How Morning Brew grew from 0 to over 4 million subscribers

Good morning! This is The Zero to One. Your second favorite thing in the world, your favorite is obviously that feeling you get in your stomach going down a roller coaster. 🎢

Here’s what’s in store for you today:

• Deep dive of Morning Brew, a $75M exit making business news simple and fun.

• Interesting things around the community.

Morning Brew: $75M making business news interesting

This story begins like any good story: “Back in college…”

It was 2014. Austin Rief and Alex Lieberman were both business students at the University of Michigan. Alex was in his senior year, with a job lined up at Morgan Stanley and Austin was two years behind with his eyes set on investment banking - every business student’s dream.

To help himself and other students keep up to date with the business world, Alex wrote a newsletter - a PDF attached to an email - that summarized the Wall Street Journal.

This was the start of what would become Morning Brew.

In 2015, Austin and Alex teamed up and officially launched Morning Brew.

5 years later and they would sell a majority of the business for a valuation of around $75M.

Today the Brew (to make Morning Brew sound evening cooler) has 4M+ subscribers and does over $70M in revenue, with no plans of slowing down. But this isn’t about what’s to come.

This is the story of how Morning Brew went from Zero to One. 🚀

Business model: How Morning Brew makes money

Simply put, Morning Brew is a media business. They make the majority of their money from selling ads in their newsletters.

After reaching 1M subscribers in 2018. The next step for the Brew was to launch new verticals and scale into the full media company that exists today - with 10 different brands and 6 podcasts.

Creating a portfolio of media businesses targeting professional audiences, to sell advertising space on.

With my personal favorite being Dan Toomey’s YouTube channel:

Morning Brew also has a few other monetization channels:

• Morning Brew Games: Another space to sell ads. 🎮

• Morning Brew Store: Buy all your favorite Brew merch and templates, such as financial planners. ☕️

Morning Brew also previously operated Morning Brew Learning which ran cohort-based courses - both B2C and B2B. However, it shut up shop after three years and ~4k alumni.

Morning Brew is a simple (not easy) business. But a great simple business.

Morning Brew’s Growth

In 2014, Alex’s senior year at UMich, he started writing Morning Brew, originally called Market Corner for two reasons:

1. He wanted to keep up to date with the business world to be properly prepared for his job on the trading floor at Morgan Stanley - for which he had received an offer to return after a successful internship.

2. He wanted to help other students keep up with business news in a better way than reading the Wall Street Journal.

From day one, he launched a highly sophisticated newsletter. And by that I mean he attached a PDF to an email and BCC’d everyone on the same chain.

In spite of its awesome design, students loved it.

So in December 2014, Alex wanted to take it more seriously.

He asked his subscribers if they had any ideas.

Enter Austin.

Austin believed there was something there with Alex’s newsletter - if people read it while it looked like that, then the underlying idea must be great.

So he replied with some thoughts.

They met. Hit it off. And decided to work together on it.

In March 2015, the Morning Brew website launched!

But very quickly they both realized they needed to find writers - one problem though: they had no money.

So they asked students who were interested in business if they wanted to write for them.

For free.

All they got was their name and brand out there.

The only person they needed now was someone who could make sure the voice remained consistent. They wanted their content to sound like a friend.

So they found someone at UMich who they thought was funny and who had an interest in business.

They now had their editor.

When Alex graduated in June 2015, they had 10k subscribers.

Alex then went to work at Morgan Stanley, working on the business in the evenings. While Austin still had another two years left at college.

In September 2016, Alex decided to leave his job and go full-time into Morning Brew.

When Austin graduated, he joined him - driving to New York the day after graduating.

By the summer of 2017, they had ~100k subscribers. Growth ballooned from here. Hitting 1M subs in 2018, and now, over 4M.

But these subscribers aren’t just vanity metrics.

In 2020, Morning Brew made ~$20M in revenue.

~$46M in 2021. And ~$70M in 2022!

Along the way, in October 2020, Morning Brew sold a majority of their business to Axel Springer (Business Insider’s parent company) for a valuation of ~$75M.

Key Success Factors (KSFs)

🧠 1. Understood the main thing: One thing Austin and Alex were awesome at doing when growing the Brew was keeping the main thing, the main thing. Write. Grow. Sell.

💑 2. Built an engaged community: Morning Brew built and nurtured a loyal community around the brand. Creating ambassadors who wanted to share the Brew within their circles.

💲 3. Chose growth over short-term revenue: Being in college allowed for Alex and Austin to optimize their decisions around growing the Brew and not on revenue. This helped them build a sustainable and profitable business in which they owned the majority of the equity.

