The Morning Brew newsletter will bring in $20 million in revenue this year

A discussion with CEO Alex Lieberman

Jul 23, 2020

When you think of the rise of newsletters, Morning Brew, the five-year-old, 2 million subscriber-strong business newsletter has to be top of mind.

With five products (four newsletters, one delivered to each of its vertical audiences [general business, retail, emerging tech, marketing] and a podcast), the 45-person company will bring in $20 million in revenue this year, according to CEO Alex Lieberman.

You can check out Morning Brew here.

As part of the ongoing experimentation with this newsletter, I asked Alex if he’d be a guinea pig of sorts and sit down (well, Zoom) for a Q&A about his business, how it works with advertisers, and what the future of newsletters might look like.

If this is a feature you’d like to see more often, let me know!

(Image via Grace Rivera)

This interview has been edited for length and clarity.

The Media Nut: How did you get started with a newsletter?

Alex Lieberman: My co-founder (Austin Rief) and I started it in 2015, when we were at the University of Michigan. Austin and I were finance people, and we were always planning on doing that. We both studied in the undergrad business program. So I had gotten a job offer at Morgan Stanley and I needed to do something to pass the time, so I helped students prepare for job interviews. I helped them with mock interviews, and one thing I asked them was, how do you keep up with the business world. They’d say, ‘I read the Wall Street Journal because I have to. It's dense, dry.’

So what I heard was, 1) I need to force myself to stay in the know for my job 2) these students tell me there needs to be something to connect with. So I started a business roundup: Market Corner. It was a PDF - the top Journal stories; blurbs, business terms; interview questions. The DNA of Morning Brew now.

I was writing that every day for a few months. And it was purely word of mouth, so you had to tell me and I'd add your email. 500 people signed up.

During winter break, I brought Austin on, he was an early reader. He met up with me, said he’d been reading this and had ways to make it better. Launched first newsletter in March 2015. I graduated from UM in May 2015, didn’t have a large enough audience to go full time. So I went and worked at Morgan Stanley; in September 2016 I left to do the Brew full time. Austin joined in May 2017.

The business has been around for 3 years. If I think about it in terms of chapters: Chapter 1- a hobby; Chapter 2; a business; Chapter 3; a media company.

The team’s at 45. We serve four audiences: general business; retail; emerging tech; marketing. We have five products and a general podcast that we do twice weekly. The business will do $20 million in revenue. It is significantly profitable.

Have you seen an increase in subscribers since the pandemic began?

Yes. We saw an increase and now leveled off. As a function of 1) people being home, and having limited choices; 2) during any economic duress people experience, they go to news to sort through the confusion.

We saw an uptick in subscriptions. So much so, we had decreased our paid marketing budget in the event ad dollars pulled back. During that time we slashed our paid marketing, our growth stayed the same as if we were spending hundreds of thousands a month. It’s slowing down now.

On the flip side; it’s harder than ever to grow a podcast. When are people listening to podcasts? As they commute, and now, as the commute is from the second floor to the first floor, people aren’t listening as much.

What was your paid marketing spend?.

Per month: low- to mid six figures. Paid marketing is a top-two cost to business.

Where do you spend?

Biggest in Facebook and Instagram. Then Youtube influencers to buys in other email newsletters, to lead gen on different media sites.

How do you work with advertisers?

We have always created creative in-house for brands; our copy writing team writes. We run “native ads” in our newsletters and podcasts; copy ranges from 100-150 words and they feel similar to the Morning Brew voice. We recently started doing custom images. We do custom edit images.

What’s stayed consistent: having an in-house sales team. About 75 percent of our business is direct, and 25 percent is with agencies. Over time, as advertising real estate goes up, the sale becomes different and the experience becomes different. In the early days an advertiser could buy three newsletter spots; now it’s a more holistic partnership. You want to get in front of an aspirational business person through the podcast and newsletter. It’s more omnichannel.

What kinds of advertisers do you have?

Our stronghold is endemic: financial services firms, investing services. Betterment to Fidelity to Vanguard to Etrade. We've worked with a ton of DTC - Allbirds, Quip, Tushy. We’ve also worked with a bunch of entertainment companies, like HBO. Basically, every category except for airliners.

What are their KPIs?

Where some media brands offer a continuum from 100 percent performance to 100 brand marketing, for us it’s performance marketing. We don’t have the luxury of those relationships; what has always been hardest is convincing companies like Lexus to do brand marketing in front of the Morning Brew audience to increase audience perspective.

What it’s more been, is the advertiser says, ‘Hey Morning Brew, we’re spending $100k a month on all the channels, if you perform based on a CPA we’re trying to target relative to other platforms, we’ll continue spending with you.’

So I’d say it’s 90/10 performance vs. brand. It’s a good thing; it’s forced us to care about what we’re creating. The downside: average deal size will be smaller, so we work with more brands to fill inventory. It will shift over time, and we’re targeting by the end of 2021 to be 50/50.

So Morning Brew seems to be cresting at the right time. With reporters suddenly out on the curb after getting laid off, many are starting newsletters (ahem!), are we seeing the dismantling of traditional media?

Yes, we are seeing the unbundling of traditional media other than a few of the most established media houses, New York Times, Washington Post, Wall Street Journal.

What journalists love doing: create great stories that people consume and give a different view of the world. Journalists, however, don’t like doing back office stuff related to the media business. You know, like accounting, sales, tech. To most journalists, it’s not super interesting.

So what Substack has created is the ability to focus on your craft while also being able to provide yourself a livelihood.

Also interesting: rebundling. Let's say you build up a free audience, and introduce paid and then convert. Over time you build an audience and sustain a livelihood and extra cash to build something. What you’ll see is a bifurcation of an individual creator who loves being an individual creator - that's your life/career.

Another group is: I’ve created a big audience,and will bring in others to write for this audience. So where does rebundling happen? Substack? Ghost? Or maybe you hire someone to build out a site and payment tech, and over time bring on more people. So you start seeing more niche brands.

At what point do you do original reporting?

We are starting to get there. What we’ve always been: curation and remixing. This idea of reading original sources, reporting and writing from scratch with our voice.

Where we're going: the priority of the business is to go deeper. How do we keep people on site?

With our B2B audiences, original content will be more necessary. Industry professionals will come to us for insights and analysis. We won’t ever be breaking news. I think it will be like Ben Thompson, doing analysis and thought provoking analysis to help the business professionals think more deeply about the industry they’re in.

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Otis Redding, “Cigarettes and Coffee”