🎧🍌 Growing Morning Brew to 6 Million Subscribers and $70 Million Revenue | Austin Rief, Co-founder and CEO
A zero to one playbook for building media companies, two cent CAC, early stage investing math, how ad agencies work, and Austin's hiring secrets
Austin Rief is the Co-founder & CEO of Morning Brew, building the WSJ for the next generation.
Austin and co-founder Alex Lieberman started the company in 2016. They’ve since grown it to 6 million subscribers and $70 million in revenue in six years.
We talk through the early days of Morning Brew while students at the University of Michigan, and Austin's playbook for starting a new media company from scratch today.
We get into the creator economy, early stage investing math, acquiring subscribers for two cents as the first advertiser on Instagram Stories, ad based business models and how agencies work, advice on hiring sales teams, and his secret for sourcing remote talent in Sri Lanka.
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Timestamps to jump in:
3:42 How to start a media company from scratch today
13:01 Future of the creator economy is niche products
14:42 Opportunity in B2B media today
17:05 Reflecting on investing during ZIRP
21:30 Why its starting to feel like 2021 again
23:16 Talking VC portfolio math
27:09 Starting Morning Brew with Wall Street interview prep
33:35 Being so dumb that they never pivoted from being a newsletter
35:29 How newsletter business models works
38:32 Morning Brew’s first viral Instagram post
40:37 Acquiring subscribers for two cents on Instagram Stories
42:29 Nik Sharma’s poor mans paid ads strategy
44:32 Landing Discover as their first big sponsor
46:06 How agencies and ad buying works
49:49 Why sales roles are so hard to hire for
53:04 Importance of offsheet references
57:43 Sourcing talent in Sri Lanka with Oceans
1:04:23 Austin and Alex’s unique co-founder dynamics
1:07:16 Dental plans, rotisserie chickens, and company laptops
1:10:00 Building WSJ for the next generation
Referenced:
Read Morning Brew
Try Oceans to hire top talent in Sri Lanka
Craig Fuller’s podcast episode
Overtime episode with Co-founder Dan Porter
Kevin Espiritu’s episode on Epic Gardening
Forbes article on Morning Brew
Austin on X / Twitter and LinkedIn
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Transcript - (read on Rev)
Find transcripts of all prior episodes here.
Turner Novak:
Austin, welcome to the show.
Austin Rief:
Thanks for having me. I'm excited to chat.
Turner Novak:
Yeah, I'm excited, too. I feel like we could have done this a long time ago, but I'm glad we're doing it now because I think it's going to be an awesome conversation. Just state of the world, everything going on, where you're at with Morning Brew. Speaking of Morning Brew, though, if you were to start a media company today, starting from scratch, what would you do?
Austin Rief:
Yeah, I think a lot of people out there are trying to recreate the Morning Brew model. I think a lot of people have, based off the success of a lot of these SaaS platforms, maybe you've invested or you know of a lot of them, whether it's Beehiiv, which obviously is former Morning Brew employees, or a circle, these platforms are awesome. They democratize what we did at Morning Brew, but I also think they make standing out really, really challenging. So there's two angles I would go, I think one's heavily spoken about, and one is less. So the first angle would be going deep, deep B2B your passion audiences.
Turner Novak:
These are the heavily, heavily spoken about. People kind of know this strategy.?
Austin Rief:
Yeah, yeah. So a lot of people talk about, like, going deep B2B. I think Industry Dive really championed that. I think there's a way to go deeper though, and you can build events and subscriptions, but that's known. I think that's the standard path. Or again, in that vein, maybe create a publication for Ferrari owners. I think that if you had a publication for Ferrari owners, that'd be very valuable if your audience was every Ferrari owner on the planet but...
Turner Novak:
Do you know Craig Fuller at FreightWaves?
Austin Rief:
I love Craig. Craig's great.
Turner Novak:
Yeah, that's an insane, you know, niche in terms of number of followers or number of subscribers, but insanely valuable. It's just people who own planes. It's like a flying magazines for private jets, essentially. Insane audience.
Austin Rief:
I don't know if you saw, but he's doing now the same thing, I believe, for yachts. So he bought a collection of yachting magazines as well. What's so smart about what he's doing is he didn't say, "Hey, I'm going to buy this thing." Or sorry, "Build a thing from scratch." He's buying these legacy magazines that have really high, really wealthy audiences, high affinity audiences, and the people who read private jet magazines probably are really into them, but because they're magazine businesses, they don't trade it 10 times revenue. They don't even trade it 10 times EBITDA. My guess, and I have zero insider information, but my guess is he's buying those for two to four times even EBITDA.
This actually goes into that second category that I didn't get to yet that I was going to talk about, but he's using that media that has high affinity, high intents from a user to go do something, but he's saying, "Hey, I'm going to buy this at 2S, but then I'm going to put that audience's attention on something that's probably worth 5, 10, 20 times EBITDA, if not 10 times revenue, like real estate, for example, or maybe financing or private jets." I think that's a really interesting play.
Turner Novak:
Yeah, Yeah. So I had them on the podcast probably eight months ago. I'll throw a link to the episode if people want to check it out in the description. But yeah, he bought land and just made an airport, basically, and then you could buy houses on the strip that had like a hanger in the house, essentially. So you take this magazine, and you're like a real estate developer, like you just flip the business model. It's insane.
Austin Rief:
Well, if you think about that, it's actually not that dissimilar from what someone like Ryan Serhant is doing. Right? You could argue Ryan Serhant's a media company that just happens to monetize via the 2 or 3% that real estate brokers get, and I think that, and yeah, you asked me the original question, and a roundabout way of answering it is that's what I would do, is I would find a really passionate or I build, or ideally, buy a passionate audience, but one that's not monetized well, and instead of trying to fight the uphill climb of doing ads or subscriptions, I would probably have those, but I would have a much higher purpose or a much larger ambition. I'll give you an example, and I know you know it well because actually an investor in it, but what Overtime is doing is brilliant. So I'll talk your book for just a second.
So I can name 10 off the top of my head companies who basically said, "Hey, we're going to take sports highlights, put them on Instagram, put them on Snapchat, put them on the next platform." They've raised a bunch of venture money, and it truly is the definition of insanity. They're doing the same thing over and over again expecting a different result. They've all gone to zero, but Overtime said, "Hey, we're going to take that same strategy, but instead of just making money off ads, which they do, we're going to build basketball leagues, and we're going to compete in some ways with the NBA or with other cable providers. I'm sure going to sell tickets to games." I'm sure they're already be doing this. They're going to sell that TV package to ESPN or whoever.
So that's what I would do, is I'd say, "Let me find an interesting audience. Let me ideally go buy someone who is aggregating that audience in a really passionate way." But then I wouldn't think, "Okay, let's stop at ads or subscription." I'd say, "No, what's the big bet we can take? Is it sports?" There's a lot of interesting stuff in sports. I mean the UFC is a media company. F1's a media company, Overtime. Or it could be if I started that audience of Ferrari owners, maybe I end up buying a car museum or whatever it may be. But that's what I would do. I try to pair a passionate audience with a much better business model because there's never been a better time to create content, zero marginal cost to create content, but there's never been a worse time to monetize content via ads or subscriptions. It's just so hard. So I personally wouldn't do it again. I wouldn't put those two together, and I'd find other ways to monetize.
Turner Novak:
Yeah. It's interesting with Overtime, like when you take that example, they've got these leagues. They have a basketball league or whatever. A lot of these leagues, start up sports leagues that have tried to happen in the past, a lot of them fail because they can't make money, and most of the time, it's brand deals and then, like, TV rights. So they're kind of starting to sell the TV rights, but they already monetize all the content with ads. So it's like, "Oh, by the way, Gatorade sponsor the content but then, also, we'll put you in the league." So you kind of solve that cold start problem too. But then you also have all this distribution online to then get people to pay attention to the league, and then you do different categories too.
