How to build a $100M+ newsletter business
Newsletter Growth, 8-Figure Exits, and Future Media - April 4, 2025 (about 2 months ago) • 01:11:15
Transcript:
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Austin Rief | I still think the big opportunity in the media space, if someone wants to take a big swing, is to go build a billion-dollar company.
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Sam Parr | Wait, so say what you were saying earlier. How you hated me? Or no, you didn't hate me?
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Alex Lieberman | No, I didn't hate you. I just hated you, just to be clear.
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Austin Rief | I hated you.
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Alex Lieberman | I did not hate you. I feel like part of my shtick has always been that I don't hate anyone. I try to kill people with kindness. I want people to feel like douchebags for hating me because there's no way to hate me. I feel like that was my MO for a while.
But I remember being on the phone with Tim Shaw, and he was an investor in The Hustle as well.
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Sam Parr | Yeah, I was so mad at him for investing in both of our companies. I was so angry. | |
Alex Lieberman | Yeah, I remember being on the phone with him, and we were talking about you for some reason. I was like, "Yeah, I would love to talk to Sam, but I don't know if he wants to talk to me or us." Tim was just like, "Yeah, I don't think he likes you guys very much."
But anyway, I didn't hate you. I was just jealous of certain things at The Hustle. One of the things I was most jealous of was the welcome email. I remember reading the welcome email and being like, "This is so freaking good," and I'm so angry that we don't have one that is as good as this.
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Sam Parr | I would have traded you the welcome email for your guys' ability to be financially... you guys are far more than competent, but I was barely competent. So, the envy went both ways.
Alright, so here's what I want to do for this show. So, here's the deal. Do you guys say what you sold for? Is that public or not?
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Austin Rief | We could say **$75,000,000** is the public number.
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Sam Parr | So collectively, the Hustle and Morning Brew were sold for hundreds of millions of dollars. We were sort of like the graduating class of 02/2020 or whatever. We were the early people in the newsletter game. We didn't invent it, but we kind of helped pioneer a little bit of what is popular today.
Now, officially, as of a couple of weeks ago, we are both, or all three of us, are officially out of our companies. I've been out for a minute, Alex has been out for a minute, and now Austin is out. We could finally reveal a bunch of information.
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Austin Rief | Sorry, Sam. To be clear, I'm technically the Executive Chairman, so I'm no longer involved in day-to-day operations. However, I am the Executive Chairman of Morningbro. | |
Sam Parr | You are no longer operating, but I think you guys still have equity ownership?
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Austin Rief | No, we're both lit up.
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Sam Parr | Alright, so that's what I mean. What I wanted to do was go year by year, explaining to the listener what we were doing in each year. I wanted to cover our revenue and profit, our subscriber growth, the things we learned, and also add the things we would do differently if we were starting again today. Additionally, I want to include things that we wish we had done. Does that sound good?
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Alex Lieberman | Yeah, sounds good. I'm also excited for it because, at the time, I didn't know any of your numbers. So, this is like the first time I actually know your numbers as we were going through it. | |
Sam Parr | I think I've shared with Austin my whole data room. The cool thing about having a data room is that you're supposed to have all the information easily accessible. This way, you can kind of go back and look at it.
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Austin Rief | Yeah, 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 just put it side by side.
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Sam Parr | So, you guys started in February 2015. What was the original premise? Weren't you both in college?
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Alex Lieberman | Yeah, so I was a senior at Michigan, and Austin was a sophomore. I mean, both of us were kind of on the finance track.
The general premise, and it's so funny because we've told this story so many times about how it started, I don't know if it's actually the truth; it's just what I remember. Basically, I was helping students prep for job interviews. I would ask kids during these mock interviews, "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, "This is crazy! These kids are about to spend their whole careers in business, yet they don't have something that they enjoy reading." So, I started putting together the kind of original version of Morning Brew, which was called Market Corner. It was a PDF that I attached to an email listserv every day, and Austin was one of my readers.
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Sam Parr | Can I tell you what I think the real story was? Because it's probably the same story as mine. Sure, you saw the success of the scam and you just said, "I'm just gonna do this for finance people," or in my case, "tech guys."
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Alex Lieberman | Definitely possible. Yeah, I...
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Austin Rief | I think that's partly true. I do think Alex started the PDF version. There were two versions: there was the Market Corner and then there was Turning into Morning Brew. The evolution of Morning Brew was totally inspired by, "Wow, if these two women in New York City could get millions of people— I think maybe a million people at the time—reading, why can't we do the same?"
There were a bunch of, you know, at the time we thought, dudes in finance who wanted to read about the business world.
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Sam Parr | Did you have any revenue in year one? | |
Alex Lieberman | No, 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 like a fake timeline where we didn't have to worry about bringing in revenue.
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Sam Parr | So, in February 2015, I think I was 25. It wasn't the hustle; it was just an event called HustleCon. That year, I think it made around $400,000 in revenue and like $200,000 in profit. It was a good event, but it was basically like a TED Talk for entrepreneurs.
I was so scrappy, and I honestly regret it. One of my biggest regrets in life is buying the supplies that I needed for that event at Costco and returning the stuff that we didn't use. I didn't realize that you throw things away once... like Costco throws it away. The most shame that I'd ever felt was being that cheap and horrible, and that was... | |
Alex Lieberman | Was the hustle that profitable? Like, when you did it that first year, was it profitable?
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Sam Parr | Yeah, yeah, because it was just me. Then I asked my buddy John to help, and it was just us two.
It made it so... when we started in February 2015, or sorry, the next year in February 2016, I started the hustle because I was like, "Conferences suck." I wanted to create a newsletter because I had seen TheSkimm, I read about Thrillist on Mixergy.com, and a bunch of other newsletter businesses.
When I started that business, I had $500,000 in my bank, and it was all from conferences. | |
Alex Lieberman | It's pretty wild.
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Austin Rief | I think what you said is interesting about the math. At the time, we have a funny story we can tell now that we've held back for a while 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 this newsletter thing? It makes no sense." But Alex and I would sit there every night and go through a spreadsheet. It was the most basic spreadsheet showing that, you know, newsletter subscribers grow 5 or 10% a month and CPMs stay flat.
Over time, you can get to hundreds of thousands or millions of dollars in revenue a month. I think it was really that simple.
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Sam Parr | I had the exact same spreadsheet. I listened to every interview with Ben Lehr and I'm like, "Tell me what the CPMs are." Then I met with Business Insider reporters and I said, "Tell me how many people visit your tech part of your website."
They said, "80,000,000."
Okay, then yeah, like you're giving me some numbers to triangulate.
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Austin Rief | Yeah, and like at the time, everyone was spending millions of dollars putting video on Facebook. You know, I don't think we were actually that smart; I just think the people around us were really dumb.
I do think one of the big advantages... you know, they say at a poker table, "If you look around and you can't find the sucker, you're the sucker." Well, I think we picked an industry with a lot of suckers. There were a lot of people who started five or ten years before us, and they just weren't smart. They were doing the same thing that they did for ten years.
Even in 2015 and 2017, we were like, "Yeah, BuzzFeed just doesn't make sense. It's not worth a billion dollars." For five years, I think people didn't believe us. Over time, I think we proved that our model, while it seems silly, actually works. It worked, and it made us a bunch of money.
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Sam Parr | Alright, a few episodes ago, I talked about something, and I got thousands of messages asking me to go deeper and explain. That's what I'm about to do.
