others have exited their roles entirely.

Year-by-Year Analysis of Growth

Starting Points

Discussion begins on analyzing each year since inception, focusing on revenue, profit, subscriber growth, lessons learned, and potential changes if starting anew.

Origins of Morning Brew

One founder recounts how they started by helping students prepare for job interviews and identified a gap in engaging business news content for young professionals.

They initially created "Market Corner," a PDF version aimed at finance students who found traditional sources like the Wall Street Journal unengaging.

Evolution and Revenue Insights

Inspiration Behind Morning Brew

The evolution into Morning Brew was partly inspired by observing successful media ventures targeting specific demographics (e.g., women in New York City).

Revenue Challenges

In contrast to other ventures like HustleCon which generated revenue early on ($400k), Morning Brew had no revenue during its first year due to founders still being in school.

Costco Returns and the Start of a Newsletter Business

The Emotional Impact of Returning Items

The speaker reflects on the shame felt when returning unused items to Costco, highlighting an emotional struggle with perceived frugality.

Launching the Newsletter

In 2016, motivated by dissatisfaction with conferences, the speaker decided to create a newsletter inspired by successful models like The Skimm and Thrillist.

Initial Financial Success

By leveraging $500,000 earned from conferences, the speaker began their newsletter venture despite skepticism from others about its viability.

Understanding Revenue Potential

The speaker and their partner analyzed subscriber growth and CPM (cost per thousand impressions), believing that consistent growth could lead to significant revenue over time.

Industry Insights and Competitor Analysis

They noted that many competitors were investing heavily in video content on platforms like Facebook while overlooking simpler newsletter models; they believed this presented an opportunity for success.

The Journey Through Wall Street

Balancing Two Careers

In 2016, while working full-time at Morgan Stanley, the speaker dedicated evenings to developing their newsletter business.

Realization of Industry Dynamics

The speaker describes feeling outmatched intellectually among Wall Street peers but found themselves more competent in media due to lower competition levels.

Quitting Corporate Life

After facing scrutiny from Morgan Stanley regarding potential insider trading linked to their newsletter work, the speaker decided it was time to leave corporate life behind.

The Journey of Starting a Media Company

Initial Steps and Key Connections

The speaker discusses quitting their job after raising a small round in 2016, highlighting the year as pivotal for networking with media executives like John Steinberg, who was starting Cheddar.

John Steinberg, previously CEO of BuzzFeed and Daily Mail North America, reached out via email to the speaker and Austin, expressing interest in their newsletter without them knowing his significance in the media industry.

The email from Steinberg had a simple subject line "intro to founders" and contained minimal content. This led the speakers to research him on LinkedIn, realizing his prominence.

Meeting with John Steinberg

Alex recounts visiting Steinberg's office, expecting discussions about investment or partnership but instead finds himself being interviewed for a position at Cheddar.

During the interview, Steinberg quizzes Alex on how he would source experts for news stories, indicating an unexpected direction in their conversation.

Alex expresses disinterest in working at Cheddar; Steinberg candidly states that legal fees would exceed what he could pay them, which resonates with Alex as a harsh truth about startup economics.

Parallel Experiences

Another speaker shares a similar experience involving Ben Lear from Thrillist. Initially thinking they were going to sell their company for $5 million but ended up being interviewed instead.

The realization that newsletters might not be valued highly led to feelings of frustration but also reinforced their conviction in building something valuable independently.

Growth Metrics and Strategies

In 2016, The Hustle launched and generated $400k in revenue by leveraging blog posts that attracted significant traffic—500k to 1 million visitors monthly—demonstrating effective growth strategies through content marketing.

Despite having fewer resources (only three team members), another venture managed $25k through events rather than advertising. They began advertising later that year with initial deals around $4,600.

Reflections on Early Challenges

Both speakers reflect on early challenges faced while growing their respective companies. They emphasize the importance of maintaining confidence despite external pressures or offers from larger companies.

This structured approach captures key moments and insights from the transcript while providing timestamps for easy reference.

