I still think the big opportunity in the media space, if someone wants to take a big swing, someone wants to go build a billion-dollar company, it's...
Wait, so say what were you saying earlier? How you hated me or... No, you didn't hate me. No, I didn't hate you.
Like I hated you. Just to be clear, I hated you. I did not hate you.
I feel like also part of like my shtick has always been like I don't hate anyone. And I try to kill people with kindness. I try, like people have to feel like douchebags for hating me because there's no way to hate me. Like I feel like that was my MO for a while.
But I remember... Yeah. I remember being on the phone with Tim...
Shaan, and he was an investor in The Hustle also, right?
Yeah. I was so mad at him for investing in both of our companies. I was so angry. Yeah. And I remember being on the phone with him and I was like, 'We're talking about you for some reason.' And I was like, 'Yeah, like I would love to talk to Sam, but I don't know if he wants to talk to me or us.' And Tim was just like, 'Yeah, I don't think he likes you guys very much.' And no, but anyway, I didn't hate you, but I was jealous of certain things at The Hustle. And one of the things I was most jealous of was the welcome email. Like, 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. I would have traded you the welcome email for your guys's ability to be like financially... like just you guys are far more than competent, but I was barely competent. So...
So like the envy went both ways. Um, all right, so here's what I want to do for this show. So here's the deal. So wait, do you guys say what you sold for? Is that public or not?
We, yeah, we could say 75 million I think is the public number. So, collectively The Hustle and Morning Brew, we sold for like hundreds of millions of dollars and we were sort of like the graduating class of like 2020 or whatever. We were the early people in the newsletter game. We didn't like invent it, but we kind of helped pioneer a little bit of what is popular today. And now officially, as of a couple 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. Now Austin is out. And we could finally reveal like a bunch of information. And sorry, Sam, to be clear, I'm technically executive chairman, so I'm no longer day-to-day, but I am executive chairman of Morning Brew.
You are no longer operating, but I think you guys... do you still have equity ownership?
All right. So, that's what I mean. And so, what I wanted to do was I wanted to go year by year when we each started. And I want to explain to the listener what we were doing in that year, what our revenue and profit was, what our subscriber growth was, things we learned, and also we have to add this, things that we would do differently if we were starting again today, and things that we wish we had done. Does that sound good?
Yeah, sounds good. I'm also excited for it cuz 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. I think I've like shared with Austin like my whole data room at this point. The cool thing about having a data room is like you're supposed to have, you know, all the information that's easily accessible so you can like go back and look back. 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 side-by-side it.
So you guys started in 2015. What was the original premise? And weren't you guys both in college?
Yeah. So I was a senior at Michigan, Austin was a sophomore. Um, I mean both of us were kind of on the finance track. The general premise, and it's so funny because like 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 is the story, but basically was 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.' And so, 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 OG version of Morning Brew, which was called Market Corner, and it was a PDF that I'd attach to an email list every day, and Austin was one of my readers.
Can I tell you what I think the real story was, cuz it's probably the same story as mine. Sure. You saw the success of The Skimm and you just said, I'm just going to do this for finance people, or in my case, tech guys.
Definitely possible. Yeah, I think that's partly true. I do think Alex started the PDF version. Like 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 off of, wow, if these two women in New York City could get millions of people, I think maybe a million people at the time reading, like why can't we do the same? There's a bunch of, you know, we at the time we thought dudes in finance who wanted to read about the business world.
And did you have any revenue in year one?
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 is Austin and I were still in school. So we basically had a year and a half to two years of like fake timeline where we didn't have to worry about bringing in revenue.
So in 2015 I think I was 25. Uh, it wasn't The Hustle. It was just an event called HustleCon. And that year, I think it had made around $400,000 in revenue and like $200,000 in profit. Like it was like a good event, but we... and it was basically like a TED talk for entrepreneurs, but 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. And I didn't realize that you throw things away once, like Costco throws it away. And it was like the most shame that I'd ever felt was like doing being that like cheap and horrible.
And that was... Was The Hustle that profitable? Like when you did it that first year, was it profitable?