I told you guys how I use ChatGPT as a life coach or a thought partner. What I did was upload all types of amazing information. I uploaded my personal finances, my net worth, my goals, different books that I like, and issues going on in my personal life and businesses. I uploaded so much information.
The output is that I have this GPT that I can ask questions about issues I'm having in my life, like, "How should I respond to this email?" or "What's the right decision?" knowing my goals for the future and things like that.
I worked with HubSpot to put together a step-by-step process showing the audience, showing you the software that I used to make this. The information that I had ChatGPT ask me all this stuff, so it's super easy for you to use. Like I said, I use this 10 to 20 times a day. It's literally changed my life.
If you want that, it's free. There's a link below. Just click it, enter your email, and we will send you everything you need to know to set this up in just about twenty minutes. I'll show you how I use it again, 10 to 20 times a day.
Alright, so check it out. The link is below in the description.
Back to the episode. Alright, so fast forward to February 2016. Where are you guys at? How many subscribers do you have? What was your revenue in February 2016? What's the business?
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Alex Lieberman | Yeah, so 2016 was the year when... at this time, I was working full-time on Wall Street, doing the brew from basically 7 PM to 11 PM every night. I was falling asleep on my laptop, on my lap.
Where were you working?
I was at Morgan Stanley.
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Sam Parr | Was that miserable? | |
Alex Lieberman | Yeah, yes, it was... my entire life was built up to that. Remember, my dad was a trader on Wall Street for twenty years. My mom was... this is all I knew, but it was horrible.
Going back to what Austin was saying about there not being a lot of smart people in media, I actually think the best thing we did is what I call "IQ arbitrage." I was on a trading desk where everyone had a PhD in math. I was the dumbest person on my desk, not even a shadow of a doubt. Just by moving to media, I became not the dumbest person.
In September of 2016, I quit my job. Also, it was hilarious. Right before that, I almost got fired from Morgan Stanley because they were worried I was insider trading through Morning Brew's newsletter.
So, HR found out about Morning Brew, which I was supposed to have permission to work on. The guy who was supposed to give me permission told me he got fired in a massive layoff at Morgan Stanley, so I didn't get permission. They basically had me meet with Morgan Stanley lawyers—two litigators defending Morgan Stanley—saying, "You can never tell anyone about this meeting, but we are concerned that you are trying to make investment decisions and get private information using your newsletter."
So, that was kind of like the last straw for me. It made me really not enjoy the job. I quit my job, and we raised a small round in 2016. Twenty-sixteen is also the year when we talked to John Steinberg as he was starting Cheddar. | |
Sam Parr | And John Steinberg is like a media executive. Did you guys see the Facebook message that he sent me?
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Alex Lieberman | Yeah. | |
Sam Parr | So, this guy named John Steinberg, at the time I think I was 26, and I was just a guy in a shitty apartment trying to do this newsletter. John Steinberg is the president or CEO of BuzzFeed, and he's about to start a new company called Cheddar.
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Alex Lieberman | He was at BuzzFeed, then he went to Daily Mail North America, where he was the CEO. He stepped down from Daily Mail, and then he sent Austin and me an email.
Austin, what was the subject line? What did the email say again?
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Austin Rief | Yeah, so it was from his Gmail. We had no idea who John Steinberg was. We didn't know the media industry, and we get an email from him. It's like "johnsteinberg123@gmail.com," and he emails us with the subject line "Intro to Founders." The body of the email was just about what we were doing. That was the whole email.
So we looked the guy up on LinkedIn, and we're like, "Holy shit, this guy's a big deal!" You know, we give him a call. I mean, Alex can tell the story better, but he flips it on us. He makes us think that he's excited about us and that he's going to invest in us, all this stuff. Then he brings Alex to his office, and I'll let Alex take it away. What happens? Go ahead.
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Alex Lieberman | Yeah, so I go to John's office, which at the time was a tiny, like, closet of a WeWork space. It was him, Peter Gorinstein, who was his co-founder and the Chief Content Officer. I get there, and I think the conversation is going to be about how John is going to invest in Morning Brew or how Morning Brew maybe will have a segment on Cheddar that would create, you know, audience and distribution for us. Instead, he starts interviewing me.
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Sam Parr | Yeah, because he wanted you to work there.
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Alex Lieberman | Yes, so he started interviewing me. He's like, "Okay, so Fitbit earnings come out. You need to get an expert on the story to talk about what this means. Who are you talking to? How are you finding them? Let's go." I was like, "Well, I'm gonna figure out a way to get to the..." | |
Sam Parr | Oh, you totally do it! Yeah, yeah.
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Alex Lieberman | And then at some point in the conversation, I was like, "You know, 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 or you guys investing in us."
I will never forget this line. Honestly, I have some respect for him because he wasn't wrong. He said, "To be totally honest, the cost of the legal fees to do this deal would be more than what I would pay for you guys."
And I was like, "Damn, he's right." Right now, he's right.
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Sam Parr | Have an ex with a very similar story. First of all, related to John, I just found an old message on Facebook that says, "Sears is opening two lines. Have we met? We should meet."
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Austin Rief | Dude, he’s amazing. He’s there like four or five times, and that guy’s motor just runs. He is just unbelievable.
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Sam Parr | So, this is... we're in the year 2016. I get an email, or maybe I called Ben Lear, who started this thing called Thrillist, which became Group Nine, like a billion-dollar company. He's one of the co-founders of Lerer Hippeau, which is like one of the most preeminent VCs in New York.
We start talking, and I think he's going to buy The Hustle right out the gate. I'm like, "Hell yeah! $5,000,000! That's how much I have right now already." I thought the offer was going to happen, and then he brings in the president of the company, and it turns into an interview—the exact same thing. I was like, "Oh, I thought you were going to buy us."
He's like, "Brother, this is a newsletter. This will never make more than like $2,000,000 a year." I was like, "Well, I don't know, man. If you do the math..." He was like, "No, you should come and join us. We're a real company. If you want to make this work, you have to join our company."
And forever, that has been a chip on my shoulder. | |
Alex Lieberman | And just think about how valuable it was that we all kind of had conviction and were irrationally confident in what we were doing. You could see so many other scenarios where someone is, you know, googly-eyed by someone who's super successful and goes and joins their thing. That basically cuts all of the possible upside that we ended up experiencing with our businesses.
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Sam Parr | So, this is alright. We're in the year **February 2016**. The hustle launched in **April 2016**, and that year we did **$400,000** in revenue. I think by the end of the year, we had around **100,000** subscribers.
I had this strategy where I was writing these crazy blog posts and getting like **500,000 to a million** people a month coming to our website, and that's how we grew. Of the **$400,000**, I think **$100,000** was advertising revenue.
At that time, there were four of us. Where were you guys?
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Austin Rief | So that's amazing because in 2016, we did our first ad deal. It was a watch brand called Emelhart. I believe it was about a $3,000 deal for three... We used to call them exposures. We were so naive; we called them ad exposures.
It was three of us. We had a writer who, ironically, we poached from BI. I think I'm not kidding; I think he made it like seven days. He barely made it at the company. He quit because we wanted him to work more than a nine to five.
But you know, we did $25,000 that year. You did $400,000. There were three of us, and I was still in college.
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Sam Parr | But mine, ours were events though. It wasn't advertising, which is way less... like more, but you...
