Alex Lieberman and Austin Reif on Monday, January 20, 2020 —
Morning infusion is ready for adulthood.
What started as a light-hearted college business newsletter by two college students in their University of Michigan dorm has grown into a multifaceted media operation. The company’s flagship product, the Morning Brew daily newsletter, topped 4 million subscribers after a 3 million run just a few months ago, co-founder Austin Rief told CNBC in an interview.
Building on its popularity, Morning Brew now has over 230 employees who create newsletters for retail, marketing, HR and emerging technologies. Rief, 27, and co-founder Alex Lieberman, 28, are pushing into podcasts and YouTube shows to expand the brand.
Morning Brew generated about $50 million in sales in 2021, Rief said, which more than doubled 2020’s $20 million annual revenue. advertisements in the newsletter. The company has been profitable since inception, with current margins “in double digits,” Rief said.
“We want to make economic news more readable,” Rief said. “We view our competition as everyone and no one. It’s an attention economy, so we compete with everyone. But in terms of direct competitors, we don’t have any.”
Many newsletters developed during the Covid pandemic as simple means of disseminating information to distant and dispersed audiences. Legacy outlets such as the Wall Street Journal and Bloomberg have dedicated resources to them to build audience and subscriber loyalty. The New York Times has over 71 newsletters, Digiday reported last year. Small media companies like Axios, Politico, Punchbowl and Puck also rely on them to expand their reach.
Still, there are signs that newsletter growth is capping. TheSkimm, a media company that targets millennial professional women, hit the headlines in 2018 with 7 million subscribers to its flagship newsletter, the Daily Skimm. That number has grown since four years ago, but much more slowly, according to someone familiar with their subscriber numbers. A spokesperson for TheSkimm declined to reveal the current number of newsletter subscribers.
Morning Brew has an unusual structure that contradicts its own growth. The co-founders sold a majority stake in Morning Brew to Insider in October 2020, valuing the company at $75 million. Insider itself is owned by a German digital media conglomerate Axel Springer.
It’s creating a business within a business within a business. Rief and Lieberman operate independently within Insider and Axel Springer. They have their own board of directors, made up of Insider and Axel Springer executives, including Insider founder and CEO Henry Blodget.
Rief credited the acquisition of Insider as a springboard for its recent growth. Since announcing the sale in late 2020, Morning Brew has hired 180 of its 230 employees, leading to additional verticals and a much larger presence on TikTok, Instagram and Twitter.
The headquarters of the Axel Springer publishing house in Berlin, Germany.
Sean Gallup | Getty Images
Rief said his company is looking for other media companies to grow even more.
“We want to do more of what we’re doing now,” he said. “We want verticals targeting new industries and more creators on the platform talking about money, work life and business news.”
Rief declined to comment on the specific targets identified by Morning Brew, although he said no deal was imminent.
A potential partner could be theSkimm. Co-founders Danielle Weisberg and Carly Zakin have had “dozens of conversations” with merger partners and potential acquirers over the past three years, according to a person familiar with the matter. Unlike Morning Brew, which took no money from venture capitalists, theSkimm took about $28 million in venture capital, according to Crunchbase. These investors want a return on their capital. A representative for theSkimm declined to comment on the mergers and acquisitions.
Carly Zakin and Danielle Weisberg launched theSkimm in 2012, a daily newsletter aimed at millennials.
Both companies share a deliberately light tone with a distinct goal of educating. Rief says the goal is to be “witty”, but not “funny for fun’s sake”.
As Lieberman and Rief have aged, Morning Brew’s coverage has followed their life circumstances, first targeting students interested in business, then speaking directly to young professionals. Today, the average age of a Morning Brew newsletter subscriber is 30. The larger target audience is between 25 and 40, Rief said.
Rief and Lieberman have already made millions selling a majority stake in Morning Brew. This eased the pressure to increase the company’s valuation by switching to subscription products. Valuation multiples for advertising-based new media companies tend to be one to three times annual revenue, while subscription products — like The Athletic — may require valuations of five to eight times annual turnover.
Still, Rief said he was open to a subscription product once he felt the company was reliably producing content that a dedicated audience would pay for. Meanwhile, Morning Brew has launched an educational product, offering week-long virtual courses on topics including audience building, storytelling, finance and leadership. Programs tend to cost between around $500 and $2,000, depending on the length.
Morning Brew also started an event company tied to specific coverage areas, such as Emerging Tech Brew and Marketing Brew, and a commercial site which sells branded coffee mugs, clothing and other commercially oriented whimsical items, such as a pair of Elon Musk socks with hearts on them.
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