I think they have basketball. They have a flag football league, which I'm not sure how big that one is. Then they have a boxing concept also that's relatively new, but I think it's doing pretty well. People seem to care about boxing.
Austin Rief:
Yeah, I don't know too much about that, but it makes a lot of sense because, you know, at Morning Brew, I've been doing this for almost a decade now, and the hardest part of selling ads is getting a CMO to actually care about you. When you're small, in a counterintuitive way, we used to go into meetings with American Express or big firms, and we say, "Hey, we want to work with you so badly, we're actually going to get you a really great deal. We're only going to charge you 50 grand." The problem is American Express can't only spend 50 grand on something. They're deploying at... We can look it up. I'm sure ChatGPT can pull up quickly, but they're probably deploying hundreds and hundreds of millions of dollars a year on marketing campaigns. So it's actually inefficient. Even if you're giving them a discount, it's inefficient for American Express, five years ago, to work with Morning Brew.
Today, it's 70 million of revenue. It's more interesting. But if you're Overtime, and you say, "Hey, you can buy media, and you can buy live, and you can buy basketball, and we can partner with our fast stations. Right? Our fast providers, so you can buy OTT as well." All of a sudden, you have a portfolio where it probably is worth the CMO of American Express's time." If you are going to be in an ad-based business, and I'm not against ad-based businesses, I just think it's one piece of the puzzle, you need to have enough such that head of an agency or CMO is going to actually want to meet with you, and that is why I think what they're doing is really interesting. They give you a full 360-degree experience. So, again, if you told me five years ago, Overtime would be where they are. Today, I would've said, "You're absolutely crazy." I didn't get it. Now, looking back, it makes a ton of sense, and I think that's a multi-billion dollar company.
Turner Novak:
That's good to hear as an investor in the company. So what's your opinion then on kind of more creator-led businesses? Like, is that a good idea?
Austin Rief:
To me, it's not good or bad. Right? There are going to be really successful creator-led businesses, but I think the creator economy, and I think we're getting to an inflection point, but the creator economy was where the direct to consumer economy was, let's call it maybe 10 or eight years ago, where people saw all these tools, Shopify, targeted Google Ads, targeted Facebook ads. They said, "Look, I can go buy something essentially off Alibaba, some crappy mattress. I'm going to put it in a box. I'm going to ship it to you." Even that had a little bit of innovation, which is better than a lot of these creator-led companies. You see that, and a lot of these creator-led companies are simply just slapping a logo on a product and selling it. I don't think, long-term, that's going to work.
It's probably going to work for MrBeast because he's the biggest. Right? It probably will work for Logan Paul because he's big as well. But I think a lot of these creators creating commoditized products with no real story as to why it makes sense other than, "Oh, I like that creator." I only see the creator economy getting more and more competitive. Things are going to be niched down like they were in the direct to consumer world. So, yes, I love the idea of a creator creating a product, but there has to be a real reason why that creator is creating that product, and ideally, there's actual real innovation in the space. It's actually a really useful cool product. A great example of that is, I can't remember his name, but his handle's Plant Daddy.
Turner Novak:
Kevin Espiritu? He's also been on the show Epic Gardening.
Austin Rief:
So someone like that. That's awesome, right? Because he's acquired really interesting seeds, and he will give you a real reason to buy his product. He gives you the content. But at the end of the day, what's my reason to buy a creator's drink or to buy... I like them, but affinity wanes. Ultimately, I do think the ones that are going to win out over the course of a decade, you do actually have true benefit above and beyond, "Oh, I just like this person, so I'm going to buy their whatever it may be."
Turner Novak:
Yeah, it's kind of just they're good marketers, and you combine a good product with good marketing, get it in front of people, get their attention, and I don't know, I mean, maybe an example is Kellogg's from the mid-1900s or whatever. They started creating these characters that they sold to kids. Right? They just had commercials, and it was like, "Hey, Fruit Loops." It's this cool toucan bird, and there's, like, rainbows, and it's all in color. Then you get it, and it's just full of sugar, and it tastes really good. It kind of makes sense from that angle.
Austin Rief:
Or look at Disney. Right? And Disney's ability to license their brand on everything, and it's because they... Again, I put Disney, the MrBeast bucket where it's like they actually have that huge scale, and they have really interesting IP as well. They're kind of both. Right? The scale of MrBeast, probably obviously much bigger, but they do have unique IP that... You know, they're not just doing pranks on YouTube. There's 10 people doing pranks on YouTube, and you know, and they'll be a hundred tomorrow or a thousand the next day. So if you're a, "Hey, I do pranks on YouTube and I sell sugar in a can." I don't know how sustainable that is long term.
Turner Novak:
You need to have something like there's also CBD in it, or we've removed all the sugar, or it has steroids, so you'll get ripped from drinking it or something. Like, you need to do something that actually makes it different.
Austin Rief:
What you said is actually really interesting. I think there is a huge wave, a huge push into this health and wellness space, and whole foods, real foods, and I'm looking forward to creators really leaning into that. I think creators have leaned into the better for you or maybe marginally better for you.
Turner Novak:
Yeah, quote-unquote, better for you. Yeah.
Austin Rief:
Yeah, better for you than what? Than something that's absolutely terrible. Yes, that is true, but I'm not sure if that's what you want to compare yourself to. I think if a few creators start leaning into that space, they can really build out a niche. I don't think people are... Of course, there are some people on Twitter talking about all this. Brian Johnson writes on a really good job, but we need... Brian Johnson's great with the health and wellness space because you always need someone leading the charge being the extremist. So that makes everyone else seem like they're not as extreme.
Turner Novak:
They're less, less crazy than this crazy guy.
Austin Rief:
Yeah, less... I love Brian Johnson. I think he's an absolute character.
Turner Novak:
Yeah, great marketing.
Austin Rief:
Amazing marketing, but he's going to pave the way for someone like you or me or whoever, and hey, look, I'm not trying to never die. I'm just trying to improve my health span and just enjoy my life, and here's an awesome product, and it makes sense for me because of X, Y, and Z. I think that's going to be a really great opportunity, and I think there's some people that have protein powders and things like that, but then there's another wave coming of that.
Turner Novak:
I don't really do much CPG investing. I've invested in one CPG company. It's kind one of those things where VC 101 is... CPG is bad. It doesn't make sense, but I can't remember if we were recording when you mentioned this, but the lower your valuation, like the entry point you come in at, you actually could get venture like returns. Right? It's like you invest at 3 million, 6 million posts, the company gets acquired for 700 million by Kellogg's, and you got an ADX or a 150x. That's actually really good, like it can work.
Austin Rief:
Yeah, absolutely. So it's funny. The big topic of conversation in 2020 through 2022, after a lot of the bubble burst on this D2C world, because they created, I think mostly commoditized, and they were marketing hacks, not product innovation, was no one invested in DTC. Similar to you, I didn't do much DPG DTC investing. I did write checks in two people who I really liked, but I didn't necessarily even believe in their products. I don't think we were recording, but I won't say the company's name, but I invest in the company. He had started two successful companies before this. This is third company. I said, "Look, I think this idea is terrible, but I'm going to give you money because I really respect you and you must see something I'm not seeing."
Fast-forward three years, they're approaching a hundred million of ARR. It's a subscription product, and they're ripping 25 to 30% EBITDA margins, and I'm getting a check, a distribution check every couple months for the price of my investment.
Turner Novak:
No way.
Austin Rief:
Yeah, it's crazy. So the reason I was able to do that was because it was 6 million posts, and so if the company's worth, I don't know, maybe quarter of a billion dollars today, yeah, that's a 40x right now. So yeah, I think CPG DSC can absolutely work. You just can't invest it 30, 40, 50 in the seed round like people were in 2022.