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Austin Rief | Guys, did what fill a hundred thousand? | |
Sam Parr | Of ads, that's pretty good. Yeah, we started advertising, I believe, in June. I looked at my first deal; it was $4,600. I cold emailed a guy named Chris Martinez at Wealthfront. | |
Alex Lieberman | So funny! That's the funny thing. It kind of reminds me of, like, if you go to my LinkedIn and look at my DMs from the last ten years. I have basically DMed every human being that has worked in growth marketing or media over the last ten years.
I remember that name, Chris Martinez, because I probably emailed him 12 times over that year to try to get him to do a deal with us.
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Sam Parr | I don't know who Chris is anymore. I haven't talked to him, but if you're listening, thank you.
The things I would do differently from when I was 16 are: we raised a little bit of funding, and I would not have done that. In fact, I tried to raise way more money, but no one invested, which ended up being a blessing because I made a lot of money since I owned the majority of the company.
That's what I would do differently. So, if you're listening to this, if I were starting today, I would not raise funding at all. Would you agree?
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Austin Rief | I think raising funding is all about your business needs. Right? I certainly wouldn't have raised more money than we did, but we did need the $750,000.
I actually specifically remember this. Fast forward to 2017, it was December 27th, 2017, and I didn't realize that payroll goes out early if it's New Year's Eve because they don't do payroll on holidays. I had a check in my hand that was going to make payroll, and I had to sprint to JP Morgan because they were going to close at 5:00 PM. It was like 4:55 PM.
You know when people say you were close to missing payroll? I was literally two minutes away from missing payroll. So, we didn't need every penny from a cash flow perspective because, obviously, media companies have accounts receivable. You might need 30, 60, 90, or even 120 days just to get paid.
So, we didn't need the money, but yeah, for a media venture, I don't think you should raise more than you absolutely have to.
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Alex Lieberman | I will say there is one thing I would have done differently, and like one big lesson from that.
The first is, we had 28 individual investors. So, we had 28 people who wrote checks ranging from $2,500 to $100,000.
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Sam Parr | Same. | |
Alex Lieberman | But if I were to do it again, I would have way fewer [investors]. I would also try to suss out if these people are going to be difficult because, well, fast forward at some point, there were some very difficult investors when we sold the business.
The second point is that time is a crazy thing in startups. You always think you can get more done in a shorter amount of time. I remember we had a slide in our investor deck that showed our one-year plan to investors. Looking back on it now, that slide took us nine years. We tried everything in that slide, and it took us nine years to try everything. Most of those things did not work, but yeah, it took nine years to accomplish our one-year plan. | |
Sam Parr | Alright, so we're now in February 2017. Do you remember we ended the year? I tell the story differently. I tell the story that we went from 100,000 to 500,000 subscribers. I think I missed a year because I went back to February 2017.
We ended the year with 250,000 subscribers. We had $2,200,000 in revenue: $400,000 was from events and $1.8 million was from advertising. My big learning that year was hiring a sales team. I did a lot; I think I did the first year of ad sales, and I was horrible at it. I didn't realize how uptight you had to be. You had to be like buttoned up. I didn't understand this.
Where were you guys at the end of 2017?
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Austin Rief | Yeah, so 2017 was the year that we were both full-time.
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Sam Parr | Or I... | |
Austin Rief | <FormattedTranscription>
We were only full-time for half the year. We ended with a hundred thousand subscribers and generated $300,000 in revenue. We finally started taking a salary, taking $60,000 each.
That was the first real year we hired our first employee, Tyler Denk, who is now the CEO of Beehive. I'm sure everyone listening knows Beehive, and he was transformational for us.
</FormattedTranscription> | |
Sam Parr | What was his job? Everything. | |
Alex Lieberman | Dude, do you remember his first title? Austin, do you remember?
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Austin Rief | No growth. Engineer. Growth engineer. Yeah.
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Sam Parr | Yeah. | |
Austin Rief | Yeah, I mean, he did everything. Between him and then we had Michael Schwartz, who also now works at Beehive, who was our first writer. He brought on Neil Freiman, who still works at Morning Brew today.
I mean, look, Alex was the visionary of the Morning Brew voice, but I do think Neil was really the executor and took it to the next level. Neil is... I think I spoke about him last time I was on the podcast. Neil was huge for Morning Brew. He really did what Alex and I couldn't do, which was take this idea in our head and put it on paper every single day, three hundred sixty-five days a year, for now over ten years.
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Alex Lieberman | I also think Neil is a great example of what we did well at The Broom and what you did well at The Hustle. I think about our first three writing hires: Neil, Michael Schwartz, and then this woman, Nikki. All of them were nontraditional hires. Like, I think...
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Sam Parr | Both the... | |
Alex Lieberman | <FormattedTranscription>
The Morning Brew and Hospital were really good at finding undiscovered talent and seeing a ceiling in them that other people didn't realize.
It was the same thing for you. I remember, we'll talk about it later, but I watched your writers like a hawk. I could read a Hustle story and knew who wrote it without seeing a name attached to the story. I knew their backgrounds, and none of these people were what media companies would traditionally hire as talent.
</FormattedTranscription> | |
Sam Parr | Dude, 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."
So, the only people I could afford and convince to do this stuff were, for example, Lindsey Quinn, who was a blogger at a procurement startup or something. I don't even know; she was not a writer, but she could write and wanted to write.
You seldom get on the dream of, "Wouldn't it be fun if you could do this hobby all the time and make money from it?" That's the only type of people we could convince to join us.
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Alex Lieberman | She was my writing hero. The number of times in my career I've tried to poach her is very non-zero.
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Sam Parr | Yeah, she was fantastic. | |
Austin Rief | And this really fast forwards to 2018. But Alex isn't kidding; we knew every single writer you had. Alex, in particular, knew every single story and who wrote them.
We would come to work every day at the end of 2017 and into 2018. For the first two to three hours, we would print out Morning Brew, Axios, The Hustle, and The Skimm. With a paper and pen, Alex led the charge. We'd go through every single story; he'd circle what he liked and X out what he didn't like.
Look, Alex is the most likable person on the planet. You now know the sound; I'm sure a lot of listeners know how likable Alex is. The only person on the planet I know who doesn't like Alex is our first writer because Alex would sit there and just cross out half the words he put in the newsletter and be like, "Look, Lindsey Quinn wrote this same story better than you did. Be better."
I mean, we were maniacal. We lost our minds to the game. We were crazy about this newsletter thing.
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Sam Parr | And for the record, I didn't do that, and that's a regret. Now that I'm older and understand how company building works, I would... if you told me you were doing that, I'd be like, "You guys are insane! Just have fun, do what feels good."
But that does not... like once you get past, I don't know, $5,000,000 in revenue or something like that, you can... and that means you probably have some type of product-market fit. You could absolutely iterate your way to being wonderful. You know, starting like you're at a B or a C+, you can get yourself to an A+ through iteration.
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Alex Lieberman | And honestly, I think a lot of my maniacal approach to content came from what Austin had taught me along the way about standard setting. Basically, the standard of your business is what you allow. If you allow suboptimal content to be created, that becomes the new standard you set. By not saying anything about it, you're implicitly saying that it's okay. To me, that was my biggest fear: if I accepted things that were not exceptional content, that would become the new standard.
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Austin Rief | It is you guys.
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Sam Parr | During this era, in February 2018, I was 22 years old. | |
Austin Rief | Right. | |
Alex Lieberman | Yeah, and I mean, I'm what, a year and a half older than you?
