$100,000,000 Newsletter Strategy

in 2020 the morning Brew was acquired for 75 million dollars a precipitous climb for the company that just five years earlier was started out of a University of Michigan dorm room two years later they are on Pace for 75 million dollars in annual revenue and in this conversation with CEO Austin Reef we talk about the metrics that matter to a company like the morning Brew what he's learned about hiring scaling a company and how they've implemented the EOS model to get outstanding results stay with us foreign you had a very interesting tweet recently there is no industry in the world that is easier to get to an eight-figure exit than digital media but there's also no industry harder to get to a 10-figure valuation than digital media can you explain uh what that means in more detail and maybe what you're experiencing that made that pain so or that realization so clear yeah so when everyone starts whenever anyone starts off a question with you tweeted recently my heart drops I'm like oh no like what what are you gonna bring up but no this is a a good one I have a lot of conviction this so first off let's define digital media I'm not really referring to Netflix or anything like that right I'm talking about digital publishing right the the BuzzFeed Vox morning Brews all all these these companies that grew up over the course of 10 or 15 years and I think the challenge with most of these companies is you well the pro right why is it easy to get to eight figures of Revenue or maybe even eight figures of profit it's really inexpensive to create content right uh you know creating a tweet costs nothing creating video content we're creating video content and audio content now it's costing us uh whatever Riverside costs so you know very very inexpensive so creating content inexpensive Distributing content very inexpensive right you have these platforms and you can find fit on a platform before they change an algorithm you can build a great audience on Instagram or Facebook or Tick Tock or YouTube and so it's really inexpensive and allows you to test and iterate and get your voice out there create a brand we did it over newsletters other people done it on YouTube on podcasting and so that's why it's actually not that hard to build an audience and then sell uh sell that audience or sell to that audience the reason why it's so hard to create let's call it a billion dollar company is because the shelf life of content is like three seconds right I create a tweet that content is good for a very short period of time we create a newsletter that newsletter is good for what a day maybe and so you with a digital publisher you're amortizing this content over the course of minutes or hours versus Netflix uh which is another Media company right they create uh squid games and people watch that for years and years and and maybe decades right and so you can spend so much more money on content you can invest in it right and therefore you can amortize that content over a longer period of time but when you're a digital publisher creating news or or even Evergreen content like it's really the the value is not there uh and so it is very difficult over time to build uh a multi-billion dollar brand in media not say it can't be done there are people doing it but it's incredibly difficult versus software again has very different economic softwares economics similar to Netflix you create software it's good forever or or close to forever and you can advertise that over you know many customers in a long period of time and you know akin to you know a recent tweet there's a lot of noise in Twitter but there is also signal if you're paying attention to and listening to the right people and so the reason that that you know put an antenna up for me is this is high signal because you are the CEO of one of the flagship Vanguard digital media upstarts that's pointed to as being you know Blue Chip front line as it pertains to growth and what's accomplished so it's it's particularly uh uh you know interesting when you're the one kind of waving that flag and not you know some VC that got wrecked because they got into BuzzFeed advice or something yeah I I mean look right I am talking my book a little bit we didn't raise capital and and and so uh and I don't believe any company should raise capital or not a lot of capital especially not Venture Capital uh so yeah I think it's incredibly difficult to jump it's hard to make a billion dollar company or or create one anyways uh but particularly in media and so uh yeah it is hard and and you know if I build a 999 million dollar company I'll be happy so I'll be okay with that I think understanding the potential of what you're building is incredibly important always here the last couple years so many people right have raised at their company can be worth 10 20 50 billion and it just they turn themselves to a bit of a zombie so talk to me about where morning Bruce stands now uh you know people that are they're paying attention they know that there was a majority acquisition of the firm by Business Insider um but but talk to us about I looked at like didn't look like there's over 300 people working at your company now yeah so morning Brew was majority acquired you know technically by Axel Springer Axel Springer owns uh Insider and a bunch of other they spot Politico it's a very large German media and holding company and that deal happened end of 2020 since then we've really taken off from really every metric so we've gone from about 50 employees to about 300 Revenue went from 20 million to 70 million or so profitabilities increased and so we've really just grown a ton since then across not just newsletters so after we launch morning Brew we launched you know the morning Brew for X for X industry or X job function marketing Brew retail Brew HR Healthcare Brew launch today if anyone listening or watching this works in