Yeah. Yeah. Cuz it was just me and then I asked my buddy John to help and it was just us two. And yeah, it made it. So like when we started in the year 2015, or sorry, so the next year in 2016, I started The Hustle because I was like conferences suck. I want to create a newsletter because I saw The Skimm. I read about Thrillist on mixerg.com and a bunch of other newsletter businesses. And when I started that business, I had $500,000 in my bank and it was all from conferences.
It's pretty wild. I think what you said is interesting about the math, right? I think at the time, and 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. But so many people came to us and they would say like, 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 we'd go through a spreadsheet and it was the most basic spreadsheet of, you know, newsletter subscribers grow five or 10% a month and CPMs stay flat and over time you can get to hundreds of thousands or millions of dollars of revenue a month. And I think it was really that simple.
I had the exact same spreadsheet. I listened to every interview with Ben Lerer and I'm like, 'Tell me what the CPMs are.' And then I met with Business Insider reporters and I said, 'Tell me how many people visit your tech part of your website.' '80 million.' Okay, then. Yeah, like you're giving me some numbers to triangulate. Yeah.
And like at the time, everyone was spending millions of dollars putting video on Facebook. And 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 the industry with a lot of suckers. There are 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. And you know, even in 2015, 2017, we were like, BuzzFeed, it just doesn't make sense. It's not worth a billion dollars. And for five years I think people didn't believe us and over time I think we proved that our model, while it seems silly, it actually works. It worked and it made us a bunch of money.
All right. A few episodes ago, I talked about something and I got thousands of messages asking me to go deeper and to explain and that's what I'm about to do. So, I told you guys how I use ChatGPT as a life coach or a thought partner. And what I did was I uploaded all types of amazing information. So, I uploaded my personal finances, my net worth, my goals, different books that I like, issues going on in my personal life and businesses. I uploaded so much information. And so the output is that I have this GPT that I can ask questions that I'm having issues with in my life, like how should I respond to this email, what's the right decision knowing that, you know, my goals for the future, things like that. And so I worked with HubSpot to put together a step-by-step process, showing the audience, showing you the software that I use to make this, the information that I had ChatGPT ask me, all this stuff. So, it's super easy for you to use. And like I said, I use this like 10 or 20 times a day. It's literally changed my life. And so 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 20 minutes, and I'll show you how I use it again 10 to 20 times a day. Um, all right. So, check it out. The link is below in the description. Back to the episode.
All right. So, fast forward to 2016. Where are you guys at? Uh, how many subscribers do you have? What was your revenue in 2016? What's the business?
Yeah. So 2016 was the year when at this point I'm working full-time on Wall Street doing The Brew in basically, you know, let's call it 7:00 p.m. to 11:00 p.m. every night falling asleep with my laptop on my lap.
Yeah. Yes, it was. Uh, my entire life was like built up to that point because remember like my dad was a trader on Wall Street for 20 years. My mom was like, this is all I knew. But it was horrible. And going back to what Austin was saying about just like there not being a lot of smart people in media, I actually think the best thing we did is like I call it like IQ arbitrage where I was on a trading desk, everyone was a PhD in math. I was the dumbest person on my desk. Like not even a shadow of a doubt. And just by moving to media, I became not the dumbest person. 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 they basically, 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 and told me he would got fired in a massive layoff at Morgan Stanley. So, I didn't get permission. And they basically had me meet with Morgan Stanley lawyers, two litigators that were 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. Made me really not enjoy the job. Quit my job. We raised a small round in 2016. 2016 is also the year when we talked to John Steinberg as he was starting Cheddar. And John Steinberg is like a media executive.
Did you guys see the Facebook message? Yeah. That he sent me.
So this guy named John Steinberg, at the time I think I'm 26 and I'm just like a guy in a shitty apartment trying to do this newsletter and John Steinberg is the president or CEO of BuzzFeed and he's about to start a new company called Cheddar. He was at BuzzFeed. Then he went to Daily Mail North America that he was the CEO of. He stepped down from Daily Mail and then he sent Austin and I an email.
Awesome. What was the subject line? Like what did the email say again?