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Austin Rief | Yes, you were 24.
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Sam Parr | Dude, you guys were like... I'm like, what you guys are in when you were 22. Today, I am now a 22-year-old Austin and a 22-year-old Alex. I totally buy into everything you're saying. Back then, I completely would have laughed at you, and your way is 100% the right way. It's crazy how mature you guys were at such a young age.
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Austin Rief | <FormattedTranscription>
Age... yeah, when we sat down at first to set our core values, I thought core values were fluffy. Now, in hindsight, I actually regret that we didn't write those in stone and keep them. We messed around with them a bunch, but two core values were really important.
The first was to have an **ownership mentality**. Act like you're an owner. If you own something, you're going to critique it every day, give it feedback, care a ton, and drive towards it every single day.
The second is the **underdog mentality**. We came into work every day as a group of misfits, a group of people who had no idea what they were doing in the media industry. We just acted like underdogs. It's March Madness right now, and you can see the way these underdogs show up to games. They're loose; they don't have this weight on their shoulders.
Every day, we came into work and said, "Screw it! We are going to kick the shit out of all these legacy media companies who raised these live-at-sea $100 million in funding." Alex and I would sit down and think, "What could you possibly do with $100 million in funding?" What they did was burn it, flush it down the toilet, and add no value to their companies.
</FormattedTranscription> | |
Alex Lieberman | Yeah, I also think it's like at the time, Austin and I just had such a fire. I think for Austin, similar to you, Sam, he kind of creates an opponent in his head, and that is enough to basically create this insatiable drive to win.
I think for me, I actually have less of that, but the thing that compensated at the time were two things: my dad dying and feeling like I needed to provide for my family. I told you this last time when we saw each other in person, Sam. I was bullied from fifth grade to twelfth grade, and I felt like I just wanted to prove that I was worthy.
That was more than enough. Even when the brew was small, Austin and I had this deep in our bones feeling that we were going to succeed. We believed the business would ultimately sell; it was just a matter of time.
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Sam Parr | That's what I've always admired about you guys. You have this really cool combination of optimism and pessimism. Austin is like afraid all the time, yet he's logical enough to say, "I'm gonna do this, this, and this," and then consider the likely outcomes, which are A, B, and C.
I did not feel that way. I had a scarcity mindset.
So, in February 2018, you guys did $3,100,000 in revenue. You had 10 employees. How many subscribers did you have?
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Austin Rief | So, in 2018, we went from 100,000 to 1 million subscribers.
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Sam Parr | So, in 2018, I think we ended the year at **500,000 subscribers**. We had **$5,100,000** in revenue; about a million was from events. I paid my team, and we had **$160,000** in profit. That was the first year that we spent on advertising. I went and looked back, and we got to like **200,000** subscribers organically. Then we spent money on ads, and I spent **$1,000,000** that year. Did you guys spend money on ads that year to get to a million subscribers?
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Austin Rief | We spent every penny we possibly could. I would track daily cash flow to make sure that we had enough money.
I mean, 2018 was the year for us. There were days in 2018 when we were growing by $20,000. You know this! We would do these MacBook giveaways, and we would grow by 25,000 to 25,000 subscribers in a day.
So yes, we spent every dollar we could possibly find. My only regret is that we couldn't figure out a way to find more money to put into Facebook ads. | |
Alex Lieberman | If I remember, by the end of that year, we were spending like $500,000 a month on ads, right?
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Austin Rief | At least. | |
Sam Parr | That's crazy! I had such a poor mindset where I didn't look at it like you guys did. You had this finance background, and also, I think you are just more like this naturally. You had this mentality of, "Well, I will spend $1 to make... if $1 turns into $1.10, I will spend every dollar I have."
For me, it was like $80,000 a month. That's astronomical! It doesn't matter what the return is, you know what I mean? That was a failure; that's an immature mindset. | |
Alex Lieberman | I also feel like part of it was that Austin and I were younger than you. At the time, we were only making $60K, or I think we had upped our salary that year to $120K.
I don't know, I think part of maybe your mentality for the hustle was that this was kind of just a cash-flowing lifestyle business for you. You could continue to pull money out of the business as the vast majority owner of it. I feel like Austin and I, at the time, weren't thinking about monetizing it for ourselves in the same way.
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Austin Rief | Yeah, and Sam, I knew you thought that, right? Because, you know, I had a deal in Rippling. That whole thing just happened, and we certainly didn't have someone in your Slack. But we would talk to all your former employees. We would get every bit of information we possibly could.
I knew that you had a profit threshold. You're like, "I want to profit this every month." I said, "Well, that means Sam's taking his foot off the gas." So if Sam's taking his foot off the gas, I'm going to do the opposite, and we're going to... which...
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Sam Parr | Isn't it funny? I didn't make a lot of profit. I actually didn't make a lot of profit. We grew revenue by about 50% most every year, but I did not.
I think you were talking about values. I wish I would have... you know, I think you guys matured earlier than I did. I was still really immature, and I didn't codify my values or the culture. I started the company when I was 24 or 25, and I think I evolved to where I am today when I was about 31. You guys were kind of like 31-year-old Sam when you were 21.
But had I done it over again, and if you're listening, I would codify your values early on and stick to them.
Also, what a lot of people do is they buy ads. Back then, this was only a handful of years ago, it felt like buying ads was more... there weren't that many experts. Now, to buy ads, it's commonplace. It's way more common, and so people buy ads way earlier for their products now. I actually think that's a huge mistake. | |
Alex Lieberman | Totally, yeah, I totally agree. I mean, that's the part of the story that we didn't talk about. We didn't do paid acquisition until 2017, really. So, in 2015 and 2016, to get to a hundred thousand subscribers, it was entirely organic growth.
By the time we actually started paying for subscribers, we knew we had a great product. We knew how long subscribers were staying. We also knew how to work within the scarcity of not having money but finding ways to grow regardless. I think that muscle, if you skip over it, is a really bad thing.
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Sam Parr | Okay, and another thing that I learned... Well, I learned this in February 2019. So, we're in February 2019. You guys did $3,100,000 in revenue with $3,000,000 in profit.
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Alex Lieberman | 13.1 | |
Sam Parr | Sorry, $13,100,000 in revenue, $3,000,000 in profit, a salary each of $250, and a team of 25. We did about $8,000,000 in revenue, with $6.40 being from events. We had a profit of $200,000, but we did cash flow of $1,600,000.
And I'll explain why. At that point, I sort of switched the business to caring about cash flow. I had subs of about $1,200,000, and that year we launched this podcast under the Hustle name, "My First Million," in February 2019.
The thing I learned was that, you know how a lot of social media companies are like, "Who cares about revenue? Who cares about profit? Just grow your users"? This was the year that I learned that to be true. If you know that you make a certain amount of revenue via advertising or subscription per user, that's the only thing that matters. It's just getting more users, and I wish I would have understood that a little bit earlier. | |
Austin Rief | Yeah, I think what we learned this year was that we started to see the plateau of not just newsletter growth, but also of the economics of newsletters. Morning Brew got to a point where we started to ask ourselves, "How much could you make on a single newsletter?" | |
Sam Parr | I think it was **$18** for us per subscriber, right? **50¢** a month for advertising, maybe?
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Austin Rief | That sounds right. I don't know exactly. Yeah.
