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3.18.21   12:00 PM

Morning Brew isn't just a newsletter, it's a burgeoning email empire. It counts five verticals — including its namesake newsletter, Retail Brew, Marketing Brew, Emerging Tech Brew, and Sidekick — which catapulted Morning Brew from co-founders Austin Rief and Alex Lieberman's simple college listserv to a media company that was acquired by Insider in October for a reported $75 million.

The ad-based, free subscription business model seems simple enough at first glance, but what makes Morning Brew stand out are the lessons it's learned from new media and the rise of the creator economy, as well as its strong branding efforts on social media. While Morning Brew is comfortably winning the newsletter game and is in no rush to spread itself thin, Rief's vision for the future of the company is as much about creators, branding and subscription-based revenue as it is about providing you a valuable resource in your inbox every morning.

The Business of Business spoke to Rief about the history of Morning Brew and his read on the current media landscape — which is rife with layoffs and mergers — as well as where he sees his company fitting in.

  • Austin Rief on Morning Brew's origins and the future of digital media


    Could you talk about the history of Morning Brew, from the original idea to the deal with Business Insider?

    Morning Brew technically started in 2014. When I heard about it, it wasn’t even a newsletter at the time, but a PDF attachment that was going around the University of Michigan that was trying to make the business world seem more conversational and interesting. And so I signed up. One day, the writer of that, Alex Lieberman, sent out an email saying, “Hey, I'm looking to go take this a step further, who's interested?” I saw potential in it, so we joined up. And to make a long story short, we spent winter break of 2014 into 2015 at the University of Michigan working on this. On March 14 it [was] the six year anniversary of Morning Brew. The idea was to empower and educate young business professionals. It really was college students at first, and we quickly learned that this can be attractive for young business professionals as well. And that was kind of our “aha” moment of like, “Oh, this is bigger than just college students. This is for everyone.”

    I was a sophomore and Alex was a senior. He went to work at Morgan Stanley for a year and I interned at an investment bank. And quickly we realized that this was something. We didn’t know what and we don't know what the potential was, but there was too much progress to not continue going. So we did. I spent my entire senior year working on it, and then went full time in 2017. We raised a small convertible note, and we were off to the races. Until the end of 2018, we did nothing besides write, sell and grow the daily email newsletter to get it to about a million subscribers. We had our one million party two years ago now. So that was the first couple years: Just a single newsletter and being hyper, hyper focused on one product. 

    So from zero to one million, was it just you and Alex working on the newsletter?

    In 2017, we brought on our first two employees. One was a writer, and one was a jack of all trades: A little product, a little tech, a little engineering, a little bit of everything. Then we quickly grew to another writer. We were a very lean team, but there’s been a lot of growth. In the last 15 months, we went from 25 to 86 people.

    How did the deal with Insider come to be, and how does Morning Brew operate as a part of the larger company?

    We started getting a bunch of offers around 2018, but we didn’t think they were that interesting, and we had no intention of selling the business. But [Axel Springer] was persistent, and they reached out and COVID happened. We have really big ambitions and want to be aggressive in what we’re doing, and having the backing of a large company that's gonna allow you to take risks was attractive to us. We had no idea if there was gonna be a second wave of COVID that was gonna affect things, or maybe an economic recession. We're in an ads business, and ads businesses are quite volatile. They're not recession proof at all. And to have the opportunity to have the same ambition, if not bigger, but have some stability, and some economic backing was really, really great for us. So we're an independent company within the Axel Springer family. We have our own HR — we don't share anything in terms of staff. In the grand scheme of being owned by a $12 billion company, we're pretty autonomous.

    If you look at media acquisitions like BuzzFeed and Huffington Post just this week, you see the complete opposite of that. So how important was it to you to be able to keep a level of autonomy when you were making the deal with Insider?

    It was everything. That's what we wanted. It was a requirement.

  • The Insider/Axel Springer acquisition and how ad-based businesses can survive


    You mentioned that you received a lot of offers. What made you turn down certain deals and eventually say yes to Insider?

    Obviously, price mattered. As did finding partners we felt comfortable working with. At the end of day when you're a media company, you can only sell to one of three entities. You can sell to a vertical integration play, like Hustle just sold to HubSpot, you can sell to a private equity company, or you can sell to a media conglomerate. There are pros and cons of all three. The pros of selling to a vertical integration like Hubspot is that they could have the highest willingness to pay because they have quite high revenue multiples on the business. But there are cons. They may not value everyone at your company, and so they may have to make some adjustments. Private equity probably will pay the lowest multiple. They're very focused on EBITDA, and not focused as much on growth oftentimes. And there's the media conglomerate, which is kind of in the middle. And so we spoke to people in all three of those buckets. So of everyone, we thought Axel Springer was the best business to sell to. 