Starting a Business: Lessons Learned

Reflections on Early Funding Decisions

The speaker recalls their experience with Chris Martinez, emphasizing the persistence in trying to secure deals and reflecting on the lessons learned from early funding attempts.

They express regret over raising funding, suggesting that if starting today, they would avoid it altogether. However, they acknowledge that some funding was necessary for cash flow.

Challenges of Cash Flow Management

A specific incident is recounted where the speaker narrowly avoided missing payroll due to an early holiday schedule, highlighting the critical nature of cash flow in media companies.

The speaker notes that while they needed funds for operations, they advocate for raising as little money as possible in media ventures.

Investor Relations and Team Dynamics

Reflecting on their investor base, the speaker mentions having 28 individual investors and suggests that fewer investors would have been preferable to avoid complications later.

They discuss time management in startups, revealing how their one-year plan took nine years to execute fully.

Growth Metrics and Hiring Insights

By the end of 2017, subscriber growth reached 250,000 with $2.2 million in revenue; hiring a sales team was identified as a significant learning point after initial struggles with ad sales.

The discussion shifts to hiring practices; Tyler Denk's transformative role is highlighted alongside other key hires who contributed significantly to company growth.

Talent Acquisition Strategies

The importance of non-traditional hires is emphasized; Neil Fryman’s contributions are noted as pivotal for executing ideas effectively within Morning Brew.

The speakers reflect on recognizing untapped talent among writers who did not fit traditional media molds but showed potential and passion for writing.

Observations on Industry Hiring Practices

There’s a shared sentiment about struggling to recruit established media professionals; instead, they found success by hiring individuals passionate about writing from diverse backgrounds.

The conversation concludes with an acknowledgment of knowing each writer personally and understanding their unique contributions to the company's narrative style.

Insights into Newsletter Creation and Company Culture

The Early Days of Newsletter Development

In 2017-2018, the team would meticulously review various newsletters like Morning Brew and Axios, with Alex leading the charge in critiquing content.

Alex was known for his direct feedback style, often comparing writers' work unfavorably to others, pushing for higher standards in content creation.

Reflecting on past practices, there is a regret about not being more relaxed during the early stages of company building; understanding that iteration can lead to improvement over time.

Standards and Expectations in Content Quality

A key lesson learned was that the standard of a business is defined by what is accepted; allowing subpar content sets a low bar for quality.

The fear of establishing a new standard through acceptance of mediocre work drove a commitment to exceptional content.

Core Values and Team Dynamics

At ages 22 and 24, the founders recognized the importance of core values which they initially viewed as "fluffy" but later regretted not solidifying them.

Two pivotal core values were established: an ownership mentality (taking responsibility for outcomes) and an underdog mentality (approaching challenges with confidence despite being inexperienced).

Competitive Spirit Against Legacy Media

The team operated with an underdog mindset, motivated by competition against well-funded legacy media companies that they believed wasted resources without adding value.

Personal Motivations Behind Success

Personal experiences such as loss and bullying fueled determination; feelings of inadequacy transformed into motivation to prove worthiness through success.

Growth Metrics in 2018

By the end of 2018, revenue reached $5.1 million with significant subscriber growth from 100,000 to approximately 500,000 subscribers due to strategic advertising investments.

The year marked aggressive growth strategies including daily tracking of cash flow and substantial spending on ads leading to rapid subscriber increases.

Investment Mindset and Growth Strategies

Spending on Advertising

The speaker reflects on their aggressive spending strategy, noting they spent every dollar available, with a peak of $500K per month on Facebook ads.

A contrast in mindset is highlighted; one individual views spending as an investment (spending $1 to make $1.10), while another sees high monthly expenses as daunting.

Perspectives on Business Ownership

Discussion about differing perspectives among team members regarding the business's financial approach; younger members focused less on personal monetization compared to the more established owner.

The speaker acknowledges that their older counterpart had a profit threshold which influenced their growth strategies, leading to different operational approaches.

Learning from Experience

The speaker admits to having matured later than others in the group and emphasizes the importance of codifying values and culture early in a company's life cycle.