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Sam Parr | $0.75 | |
Austin Rief | Something like that... I think that makes sense. But what we learned was that the answer ends up being far, far down the road.
We started to ask ourselves, you know, do we just want to be a single newsletter? Or are we going to get to a place of diminishing returns from pumping more and more money into it? This year, we probably spent $6 to $7 million on paid acquisition. We spent what you did in revenue, almost just pumping growth back in.
We started to ask ourselves, does this make sense? That's where we learned about industry dives. We began to really take the approach of, wait, our audience works in retail, they work in marketing, they work as CFOs or in finance. What if we took that path? The CPMs are higher, you don't need to grow as fast. It's not a race to the bottom; it's more of an engagement play.
And so, that's when we went into our industry verticals.
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Alex Lieberman | Yeah, and what I would say is also that year... I actually think of all the years in the business, 2019 was the most important year.
That was the year when Austin and I... I can't remember what month it was, but basically, I would say Austin and I really never got into big arguments or fights in the history of the business. However, in that year, I could tell Austin was, or on a single day, Austin was most upset with me.
Basically, what I remember is Austin and I were still working in the business. We were in the frickin' mud, and all we could think about was making sure the newsletter went out tomorrow and making sure we were getting an ad deal for Friday. We could not see a month or a quarter ahead of us.
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Sam Parr | That's a really stressful time.
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Alex Lieberman | Yeah, and I remember one day we were in WeWork. I got a message from Austin on Slack saying, "Hey, one of our investors, this guy Scott who created the Snuggie and has a bunch of other products, told Austin—because Austin had asked him about resources to operationalize and run your business—that he uses this book *Traction* and that we're going to read it and adopt it in our business."
Austin read it and then messaged me on Slack, saying, "Dude, you need to read this book yesterday, and this is what we're going to do." I remember a day went by, and then a few days went by, and I still hadn't read the book. Austin messaged me again and asked, "Did you read the book?" I said no, and he responded with something along the lines of, "I don't understand why you're not doing the thing that is the most important thing in our business right now." I could tell for the first time... | |
Austin Rief | That, like, he was actually pissed.
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Alex Lieberman | At me, so I went that day and I read the entire book. I did not work. I went to the highest floor of our WeWork and just read the book.
I think a few things happened. One is that *Traction* was a game changer for our business. I also think that it really became the inflection point where Austin took over as CEO of the business, not in title but in action. I think it was a transformational year for the company.
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Sam Parr | I read that book around the same era, and it had the exact same impact on me. In fact, on Tuesday—it's Wednesday—I hired an EOS implementer, and I met with him yesterday to implement it into Hampton.
So for those listening, EOS stands for Entrepreneur's Operating System. It's a framework to run your company, and it's based off a book called *Traction*. That's so funny that we all came across this at the same time.
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Austin Rief | Yeah, I'd love for you to do a full episode of *My First Million*. I think everyone would benefit from it. You could do a postmortem and talk about how you implemented it. Reveal as much as you can because we didn't hire an implementer. I thought it was a waste of time and money. | |
Sam Parr | It's totally worth it, and that's my...
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Austin Rief | My biggest regret is not hiring an implementer because I didn't want to be the bad guy. I didn't want to be the bully. You basically spend, you could say, thousands of dollars. | |
Sam Parr | $60,000 is usually the guy I talk to. It's $60 a year. Wow. | |
Austin Rief | Which, by the way... | |
Alex Lieberman | The way is why it's an unbelievable business. It's basically like a digital franchising business. It's such a cool business.
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Sam Parr | Yeah, it's worth it. It's basically $60 a year. It's an executive coach/organizer.
But it's so funny that it happens when you're running a company. Once you get to like the five to ten million mark, that's where it's like, "Alright, what we are doing is mostly working, at least good. Let's do more of it."
And how do I do more of it without killing myself, creating redundancies, and building a company? Transitioning from a business to a company is where that book helped me.
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Alex Lieberman | A percentage... yeah, I kind of thought about it at the time as the first chapter of Morning Brew being a newsletter as a hobby. The second chapter was the newsletter as a business, and the third chapter was the newsletter business, meaning multiple newsletters.
There was no way we were going to be able to do more than one newsletter unless we figured our stuff out because we were too in the weeds. | |
Sam Parr | How many subscribers did you guys have at the end of 2019? | |
Austin Rief | I'd say probably about two. We probably went from one to two, maybe from one to 1.8. But again, that year was defined as us maturing as a business.
So, Sam, at The Hustle, where were you in terms of maturation? You were doing more than we did. You had events, you had an ad business, and you launched "My First Million." How was the business actually being run?
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Sam Parr | <FormattedTranscription>
Oh, and I have to say, we launched Trends that year. Trends was basically a $300 a year subscription where I had this woman named Julie and Steph Smith write a weekly email. We also had a Facebook group where you could talk about interesting companies.
That's why we started measuring cash flow. I learned the importance of building $300 upfront versus monthly. At that time in the company, I had so many demons that I was still trying to get out of. I learned that the issues you have as a person transcend into the company.
I didn't have what you guys had—each other as right-hand men. I didn't have that support in the company where I could confess to someone all the things I was nervous about. So, I ran the company using EOS (Entrepreneurial Operating System). I had Brad, Adam, and Ryan. Brad did content, Adam did sales, and I think I had Scott Nixon who did growth. I also had one person who did events, but I can't remember their name. Then I had Steph Smith who did Trends.
So, I had five people who reported to me, and I was starting to get a little checked out because I was so exhausted at this stage. You know, exhaustion kicks in around year four or five, and I was starting to feel dead from running the company. I just did not care anymore.
Sean came to me wanting to launch MFM, and I thought, "That's stupid." I hated everything at that point. I was like, "This is stupid, but if you really want to do it, we'll be the publisher, so we own it. But show me an episode." He sent me the episode, and I was like, "Fine, we'll do it."
But there was no planning; I published it the next week. There was nothing. I really was immature for not doing planning, not having longer-term thinking, and for exhausting myself out.
</FormattedTranscription> | |
Alex Lieberman | Yeah, one thing I'll say is I think in that year when you kind of felt mentally toast and a little lost, I felt the same way, though for different reasons.
The other thing that's an interesting observation is, like, you mentioned that Austin and I had each other as right-hand people while going through business. I think that's true to some degree, but I also believe that Austin and my relationship has evolved a lot over the years.
We started the business so young that the way I co-found a company now, and the level of direct communication and feedback I have with, like, even for Storyarb with my CEO, looks very different than the way Austin and I would give feedback to each other in the brew.
It's not for any other reason than we didn't have the maturity to speak with radical candor and communicate openly. I think we were afraid of critiquing each other and giving feedback.
So, I actually think, at least for me, a lot of my growth honestly came through things like therapy or dealing with it on my own. It's funny; I think Austin and I as co-founders today will look so different than we did as co-founders from 2016 through 2019.
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Austin Rief | I will say, for me, I think my big maturation... I matured a lot during the sale process. We dealt with so much and so many different stakeholders.
Look, Alex and I are really lucky. We grew up with nice families, and we started this business. Basically, from day one, everything took off. We had no hardship.
The hardest part of running the business, professionally, was during the sale process. We had some investors who were upset with us for selling too early. These were the same investors who, six months earlier, were begging us to sell.
