From: myfirstmillionpod
The newsletter industry has seen significant growth and diversification, with various successful models emerging. This article explores different strategic approaches to building and scaling a newsletter business, as discussed by founders who have navigated this landscape.
Morning Brew’s Journey and Strategy
Morning Brew, co-founded by Austin Rief and Alex Liberman, started from humble beginnings at the University of Michigan in 2015 [00:01:34]. Initially, Alex Liberman’s “Market Corner” was a simple PDF attached to an email, focused heavily on finance and markets [00:01:12]. A key early decision was not to raise Venture Capital, primarily because Austin was a sophomore in college, making it difficult to secure funding [00:01:47]. This forced them to operate lean, leading to unconventional tactics like personally collecting emails in lecture halls [00:30:15].
Morning Brew adopted a “horizontal route” strategy, launching multiple newsletters to accelerate revenue growth through advertising [00:08:18]. Their content focused on general business, making a broad subscription or event model less viable due to a less specific tone and target customer [00:08:50]. Instead, they embraced the B2B (business-to-business) model, often pre-selling advertising slots for new newsletters before hiring writers, allowing them to break even quickly [00:09:17].
The advertising business, particularly with large corporate clients, was described as a “grind” due to high fixed costs and a lack of guaranteed recurring revenue typical of SaaS (Software as a Service) companies [00:14:06]. They initially sold direct response ads to companies like Casper, but as they grew in New York City, they tapped into the “black box” world of major media buying agencies with multi-million dollar budgets [00:19:08]. These relationships, rather than pure logic or facts, often drove ad sales, influenced by concepts like “use it or lose it” media budgets [00:19:34].
At a valuation of approximately $70 million for a majority stake, Morning Brew demonstrated the significant potential of this advertising-driven, multi-newsletter approach [00:02:54].
Core Operational Principles
Morning Brew’s operational success was underpinned by a clear, almost “maniacal” focus on key metrics and constant iteration. Their mantra was “write, grow, sell,” a phrase written on their office wall [00:07:27]. They meticulously tracked their open rates on a “Great Wall of Opens” daily for two years, driving constant improvements in content and growth [00:07:33]. This data-driven, focused approach allowed them to project significant growth based on simple Excel models, even when investors were skeptical of their low cost structure [00:29:16].
The Hustle’s Contrasting Path
The Hustle, launched in April 2016, a year after Morning Brew, developed a competitive rivalry, often comparing their content and strategies [00:03:43]. While Morning Brew was “buttoned up” and New York-based, The Hustle was described as “a little bit of a crazier person” from the San Francisco tech scene [00:04:00].
The Hustle’s content had “an edge with a tone,” targeting entrepreneurs and aspiring entrepreneurs [00:08:36]. This specific niche allowed them more flexibility to launch supplementary products like “Trends” (a subscription service) or “Hustle Con” (events) [00:08:44]. While Morning Brew opted for horizontal expansion with multiple newsletters, The Hustle leaned into verticalizing its offerings, aiming for diverse revenue streams beyond advertising [00:07:46]. This approach, while potentially slower to achieve high revenue, was seen as having the potential for a “billion dollar company” due to its multi-revenue stream model [00:09:35].
The Milk Road: A Case Study in Niche Aggregation
The Milk Road is presented as a successful example of a “Morning Brew for X” model [00:50:00]. This approach involves finding a growing industry (like crypto) and “riding that tailwind” by owning the niche with a distinct brand [00:12:04]. The Milk Road built the biggest daily crypto email in less than a year, proving the effectiveness of this bootstrapped, niche-focused strategy [00:10:11]. This model thrives by focusing on a specific Total Addressable Market (TAM) and aiming for a high percentage of that TAM to read the product, leveraging a unique tone [00:11:46].
Newsletter Categories and Opportunities
Austin Rief categorizes newsletters into three types:
- Editorial Newsletters: Long-form content, often from individual writers (e.g., Substackers) [00:11:17].
- Aggregation Newsletters: General business, focused on scale (e.g., early Morning Brew and The Hustle) [00:11:30].
- “Morning Brew for X”: Niche aggregation that summarizes news with a specific tone for a targeted audience [00:11:39].
The “Morning Brew for X” model is highlighted as the biggest current opportunity, especially if the “X” is a growing industry (like AI or crypto) or a B2B professional niche (e.g., retail professionals, HR professionals) [00:12:02]. For consumer-targeted newsletters, it’s suggested to focus on high-dollar niches (e.g., “newsletter for Ferrari owners” or “Rolex owners”) [00:12:31].
Insights on Business Models and Industries
The conversation also touches on broader business models:
- B2B Media: The B2B media world, exemplified by Industry Dive (a $600M newsletter business), is seen as having significant opportunity, despite perceptions of “whack” content [00:13:07]. The key to competing with established players is to “treat B2B like consumer,” focusing on engaging content that resonates with individuals [00:13:52].
- Agencies and Marketplaces: In challenging economic times, opportunities arise in businesses that help companies save money or individuals earn side income [00:46:00]. Examples include outsourced talent agencies focusing on specific niches (e.g., content marketing for B2B companies) or marketplaces for developers like Toptal, which have bootstrapped to significant revenue [00:46:40].
- AI Side Projects/Tools: A potential strategy involves building an “AI newsletter” to aggregate information and then creating a “holding company” to invest in and acquire small AI side projects [00:51:17]. This would allow for cross-promotion and bundling of products, generating revenue through product sales rather than just advertising [00:51:30]. However, concerns were raised about the durability of these businesses due to the rapid pace of AI development potentially making tools obsolete or consolidating functions [00:53:47]. This risk is compared to the “picking pennies up in front of a steamroller” analogy used for Amazon FBA aggregators (like Thrasio), where platform changes or increased competition can quickly derail a business model [00:54:37].
Overall, the discussion highlights that while different approaches exist in the newsletter space—from broad aggregation to niche specialization, and from ad-centric to diversified revenue streams—success often hinges on obsessive focus, adaptability, and a deep understanding of market dynamics.