Reflecting on past advertising strategies, the speaker notes that many entrepreneurs now invest in ads too early without understanding their product's market fit.

Organic Growth vs. Paid Acquisition

The discussion reveals that prior to 2017, growth was achieved entirely through organic means rather than paid acquisition, allowing for better understanding of subscriber retention and product value.

Emphasis is placed on learning from previous years' revenue models; recognizing user growth as paramount over immediate profits became a key insight.

Revenue Insights and Strategic Shifts

In 2019, contrasting revenue figures are presented: one company generated $13.1 million with $3 million profit while another made about $8 million with lower profitability but higher cash flow.

A pivotal realization occurred regarding user acquisition—focusing solely on growing users can lead to sustainable revenue streams if managed correctly.

Industry Dynamics and Engagement Strategies

As newsletter economics plateaued, questions arose about sustainability; significant investments were made into paid acquisition without clear returns.

A strategic pivot towards industry vertical engagement was discussed as a way to enhance audience connection without racing for rapid growth.

Business Growth and Challenges

The Stress of Early Business Operations

The speaker reflects on a particularly stressful year in their business, highlighting the intense focus on daily operations like newsletter distribution and securing ad deals.

A pivotal moment occurs when an investor suggests reading the book "Traction" to improve operational efficiency, which sets off a chain of events for both speakers.

Impact of "Traction" on Business Strategy

After initially neglecting to read "Traction," the speaker feels the pressure from Austin, who emphasizes its importance for their business's success.

Reading "Traction" becomes a transformative experience, marking a turning point where Austin effectively assumes more leadership responsibilities within the company.

Implementing EOS Framework

The speaker shares that they also found value in implementing the Entrepreneurial Operating System (EOS), which is based on principles from "Traction."

There’s a discussion about hiring an EOS implementer, with reflections on past hesitations regarding costs versus benefits; regret is expressed over not hiring one sooner.

Transitioning from Business to Company Structure

As businesses grow beyond $5 million in revenue, there’s a need for structured systems to manage operations without overwhelming founders.

The speaker describes their journey through different phases of business maturity and acknowledges that understanding operational frameworks was crucial for scaling effectively.

Personal Struggles and Team Dynamics

The conversation shifts to personal challenges faced during this growth phase, including feelings of isolation compared to peers who had supportive teams.

Despite having team members responsible for various functions, exhaustion sets in as the speaker grapples with leadership fatigue while managing multiple projects.

Reflection on Business Growth and Challenges

Personal Growth and Maturity in Business

The speaker reflects on a period of mental exhaustion due to lack of planning, acknowledging immaturity in their approach to business.

They share a common experience with another co-founder, highlighting the evolution of their relationship over time as they matured in their roles.

The speaker notes that early feedback mechanisms between co-founders lacked maturity, impacting communication and growth.

Personal development was significantly influenced by therapy and self-reflection during challenging times in the business journey.

Navigating the Sale Process

The sale process marked a pivotal moment for personal growth; it involved managing various stakeholders' expectations and emotions.

Tensions arose from differing opinions among investors regarding the timing of the sale, revealing complexities in stakeholder relationships.

The realization that financial stakes can alter perceptions of ownership led to personal challenges for the speaker during this transition.

Communication Dynamics

A humorous anecdote illustrates how personal relationships can influence professional interactions; feedback from a spouse prompted self-awareness about communication style.

Despite being intense and assertive, there is recognition of needing to balance being right with maintaining respectful dialogue.

Impact of COVID-19 on Business Operations

In 2020, both businesses faced significant revenue challenges due to external factors like COVID-19, leading to fears of potential closure.

A major sponsorship cancellation exemplified immediate financial threats; rapid decision-making became crucial for survival.

Strategic Adaptations During Crisis

Quick brainstorming sessions led to innovative solutions such as launching an education business to generate short-term cash flow amidst declining revenues.

Collaboration with notable figures (e.g., Scott Galloway) helped create new revenue streams through educational initiatives during tough times.