    Why didn’t Morning Brew go the route of a paid subscription? Do you consider yourselves to be more of a tech company, or more of a media company?

    I don't really worry about labels so much. I mean, maybe we're a media company. But I think media and commerce — it's all converging. And we will absolutely look, at some point, to launch a subscription service or something that will get direct revenue from our user, whether it's a subscription or a one off paid thing. It's about finding the best business model for us. We're gonna explore a lot of different revenue opportunities, but we still see so much room to go in the ad-based business. We want to get this right and then expand — we don't want to also get into commerce and subscription and everything in the same year. It's just too much.

    You often hear that the ad-based business model is dying out. How has Morning Brew been able to make it work when others haven’t?

    I don't think ad-based businesses are bad businesses. Is that the best business model in the world? No, of course not. But it works. What I think is probably overriding that narrative is the fact that a lot of these businesses aren't well run. They're over capitalized, they're inefficient, they don't truly have a real audience. So if you don't have a real audience, you definitely can't monetize for subscriptions; you're going to try to monetize through advertising. And people don't want to spend money if nobody’s really engaging [with the product]. And all of a sudden, [people will say] “Oh, ad businesses aren't good.” 


    "If people come to your site just because they find you in a Google search, and you're not providing utility to them? Well, then you don’t have an audience. That game is a race to the bottom." — Rief


    But a lot of these businesses out there that are ad businesses could be good if they didn't have to live up to the valuations on the capital they raised in 2016 or 2017. And by the way, it's unfortunate because a lot of times people are getting laid off. And these companies are struggling because of mistakes that execs made years ago that really hurt their ability to succeed today. 

    I can think of several companies that have gone through the wringer of M&A, and have ended up in a rough state today. The first one that comes to mind is Gawker, which became Gizmodo, which is now G/O. If you look at those sites, it's an ad-based business. But over the years, it's changed from “The ads are there” to the ad  dominating the page, and you see writers and readers at that site complaining about how the user experience has become really bad. How do you find the balance between the actual content of your newsletters and the parts that generate revenue?

    We think about this a lot. It's a very careful balance to get that right. There's no right or wrong answer. What I will say is that I think that comparison to some of those other companies is not a great one. Because if people come to your site just because they find you in a Google search, and you're not providing utility to them? Well, then you don’t have an audience. So people aren’t more likely to click on your advertisements than any other advertisement, and you’re just monetizing through standard programmatics. So yeah, that game is a race to the bottom. But when your ad units are actually additive to the content — some of our advertisements 5% or 6%, click through rates. That's incredible. It just shows that we're working with the right companies, we have the right message, and it's on brand. And our audience actually at times finds it useful to get recommendations from us. And so it really does depend on how engaged the audience is, how much they trust, what you say, and things like that.

  • Morning Brew's social game


    Something I see Morning Brew doing to help build that trust is developing social media personalities that aren’t specifically attached to the brand. I see it with your Twitter and with other people at the company. How important is it to you and to the team overall to have individual presences?

    It's incredibly important. That's where we're going, right? We're going to a place where we are going to have what I like to call an army of personalities. We're going to leverage the Morning Brew brand to help accelerate and push their content forward.

    To take a step back, the plan for the future is just to do two things that are simple, but not easy. The first thing is to make people smarter and better at their job. And that's what we're doing in the B2B business. That's Retail Brew, that’s Marketing Brew — it's anything else we launched that’s in business. That's part one. Part two is the B2C business. We're going to take the Morning Brew consumer and we're going to start to think about the other things that that person would like from us, whether it’s personal finance, productivity, or investing content. All of that is all going to incorporate personality and people. For us, personality is huge. It's incredibly important. 

    Something I noticed that the Morning Brew Twitter account does is that it uses the language of the platform, if that makes sense. I really see Morning Brew engaging with the language that I see regular users use on Twitter. So I was wondering if you could talk a little bit about the social media strategy and how it's paid off?

    It started very organically. At the end of day, your social media managers are people, and you need to lean into that because people resonate and empathize and listen to other people — not brands. Brands can augment, but [readers] really want people and not just the brand.