any of these industries definitely go sign up they really are great Publications and so that's where we we went next and now we're starting to expand beyond that into multimedia content audio video content as well as other revenue streams so we've built an education team which is our first foray into direct to Consumer Revenue and so one of the you know elements here when it pertains to multimedia I have so many questions you gave me like three different Pathways to go down so I'm actually going to reel it back in and go to specifically one associated with the acquisition that rate of growth and the increase of uh employees and all these other things can you break down part of what was unlocked or enabled as a part of the acquisition was it you know was it cross promotion between these other brands was it access to existing you know sales infrastructure like how do you conceptualize you know the before and after of morning Brews operations after that majority acquisition occurred yeah so it was actually none of that right it wasn't Synergy with any other company but it was access to Capital so we've been bootstrapped for so long and what Axel Springer gave us the ability to do number one it gave us a little bit of secure job security for people we hired so people were more willing to come to morning Brew if we had the backing of Axel Springer and number two it allows us to be a little bit riskier because the axle Springer wasn't going to let Maureen Brew out business and so we were able to ramp up investment a little bit faster than if we would have otherwise if we didn't have an owner and so we were able to invest more than historically we would have because you know we didn't want to your cash was a concern when you're owned by a 10 billion dollar company cash becomes less of a concern uh because of the infrastructure around you got it that makes a ton of sense I want to build back up to the multimedia and like morning Brew is a really interesting thing that you know the morning Brew could potentially now be a brand that someone interfaces with and they don't think of you guys as a newsletter company which literally like I remember getting the newsletter I I'm gonna guess like 2018 or 2019 for the first time and it's like wow this is so cool but so distinct it's crazy that like it's even possible now that someone might see it as like Dan on Tick Tock or you know some educational YouTube video yeah that's exactly it right so I think there's pros and cons to that right a lot of companies out there a lot of media companies have decided to build a branded house everything a morning Brew this morning brew that a lot have and I think the challenge is it's really hard to be all things to all people and we have subsets of our audience that like to get personal finance content in a really funny tone from Katie right or like to get comedy tick tocks from Dan or want to hear about entrepreneurship from my co-founder Alex and Sophia and Jesse puji over at The Crazy Ones which the new show they launched but we want to be careful about preserving morning Brew's voice and morning Brews uh Essence right and so while everything within all these other brands they do ladder up they have the same ethos they have the so the same uh voice they they are portrayed in different ways right and so uh yeah you totally could stumble upon money with Katie or The Crazy Ones and and at first not even know it's a part of morning brew and that's a great thing for us we view that as opportunity it allows us to be more flexible more Nimble allows us to test things uh with less uh risk and so yeah we're we're excited about that the house of Brands approach and it's interesting that you still talk about voice because from the earliest days when it was really understood as kind of a singular newsletter company I remember you know you and Alex both talking about that as like the style guide and the what uh what reading a morning Brew newsletter should what that experience should be um I want to talk about some of the new multimedia properties but first going back to those early days there's a Simplicity to the early days of a business where there's only a couple metrics that matter obviously cash in the bank and revenue but specific to a newsletter business was it really you know new subscribers sign ups and open rate like what were the metrics that mattered to you operationally at that point in time yeah at the beginning of the company we had three goals right the best possible newsletter on the planet grow that newsletter with high quality subscribers and then sell ads into that newsletter to support the growth of the writing team to hire more writers so we could get even better and support the growth of the newsletters we could grow with more high quality subscribers that was the flywheel for two or three years straight we didn't think about anything else right grossel right gross sell and what we did was we I think a lot of newsletter companies just focused on newsletters but we focused on opens we were really really hyper focused on opens it's a little bit more tricky to do that now because of uh Apple's new updates but five years ago that's all we cared about so every single day at 11 A.M we'd stop we were doing and we checked the open rate of the newsletter and we'd write it on a whiteboard and we had just months and months and months of open rates every single day and that was our North Star and that's what we were most focused as a company and everything that went into that with something that mattered a b testing subject lines acquiring high quality subscribers writing a great newsletter and you know the the five six seven ten people work at the coming time our entire lives revolved around that number at 11AM every single day and and so now as uh a firm that is you know an order of magnitude larger how do you instigate that same degree of focus on a team by team