Business Roller Coaster: From Uncertainty to Boom

Initial Struggles and Unexpected Success

The speaker reflects on the early struggles of their business, noting that they feared going out of business during the first half of the year. However, by the second half, they experienced significant growth.

The trends product was selling exceptionally well, leading to a boom in sales. They also received government assistance due to shutdowns affecting their events business.

The emotional journey surrounding the acquisition process was intense for both speakers. One mentions a 90-day timeline from Letter of Intent (LOI) to closing.

Acquisition Process and Market Dynamics

In contrast to a 90-day process mentioned earlier, one speaker describes an 11-month acquisition journey starting in November 2019 with initial discussions.

The onset of the pandemic caused uncertainty about their business's future; however, after three weeks, they realized their company was thriving and potentially undervalued.

The stress of the sales process is highlighted as one speaker describes feeling miserable for nearly three months during negotiations.

Team Dynamics During Transition

A team member named Edie is introduced; she returned to work later in life and played crucial roles in HR and accounting despite lacking some technical skills.

An anecdote illustrates Edie's struggle with technology during high-stakes meetings, showcasing the scrappy nature of their operations amidst serious negotiations.

Negotiation Strategies and Company Valuation

One speaker discusses previous experiences with hiring bankers for selling businesses but ultimately decided against it when negotiating with HubSpot directly.

They reflect on how personal goals influenced their negotiation strategy; achieving $20 million by age 30 was a key motivator throughout this process.

Insights into HubSpot's interest in acquiring them are shared, emphasizing differences in valuation based on subscriber monetization strategies compared to competitors like The Hustle.

Future Acquisition Thoughts

Speculation arises regarding potential buyers; one speaker believed Fidelity or Robinhood would be ideal acquirers due to strategic alignment with retention plays.

A pitch made to SoFi is mentioned involving its CEO at that time, highlighting ongoing discussions about potential acquisitions within relevant industries.

Pitching to SoFi: A Missed Opportunity?

The Pitch Experience

The speaker recounts a pivotal moment during a Zoom pitch to SoFi executives, expressing high hopes for a lucrative deal.

An executive's confusion about the value proposition leads to questioning why SoFi would consider acquiring their company.

A stark contrast is drawn when another executive highlights the massive audience of SoFi Stadium, emphasizing their preference for larger metrics over smaller email lists.

Lessons in Incentives and Marketing

The discussion shifts to the challenges of convincing marketing teams that they could outperform them, highlighting the humility required for such acceptance.

The inability to connect with major financial firms like Fidelity and E*TRADE led them to seek alternative buyers, indicating a lack of interest from traditional media companies.

Decision-Making Under Pressure

Despite receiving no written offers from other companies, fear drove the decision-making process leading up to their eventual sale.

Reflecting on this choice reveals that while it felt right at the time due to uncertainty, hindsight suggests different outcomes were possible.

Revenue Growth and Future Insights

Financial Performance Overview

In 2020, they sold half of their company; by 2021 revenue reached $46 million with $10 million profit.

Revenue grew further in 2022 and 2023, maintaining consistent profit margins despite ownership changes.

Current Trends in Newsletters

The speaker reflects on initial skepticism towards platforms like Substack and Beehive but acknowledges their success.

A critical insight is shared regarding misconceptions about current market economics compared to past opportunities in newsletter monetization.

Content Quality Over Quantity

Emphasis is placed on content quality as essential for engagement; many new entrants fail by focusing too much on growth hacks rather than substance.

Niche Markets as Opportunities

Targeting niche markets can yield higher CPM rates; understanding direct monetization strategies becomes clearer with focused audiences.

Advertising Strategy Reflections

Past struggles with monetizing audiences through various methods highlight the importance of finding effective solutions tailored to specific demographics.

Fashion Choices and Personal Branding

The Impact of Clothing on Professional Identity

The speaker recalls a negative experience with wearing brown shoes typical of tech salespeople, leading to a strong aversion to that style.

This personal anecdote highlights the importance of authenticity in branding; the speaker expresses a desire to create products that resonate with their audience's true identity.