We had employees who felt as if they didn't own enough of the company. What you learn is that when you sell a company, there's a huge lump sum of money that's in a paper. When everyone sees that lump sum, everyone starts thinking, "Oh, how can I get mine? How can I get my money?" Sure, I only own 25% of this company, but actually, I kind of view myself as a co-founder. I kind of view myself as worth more than that.
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Austin Rief | 5% of this company... I think I took that very personally. It was very hard for me. At the time, I was a bull in a china shop, right?
I remember taking these calls, and my now wife was in the other room. I'm on the calls with these people, and my wife 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 replies, "You're totally right, but you can be right and not be an asshole." I was like, "Oh, I didn't know that was possible."
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Alex Lieberman | Like I... | |
Austin Rief | Didn't know you could feel like that. That was a thing. So, I was the total asshole up until then, and I think I've matured a little bit since then. | |
Sam Parr | Well, you're still a bull in a china shop, but in a great way. You know, what I was telling you earlier was I would never want to have an argument with you. I don't want to fight with you because you will win a lot of times. You're so smart and you're just intense.
So, let's go to the year 02/2020. The year 02/2020 is the year we both sold. In 02/2020, you did $20,000,000 in revenue and $6,000,000 in profit. We did $12,000,000 in revenue, and I forgot how much profit we made, but we had about $3,000,000 in cash and 1,500,000 subscribers. I think you had three.
At the beginning of that quarter, on 02/01, we were probably in the same spot. I thought we were going out of business. When COVID hit, I thought it was over. Did you think that?
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Alex Lieberman | Yeah, I mean, it's very interesting. I can remember these big moments, like exactly where I was pacing in a room talking to us. I literally remember pacing back and forth in my now in-law's main room talking to us. We were discussing one of our biggest sponsors, who is a financial services company. I can't remember the exact number, but let's just say they had a $75,000 sponsorship coming the next day.
Then, the day before, as COVID was starting, they canceled it. So, right, $75,000 gone in one conversation. Then, basically, the floodgates opened. I can't remember the exact amount, but let's just call it like, in a few weeks, 30% of all revenue that we had booked vanished.
I remember Austin and I going back and forth, being like, "How the hell are we going to make enough money to just not fire people?" The first lever we pulled was we basically turned paid acquisition and paid marketing down to zero. But he and I literally brainstormed everything from starting a Patreon and asking people to donate, all the way to our education business.
We ended up launching an education business at The Brew, which we've since shuttered. But the reason that started was to bring in short-term cash, and that first education initiative was a partnership with Scott Galloway when he was starting Section Four. | |
Sam Parr | We did the same thing. We did an edge-like course, and it made $300,000 in one month.
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Alex Lieberman | like | |
Sam Parr | Helped save us. That was the year that I learned what the term **force majeure** meant, and it was crazy. I thought we were going out of business. I remember you guys had just signed an $80,000 a month office lease, and I was like, "Yeah, I hope this breaks them down. I hope this is their downfall."
During this era, I remember I got one of our advertisers who we shared. When we got going, advertising in newsletters wasn't really much of a thing. We had to convince early adopters to give it a shot, so we had a lot of shared advertisers. I would beg them, "Show me their click-through rate versus our click-through rate." What I learned was that it was basically the same for a lot; it wasn't significantly different.
For the first half of that year, I thought we were going to go out of business. The second half, everything **boomed**. It was crazy! The business was booming; our trends thing was selling like crazy. People were spending like crazy. It was a boom.
I remember we got what the government gave you money for, like... P something? Yeah, PEP... PEP. We got some of that money because our events business got shut down entirely. I was like, "I don't know how I'm going to make payroll." Then it turned out, I'm like, "Damn, I kinda feel bad because we killed it. We killed it that year." It felt great. | |
Alex Lieberman | I remember the emotional journey of the acquisition was crazy for Austin and me because our... I don't know how long your sale process was, but our customers...
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Sam Parr | It was a total of ninety days to closing, but then there were like thirty or sixty days of flirting. | |
Alex Lieberman | Yeah, so ours looked completely different. Our process, like end to end, was eleven months. The first conversation with the person at Axel Springer was in November of 2019. I remember we first got deal terms; I can't remember when it was, but let's just call it like January or February or March.
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Sam Parr | From Axel Springer. From who? | |
Alex Lieberman | Yeah, from Axel. I remember what happened was in March, the world shut down. So there was a period of three weeks where Austin and I were like, "Forget a deal. We don't even know if we're going to have a business."
Then, after those three weeks, starting in April, everything ripped. We went from Austin and I being like, "We don't even think we're going to have a deal. We don't even know if we're going to have a company after this," to realizing, "We're way underpriced. We're doing so well. Are we even being paid appropriately for how much the business is ripping now?"
That roller coaster in those three or four months was insane. | |
Sam Parr | It was so intense. The sales process that year was the most intense part of my life. It was horrible; I was so miserable. I was bummed for almost every day for three months.
This woman who works with me, her name's Edie, she still works at HubSpot, I believe. I hired her earlier that year, or maybe a few months before COVID hit. She was probably 63 or 65. She had birthed her daughter a little bit later in life, in her forties, and was like, "Now that my daughter is 20, I'm gonna go back to work to prove to her that young women can kick ass." I was like, "Hell yeah, you're the best! I would love to hire you."
So, she was our HR person and our accountant. She was great. But then, during the deal process, I learned something. We would be in a meeting with me, HubSpot—which had like six people—KPMG accountants, six people, and then six lawyers. It was like a $20,000 meeting.
I heard Edie and I kind of saw her bring her iPhone up and take a picture. I was like, "Edie, what the hell are you doing?" She said, "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 trying to take pictures." I was like, "Edie, I gotta teach you how to use Dropbox, man."
She was brilliant; she nailed it and was so good at her job, but she didn't know some of the technical stuff like using Dropbox. So, I had to teach her during this process, and I thought, "I can't tell them that this is how scrappy we are." | |
Alex Lieberman | Wait, did you use a banker? | |
Sam Parr | Dude, I hired a banker. So, the first time I tried to sell, I hired a banker and we ended up getting an offer from Vice. It was an all-stock offer. Thank God I didn't take that. And you say...
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Austin Rief | You've been working at McDonald's.
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Sam Parr | Oh my god! I went to tour the office and like no one was there. I was like, "Where is everyone?" 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 and I hated it. I always thought that 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 $20,000,000 by the age of 30. I was like, "As long as I make that, I don't care." The deal allowed that to happen, so I didn't hire a banker.
I actually talked to Kip, the CMO of HubSpot, and he told me that he tried buying you guys. He was like, "I wanted to buy both of y'all and own the business newsletter space." He said, "But they were too far along and you guys hadn't talked to anyone." So, I knew we were going to be able to buy you, but not them.
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Austin Rief | Yeah, so I don't know if Kip is totally being truthful there. I think Kip wanted to buy us. I got the impression at the time that they were going to make a $120,000,000 bet on email newsletters. They were really interested, but because we did a better job of monetizing each subscriber, we were more expensive.
The Hustle didn't care, or HubSpot didn't care about that extra revenue or profit. What's $10,000,000 of profit to HubSpot? They cared about our users. It's the classic case of vertical integration.
You know, you said you always thought you were going to sell to HubSpot. I always thought we were going to sell to Fidelity, E*TRADE, or Robinhood. I thought it made so much sense as an acquisition play and as a retention play.