basis because just the quantity of metrics that have to matter when you're at this scale has to it it also Grows by an order of magnitude how do you instigate that but also stay kind of abreast of all these different teams as the CEO yeah so what's interesting is now Maury Brews multi-product right multi-mediums multi-revenue Stream So to your point many different metrics matter and so what we do at morning Brewers we use this this approach called traction I don't know if you've read it it's a I think the author's name is Geno Wickham or something Gino Wickman yeah yeah it's a great book and so we have company rocks right those the the companies three to seven top goals for for the next 90 days each one on each person on leadership has their goals there are three to seven goals and we start to layer them down at the company and so now we don't uh and I think it's a little unfortunate but just the way our business is right we can't have a metric like the New York Times which is like 15 million subscribers and that's North Star for us there's a variety of metrics because we are multi-revenue stream multiple multiple uh businesses uh and so those metrics might change every year every quarter this quarter we're really focused on growing this property this year we're really focused on monetizing this property and what's really important is the company understands what are the three or seven most important things for the whole company and then each leader to understand what is their priority are their priorities uh helping us get to this quarter's goals or are they setting ourselves up for next quarter's goal or next year's goal and it's a little bit more complex it's like a little bit of a web that takes way more preparation than simply saying right gross sell one newsletter and it's definitely one where you know that book coaches you towards starting at the top so really starting in the clouds 10 years out three years out what do you want what are you trying to attain and to some degree it doesn't perfectly then lay out what the micro goals are but it allows you to actually at least trim the fat of the things that maybe were potentially stealing some of your focus that are no longer relevant how have you constructed or are you comfortable sharing what those really big you know vision and goals are for morning Brew over those time Horizons yes so what's interesting is that that number has changed every every time right my original goal was I mean day one and avoiding group or even what traction was my goal was like how do I make enough money so I can do this for a living so I don't have to go get my job in finance and then once we accomplish that I was like how do we get to uh 10 million dollars of Revenue like that would be crazy and then it was like wow can we get to 25 million of Revenue and even a year ago we were at 46 million we're like you know we get to we get to 100 million dollars of Revenue that would be amazing in three years right and we're sitting here today at 70 million dollars of Revenue uh this year or so and for us it's it's now how do we get the 250 of Revenue right and now it's like how do you do 100 million dollars of profit right for me if as a media company a digital media company we get you a hundred million dollars of profit that's more of a 10-year Vision I believe right I think that would be that would be incredible and so I I mean in the vein of morning Brew we've always cared about profitability and so Revenue goals are nice right they're easier to look at they're easier to to Think Through uh right but ultimately I think you know the 10-year goal could be 100 is 100 million dollars of profit uh in my mind at least that would be you know 100 million dollars of profit and 20 was that 2032 or whatever it would be would be pretty crazy yeah hopefully just inflation hasn't gone crazy by then exactly um so so all of this really builds up to one of the core questions that I wanted to ask you which is you if you look at the statistics around entrepreneurship and on the success of entrepreneurial Ventures how counter-intuitively if you watch you know like the social network or someone something it's not actually 20 year olds that have the highest probability of success and the best outcomes when it comes to a venture it's usually a second time founder it's usually someone in their 40s maybe their 50s and so you and Alex are really substantial outliers not just in the realm of digital media but as entrepreneurs who founded companies in their 20s generally so my question for you is really the attainment of knowledge Beyond so your imagine yourself starting hey can we you know make enough money so that I don't have to go you know work in finance that's a huge gap between executing you know the operations of a firm that is on its way to 100 million dollars in Revenue the actual collection of the knowledge that you needed were you you know hiring coaches hiring Consultants obviously you're reading books but like what did you do to Fast Track the knowledge attainment there's a little bit of survivorship by here right which is to say that I agree you know it to some extent that we we learned a lot we worked really hard but also let's you know just be transparent we got lucky right we luckily stumbled upon newsletters now we took advantage of that right and I think that's your question how do we do that I think it's a few things I think one now of course I have a business coach and I have a great network of people but in the early days it was just we were so fully immersed in what we did every single minute of my life that I wasn't sleeping I was reading a book on growth marketing because how are we gonna grow the newsletter it was spending time talking to people who sell ads it was going to Industry events although not too many to be honest um I don't think there's that much value but going to there when we saw value and just