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, it's like
[email protected] and he emails us, subject line: intro to founders. Body of the email: like what you're doing. Period. That was the whole email. So, we look the guy up on LinkedIn and we're like, 'Holy [__], this guy's a big deal.' You know, we give him a call and I mean, Alex can tell the story better, but he turns it, he flips it on us, he makes us think that he's excited in us. He's going to invest in us, all this stuff. And then he brings Alex to his office and I'll let Alex take it away. What happens? Go ahead.
Yeah. So I go to John's office, which at the time was a tiny like closet of a WeWork space, and it was him, Peter Gorenstein, who was his co-founder and the chief content officer. And 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.
Yeah. Because he wanted you to work there.
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.' And I was like, 'Well, I'm going to figure out a way to get to the CEO.' 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. Like I thought we were going to be talking about a partnership with Morning Brew. Are you guys investing in us? And I will never forget this line. Honestly, I have some respect. He said this cuz he wasn't wrong. He goes, 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 now.
Dude, I have a very similar story. First of all, related to John, I just found an old message on Facebook that I got. Here's his opening two lines: 'Have we met? We should meet.' Dude. He's amazing. He's done it like four or five times and that guy's motor just runs. Like he is just unbelievable. So this is, we're in the year 2016. I get an email or maybe I cold emailed Ben Lerer who started this thing called Thrillist which became Group Nine, like a billion dollar company. Then he's one of the co-founders of Lerer Hippeau which is like one of the most prominent VCs in New York. We start talking and I think he's going to buy The Hustle right out the gate. And I'm like, 'Hell yeah.' Like, '$5 million? That's how much I have right now already.' Like the offer is going to happen. And he brings in the president of the company and it turns into an interview, the exact same thing. And 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 million a year.' And I was like, 'Well, I don't know, man. Like, if you do the math...' He was like, 'No, like you should come and join us. Like, you know, we're a real company. Like, if you want to make this work, you have to join our company.' And that forever has been a chip on my shoulder.
And just think about like how valuable it was that we were all kind of like both had conviction and were like irrationally confident in what we were doing because like you could see so many other scenarios where someone's like, you know, googly-eyed by someone who's super successful and goes and joins their thing and it basically cuts all of the possible upside that, you know, we ended up experiencing with our businesses.
So this is, all right, so we're in the year 2016. The Hustle launched on 4/1/2016 and so that year we did 400k in revenue. I think we had at the end of the year we had like 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. And I think of the 400k, I think 100,000 was advertising revenue and I think it was four of us at the time. Where were you guys?
So, that's amazing because in 2016, we did our first ad deal. Uh, it was a watch brand called Emil Hart, 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. Uh, it was three of us. We had a writer who, ironically, we poached someone from BI. I think, I'm not kidding, I think he made it like 70 days. Like, 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. We were three of us and I was still in college. But ours were events. So it wasn't advertising, which is way less like... But you guys did what? Still 100,000 of ads. That's pretty good.
Yeah. We started advertising, I believe, in June. And I looked up my first deal. It was $4,600. I cold emailed a guy named Chris Martinez at Wealthfront. So funny. That's the funny thing is it kind of reminds me of like if you go to my LinkedIn and look at my DMs from the last 10 years, I have basically DM'd every human being that has worked in growth marketing or media over the last 10 years. And I remember that name, Chris Martinez, cuz I probably emailed him 12 times over that year to try to get him to do a deal with us. 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 '16 is we raised a little bit of funding. I would not have done that. I thought, and 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 because I owned the majority of the company, but 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?
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 is now fast-forwarding 2017, it was December like 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. And 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 five o'clock. It was like 4:55 and you know people say you were close to missing payroll. I was literally two minutes away from missing payroll. So, we did need every penny from a cash flow perspective because obviously media companies, the accounts receivable on them, you might need 30, 60, 90 or 120 days just to get paid. So, we did need the money. But yeah, for a media venture, I don't think you should raise... you should raise as little as humanly possible. I will say there is one thing I would have done differently and like one big lesson from that period and the raise. The first is we had 28 individual investors. So, we had 28 people who wrote checks from $2,500 to $100,000. But if I was to do it again, I would have way fewer. I would also try to suss out if these people are going to be difficult because we'll fast-forward at some point, but there were some very difficult investors when we sold the business. The second is time is a crazy thing in startups and you always think you can get more done in a shorter period of time. And I remember we had a slide in our investor deck that showed our one-year plan to investors. And that slide, looking back on it now, took us nine years. We tried everything in that slide and it took us nine years to try everything. And most of those things did not work. But yeah, it took nine years to accomplish our one-year plan.