We pitched SoFi, and I was talking about this last night with Alex. Sam, I don't think I've ever told you this story. I definitely haven't told it on the podcast, but we pitched SoFi, and the CEO of SoFi at the time was formerly the CEO or COO of Twitter, I think, Anthony Noto. He really liked us, or at least liked the business.
We pitched a group of executives at SoFi over Zoom during COVID. I was like, "Alex, this is our pitch. This is our moment. We're going to sell for hundreds of millions. We're going to get all this stock in SoFi; it was going crazy."
We pitched him for fifteen minutes, and the woman, I'm not kidding, deadpans looks at Alex and goes, "I don't get it." I'm like, "Which part?" She says, "Why would we buy you guys? I don't get the whole thing."
I was like, "Well, you know, content to commerce. We have an audience." The other guy, the head of business development, flips the background of his screen and shows SoFi Stadium. He goes, "300,000,000 eyeballs a year." I'm like, "What?" He says, "That's how many people see this stadium. You think we want 3,000,000 emails? What are we going to do with 3,000,000 emails?" And that was the entire call.
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Sam Parr | What a douche! Your wife should've talked to them. That's insane to me.
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Austin Rief | But I think, Allison, you made a good point.
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Alex Lieberman | About the lesson in incentives there. | |
Austin Rief | Yeah, I mean, at the end of the day, we were telling the marketing team of a company, "We can market your product better than you can." You know, what CMO or head of marketing is going to buy a company unless they have a ton of humility? If they believe that our pitch is, "We can do your job better than you can," then I think that she was pretty fearful. And so, that's why that deal didn't go through. So, you know, we couldn't even get...
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Alex Lieberman | In touch with the Fidelity's of. | |
Austin Rief | The world, the e-trades of the world, they didn't like... that wasn't even a conversation. So that's when we went to more media buyers, like Axel Springer, who already had made the offer, and a few others.
Look, we shopped it... I don't know about you, but I'm curious how many conversations you had. We shopped it to everyone and we got no computer.
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Sam Parr | It to all traditional media companies. No one was interested. Hearst wasn't interested, like The New York Times wasn't in. No media people were interested. Frankly, I hate the media industry, so I was kind of happy.
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Austin Rief | Yeah, and that's part of the reason we sold. I mean, a couple of hours before we signed, we were unsure. I was talking to all these people, getting all this advice, but we came back to the fact that we own the vast majority of the company. We didn't get a single offer in writing from another company, and that was just terrifying to us.
We said, "What if Accessware 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 so scared. It was a... you know, we made a decision. I think it was the right decision in hindsight, but we did it partly because we were scared.
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Sam Parr | Can I... Alright, I want to rattle off the numbers. So, my story ends there in 2020. You guys sold half the company and then later sold the rest.
I'm going to rattle off the future numbers, but then I want to talk about future stuff—like what people listening can learn.
In 2021, you did $46,000,000 in revenue and $10,000,000 in profit. In 2022, it was $70,000,000 in revenue and $10,000,000 in profit. In 2023, the numbers were the same. I imagine the business now is in the $70,000,000 to $90,000,000 range, something like that. But you guys aren't owners anymore.
What do you think? People are doing newsletters now, and they are really popular. I remember when Substack started; I thought it was the dumbest idea ever. I chose not to invest in Beehive; I thought that was a silly idea. I was wrong about both of those things.
What do you think that the people starting now are getting wrong, and where's the opportunity, in your opinion, in this space?
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Austin Rief | I think the number one thing that people get wrong is they view this arbitrage that we had in 2017 and think it exists today. They believe the same economics apply because they read a blog post that 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 out there. People forget that the most important thing goes back to what we did in 2018: we printed the newsletter out every day, and we were not maniacal over the content.
Every person I see now on Beehive, 99% of them are like, "Oh, here's an untapped market. Let me write like C+ or B- content, use all these growth hacks, and I'm going to get to a million subscribers. I'm going to sell all these ads."
I think they get to half a million or a million subscribers, but their ads don't sell for $50,000; they sell for $3,000. The economics don't work because there's not enough engagement, and 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 and the code not being viable, the product not working that well. You have to focus on the content first; everything else follows.
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Alex Lieberman | Yeah, I would just add on. Austin and I have obviously talked about this at length, but the more niche, the better. The internet is just 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 I would argue that in this advertising pullback that has happened for media companies in general, B2B has been less impacted.
The other part about it is, you know, the trouble we had at Morning Brew, which I think you had less of at The Hustle, is we could not figure out how to monetize our audience directly. We tried everything. We tried selling merch to them, we tried the education product, but we couldn't figure out a good solution for our audience. I think Causal Trends was a really smart product for your audience. The more niche you go, I think the clearer it becomes how you can directly monetize your audience.
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Sam Parr | I think a big thing to learn for people starting now is that my strategy was partially right and partially wrong.
The strategy that I had? I hated advertising. I remember, do you guys remember how the sales guys always wore jeans, a plaid shirt, and these bright brown shoes? I remember I bought a pair of those brown shoes and wore them to one meeting in New York. At the end of the meeting, I took them off and threw them away. I went home in my socks. I was like, "I'm never wearing these fucking brown shoes that tech salespeople wear ever again." I will never wear these brown shoes.
I distinctly remember that because I hated it. So, I was like, "I want to create products to sell to my audience." What a lot of people get wrong about that is they go outside. For example, I think Adam and Becca at Workweek wanted to sell software products or something like that. That strategy, and the strategies of many others who want to try and do that, will almost always fail.
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 like what Mark Zuckerberg was to Facebook—being a tech wizard—you need to be that about content. Otherwise, it's not always, but almost always, the business sucks.
So, I think that for the people listening, if you are going to build something, go super hard on content. Make money via advertising, which is the right thing to do. Then, if you do make money in other ways, you will almost always want to make money in ways that fit within the ikigai of your company's core competency and what the world wants, which is some type of content or media thing.
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Austin Rief | Yeah, we see it all the time where people start a media company. They try to sell a product, and it's really hard because you're pivoting from a content company to a product company or software company. It's really, really tough. | |
Sam Parr | It's like BuzzFeed. Haven't they tried making ovens or something like that?
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Alex Lieberman | Yeah, with Tasty, they have their entire cookware brand. I think at the end of the day, it's basically like you are adding so much complexity to your business, especially the more you get out of your core.
It's like, people like a media company, and content is the product. A media company is a business. Then what you're basically saying is you want to create an entirely different business. Now, what you need to figure out is: is the entirely different business product exceptional? Do you have someone who understands it deeply who can run it?
Then, on the media side, can you keep that going in the right way? Also, is there an intersection where your audience not only trusts you but also trusts the thing that you're now selling them? That's a different product. There are so many more moving pieces. | |
Sam Parr | What else for different opportunities you guys had on here that being based in New York helped? I agree with that; it helped you guys a lot. I think if you are an AI company, being in San Francisco is beneficial. If you are a media or content company, being in New York is beneficial.
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Austin Rief | I think that was huge for us. I think if you want to build a big brand in media, you have to be where the ad agencies are. I mean, Alex was just grinding, going to ad agencies, meeting with people, talking to people. If he lived in Austin, those people weren't there. He was never going to be able to meet with them in person.
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Sam Parr | Yeah, it's like you're not in it to win it if you are not in New York.
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Alex Lieberman | Yeah, one other thing I would say is that I think, actually, Sam, you and I feel differently about newsletters now. I know your perspective is that newsletters are so much harder and you wouldn't necessarily do it today.
