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August 26, 2021updated 30 Sep 2022 10:33am

CEO interview: How student start-up Morning Brew became a $75m-valued newsletter business

By William Turvill

Morning Brew was started in 2015 as a business newsletter written by two University of Michigan students for their peers.

Today, that same email – filled with memes, puns and jokey headlines designed to make business news digestible – is delivered to more than 3m inboxes each morning.

Co-founders Austin Rief and Alex Lieberman, now chief executive and executive chairman respectively, have a staff of more than 100 and multiple newsletters with a combined readership of 3.5m.

They expect their growing media business – reportedly valued at $75m when Axel Springer’s Insider group acquired a majority stake last year – to nearly double its revenues this year, from $20m in 2020.

To find out more about Morning Brew’s success, and its plans for the future, Press Gazette interviewed the business’s chief executive, Rief.

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Q: When you founded Morning Brew, students were your target audience. How has Morning Brew’s readership changed since then?

Rief: “For us, that was the big inflection point. We realised very early on – maybe six months or a year in – that it wasn’t just for college students. It was for young business professionals as well.

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“[Now] we have people of all ages, and a lot of people, reading Morning Brew. It’s a lot less – I mean, it’s actually very much the minority, college students. It’s a lot of business professionals living in coastal cities.”

How did you build up your early subscriber base?

“In the really early days, so to speak, my co-founder and I, we’d go to clubs, classes, getting people signed up. We were college students. We had zero money to invest in growth.”

How well did this work? Would you recommend this boots-on-the-ground approach to other newsletter businesses? Should they be knocking on doors to find subscribers?

“The metaphorical knocking on the door? Yeah. Now, literally going door to door knocking? No. I don’t think that makes sense.

“One of the big benefits of colleges is you have a high concentration of people. So we weren’t asking one or two people. We were going to an econ 101 class with 500 people.

“So the idea, the sentiment of – quote, unquote – knocking on the door makes sense. But in practice, you have to find out where people are concentrated.”

How do you grow your subscriber base now?

“Now we do everything. Paid acquisition, Facebook, TikTok, YouTube.”

In its early years, Morning Brew benefited from its existing readers recommending the newsletter to their peers. Still today subscribers are rewarded for making referrals. Three referrals give you access to exclusive Morning Brew events, 1,000 referrals earn you an “epic makeover” for your home office. 

How important are referrals to Morning Brew in 2021?

“Our biggest growth driver is still the referral programme. It’s still big for us and, yes, it’s been really important. We wouldn’t be where we are today without the referral programme.”

Rief estimates that around 20% of Morning Brew’s sign-ups still come from referrals.

But have any readers actually reached the 1,000 referral mark?

“Not a lot. But there are some. There are definitely some.”

Were there any particularly important milestone moments for you in the growth of Morning Brew?

“There were two moments, right? One, when we hit 100,000, and we thought: ‘Oh, this is big. This could be really, really big.’

“And another is when we saw the path to a million. When we saw the path to a million it changed our mindset a little bit. We were like: ‘Oh, wow. A million’s a very big, real number.’”

When did you start to believe that Morning Brew could be a good, serious business?

“When we started off it was just a side project. It was a simple side project. But I would say, end of 2016, summer 2016, we were like: ‘Oh, this is really interesting. Let’s go full-time and see what we can do here’…

“Summer of 2016 I was going into my senior year of college and I decided to go full-time. And that’s when we doubled down on the business and started really focusing on setting up a team to sell ads.”

When did you start making money?

“We generated our first revenue in 2017. It was like very small, but first revenue was 2017. But 2018 was when revenue started to gear up. I think we did a couple of million in 2018.”

Did you find it difficult to sell advertising back then?

“It was definitely tough, but we started off just taking any money we could get. We were just basically pricing things just very, very inexpensively – a couple of hundred dollars at most.”

How did you deal with Covid-19 and the advertising downturn last year?

“The advertising downturn didn’t last the full year. I think it only lasted about six months or so. Maybe less. Maybe three months. It definitely hit us hard in March.

“But the thing about our advertising, which is different to most people, is our advertising is both brand awareness and also direct response. So our ads actually work. They perform. We generate dollars, ROI, for our advertising partners.

“And prices definitely came down but, at the end of the day, when there’s a recession – when companies get scared – there’s a flight towards safety. They keep their dollars in performance advertising. And we perform.

“So while things definitely go down, because some of the brand advertisers pull out, we still had the ability to sell ads, because we perform.”

How bad were things at the peak of the crisis? Did you have to consider making cuts?

“There were probably 14 days when things were really scary and then we got our feet under us and we decided to run the business differently. We didn’t want to do any layoffs, and we didn’t do layoffs. That was really our goal – continuing to employ everyone at Morning Brew.”

What changes did you make?

“We ended up not making those changes because things rebounded faster than expected. But we put in a plan – we were going to hire fewer people, we were going to drop our price of ads – we were going to do a bunch of things.”

Read more: Interview with Insider founder Henry Blodget

How did your October 2020 sale to Insider come about?

“We’d been talking to them for a while, like a year. Things went back and forth and eventually, we decided they were the right partner for Morning Brew.”

How has the deal changed Morning Brew?

“It’s been good. They give us the autonomy to do what we want and to grow the business. Things have been really good.”

Rief says Morning Brew now has between 110-120 employees, having started the year with around 60. The company made around $20m in revenues in 2020 and expects this figure to nearly double this year.

Morning Brew is now working on plans to expand beyond its traditional newsletter base.

“We’re focused on product expansions. We’re focused on audio and video and social… Hopefully, in 2022 we’ll be launching our live events business, assuming Covid allows.”

Advertising currently makes up nearly all of Morning Brew’s revenues. How much of this revenue comes from newsletter sponsorships?

“It’s a majority. It’s decreasing as a percentage of revenue as we sell other things, other kinds of sponsorship [in audio, video and social media], but it is a large majority right now.”

The podcast market is notoriously difficult to make money from. Have you found it a good market?

“Yeah, we’ve found it to be a good market.

“We’ve seen success selling our audio products. But we view them more as franchises. We don’t just sell a podcast. We sell a franchise.

“So my co-founder’s got a podcast called Founder’s Journal. And we’re looking not just to sell pre-roll or mid-roll ads in the podcast – we’re looking to sell the entire franchise. So you can buy sponsorships on his Twitter account and a little bit of everything. So you’re buying the franchise, not the series itself.”

Could Morning Brew launch a paid subscription offering in the future?

“We are going to launch a product that generates direct revenue from our readers. How that business will look – will it be recurring revenue, will it be one-off sales? – we’re still working on.

“Right now, we’re building that out. But for us, we’re focused on generating reader revenue. We’re not focused on a business model like subscription.

“If it works out, great. But we’re not saying, ‘Hey, we want a subscription – how can we get there?’ We’re saying, ‘Hey, what’s the best product and services for our users?’”

As of now, Morning Brew is North America-focused. Will you be aiming to expand globally in the future?

“Right now we’re focused on serving our current customers better as opposed to launching new services for new customers.”

Six years ago, when Rief and Lieberman founded Morning Brew, they were students writing for other students. Today, they are young professionals running a media brand aimed at other young professionals.

Are you concerned that as you and others running the business grow older, you will lose touch with the interests of the young professionals of the future?

“We’re going to continue to hire really good people and they’ll help us figure that out. I’m not so worried about that.”

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