Turner Novak:
Yeah, I know. I know we weren't recording at this one, but we were both reflecting on that where it's like we probably just did it too much. But it's interesting because it kind of... I don't know if I've ever mentioned it on the podcast, but I've definitely mentioned it publicly before, is on a relative basis, like when you see other people doing it at a hundred million posts, and you you know, I'm only at 30, it's pretty reasonable. But at the end of the day, it should have been six. You're like, "Shit. It was still way too high." So I think that's one of the big things I got tripped up on throughout just 2020 and 2021 was I wasn't thinking on an absolute basis.
I was thinking more relatively, and relatively, I felt I was doing pretty well, but then on an absolute basis is was like, "Yeah." Instead of being 10x over value, you were 5x, and you still messed up. Like, it was still too high.
Austin Rief:
Totally, and look, I think the tough thing, if I have my timeline right, you were an emerging manager. You maybe were on fund one of your first standalone fund in 2020, 2021 time.
Turner Novak:
Yeah, it was the top.
Austin Rief:
Yeah, your job is to deploy money. If you went to your LPs and said, "Look, I raised all this money and I'm just going to sit on it for two years because I think valuations are too high." And Bitcoins at 60,000, and all these companies are raising at crazy valuations, your investors would've asked their money back. They said, "What are you doing?" It's almost like Michael Burry in the big short, obviously not to that extent, but basically, you've had to tell your investors, "Hey, I raised money to invest in companies. I'm not going to invest in companies." That's really, really hard, and so I think you're right. You were, and so was I. I think a lot of people were in the mental space of, "Okay, I need to deploy this money in 24 months, and even when you do that. Let me look for lower valuations." But if the whole market was 2x over value then you're investing at 10 or 20% discounts, you're still way off of where you need it to be to have great returns.
Turner Novak:
Yeah, and I think you have that realization of you know that things maybe feel too expensive, but having never been through it before. Right? I think both you and I kind of started investing in startups, like, around that time. So that was sort of, quote-unquote, normal. You see the data, and you maybe see like, oh, prices are going up, but it kind of felt okay at the time.
Austin Rief:
Yeah, and I'm curious. You know, I have a friend. Actually, he was over yesterday. We were hanging out, and he said, and he's in the crypto space, so Granite Bitcoin as we're recording this, is, I don't know what, 94. It came down from 99. He said things are starting to feel like it's 2021 again, and not necessarily in terms of valuations, although they've definitely come up, but the speed at which deals are getting done and how proactive and preemptive these rounds. I'm curious, are you seeing the same thing?
Turner Novak:
Sort of. So I have not done a lot of AI-related investing. I've done a little bit. I'm working on my Q3 LP update, which I'm going to send out, and I've just kind of found some data. I actually think that the hottest startups of today are actually more overvalued than they were in 2021, and that's basically from my view. If you just take a look at what people are paying for companies in the public markets, they'll pay like eight times revenue for the average task company versus what they'll pay in the private markets.
In 2021, the private markets was about, it was just under two times more expensive than publics. It was about 1.8x, and today, it's about 3.3x more expensive. So the, quote-unquote, best, most expensive private market companies are almost twice as overvalued as they were in 2021. I think the caveat is that you're just going based off of a revenue multiple, and the revenue multiple, it's basically how fast the company's growing. That's how people back into that.
So the companies, they are growing faster. There's AI companies that will go from zero to a couple million or 10 million in revenue in a couple quarters, or you know, a month or two. So if you think that that's going to continue, you could argue that it's justified, but that's the big question. It's like, "Is this thing going to get to a billion in revenue in two years, and you're going to look like you got a good deal?" I think that's a pretty open-ended question. It's very subjective in my opinion.
Austin Rief:
Yeah, and I'm sure that answer, where you fall there, is also very dependent on what kind of fund manager you are. If you're a 16Z, you probably take that bet because you want to deploy a lot of capital and get into that B, and C, and D, you know, for you. If you're more pre-seed and seed, maybe the calculus isn't quite there on those deals because even if they do get those revenue numbers, which you have to weight that by probability, you know, it depends how much capital you got into the business, but I think you're less of buying a call option into a later round, and it's your first round is your Super Bowl.
It's not, "Okay, let me back the next big company so I can write three or four checks into it and get half a billion dollars into that company?" Maybe you're weighted return is 3 or 4x. You're looking for 50x or a 100x on that first check.
Turner Novak:
Yeah. My general strategy is, you know, I look to try to get a 10x fund, roughly 10 x. Usually, I think the park baseline is 5x. So if you're not getting at least 5x, you probably shouldn't be doing venture. So if you want to underwrite 5x, you need to get... If you just put about, you know, 20 positions in a fund, you write 20 checks. So that means each position is 5% of the fund. Well, if you just assume... I mean, I just assume there's only one thing that hits in each fund, and everything else is a zero. So I just say, "I need 5% of my fund to return 500% of the fund, so I need to the 100x on this one position." What does the average outcome look like? Does the average outcome look like 700 million? Does it look like 2 billion? Is it 50 billion? If you assume that your average exit is going to be 50 billion, you know, you can come in at very high prices to still get that 100x return.
Now, there's going to be dilution. You're probably going to get diluted at least 50%. So you probably need the 200x change in valuation, maybe more. So when you just think about, "Okay, I'm coming in at..." If you come in at 1 million post-money... Well, say you get 200x change in valuation, you get to lose a 500X or 500%, you only need to exit for 200 million to get a 5x fund. Now, is 1 million post-money a realistic entry point? It's probably not. Is 5 million realistic? I don't know. Is 10? Is 15? So I think, as you start going beyond that, you know, you kind of maybe have to start tapping out around 20 million, 25 million. Then you get to the point where your big winner has to exit for 3, 5, 10 billion, and then also, when your entry points get too high, you miss out on the upside.
So let's say you get a company that exits for 25 billion, they go public, but you only got an 80X on it because you came in at 80 million post or whatever, and your fund, you barely return the fund with it, but it was like the biggest outcome ever. So I think there are all things you just have to think through while you're doing this, and you're kind of like, it's hard to know thinking today 10 years or 15 years in the future. So you just have to have this almost rationality of just what makes sense on this spreadsheet math that I'm doing. That's not going to be right. Whatever I think is going to happen with this company, it's not going to actually happen. So I don't know. That's my general framework for it though.
Austin Rief:
You know, it's super interesting. I think, also, what made that worse in '21 and '22 is people were logo chasing. So funds were getting raised so quickly where if I could get into ramp at a billion, someone would write that check at a billion because like, "Oh, this thing's going to get marked up to eight in a year, and is it worth eight at the time? Who knows? I mean, someone paid it, okay, but now, I can ramble my deck to go read my fund two and start stacking funds." I think that was the game people were in.
Turner Novak:
Yeah. I mean, it's a game. I mean, you can play that game. Some people play it. Some people play it really well, but it's not the game I want to play. I want to actually make money for people.
Austin Rief:
Yeah, for sure.
Turner Novak:
Well, so speaking about making money, I want to talk about just Morning Brew. Like, how did it initially get started way back in the day? I know I'm in Ann Arbor. You guys started at Michigan, you and Alex. Just how'd you get started?
Austin Rief:
Yeah, I'll tell the story quickly. My co-founder, Alex, was helping some friends with interview prep, and in doing that, he was a senior. He had a job lined up at Morgan Stanley. His friends didn't, and in doing interview prep with his friends, he realized very quickly that people just didn't read business news. They didn't read the journal. No one was on Twitter. People weren't consuming business news, and he just thought it was crazy that these people were trying to get jobs as traders, as bankers, consultants, and no one read... No one knew what was happening in the business world.
Turner Novak:
Why not? That's like the first step. It's like you should know what's going on in the market.