working and you know I really believed uh it was outworked everyone and it wasn't okay we outwork everyone it'll be a 100 million dollar company was it we outworked everyone we can just do two percent better or five percent better and I think in some ways us having a beginner mindset and learning as we go as we went was really valuable however we did and we still do make a lot of mistakes and so again you're right we are the outliers I also invest on the side and I don't usually invest in Founders my age or when I started morning Brew because there is such a steep learning curve and the last thing to add on to that is also you have to remember it was a bootstrap business there was no investor expectation we would have raised two five ten million dollars and the investor expectation was to grow at a certain rate every year uh I think we would have failed miserably I think we set our own goals our own expectations because we didn't have outside capital and that was really really important for us to keep expectations at the right level got it but you have the coach now so can you talk about like when the realization was that maybe it's just enough money's coming in the door that I can afford it but there's also a degree to which it's like hey I now at least have a conception of what I might not know and need to access this this thing that will increase you know speaking from my own experience I just hired uh my first coach for my agency and it's like already three sessions in wow I'm just seeing the board a little bit more clearly than I previously had and I was super skeptical before I had actually hired a coach yeah I mean look they say uh everyone has a plan to get punched in the mouth right and I got punch in the mouth a bunch of times I thought I made the right decision it was a horrible decision yo you make enough decisions where you have so much conviction and you're you couldn't be more wrong you're so wrong and it's like holy I have no idea what I'm doing like I'm getting punched in the mouth every single day at work and I need an outsider's perspective and that happened you know 2019 once we went from single newsletter to multi-newsletter and we were scaling the company and you know the company got to be 20 30 40 people I was like wow I am just getting crushed like big decisions I am just you know I'm consistently you know a CEO or executives they get paid and they have their jobs to make very few decisions a day or a week and have a very high percent uh hit rate on those decisions be right 80 of the time 85 percent I was right like 50 60 right it wasn't good enough and so seeing a coach and being more introspective and and rethinking things was I had to do or we were going to fail miserably and so I saw that I started seeing a coach and I've seen multiple coaches now and I just grew some humility uh because again you should get punched in the face a bunch of times and you realize that you know just because you got here doesn't mean you're gonna be able to get to the next level are there any of those decisions that you have enough distance from now that you can share I most of them honestly were hiring right most of them were like oh we need this role I want to hire that person you hire that person like oh my God like that person is like not right for this role like what was I thinking why do I think we need someone that's senior why did I think I needed someone with uh you know with that background and you just get punched in the the face with these higher incisions and the problem with these decisions are they're so they're so costly right when you miss on a senior higher it's so painful because you spend three to five you spend two months really or a month to really understand do I need this person then you spend two three four months hiring them then you have to wait a month for them to leave their job to come then it takes three to six months to realize not the right person and then a month to three months get rid of them so you're 12 15 18 months in and you're like wow we just wasted 15 to 18 months in this part of the business like what a disaster uh that's the big one the other one was expectation setting right I it it it might be a little unfair but to myself but in the early days I started this this business with Alex and there was a bunch of other you know uh people around and we didn't have the expectation right a bunch of other great employees some some people our age and we didn't have the expectation that this company was going to be as big as it was and I think if we would have a bit more ambitious mentally or I thought I thought it was me bigger maybe would have set more expectations with the team like hey this team may have all may have to hire more senior people and I think I've learned you know from the early days like you really have to set expectations all your co-workers to make sure they understand that like yes uh this is the way things are now but things can always change we might always need we might need more uh management we might need to move people around and take new roles and I think uh I wasn't being thoughtful enough when I hired someone or I made a decision and so I wasn't setting the right expectations with that person and say hey this is where it is now but maybe it'll be somewhere different later and so those two of setting expectations right from day one with new people and then also uh hiring the right people in the vein of hiring going from bad to good hires can you talk about some of the uh you know maybe 10x isn't the right term but super high leverage hires that you've made because it is digital media there is an ability to you know scale infinitely as it pertains to distribution create at a very low cost you hear this sometimes in Tech the 10x engineer that just like fixes or covers for everyone's problems but in the content business in the media business you can uncover those same