All right. So now we are in 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 in subscribers. I think I missed a year because I went back in 2017. We ended the year with 250,000 subscribers. We had 2.2 million in revenue, 400K was events, 1.8 was advertising. And my big learning that year was hiring a sales team. I did a... 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 know. I didn't understand this. Where were you guys at the end of 2017?
Yeah. So '17 was the year that we were both full-time or I was only full-time half the year. We ended at 100,000 subs. We did $300,000 of revenue. We finally started taking a salary. We were taking 60k each. But that was the first real year. We hired our first... We hired Tyler Denk who now is the CEO of Beehiiv. I'm sure everyone listening knows Beehiiv. And he was transformational for us.
Everything. Dude, do you remember his first title, Austin? Do you remember? No. Growth engineer. Yeah. Yeah. I mean, he did everything. And between him and then we had Michael Schrage, who also now works at Beehiiv, who was our first writer, and then he brought on Neil Fryman, who still works at Morning Brew today. He is, I mean, like, 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, 365 days a year for now 10 plus years.
I also think Neil is a great example of what we did well at The Brew, what you did well at The Hustle, which is I think about our first three writing hires, Neil, Michael Schrage, and then this woman Nikki, and all of them were non-traditional hires. Like I think both Morning Brew and The Hustle were really good at finding undiscovered talent and seeing a ceiling in them that other people didn't realize. And it was the same thing for you. Like I remember, we'll talk about it later, but like 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 and I knew their backgrounds and none of these people were what media companies would traditionally hire as talent.
Dude, I tried to recruit media people and they laughed at me. Like I emailed this one famous journalist and she said, 'That's cute. Thank you.' Like I tried to... and so the only people I could a) afford and b) convince to do this stuff were like, for example, Lindsay Quinn was a blogger at like a procurement startup or something, or I don't even... like she was not a writer but she could write and wanted to write and you sold them on the dream of like, wouldn't it be fun if you could do this hobby all the time and make money from it? And that's the only people we could convince to join us.
She was my writing hero. The number of times in my career I've tried to poach her is very nonzero. Yeah, she was fantastic. And this really fast-forwards to 2018, but Alex isn't kidding. We knew every single writer you had. We knew, and Alex in particular knew every single story, who wrote them. And we would come to work every day, end of 2017, 2018, we would for the first two to three hours print out Morning Brew, print out Axios, print out The Hustle, print out The Skimm, and with a paper and pen, and Alex led the charge, would go through every single story. He'd circle what he liked. He'd exile what he didn't like. And look, Alex is the most likable person on the planet. You now know this, Sam. 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, you know, cross out half the words he put in the newsletter and be like, 'Look, Lindsay Quinn wrote this same story better than you did. Like, be better.' And I mean, we were maniacal. We lost our minds. We were crazy about this newsletter thing.
And for the record, I didn't do that. And that's a regret. Like now that I'm older and understand how company building works, like I would... like 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 million in revenue or something like that, you could... and that means you probably have some type of product-market fit. You could absolutely iterate your way to being like wonderful, you know, starting like you're at a B or a C+. You can get yourself to A+ through iteration.
And honestly, I think a lot of me being maniacal with the content came from like what Austin had taught me along the way around standard setting. And basically this, the standard of your business is what you allow. And so like if you allow suboptimal content to be written, that is the new standard you set. Like basically you're implicit by not saying anything to something, you're implicitly saying that that is okay. And to me, that was my biggest fear is if I said okay to things that were not exceptional content, that was the new standard of our business.
How old were you guys then during this era in 2018?