Austin Rief:
Yeah, I just think it was just dry. It was dense. It was boring. People just didn't want to read the journal cover-to-cover, and I also think things were a little different 10 years ago. I think the average age of the journal subscriber was probably five years younger. They're now even older, but I don't think the journal realized they had an age problem, or at least not one that they were addressing. So they were truly writing for people in their seventies or whatever the average age of the journalists. I don't know. It's probably quite old now. So they were playing to their target audience.
So this audience is classic story of an audience being underserved and the light bulb moment of, "I can do it better." So Alex started doing that, and I joined him to write a daily email newsletter. It was first focused on the financial markets, then it became broader business world. Took off at Michigan. Went from zero to 2000 in like three to six months. I know, we basically sat outside of finance 101, accounting 101 classes and basically just bully people into signing up, giving us their email. We typed their email on our landing page, and then we said, "Okay, well, we could probably turn this to an ambassador program and scale within the Michigan at 30 schools, and 50 schools, a hundred schools."
It's funny. I was actually at a wedding on Saturday night, and someone's like, "I was one of the original ambassadors, the Ohio State." Which was really funny and a crazy turn of events, but it just took off. So we got to 60, 70,000 subscribers via the ambassador program, and I decided to go full time.
Turner Novak:
Like, did you know it was going to be a big thing? How did you kind of figure out that... Because I know you did a banking internship. How did you decide like, "This is actually going to be better, this kind of silly newsletter concept that doesn't..." Like, no one has said this is a viable business compared to like...
Austin Rief:
I wish I can... Look, I could lie and tell a better story, but I'll tell the honest truth was we didn't. Right? We started off as a side project. I decided I was not going to go back to my finance internship for other reasons before I decided to go full-time on Morning Brew. So I was figuring out what should I do next. I was like, "Well, I have this thing, it's doing pretty well. Maybe we can double it or triple it. It could bring in enough money to help me figure out what I can do next." Still a side project, and it just took off from there. I felt as if I had my whole senior year to work on it. Whether I was naive or lucky, my thinking was if senior year comes and goes and I can't turn this into a business and I make no trash in senior year, I'll just go back to Moelis and I'll beg them for that job.
If they don't give me that job, I'll try to go work at the big four consulting firm. I really think I can get a job there. If I can't do that, maybe I'll go work at a startup, and if I can't do that, I'll go get my MBA, and I think there was enough... The decision tree had enough outcomes where I felt confident I could figure something out if this Morning Brew thing didn't work. When I graduated, there was enough traction where we were going to spend a year on it and go forward. Alex had quit his job at Morgan Stanley. So summer of 2017, we were all in. Moved to New York, working out of an incubator. 2018, for us... I mean, look. We started... Again, things happened very quickly. Summer 2017, we're both simultaneously working on it full-time. It took us six months to kind of figure out the kinks. 2018, we're just off the races. 2018, we 10x from a hundred thousand to a million subscribers.
Turner Novak:
Were you making money when you decided like, "Let's work on this thing full-time?" Was there a little bit of revenue coming in or was it still kind of not quite there yet?
Austin Rief:
Yeah, 2017, we did $300,000 of revenue.
Turner Novak:
Okay, so you could live off of that?
Austin Rief:
Yeah, revenue, not a profit.
Turner Novak:
That's what I'm saying, like, it's enough. You could have made it work.
Austin Rief:
We took very little salaries in 2017, but 2018 we did 3.1 million of revenue, and in 2019, we did 13.3. So it was like 300,000, 3.1, 13.3, 20, 46. So it was a quick ramp.
Turner Novak:
Yeah, that's like a software company almost. That's pretty impressive.
Austin Rief:
It was crazy. Yeah, yeah. In hindsight, it felt like a software company because those were our advertisers, and we just talked about 2021, 2022. We ended up being the biggest beneficiaries of all that money. That money poured into those companies, and those B2B SaaS companies came to us, say, "Hey, look, we got to spend a million dollars in the next month. We have to grow. You know, ROI doesn't matter. Just help us grow." We couldn't collect money as fast as it was coming in. It was crazy.
Turner Novak:
This thing all started like, initially, you were attaching a PDF to an email. Right? You didn't even write it in this pretty newsletter format. Right?
Austin Rief:
Yeah, I think if you look up, Forbes has an article with the PDA was called Market Corner, and there was a... Remember, Clip Art? Where you can... You know, there was like crap. There was a bull and a bear fighting on the front cover of it.
Turner Novak:
Oh, yeah. I've actually seen this. Yeah. I've seen one of the first issues, I think.
Austin Rief:
Pretty horrible.
Turner Novak:
Pretty bad, like it was just a bunch of words, basically.
Austin Rief:
Yeah, it was really bad. It was really bad. No tone, really, and no graphics, no visuals. I mean, the only people taking newsletters seriously, in a non-commerce way, in a, "Hey, we are going to deliver information in a newsletter, not with the purpose of driving you to a website or to our YouTube page. We are going to make newsletter of product." Was the Skim. They were doing it pretty well at the time.
Turner Novak:
This was 2015, '16-ish?
Austin Rief:
2015. Yeah, I think they started in 2012. They raised their first round of funding, I think, 2024. They raised a C or an A around then. We're like, "I just thought we can do this better for a different audience, learn from what they've done, learn from mistakes they've made, and I think we can be a great business." To your point, people told me you were crazy. Very well-known media execs, some of whom I think you know, would call us and say, "You're making a huge mistake. You have this cool brand. Go raise a bunch of money and put video on Facebook." Right? The whole pivot to video thing.
Turner Novak:
Oh, yeah. That was the thing at the time.
Austin Rief:
We were so lucky in the fact that we just had no idea how to even do that. I always say we were the only team who could have built Morning Brew, and it's not a compliment. It's an insult.
Turner Novak:
Because you were so bad at everything else?
Austin Rief:
Yeah, we had no idea. We barely could put out a daily email. So Axios comes out, I think 2018, 2019, and they launched 10 newsletters. We're like, "10 newsletters? We can barely do one." They come out, and they're doing events. We say, "Events? We can't write a newsletter." But what that did is it forced... And the very best thing we ever did was, for longer than anyone else, stay more focused than anyone else on the one thing that mattered to us, which was write, grow, and sell the best possible newsletter. So by the time we launched something else, we were the biggest business newsletter in the world. You know, maybe not the world, but in America. Right?
No other newsletter had a million, million half, 2 million subscribers. So we started dipping our toe in the water in some of these B2B verticals, whether it was marketing or retail, but the machine was built. That daily newsletter was a $10 million plus product. So we were fueling everything with profits from the newsletter. We raised one round of funding in 2017. We raised $750,000. We barely dipped into that money, and we never raised money again. It was because we were not investing in other things. We just said, "Hey, let's become best in the world at this one thing."
Turner Novak:
So how much, at the, time was a newsletter subscriber work? Or I guess what was just the general monetization model? How did you make money? It was a hundred percent ads?
Austin Rief:
Yeah, so it was a hundred percent ads. Look, it still is vast majority ads. Now, there's ads across video, and podcasting, and a variety of ads. But I mean, look, we can do the math. We ended 2018 at a million subscribers, and we ended 2019... Sorry. Yeah, we ended 2019. Let's call it almost 2 million. So on average, we had a million and a half subscribers that year in 2019, and we did 13 million of revenue. So rough math was a little over $10 a subscriber, if I'm doing that right.
Turner Novak:
Just the value, like how much revenue? Then I'm assuming, at the time, newsletters was kind of like the ugly stepchild. No one cared about monetizing newsletter. So I mean, it was probably not that hard to acquire people, like it wasn't that competitive, if I'm remembering right?
Austin Rief:
So I'll tell you a story, but first, it's funny because in 2017, 2018, all we said is, "Oh, if only we started this business in 2012, 2013, we'd be acquiring subscribers so much cheaper." Then in 2020, people said, "Oh, if only we started this business in, you know." If people were starting in 2020 said, "If only we started in 2015." Digital ads are only getting more expensive. So yes, if we started earlier, it'd be cheaper. But on a, let's call it time-adjusted basis, we picked a very good time. So just to speak for a second on how hyperfocused we were, we didn't do social media for the first three years of our business, and people are like, "Why are you posting Instagram?"