🧠 1. Understood the main thing

Austin and Alex were clear on what the main thing for Morning Brew was:

Write. Grow. Sell.

They said it. Wrote it on their office walls. And got everyone to buy into it.

They were always on top of it.

It sounds like simple advice. And it is. But simple doesn’t mean easy.

Very often founders get distracted and focus on x feature or y new vertical. Not keeping their focus on what matters most for their business.

In the case of Morning Brew:

Write ✍️

The Brew wanted to write the most engaging business content. They were obsessed with readers’ engagement - creating a “Great Wall of Opens”, where every day at 11 am they would write down their open rate. A newsletter relies on great content - Austin and Alex made sure they had the best business content.

Grow 📈

The best content is only the best content if people read it. The way to make this a business was to acquire as many readers as possible - Austin and Alex would religiously track their subscriber count to make sure they were acquiring them.

Sell 💰

Acquiring as many users as possible is only sustainable if you have a way of making money from them. Morning Brew is hyper-focused on profitability, making sure they have ad partners to sell to, including massive-scale media buyers.

Knowing what your main thing is, is good. But you need to stay on top of it.

This laser focus helps you achieve your goals - both in business and in your personal life.

💑 2. Built an engaged community

Austin and Alex have created this cult-like community around Morning Brew - the good kind. Of course.

People love Morning Brew.

Alex and Austin used this to create brand Champions who spread the Brew word without having to be prompted to.

Austin and Alex understood that email is inherently personal. Readers have given you permission to be in their inbox - amongst friends, family, and colleagues.

You become a part of their daily life. Even more so, when your emails have a personality, like Morning Brew does.

To do this they wrote a one-page description in excruciating detail, defining who the Morning Brew was:

• How often does this person drink? 🍻

• Do they run? How often do they run? 🏃‍♂️

• What apps do they use? 📱

• What’s their screen time? 📺

And much more.

This created a consistent voice that readers could relate to and build a relationship with.

This connection set the foundation for Morning Brew’s community.

But once you start a community, you have to keep them feeling connected and like they are a part of something that others aren’t.

The Brew did this in two ways:

1. To this day, every email that someone has sent to Austin and Alex, they have replied to. This makes it feel like there is a person on the other end of the emails you get.

2. By creating a referral program that gives out branded Morning Brew merch. This creates this VIP feeling that fans can display publicly (so everybody knows that they’re special). Enforcing the feeling that they are a part of something cool and unique.

Creating this hyper-engaged and loyal community snowballed Morning Brew’s growth, and continues to be a large driver today.

💲 3. Chose growth over short-term revenue

Alex and Austin launched Morning Brew when they were still in college. This meant they had a few years where they didn’t need to think about the Brew as a business.

They didn’t need money - Alex had a full-time job lined up and Austin still had 2 years of college left.

So they didn’t raise a ton of money, unlike some of their competitors at the time. This meant they didn’t have to worry about investor returns or that the media bubble was bursting.

They could focus on growth over short-term revenue.

They became obsessed with making the newsletter as good as possible and growing it as quickly as possible - the selling part only came in a bit later.

Now yes, there was some luck involved with them being in university and having jobs lined up that they could afford to not treat the Brew as a business. But there’s a critical lesson to be learned here.

Don’t go all-in until it makes sense to.

While going all-in earlier can be great from a focus point of view, it can be extremely hurtful as you start to focus on quick revenue and not building the best product possible.

If you have a nest egg that you’re comfortable living on, by all means, going all in is a better decision. But if you don’t have a nice investment portfolio or savings balance, leaving everything for your startup too early can be harmful to not only you, but also the business.

One thing that’s helped me is thinking about my job as part of my business - it’s one of the revenue-generating activities of it, even though it’s completely unrelated (I do Management Consulting). And then the “revenue” that is my salary, I invest into my business, this newsletter.

You might not be in college, but it’s important to think about how you can derisk your business so that you don’t desperately try to make money in the short-term, rather than focusing on long-term growth.

Actions you can take to replicate Morning Brew’s success

Do shit that doesn’t scale 🔨

Founder of Y Combinator, Paul Graham (once described by the My First Million pod as the “Jesus of Silicon Valley” 😂) has written many industry-altering articles, but one of his more famous is about doing things that don’t scale.

It’s one of the most common pieces of advice they give at YC.

There’s a commonly held belief that if you build something better than what exists, people line up to buy your product. Or they don’t. Which must mean there is no market for it.

But that’s not the case.

Startups actually go from Zero to One because the founders make them take off.

Even those few cases that seem to have taken off by themselves usually had a push.

Morning Brew is a great example of this.