type of talents who have been some of the you know highest leverage team members on the morning Brew either shout out by name or specifically by role that just allow you to take the next step as a company the highest leveraged people recently right in the early days everyone was high leverage right and of course we're managing editor Neil Freeman is incredibly High leverage you know so much of what we do today is based off his tone and his voice so someone like that of course you can't even make a comparison or or or go beyond that but let's talk more recently it's really the executive you hire as coo we now have a publisher a head of product people like that who the team was like kind of shaky and you bring them in and they're so good at their job that I never need to think about that team it's a really big Focus for the whole company how is that team navigating what is that team doing right so it's taking it I'll use a specific example we had a B2B business uh uh it was retail Brew it was emerging Tech Brew we were launching marketing crew and that was like the focus the entire company was getting those out the door fixing those and then we hired someone in Jacob uh who took over the B2B business he was GM of B2B and all of a sudden the focus of the entire company one person was owning that and he was taking over the whole thing and that allowed everyone else to be like okay that guy has that thing we can now focus on something else and optimize other things and so people who can turn your your weaknesses or growth opportunities into like oh never need to think about those again because that person is doing such a great job that's a huge unlock for the rest of the organization it's a huge weight lifted off everyone else's shoulders and when you're thinking about your company as a system and how it interacts with one another that now becomes this lens where you're identifying the constraint you're identifying the choke point and then hopefully being able to recruit effectively enough to find someone who can fill the Gap really I'm of course I'm the CEO of the company but each executive oversees a team of between let's call it 15 and 50 or 75 people and so they're really the CEOs of their own business so when those businesses can hum and work in a really great way and then interact with other systems right other teams that's really when you have uh a a really efficient operation got it so going back we talked about the early days when you know it's just a half dozen people or so and we're just worried about you know open rates and and new subscribers and that three-piece flywheel that you mentioned um there is to to some degree uh maybe a lower threshold you don't want to mess up necessarily like you know an advertising you know spot or something but if an error is made or we need to you know experiment with this one newsletter there's tomorrow's newsletter and we'll kind of be okay maybe that wasn't the mindset that you had but I would I guesstimate when you're small there is a little bit you know Freedom or freewheelingness to how that media gets produced is that fair yeah totally so now that you're at this scale how do you think about the experiments like there's like you know the market research tested bets opportunities I'm sure like you know it's it's very straightforward hey Healthcare is this like huge business vertical we don't have something there like we need to figure out a way to attack it but then there's also like the comedic Tick Tock sketch that is very you know like EXP mental maybe to land maybe it won't and has a different type of investment so how do you think about the different experiments that the morning Brew runs and how to effectively size those bets yeah it's understanding what is the opportunity we succeed always start with if we succeed how big is the opportunity is it Quantified in the thousands the millions the tens of millions right what investment do we need to get there over what time period and what is the minimum viable test right what's the how can we build an MVP and test as fast as possible Right with someone like Dan and his tick tocks we had to hire Dan and it wasn't that big of a bet from a monetary perspective it turned out to be an amazing bet I'm glad we did it but it didn't have to be a big bet but if you told me hey we're going to build a software company that's going to do X Y and Z when you hire 50 people and that's five million dollars of annual payroll the opportunity needs to be Quantified in the you know tens and tens of millions of dollars if not hundreds of millions to make that worthwhile so how big is the opportunity how big is the investment and how much work and distraction is it going to take to get us there amen how have the packages that you've sold to your different sponsor Partners it started with the banner at the top of the newsletter how have those evolved as you've learned more about ad sales and actually built out that team within morning we really think we have it we have a really compelling ad unit which is a native ad unit written in our tone so the basic ethos that the add you does not change but the way we where we put it we've done a ton of testing we test everything in our ad units and so the number of AD units has changed right so we do small modifications but one of the reasons why we were successful was because we found the perfect fit of content medium and AD unit and that is what makes newsletter so successful is when you write that ad unit in that tone so we haven't done too much evolution of the unit itself now our package has gotten much bigger we do events that we do yes you can sponsor our events we do virtual events we do content on our site we do podcasts so when we work with a big brand we want to we're not selling products we're selling our audience right it's it's here's like in front of our audience here's like in front of it then on Instagram