Turner Novak:
Yeah, that's the classic way to grow today. It's just you post on Twitter. You post on LinkedIn, Instagram, et cetera.
Austin Rief:
So at the time, our readers weren't really on those platforms, and when they were, they weren't signing up from newsletters for those platforms. It was different. You know, Instagram is still more in the... Less like the town, what does Zuckerberg call it? The Town Hall. Less Town hall, more living room, and we had no way to make money off it. So I said, "Look, if we can't make money, why would we hire a social media manager and pay them 70, 80, $90,000 a year? Let's put that money straight back into growing our newsletter because, again, write, grow, and sell the best possible newsletter." But we had a referral program, and if you referred people, you got Morning Brew Swag. The most common thing we sent out at three referrals was stickers.
Well, in the prime of that referral program, we were shipping out a thousand pairs. You know, we sent out two or three thousand packages of stickers a week. We hand hats every single envelope. We .every single envelope. We stamped it. We put the label on. So at Friday at like 2:33, we'd stopped working. This is still when WeWork was cool, and they had beer for everyone. I think they got rid of the beer. Sometimes we'd literally bring the WeWork keg into our office, our tiny little office, and we'd set up an assembly line, and I'd be in charge of packing. Someone else would be in charge of whatever. We'd have a couple of beers, and we brainstorm a Friday social media posts.
One time, we said, "Huh, it'd be kind of funny if we..." You know, GroupMe was very popular at the time. I was using a lot, and we said, "It'd be kind of funny if we had this fake conversation between Bill Gates, and Warren Buffett, and Zuckerberg." We started this series where we make these really funny posts with all these people talking as if they're in a group chat. We had, I don't know, maybe 20,000 followers on Instagram at the time, and there wasn't the discovery there was today. So we're starting to go viral. It took way, way, way more effort. Now, the followers means nothing. We post this thing, and we got like 40,000 likes, more likes than followers. We're like, "Whoa."
So there's something there, and we kind of forgot about it. Then two weeks later, one of our friends went to Facebook's F8 conference, and heard whoever, maybe it was Boz or whoever was running ads at the time, basically imply, "I shouldn't say this, but we're launching Instagram story ads." This is when Instagram was really blowing up, trying to compete with a Snapchat. This is end of 2018, yeah. So we're launching Instagram story ads. The image sizing is going to be different, and it's going to be opt in. Right now, everything's opt-out. You kind of get everything.
At the time, you handpicked, which... Did you want to be on right reel, on Facebook? Wherever you want to be. So we said, "Well, we know you have to be early to platforms to get ship subscribers. We're going to be the first ones on Facebook, Instagram stories ads." We said, "That's our goal. Let's be the number one." And we refreshed Facebook Ads Manager, like, every 15 minutes.
Turner Novak:
To see if it opened up?
Austin Rief:
I'm convinced, we were the first advertiser on Facebook ad manager or I for Instagram stories ads, number one. I am very convinced that's the case because we refresh every 15 minutes, but we didn't think about what creative to put because we were so excited about getting access. So in a panic, we said, "That Instagram blew up. Let's just put that as that." It was lightning in a bottle. For three or four day, we were getting 2 cent CACs. We were getting subscribers for two and three pennies, and Tyler and I just pulled, like, two to three all-nighters in a row just optimizing and tweaking these ads, and I think we grew 150,000 subscribers in, like, two to three weeks.
That was just the heyday. Yes, you ask about acquiring subscribers, it was good then. But that week in particular was life-changing for me, and it really is a sign that it is worth being early to a platform. You just never know when you're going to find the right creative with the right ad mechanism, and I know, you're probably going to miss on 9 out of 10, but that 10 out of 10 can change your life. That was just huge for us. I'll never forget that. I mean, it was product market fit with the best possible top of funnel we could ever find. It was crazy.
Turner Novak:
Yeah. If you say, okay, you're making on average 10 bucks a year per user. We'll just make it simple, a dollar a month, whatever. Maybe it's like 80 cents, 90 cents a month, but you're acquiring them for 5 cents, 10 cents, whatever. As long as you're lining up the ad deals, you're paying yourself back instantly, like, within a month. That's insane.
Austin Rief:
I mean, that's how we were able to scale with $750,000. Also, remember, an ad-based business is horrible from a cash flow standpoint.
Turner Novak:
Yeah, because they will pay you a quarter later. Right?
Austin Rief:
If you're lucky. Yeah, sometimes 120 day terms.
Turner Novak:
Oh, wow. Okay.
Austin Rief:
Yeah. So again, that's just how fast we were growing. So it was amazing. You know, you hear this about product market fit. You rarely see that floodgate open in media, and we were just very fortunate that it happened.
Turner Novak:
Interesting, and to your point about the ad creative that you chose, I've heard... You might know Nick Sharma.
Austin Rief:
I know Nick well. Yeah, he is a good friend.
Turner Novak:
Yeah. I've seen him say before that his strategy's usually the lazy man's marketing paid ad strategy, is just find your best organic posts and just boost them and just pay. There's a reason that they did well, organically, so just pay to boost them again.
Austin Rief:
Totally.
Turner Novak:
So that's usually... If you're just starting to do paid ads, just find your best stuff and boost it, and that's a good way to kind of get it going, obviously. Maybe you don't want to do that forever. You need to come up with new ideas, but...
Austin Rief:
Absolutely. Yeah.
Turner Novak:
Like, how did it go? So you scale... I think, I've heard you... You've told me before, you've scaled from 100K to a million in that year. It was mostly from Instagram and referral programs. Was that how you, quote-unquote, got to scale?
Austin Rief:
Yeah, that was 80% of the subscribers that year. It was referral program and paid, mostly on Facebook.
Turner Novak:
Okay, and that's kind of contrarians. Like, most people would say don't do paid growth, but it sounds like it worked because it was efficient.
Austin Rief:
Yeah, it was efficient, and we had the ad sales team lined up to monetize it immediately. So we built them. Again, going back to we built the machine, we've been training for this for two to three years. So when the opportunity presented itself, we were ready to capitalize on it. I wouldn't recommend, today, people put tens of thousands of dollars into aid unless they have a real plan to monetize that audience, because these letters are great, they're subscriptions. But they're also terrible, they're subscriptions, and people can unsubscribe pretty easily.
Turner Novak:
Yeah. Yeah, it sounds like a good takeaway from the conversation. It's like media businesses can be insanely valuable and efficient, but also end terribly if you don't run them correctly, if that's a fair way to put it.
Austin Rief:
Yeah, and for all that work and all the effort, you sell for eight to 10 times EBITDA, and if you were a product-led SaaS company, you know, we're saying before, you're selling for eight to 10 times revenue. So it's a lot of work for, you could argue, not the same reward.
Turner Novak:
So how did you get the first kind of sponsorship deal lined up? I feel like you've maybe said Capital One?
Austin Rief:
No. So our big advertising deal was Discover. That wasn't our first advertising deal, but it was our first big ad deal. The way we got that was... Again, it was just so scrappy. The daughter of the CMO of Discover Card was a huge Morning Brew fan. She got her mom to start reading, and I think we would look through the names of every single person who subscribed to newsletter every day, and we'd LinkedIn check everyone. We saw some really cool people. We messaged all of them, and a lot of that ended up being our investor base, our advertiser base, and we saw the CMO of Discover Card, I have to say, are reading Morning Brew, and we messaged her, and she sent us to her agency, but it was a good signal for the agency to start working with us. The first RFP they sent us... By the way, I didn't know what an RFP was.
Turner Novak:
What does it stand for, for people who don't know?