My general view is that I feel like we're past the early stages of every media channel on planet Earth. I don't think anything is early anymore. Podcasts have been saturated, YouTube has been saturated, newsletters have been saturated—everything is harder in my mind.
That said, I still think there are always going to be opportunities, especially in a niche that you know a lot about, to succeed. So, I would say I am still bullish on newsletters as a way of owning your audience. I just think the level you have to play the game is higher than where we had to play the game.
One other random thought is that I used to always hate the news business. I thought it was such a bad business to be in because you need so many people to crank out content, and the economics are horrible.
However, I would actually argue that with where we are in society now, and the general distrust of traditional news, I think there's a ton of opportunity to actually disrupt news as an upstart. We've seen that with people like Barry Weiss and the Free Press, and I think we'll see more of that over the next few years. | |
Sam Parr | So, here's one of my takes on where interesting opportunities are. I would bet my life— I bet my life you guys agree with me— quarterly or monthly hardcover magazines or some type of physical newsletter.
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Alex Lieberman | Yeah, I love that. | |
Sam Parr | I almost made a podcast called "Moneywise." It's a personal finance podcast for high-net-worth individuals. I was going to make it a $500 to $2,000 a year subscription, delivered quarterly in a manila envelope with stapled printer paper. The content would consist of really well-written articles to give it a feel like a mom-and-pop type of underground zine. That's what I thought about doing, and I still think someone could pull that off.
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Austin Rief | Have you seen Arena magazine?
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Sam Parr | Is that the thing you love?
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Austin Rief | Yeah, so I think it's really cool. It's this guy, Max Mayer. I believe he worked at 8VC with Joe Lonsdale, and he started this magazine. It's quarterly now. I can't tell you if it's going to be a big business, but they tell the coolest stories, and it's beautiful.
This thing is done like a magazine from twenty or thirty years ago, where you're selling super high gloss paper, and the graphics are amazing. Then you're probably charging a $7,000 CPM to some beauty brands. It's amazing! Stripe is making these really cool ads, and Ramp... it's awesome! Everyone should check out Arena May.
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Sam Parr | What I would do is, so you said beautiful, I would make it the opposite of beautiful. I would pick an industry that has a lot of employees, whether it's like the financial advisory industry or the advertising world—something where there's like a hundred or a few hundred thousand people, but you are only one or two degrees separated from each person.
The whole name of the game would be to name as many names as possible and as many companies as possible in it. You would want to buy it for all of your staff and have rankings, like the top person this quarter. It would be almost like the difference—do you remember when Oscar started advertising in the subway versus on a computer? For some reason, when you see Casper out in the open versus on Facebook, you think, "Oh wow, this is like way more legit and exciting."
I would do that right now for an industry and name as many names as possible, so they would just be paying an annual fee per year just to have their name on paper. | |
Austin Rief | Yeah, what's that? The *30 Under 30*? | |
Sam Parr | Something like that, but for financial advisers or something. I hate financial advisers, so it would be like, "You all suck, but here are the least sucky ones."
Any other interesting opportunities that you want to bring up?
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Austin Rief | I think that's it for the media space, specifically regarding the newsletter stuff. I still believe 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 we're talking about or what The Hustle did, right? Use content to build something like a trend, but do it to the extreme.
I think the best example right now is what Overtime is doing. Oh, Dan Porter, who's been on the show, is amazing. For the first three years of this business, I didn't get it at all. I said, "Overtime, I..."
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Sam Parr | I thought it was so stupid. | |
Austin Rief | So dumb! I was like, this guy's an idiot. He left all these awesome jobs; he could do anything. He built another company off a ton of funding, and all he did was just put sports on social media. Next thing you know, he's doing basketball tournaments. I'm like, that's kind of cute.
Then he's running a league that's trying to compete with college basketball, and I'm like, holy shit! This guy is on a different level. He's trying to compete with the NCAA and the NBA. That's a big swing!
You know, if in a couple of years I build another big company, I would think like that, right? Whether it's basketball like that or paddle, I think is really interesting. There are people now thinking about doing it in tennis. There are so many interesting niches where you can take a massive swing and try to compete with the biggest organizations in the world. Yeah, I've...
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Alex Lieberman | A few... I want to add on top of that. The first is a media company focused on alternatives.
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Sam Parr | What's an alternative? Alternative to what?
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Alex Lieberman | Like alternative investments—real estate, private equity, venture capital, etc.—my whole thing is that alternative investments are becoming a bigger part of people's portfolios. However, they're more opaque and harder to understand. But they're also really interesting ways to monetize.
I think basically a company that becomes the go-to source for figuring out the complexity of investing in alternative assets is going to make a killing.
I think that's the first point. The second is that 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. The reason we never did it is that Motley Fool has built an incredible business.
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Sam Parr | **But I feel good.**
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Alex Lieberman | Yeah, but our thing was like the marketing just does not feel good to us. I think if someone can figure out how to support retail investors in a way that makes them smarter about not losing their money in the markets, media is just like, you know, the funnel to it. Even when we were at that newsletter conference two weeks ago, right? James Altucher was talking about what he makes on his premium thing.
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Sam Parr | He said he made a hundred... he did say it on stage. He said a hundred and $120,000,000 a year in revenue.
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Alex Lieberman | Yeah, and so I think that is still a massive opportunity as well.
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Sam Parr | This is awesome, guys! Thanks for doing this. How do you feel?
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Alex Lieberman | Feel good. | |
Austin Rief | That was like therapy for me. That was the most therapy I've done in my life, I think.
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Sam Parr | But for the record, you know, I never hated you guys. I hated the story that I made up of you.
For the listener, over the past three or four years, Austin and I have become very, very close. Our families are hanging out on Saturdays. Alex, you and I did a family hang two weeks ago. I have nothing but love for you guys. I consider you family, and you're some of my closest friends.
So, it's been fun to get soft instead of, you know, wanting to compete. Now that I know more about you guys over the past ten years, I don't want to ever compete against you again. You guys are very formidable and not people I want to go against. It was horrible.
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Alex Lieberman | Not nothing but love from our side.
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Austin Rief | Yeah, quite the one eighty from 2018.
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Sam Parr | It was all a story, which by the way, I think if you're listening to this and you have a company, having that story was so helpful. Yeah, like having an enemy was so helpful, even if it's made up.
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Austin Rief | It's funny you say that. I will use this time to plug my new newsletter that's launching. One of my first newsletters that I've written is about enemies. I think having an enemy, whether it's real or fake, is really important. For us, it was the skin and the hustle. I think it just motivates everyone just a little bit more.
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Sam Parr | And I know Nathan, and he's the sweetest guy ever. I've gotten to know Tyler a little bit, and he seems like a wonderful guy.
I'm not going to stop you guys from fighting because I think a fight's good. Also, I know that you're both wonderful people, and you would love each other in a different world or when this is all done.
But you have to have that, so I'm on board. What's...? | |
Alex Lieberman | Just six... six years from now, one of them is going to have a podcast. My first email, and they're going to both be on it. It's going to be all hugs.
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Sam Parr | What's your thing, Austin? Where do they get it?
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Austin Rief | You can just find it in my Twitter DMs or, sorry, my Twitter bio.
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Sam Parr | Well, I appreciate y'all, and thanks for doing this. 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 fifteen years. It's your last episode of "My First Million," so it's funny how we have all come to work together.
Alright, we appreciate y'all. That's it. That's the pod. Thanks.
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