on tick tock on on YouTube newsletters events everything right and that's our goal is to work deeply with a partner to engage them with our audience in our tone our voice our style across as many mediums as frequently as possible and if you had to evolve the archetype of who you're speaking to with that morning Brew voice because I also remember in the early days it was like I have this experience as you know someone in school or recently out of school who's just trying to access these business stories in in a way that makes sense to me and isn't kind of written like the Wall Street Journal uh so to speak but you know as the audience grows like is that still how you define The Voice or how has that had to evolve yeah I I think naturally as we've aged in our writers of age the the audience had well and the audience's age we've started to make references that are meaningful to us we're not going to reference things that are being full of college students anymore it's not saying we don't Target college kids college kids still do read morning Brew but we're targeting a little bit older of an audience and the audience has aged up in the early days of morning Brew we thought the newsletters were college kids and so it's a very different uh very different audience different way we speak to that audience now yeah I know that you guys don't always necessarily like lean into this uh comp but I noticed that Barstool has started on Instagram to post like parenting videos and you know I have a 14 month old so like I'm actually like yeah like look at this you know crazy kid doing something it's like you can't even fathom them doing that seven years ago when it pertained like it was like a frat party or something exclusively so there that makes sense that when it is so a media business is so driven by its kind of core creatives that as those creatives all age as time passes there's going to be a similar kind of um shift but there's probably also more you know uh desirable Target demo that your your advertisers like to reach exactly Austin this has been fantastic I want to aim towards wrapping up you've been uh excellent answer of all my questions um before I do that um what's your take on why the Ravens have the ugliest uniforms in the NFL those black on black uniforms as Monday night football uniforms with little purple uh accent I don't know what you're talking about we don't have that that mustard yellow garbage in that horrible Stadium up in Pittsburgh I uh we're gonna have to do like uh some sort of better something on the next time the the steals are actually good because this is definitely not the uh the the Steelers year by any stretch of the imagination I don't know what's his name looks pretty solid though what's it what's your quarterback's name the new guy we like pick it because he went to Pitt but he's there there's a ceiling we're not we're not over the the moon about him I think that this is going to be a good you really just have to worry about burrow now for the next couple years although they don't look very good either right yeah yesterday but I don't know man yeah we'll we'll see um this has been awesome I want to make sure that people can connect with you in the digital world uh what coordinates would you like us to point to people uh Point people towards if they'd like to learn more about you morning Brew all that good stuff yeah I spend most of my time on Twitter so it's Austin underscore Reef r-i-e-f you will find me beautiful and we're gonna also Point people towards the new uh Healthcare newsletter that you guys have stood up amongst all the other amazing morning boot content linked at going deep with aaron.com podcast or in the app where people are probably listening to this right now before I let you go Austin I would like to give you the mic one final time to issue a actionable personal challenge to the audience so when I left college and started morning Brew our goal was to just like make money on the internet and it's become very a little cliche now there are some people who talk about this but if you haven't done it just make a single Dollar on the internet I think it's a really empowering feeling to realize that you know we're in a time where a lot of people vilify technology and big tech companies but if you can harness the power of the internet learn on the internet and then sell things whether it's you know ads whether it's product to people I think it's such an empowering feeling to be able to leverage technology and leverage the internet to make money if it's a dollar a week you know whether it's a side hustle or a full-time thing I think it's really powerful I think it's really empowering to understand that you can turn all of this stuff built for you all this technology into a way to make money I think it's really really cool so I'd encourage everyone to try to in the next month make a single Dollar on the internet and grow from there I could not agree more I I can remember exactly that the first time uh created a transaction on the internet and uh your life's never the same so uh love that challenge hope everyone will take it and uh Austin thank you so much for sharing your time with us yeah absolutely thanks for having me we just went deep with Austin Reef hovering out there has a fantastic day thanks for listening to the end of my interview with Austin if you enjoyed it you'll also enjoy my past conversation with the founder of the hustle Sam Parr all about selling and Landing seven figure deals go check it out [Music]

Channel: Aaron Watson

Views: 18,205

Keywords: morning brew, austin rief, alex lieberman, morning brew newsletter, morning brew podcast, morning brew news, austin rief interview, austin rief podcast, morning brew daily, founder morning brew, austin morning brew, morning brew ceo, austin rief morning brew podcast

Id: GscL6opDe04

Length: 34min 13sec (2053 seconds)

Published: Sun Nov 06 2022