Austin Rief:
Request for proposal. You know, It's just basically asking, "What can we do for..." At the time, they asked for a quarter of a million dollar proposal. I was basically like, "Look, you can own the company for a quarter of a billion dollars." You know, we had 50,000 or 75,000 subscribers. We hadn't raised any money. I mean, it was nothing. So it was just very funny we got kicked into that system, and we worked with Discover for a while. They were a big advertiser, and they were also another reason we were able to scale. It was they gave us six figures, frequently.
Turner Novak:
Interesting. That's awesome. So then, how do you recommend approaching one of those processes if you're trying to do some kind of sponsorship revenue? You mentioned this thing called an agency. Is that a big piece of it if I've never heard about this before?
Austin Rief:
Yeah, so the media buying world is split into two types of... There's basically two ways to go. You can go client direct and talk to the head of growth, the head of marketing, or you can talk to the ad agency. Normally, ad agencies are only hired by companies that are really big. I'm not talking about, "Hey, we run your Facebook ads." I'm saying, "No. Hey, here's 50 million or a hundred million dollars. Go deploy that money." Typically, that money is brand awareness dollars, not always, but a lot of times it is, and they actually have budget. Right? Sitting there saying, "We need to deploy $50 million." So if you can get in touch with the agency, it's a win. It's a home run.
What I would say though is that's really hard for the problem I explained before, which is if you're a newsletter with 50,000 subscribers, and I'm an agency who American Express gave $50 million, am I really going to spend my time talking to you when Morning Brew can eat up 2 million of that, and Vox can do 4 or 5 million of that, and the New York Times can do four or 5 million? Probably not.
So yeah, it's really great to get in touch with agencies, but much harder. I would say that getting in touch with, especially performance marketers, beyond Discover, is where we started. If you have an engaged audience, performance marketers at B2B companies or big brands, they are okay oftentimes working with smaller advertisers because, I would say, the brand is more focused on ROI, whereas, the agency, just like, honestly, any service provider you hire, wants to make the most amount of money, the least amount of work. So if you can make their life easy, the agency will give you a bunch of money.
Turner Novak:
Interesting. So I feel like I've mentioned before, or I've heard you guys mention before, you did this thing where to meet all these, like, heads of growth at SaaS and DTC companies. How did you get in front of all these people when you're still kind of pretty small?
Austin Rief:
Yeah, I mean, Alex ran sales in the early days and he was just an animal. He just LinkedIn messaged every single one, and you know, like everything else we did in the early days, hand-to-hand combat. What we found is those heads of growth bounced around from job to job. So one day, they worked at Casper. The next day, it was working Parker. The next day, it was Bambi Stocks. So very quickly, they actually helped us get inroads with these companies because either they went to another company we went to work with or we said, "Hey, you know, you had a good experience with us. I saw you worked at Casper six months ago. Can you intro us to Casper?"
So the marketing community as a whole, very, very... They bounce around jobs a lot. They love community. Love it. So they all know each other. So referrals and recommendations, once we got our foot in the door, was a really great way to spread. I think, oftentimes, people are just scared to ask questions. They just don't say, "Hey, look, would you mind connecting us to that person?" Oftentimes, people want to just help out. So when I talk to people around newsletters, no one, almost no one is just asking their advertisers to refer them to new advertisers.
Turner Novak:
Interesting. Yeah, and that's true. If they're making money with you, like they're getting good ROI, they're... Well, I guess there's a question of, like, would they be willing to introduce the other people because you're a good product or would they be secretive and be like, "Hell no." Like, "I don't want anyone else to know about you."
Austin Rief:
So it's funny. Some are definitely secretive, but oftentimes, what we see is the desire to have an insight and share with a person in the market industry. "Hey, I spend money with Morning Brew and it works." You know, trumps "Hey, I have this unique thing. I'm not going to share it with anyone." Marketers love to talk. They love to share things.
Turner Novak:
Yeah, they're marketers. They like to get the word out. You mentioned you kind of started to hire up on the sales team. How do you hire good salespeople? Where did you find works?
Austin Rief:
So hiring salespeople, to me, is the hardest job to hire for by far.
Turner Novak:
What makes it so hard?
Austin Rief:
Yeah, so sales and marketing, specifically sales... I mean, these people's profession is to sell you. So if they're going to be good at selling anything, it's themselves. So they're just so good especially more senior salespeople, CROs, chief sales officers. I mean, a lot of CROs are actually horrible at their job, but they're amazing at interviewing. That's what they do the best at. So you really have to weed through all that sales nonsense, and I think I found two tricks for doing that. One, oftentimes, salespeople and revenue leaders have very great answers. You know, they'll say, "Oh, you know, I would solve that with three things." One, you know, things that sound really good frameworks, but just ask why or ask them to explain that. Go two or three levels deeper, and all of a sudden, you'll see people start to break down, and they'll have this beautifully crafted answer to a question.
"Hey, can you speak a little bit more about that first round? I don't totally understand that. Can you explain it in a different way?" All of a sudden, that polish will rub off and it'll be pretty poor. You say, "Hey, sorry, I'm still not getting it. It must be me. Can you maybe explain to me in a different way? I don't understand it that way."
Turner Novak:
So what are you looking for then? Are you looking for them to just give a different perspective on it or answer the question differently or...
Austin Rief:
No, what I'm looking for is when I ask you, "Hey, how do you run your sales team, and how do you know it works?" I want you to really know how you run your sales team. Say, "Oh, look, I do weekly sales meetings with my team, and I trust my leaders." All these fluffy things. Say, "Okay, great, but how do you think about goaling your team?" They'll be like, "Oh, well, I work with my CFO and we..." Okay, when you work with your CFO, how do you decide? Is it bottoms up or is it tops down, and you can like really make sure they're in the weeds and they really understand things. Again, oftentimes, CROs are really polished. They understand things such a high level, but do they understand how the sausage gets made or are they just telling their lieutenants what to do?
I want someone who has the ability to both be up here, can run a team, but also can tell you every single thing. They can tell you how their SDRs are doing outreach. They can tell you how them and their FP&A or their revenue strategy person sets goals. They can tell you what happens when one of their sellers misses goal two quarters in a row. What's your process for making sure people get to their goal? So if you can't do that, we have a really polished answer, that works really well in an hour long interview or an interview process, but week four on the job, we have a real problem. "Hey, look, I have a problem, Turner. These two sellers aren't doing well. What should we do about it?" And their answer is, "Oh, well."
Turner Novak:
Theoretical.
Austin Rief:
Yeah, it doesn't work. It's actually time to get the weed. So the first thing I would do is that, is really push back and ask why just over and over again. The second thing, and this one's a little more controversial. I've tweeted this and people don't like it, and I don't care, is, one, you have to do off-book references. You have to reference people who you... And the media world's so small, it's very easy to find people who know them. You just can't... References from people who they give you are fairly useless. A lot of these times, those people have been trained by that person to give the same cookie-cutter answers they're giving.
Turner Novak:
They'll say like, "Hey, I'm interviewing with Morning Brew, can make sure you tell them that I'm really good at hitting quota or something?"
Austin Rief:
Totally. So instead, you do off-book interviews. The thing that I think is controversial that people don't like, and it's mixed. Again, I got some slack or caught some shit on on Twitter was what you asked them. I ask every reference. I say, "Hey, look. Let's say I saw you, Turner, at a party in a year from now, and you're a reference call for someone named Jeff, and I say, 'Hey, Turner, like crazy, Jeff didn't work out, and we had to let Jeff go. Why would that be?'" I think that is a much better way to ask the "what are Jeff's weaknesses" questions because if you ask "what are Jeff's weaknesses" questions, you're going to get, "Oh, they work too hard. You know, you are going to get those BS answers." But when you say, "Hey, we fired them." In this theoretical instance. "It didn't work. Why? They can't say, "Oh. Well, Jeff was working too hard on the weekends, and you fired him."