    The brand clearly has grown a ton. You can just feel it, right? You can't measure it, per se, although we have sold some ads on Twitter and on Instagram. So it's working from a monetary perspective. But it’s still such early days. I think you're gonna look back in three years, and be like, “Oh, wow, people thought Morning Brew in 2021 was big, but that was nothing.” [The newsletters] are just one product, and we're gonna have the same impact on social media that we had on newsletters. And that's when we'll be really successful. That's when we will have gotten to where we want to be.

  • The future of big media in the world of the creator economy


    I'd like to pick your brain about the future of online media in general. In the last few years, you saw a big migration to platforms like Patreon, and now again with Substack. We’re in the midst of a strange decay of legacy media that also extends to sites that started in the dot com era, or even after. But in the middle of all that, Morning Brew is rising. Where do you see things going, and how does Morning Brew fit in?

    So I think there's like two separate parts: There's the capital J journalism part, and there's media and content in general. I do think journalism is in trouble. The business model is not one that works for most people. It works if you're the New York Times, and it works if you’re super niche. But I've never been more optimistic about media as a whole.


    "We [have to] add so much value to a creator that they feel a need to stay at Morning Brew. We have to do all these things to make us a really attractive option compared to going independent." — Rief


    People ask me, “What's going to be successful? Twitter, or Substack? Or something else?” And the answer is that everything will be successful in different ways. But the world is so much better when we have millions of content creators. The whole world's going more niche, because when you have zero marginal cost to create content, the economics change completely. We will have real, true abundance because you can reach anyone, anywhere in the world, with the click of a mouse. So it's going to be about being the best and being as niche as possible. We’re already seeing this, where it's not just people who work at news organizations — people are news organizations now. I think that's the future of media — not the future of journalism, but the future media. I don’t believe that Substack’s vision is to poach a million journalists from New York Times — it's to create a million new content creators. And that's a really exciting world where we have people creating content in their area of expertise, whether it's audio, video, YouTube, Substack, whatever works for them and their content. Like to me, that's a really exciting world to be a part of. 

    Do you see the current model of journalism coexisting with this world of content creators?

    Here's the tough part. A lot of these content creators can't do their job without journalists. Most of them are doing analysis. And if you don't have things that are reported on, then you can't do your analysis. Now, I don't have a solution for that. I do think the big players like the Times are going to get much, much bigger. I think the middle of the barbell is in big trouble. Big trouble. But the top will always be there. The Times is always going to have its place, even if they fund their journalism through recipes and games. But this whole ecosystem all relies on one journalist doing their job, so there is an issue here that we will have to solve.

    How do you, as an employer, avoid the situation that you're seeing a lot of traditional media go through now where you have writers who rise to great prominence and then decide, “Thanks to the Times or Morning Brew, I have grown my own personal audience big enough that now I can break off and start my own Substack.” Is that something you’re thinking about? How do you keep those people attached?

    We have to create this flywheel such that we can add so much value to a creator that they feel a need to stay at Morning Brew. We provide distribution, we provide them with audio editing, video editing, we provide them a salary. We can help monetize them in seven ways while they can only monetize themselves in one, which means we can pay them more than if they were on their own. We have to do all these things to make us a really attractive option compared to going independent. With that being said, there are going to be people who, no matter what we do, can go out on their own and make enough money. 

    Do I worry about that? Sure. But that's a good problem to have, right? We have to make sure that Morning Brew is not just giving up our brand to them, but they're bringing their brands to Morning Brew. But if you lose a creator for the right reasons, you're doing okay. You're actually pretty damn good. You know, I would love to have that problem of losing creators because they have this really difficult decision of staying at Morning Brew or making way more money going out and doing their own podcasts or their own newsletter. 

    When I interviewed Alex Cohen, he said something that struck me as interesting. He comes from a FinTech background, and FinTech companies are making millions right now. But if you asked him if now is a good time to start a FinTech company, he pretty strongly argues that no, it isn’t. So I want to throw the question to you. Is now a good time to start a media company? 

    Yes, it's a great time to build an audience, and a great time to start a media company. I don't necessarily agree with Alex — I think if you have a good idea, and you can execute, it's never a bad time to do something, right? Maybe it'll take you another year or two years until the market turns, but things go in cycles. People will fund things or they won’t fund things. People will buy things or they won’t buy things. But to me, it's always a good time to start something. I mean, I started a rolling fund because I believe in that. There's so many incredible people out there building great companies. 

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