Building a Business Around Content

Emphasizes that successful businesses selling products must align with the founder's core competencies, particularly in content creation.

Suggests focusing on content first and monetizing through advertising before branching into product sales, as transitioning from media to product can complicate business operations.

Challenges in Media Companies Transitioning to Product Sales

Complexity of Business Models

Discusses how companies like Buzzfeed faced challenges when trying to diversify into product lines, adding complexity beyond their original media focus.

Highlights the necessity for deep understanding and trust between audiences and new products being offered by media companies.

Geographical Advantages for Media Companies

Importance of Location

Argues that being located in New York is advantageous for media companies due to proximity to ad agencies, which facilitates networking and business development.

Stresses that without being in key locations like New York or San Francisco, opportunities for growth may be limited.

The Evolving Landscape of News and Media

Current State of News Businesses

The speaker reflects on the saturation of various media channels (podcasts, newsletters), indicating increased difficulty in breaking through today compared to earlier times.

Despite challenges, there are still niche opportunities available for those who possess specialized knowledge.

Disruption Opportunities in News

Acknowledges previous skepticism about news businesses but now sees potential for disruption due to public distrust towards traditional news outlets.

Innovative Ideas for Print Media

Potential Success with Physical Publications

Proposes the idea of creating high-quality physical magazines or newsletters as an opportunity within the current market landscape.

Shares thoughts on producing a premium personal finance publication aimed at high-net-worth individuals, emphasizing quality over quantity.

Examples of Successful Print Ventures

Mentions Arena Magazine as an example of beautiful storytelling combined with high production values, suggesting it could inspire similar ventures.

Business Opportunities in Media and Alternative Investments

Innovative Advertising Strategies

Discussion on charging high CPM rates for advertising, particularly in the beauty industry, highlighting the effectiveness of platforms like Stripe.

Suggestion to target industries with a large employee base (e.g., financial advisory or advertising), focusing on networking and name recognition among professionals.

Comparison of traditional advertising methods (subway vs. online) emphasizing the perceived legitimacy of physical presence over digital ads.

Unique Business Concepts

Proposal for a ranking system similar to "30 Under 30" but aimed at financial advisors, humorously critiquing the industry while recognizing top performers.

Emphasis on leveraging content to create trends in media, referencing successful models like Overtime that have disrupted traditional sports broadcasting.

Competing with Established Organizations

Reflection on initial skepticism towards Overtime's business model, which evolved into a competitive league against established entities like NCAA and NBA.

Encouragement to explore niche markets such as basketball or tennis for potential disruptive business opportunities.

Focus on Alternative Investments

Introduction of a media company concept centered around alternative investments (real estate, private equity), aiming to simplify complex investment options for consumers.

Recognition of the growing importance of alternative assets in portfolios and the need for accessible information sources.

Monetizing Audience Engagement

Discussion about creating a platform akin to Motley Fool that supports retail investors by providing valuable insights without aggressive marketing tactics.

Mention of significant revenue generation from premium newsletter offerings, indicating strong market demand for quality financial advice.

Personal Reflections and Relationships

Acknowledgment of personal growth and relationship building over time among participants, moving from competition to camaraderie within their professional circles.

Insight into how narratives about competitors can motivate businesses; sharing experiences about overcoming misconceptions fosters collaboration rather than rivalry.

A Lighthearted Conflict: Future Reconciliation?

The Nature of Conflict and Resolution

Tyler is described as a wonderful person, and the speaker expresses a belief that conflict can be beneficial. They suggest that both individuals involved in the fight have the potential to love each other under different circumstances.

The speaker anticipates a future where, six years from now, one of the individuals will host a podcast featuring both parties reconciling and sharing hugs, indicating hope for resolution.

Reflections on Collaboration

The conversation shifts to Austin's online presence, specifically mentioning his Twitter bio and an old photo that has been used for 15 years. This highlights how their professional paths have intertwined over time.

There’s an acknowledgment of gratitude towards participants in the discussion, emphasizing camaraderie despite past conflicts.