You never would do that. So you force them to give something that is actually critical of that person. Then you say, "Oh, that's really interesting. Oh, okay, maybe their leadership skills aren't as good as I thought. Maybe their communication skills aren't as good." Then you circle back. You don't say, you know, "Hey, Turner said blah, blah, blah." But you say, "Hey, let's spend 15 more minutes on a call talking about whatever that person identified." And you kind of ping back and forth. To me, that's how you get to actual issues. Now, people don't like that because they think it's a gotcha question, but it's not even solely to get the person, not hire them. It also helps you onboard them. If you know they're not quite as strong at whatever you told me, that Jeff's not as strong as, that's what I'll work on in the first week when I onboard them to make sure that weakness becomes a strength. That has saved me on like three or four hires.
Turner Novak:
Really? In terms of better onboarding and just knowing the weaknesses or just not hiring people or both?
Austin Rief:
Both. I'd say about 50/50. 50% of the time, I say, "Oh, wow, that's interesting. I didn't pick up on that interview process. I didn't realize that Jeff wasn't such a good public speaker." And I'd say, "Well, Jeff's really good when Jeff comes prepared with notes and has talking points. But when they're off the cuff, just the hypothetical example, they're not as strong. Okay, let's make sure that Jeff has talking points when they're talking to the team. Let's make sure that Jeff doesn't go to the team off the cuff then." A bad example, but things like that to make sure that you have them be a stronger leader.
Again, there were times where I said, "Oh, I didn't realize that." And I'll go interview them, and you'll see in a whole different light. You'll say, "Oh, wow, I thought that Jeff was really analytical. But you're right. I didn't ask why enough there. I pushed really hard, and actually, Jeff's not that analytical." Does that matter? And if so, let's reevaluate.
Turner Novak:
Interesting, yeah. It's not quite related, but it reminds me of, one time I messed up pretty bad investing in this company where I didn't push them hard enough on the go-to-market and they just never launched. I just couldn't even figure out how to get people to start using it, and the thing that they said on the surface, it sounded so good, but in reality, when I was reflecting back in this conversation, I'm like, "Man, I didn't even drill down on that at all." And it makes sense because it was one of those things where, "Oh yeah, I guess that could work." But yeah, they never were able to get anyone to use the product, basically.
So I like the asking why, like just pushing people a little bit deeper. I guess it's... I feel like I do that on the podcast too, is I always have people go a little bit deeper on the question so...
Austin Rief:
Yeah, that's where the gems come out. Right? So again, this is not all just to suss out the person's bad. This is not all I like, "Gotcha." This is also to make the person seem impressive. Maybe their first answer wasn't that good, and as you get deeper, you're like, "Wow, Turner really understands goaling. Turner has a really unique and deep perspective on how to set goals that motivate sellers. That's awesome. I'm glad I figured that out." So this is not all to suss out bad people. Oftentimes, it really helps me figure out, "Okay, now, this person's really smart, and they've spent time thinking about this part of the job."
Turner Novak:
Yeah, and I guess, just thinking about hiring team, I know you're kind of involved with this other company called Oceans. You're an investor. I'm not sure the exact setup of everything, but can you just talk about the new company that you're pretty involved with?
Austin Rief:
Yeah, so I'm an early investor and pretty involved in this company called Oceans. It's a White Glove overseas talent agency. So we help source EAs, marketers, find really anyone you want for a variety of companies. So we source for GPs and funds like you. We source for large direct-to-consumer companies like True Classic tees. We source for... I think you mentioned Nick Sharma. We work with Nick. We work with private equity-backed businesses, and we work with dental offices who want help.
Turner Novak:
Oh, wow.
Austin Rief:
Yeah, so it's the full gambit of types of companies. The reason we're different is we source all of our talent exclusively from Sri Lanka. Sri Lanka is a really interesting country. Our CEO worked for a Japanese company, and most or a lot of their talent was sourced from Sri Lanka. He saw just how high of a bar that talent at that Sri Lanka HQ was for that company. For a variety of reasons, a lot of people in Sri Lanka get STEM degrees, so you have really strong technical skills. A lot of people in Sri Lanka either go to the US or go to England to get educated, to go to college, and they'll actually oftentimes stay there for a year or two or three to work at a US company, and they'll go back to Sri Lanka, go work at a multinational corporation.
There's a bunch of them in Sri Lanka, but the cost of living, like a lot of places in Southeast Asia, is very low. So the wages aren't that great. So there's an amazing opportunity to get these people who are culturally acquainted with US workforces because they interned in college or they worked after college. So it's really unique. Not many places in the world you get that, where you have people who have STEM degrees, who worked at multinational corporations, who can really embed themselves culturally in a US-based company.
So again, we help companies save. If it's a single hire, maybe 50 to a hundred thousand dollars, but we have companies who have 10 to 15 people in Sri Lanka with us who are saving million and a half, $2 million a year. So it's really, really meaningful, and we scaled really fast. It's been around for about two and a half years, well over 10 million of ARRs`. So it's a pretty fun and cool business to be a part of.
Turner Novak:
Interesting. Is it a recruiting agency or is it like a full-time... How does that whole process work if I'm...
Austin Rief:
Yeah, yeah. So there's a spectrum here. On one end of the spectrum, it's more recruiting. Right? So firms will just go out and hire someone, and they'll be working at Banana Capital, and it's up to you to deal with everything. If they quit, you have to replace them, and they charge a one-time fee. That's a recruiting model. We're more of a staffing agency, think more BPO. So we employ the people, but from your perspective, they look, and fee, and act like they're full-time Banana capital. So they're not working for multiple companies, but we deal with all, the HR stuff, the payments.
If they go out on leave, we'll help you replace them or to have someone when they're out on leave. If they, you know, get sick, we help out there on all of that stuff. So more of the BPO staffing model than the recruiting model.
Turner Novak:
Interesting. Yeah, that's an interesting point of where... I've definitely had before like interns, had employees, they're out for two weeks, and you're just kind of like, "Ah, I guess I don't have anyone." So you guys kind of swap in on your end. I've had that before. I think we both work with AngelList for our funds. I'll have AngelList, they'll email. They'll be like," Hey, I'm going on vacation for two weeks. Austin or Turner is your new person." It's just kind of like a smooth transition. Why Sri Lanka? Am I wrong in thinking... Like, my connotation of Sri Lanka is just not high bar of talent. Is this just not a good way, like wrong, objectively?
Austin Rief:
So that, objectively, is wrong, and that is actually our biggest opportunity as a business, is to... I didn't know this either, and actually, the way I became a part of Oceans was I had worked with a lot of overseas EA firms trying to find an EA for myself. I said we were super frugal. Yeah, we were super frugal in 2017, 2018, 2019. So I probably worked with three or four firms. They were sourcing talent from the Philippines. There are a lot of really great people in the Philippines. This is not a knock on the Philippines, but there's also so much competition for Philippines' talent. Everyone, you know, has... There's millions of firms launching every niche in the Philippines.
Sri Lanka is less of a competitive market. So everything I said before, and then also there's less competition. So I was going through EA after EA. I kind of gave up on overseas talent. I couldn't find someone who was really enhancing my life. In fact, I felt as if I was losing time because I was proofreading emails, or just culturally, the other EAs I had, they couldn't book me a reservation in New York because they didn't know New York City. They couldn't book my trip to LA because they just didn't understand, logistically, how LA worked, and traffic, all that stuff. So I'd had them book my travel, but it was more time to educate them on LA.
Ian, who's the CEO of Oceans, came to me and said, "Look, I promise you this is different. Culturally, it's a better fit. Education-wise, better fit." I, over time, finally said, "Fine, I'll give it a try." And I was blown away. I was, like, probably customer four, and I said, "This is incredible. This caliber of talent is so good." So I became an investor because of that. I basically begged Ian. I said, "Look, you have to let me become a partner in this business. I have to buy into it. I think it's incredible." I just been buying up shares since then. So yeah, I kind of dog-fooded the product, if you will, and became an investor.