Rather than waiting for readers to come to them - they recruited their first few thousand readers manually. Literally manually. Pen and paper. 📝

Austin and Alex had the idea to speak to business students and so asked professors and club heads if they could have 5 minutes to pitch the Brew.

The first time they did it, they asked everyone to go to a link and sign up.

Two people signed up. In a class of ~500.

They had to change something.

They realized there was too much friction between their pitch and a student signing up for the Brew. There were too many steps. So no one did it.

And so they decided to make it easier. They went back to the good ol pen and paper.

Alex would give the pitch and Austin would go around, look people in the eyes, give them a printed Excel sheet and a pen, and ask them to put their email in - I imagine he didn’t stop staring the whole time, but who knows.

Then they would manually enter these emails into their mailing list.

Sometimes because of people’s unique (read as 💩) handwriting, they would have to try a few permutations of an email. For example, l’s might look like i’s.

For a whole semester of college, they did this, pitching to over 150 classes and club meetings.

This got them their first few thousand subscribers.

Don’t wait for customers to come to you, go out and recruit them. Even if it’s incremental. Going from 100 to 110 users is a 10% growth. Grow at 10% a week for a year and you’ll hit 14k, and after two years you’ll have 2M users.

Do things that don’t scale - this will start to build network and snowball effects.

Find how you can serve hubs 🚴‍♀️

Alex and Austin have this awesome analogy of thinking about growth like a bicycle wheel. Stay with me.

Every wheel has a hub and spokes attached to it:

The spokes are all the people who should read Morning Brew. And the hubs are the people who have access to the spokes - i.e., the individuals who can give you access to many people.

For Morning Brew, the first hubs they used were professors and club presidents - remember from above. 👀

They could give them access to speak in front of students.

But this couldn’t scale. They couldn’t go around the whole country and pitch to every class at every university.

So now what? They had exhausted all the classes and clubs at uMich.

Well, they thought if they could turn their newsletter subscribers into Morning Brew champions they could create new hubs.

So they filtered their subscribers by domain names for schools they wanted a presence at and asked students if they wanted to be Morning Brew ambassadors.

They started the program with 10 ambassadors who went through a highly selective and rigorous process. They selected the most “impressive” people - the student body presidents and the leaders of clubs.

This was the wrong strategy.

These people were already spread too thin. They didn’t have the time to commit to the Brew.

So the next time they opened the floodgates.

300 ambassadors at 200 schools.

All automated. And no rigorous screening process - although they made it seem like there was.

They had an email asking people to apply. Then an automated email to say they’ve received your application, but that it’s a very selective process.

It wasn’t. 😂

Their next step was an automated email to say you’ve been accepted. Everyone was accepted.

But this appearance was crucial in getting buy-in and ownership from the ambassadors. It made them feel special - don’t underestimate how powerful this feeling is.

They now had their new hubs - the Alexs and Austins at universities around the country.

The Brew didn’t even pay these ambassadors, rather giving rewards to them when they hit certain referral milestones.

But for someone to even care enough to share the Brew, the brand probably meant a lot to them. So Austin and Alex had to create rewards that their ambassadors would actually care about, not just expensive ones.

The answer: Extra content and signals that you were a Morning Brew VIP.

Mugs for your desk.

Shirts to show how cool you are.

They use this same idea now with their open referral program. Turning anyone into a Morning Brew Champion.

So find your first hubs. Then think about how you can evolve into more and more scalable ways to leverage them.

For Morning Brew, they started with hubs in their immediate circle - but this was completely unscalable.

Then they used this same idea at universities around the country - somewhat scalable.

Then they turned this into a completely automated referral system.

It’s a similar strategy to what Stan and Karat do - both leveraging Creators as inherent distribution channels, aka Connectors.

Create distribution channels if they don’t exist 📦

One of Morning Brew’s most successful growth tactics would be taken as a given in today’s newsletter landscape, but in 2016 they had to create the market for themselves.

Austin and Alex (I feel like I should’ve just abbreviated this to A&A in the beginning to save time, but hey, we’re here now) were obsessed with data - also something you should do.

One of the key statistics they were tracking was open rates by source.

They realized cross-promotions with other newsletters were really successful - there is a specific type of person who just loves to read newsletters - like you. I hope.

So they started to buy ads on other newsletters. Problem was, there weren’t enough newsletters to buy ads on. This growth channel seemed to be capped.

But A&A ;) didn’t let this be the case. They valued this type of subscriber and so created a bigger market for themselves.

They came in as sales consultants for a few newsletters and in exchange would buy their first month or two of ads.

This was a key lever in them scaling from 50k to 250k subscribers.

Sometimes a distribution channel may look capped or even non-existent. But think about if there is a way to create it yourself - doing this will give you a massive competitive edge.

Have a great week, speak soon!