Turner Novak:
Is this the same Ian that... He kind of works with in Ndamukong Suh? Is this the same guy?
Austin Rief:
So that's how I met Ian, actually. It's because he was working with Ndamukong Suh. I didn't realize that you knew that, but yeah, that's him.
Turner Novak:
Yeah. Well, one of those two... Ndamukong Ngwa Suh replies to myself on Twitter sometimes. I'm like, "Is this actually the football player who Dick used to play for the Lions like I know?" I think I DMed him once and I was like, "Hey, want to chat sometime?" He responded, and it was just him. Then Ian was on the call too, and I met them and have got... I actually didn't realize it was the same Ian. That's interesting. Okay.
Austin Rief:
Yeah. Again, it's incredible business. He's a great CEO, so it's cool to be a part of.
Turner Novak:
Nice. Then, well, just in terms of team co-founders, what do you think made your relationship with Alex, your co-founder at Morning Brew? You guys are pretty different. Right? How did you guys manage your relationship?
Austin Rief:
It's funny. In some way, we're very similar. In some ways, we're very different. We're both White Jews who grew up in the Northeast. We both went to private school. We both went to Michigan, which is where we met. We both were in the business school. So in some ways, we were very, very similar. We were in the same fraternity at Michigan. So in some ways, again, we were basically like the same person, but in many ways, we think very differently. I think that shared background, but the fact that we complimented each other made it so successful.
Alex is incredibly creative. He's constantly thinking about high in the sky ideas. I was there to bring him down and say, "Okay, that's great, yeah, but let's figure out how we can actually get there and do that." Alex also showed me a level of determination and hard work that I didn't know existed. Alex, there was just no stopping Alex when he wanted to do something. You know, for example, we spoke about sales before. We'd say, "Okay, we need 30 advertisers to spend $50,000 to get to the revenue number we need to." For example. I'd say, "Well, that's really tough to get 30 advertisers because we're getting a 3% response rate on our LinkedIn call outreach." Alex will say, "Okay, great. Yeah, we'll message a thousand people a day, and we'll get there." Like, "Well, we can't message a thousand people a day." Alex would be like, "Well, why not?" I'd be like, "I don't know. That's a good question."
Turner Novak:
In theory, you could just send more cool DMs.
Austin Rief:
He'd say, "Great, let's start." We literally sit there, and hours and hours and hours, we think, and we got there. You know, look, I'm not saying brute forcing everything is the way to do it, but in the early days, there was just no way we were going to fail. I think that was the biggest commonality between us. We had different ways to go about it. I think I was a little more strategic. Alex was more of a visionary. I was more of the implementer, if you want to use the more business school jargon. Yeah. But we had this common background and a common belief that there was no way we were going to fail. We didn't know the order of magnitude that we're going to succeed, but we weren't going to fail.
There was too much for us on the line, and the opportunity was too there. We saw it every day. I think that's what really connects us. When people were telling us to pivot to video, and people were telling us that newsletters are silly, and it's a side project, and it's a dumb thing, and go take the job in finance, we both mutually took that leap of faith, and we said, "We are not going to fail. We are going to make this work." And yeah, it led to a really strong bond, and we're really great friends now, and it's been an awesome ten-year journey.
Turner Novak:
You mentioned you were super frugal. Alex actually told me to ask about this. In the early days, what was the dental benefit plan that you guys gave to people?
Austin Rief:
Part of this is frugality. Part of this is we had no idea what we were doing, but in the early days, we didn't give people laptops. They had to bring their own laptop to work. There was no work laptop. You came to work with your laptop, and we'd have employees being like, "You don't provide a laptop." And like, "What do you mean? Like, we can dock it from your pay, but of course not." That wasn't even me being cheap, necessarily. I just didn't know every company gave you a laptop. Like, we're a startup. We're not going to spend money on that.
So the dental plan, we did the healthcare. We didn't have a 401k at first, but we did the healthcare plan, and one day, someone came in and said, "Hey, do we have a dental plan?" Of course, we didn't have a dental plan. I didn't even know what a dental plan was. So I walked to 7-Eleven, and you those pick flossers? Those flossers that you like...
Turner Novak:
Like a thing that you hold?
Austin Rief:
Yeah, yeah. You put in your teeth. Yeah, yeah. So instead of like the string floss, it's in like a little plastic kit, and you pick your teeth. I bought everyone at the office a pack of those, and I handed them to everyone. Every new employee got a pack of floss, and that was our dental plan for a year and a half. When people asked what the dental plan was, I said, "Hey, you can go check the drawer. We have a pack of floss."
Turner Novak:
Wow, okay. This is actually another thing Alex told me to ask you. How did you used to eat rotisserie chicken? You said you ate him. You just eat it with your bare hands like a Neanderthal. What is that? What is that?
Austin Rief:
We would eat a lot, a lot, a lot of like very cheap rotisserie chicken in the early days, I think what he's referencing, but again, we found ways to be really frugal. So I think another good example of that is... Remember a MealPal? I actually think it might still exist. Do you remember MealPal? It was in New York City. Basically, for $5 a day, you could get lunch, and Thursday at 4:00, you have to pick your lunch place, and they would give you choices, and you'd go to the restaurant. You'd pick it up.
Well, we found a hack, which was a Mediterranean place near us would let you make the... It was like a bowl, but you could make the bowl yourself for $5. So we'd stack the bowl so high that we could have lunch and dinner, and you'd literally need like rubber bands to band the thing together, the lid, because it was so high, and I'm not kidding. We would eat that for lunch and dinner, and for 250, we had two meals, and for like 12 months straight, that's all we did. Yeah, it was a good strategy. It worked really, really well in the early days.
Turner Novak:
Yeah, and Mediterranean food is like... That's an okay thing to do that with, like it's kind of healthy for you. It's not bad, bad.
Austin Rief:
Yeah. A lot of hummus, and chicken, and veggies. Yeah, it was good.
Turner Novak:
One question. What is your goal with Morning Brew? Because I know you're still super involved. You're the CEO. You're running it day to day. What's kind of the goal with all of this? Like, when do you say Morning Brew is at the destination of where I want to get it to?
Austin Rief:
Yeah. It goes back to the very beginning of Morning Brew, which was we thought there was an opportunity to create a better Wall Street Journal. So yeah, I'd say we were fairly successful. I think we're in this grand scheme of media. I do think we're one of the more successful media companies launched in the last 10 years, but the Wall Street Journal is a really big company, and I think The Morning Brew has an opportunity to be the next Wall Street Journal. Now, the journal's been around for I don't know how long, maybe a hundred years. So we have 90 years to go or whatever it may be. But I think the Impact Journal has on my parents' generation, Morning Brew has the opportunity to do that for Millennials, Gen Z.
We'll see how wide that gap can be. So on one hand, yeah, we made good progress. On the other hand, there is a lot more to go. There's a big opportunity there to make more impact, obviously, do more revenue and profits, but just to be a bigger part of this young business professional's lives, and so we have a lot of ways to go.
Turner Novak:
Yeah. We didn't even hit on this, but also, you kind of sold part of the company to Business Insider at some point a of couple years ago, and then how big is it today? I don't know if we ever mentioned, like, what's the latest public stats?
Austin Rief:
Yeah, we're about 70 million of revenue, and you know, twenty-ish percent EBITDA margin numbers, so you can do the math.
Turner Novak:
Nice. How many subscribers across? You have 10 different newsletters at this point. Right?
Austin Rief:
Over 6 million across everything.
Turner Novak:
Nice. That's impressive. Well, cool. I know you got to get running, but this is a lot of fun. Thanks for taking the time to chat.
Austin Rief:
Yeah, for sure. This was awesome.
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