How Morning Brew Exited in an 8-Figure Deal

What's up, everyone. This is Alex Lieberman, co-founder, and Executive Chairman of Morning Brew. Welcome back to Founder's Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. Today, I talk about what allowed Morning Brew to sell for eight figures in October of 2020, the decision we made and the traits we exhibited as entrepreneurs. Let's hop into it. 

Almost exactly a year ago to today, my co-founder Austin and I officially sold a majority stake of Morning Brew to Business Insider. And while it was a specific type of acquisition in the fact that we are a business-focused digital media brand, I think there are a number of lessons we can all learn as founders, builders, and professionals that gave us the opportunity to sell our business for eight figures.

The 6 most important traits for building a business

What I'm going to go ahead and do is share the six most important decisions we made or traits we exhibited as entrepreneurs while building. Number one is focus. Today, Morning Brew is a full-fledged media brand that has newsletters, web content, podcasts, social content, video shows, and events, but that's a recent thing. For the first four years of the business. We only did one thing and did it extremely well. We knew that as a bootstrap startup with limited resources, if we try to do too many things, we would dilute the quality of all of our products and we also understood that if we built up a loyal audience in one place through one channel and establish critical mass, we would be able to move that audience to other places down the line.

All we cared about was delivering the best daily business read for millennials bar none and we knew the rest would work itself out. And within this one product we dedicated our time to, we had a focused approach that we called the circle of life to turn something from newsletter into a newsletter business. Our view is that to make a newsletter a business, we had to accomplish three steps: first, create best-in-class content. Second, get that best in content in front of the right audience, and third, monetize that quality audience through ads. So for the first four years of the business, from 2015 to 2019, not only were we solely focused on our newsletter and that was it, but we were also solely focused on deploying people and money to these three steps, nothing else.

And by the way, that was a really hard thing to do. I cannot tell you how many distractions were thrown our way in the early days. We were told by people we should be doing video. We were told by people that you can't build a media company with just a single newsletter. We were asked by other companies as we built up credibility in the space to create their newsletters for them and they'd pay us to do it. But we were ruthless about saying no, even when short-term money was dangled in front of our faces.

Next, number two, storytelling. I say this all the time, and I've said it in a past episode that we'll link to in the show notes, but Sales has an unnecessarily bad rap. Selling is storytelling and without good storytelling, Morning Brew would not be a thing. It's that simple. The reason is you have a vision as a business long before you have an offering that accomplishes the vision the you tout. It's a chicken and the egg problem. And the way that you solve this vision-product mismatch is by getting people to buy into your vision and build momentum, so you have a chance of creating a product and sustainable business that one day can accomplish the vision. 

And at Morning Brew, there were three main types of people that we story-told to in the early days to will the business into existence: investors, employees, and advertisers. We were two college students and first-time entrepreneurs that had to somehow convince 28 individuals that they should put their hard-earned money from their career with Morning Brew. Think about how crazy that is. We had to learn how to sell them on our vision and also tailor our stories to their incentives. So for example, for many of these early investors, they cared as much about feeling a part of the journey for nostalgia reasons as they did about pure financial return. So we made sure that a big part of our storytelling about Morning Brew was focused on giving them a constant peek behind the curtain of the business. For employees. it was just as challenging, but instead of people betting their already hard-earned money on us, they were betting their future earnings on us. Imagine how hard that decision is for someone to decide to quit their job at a steady business in order to join a two-person startup that isn't yet making money and has a high chance of failure. First, it takes a certain type of person to make that decision. But we also as founders needed to make sure that we were exceptional at selling, not just a vision, but also a game plan that gave confidence to any of the early employees that were going to bet their career on us. So we had focus and we had storytelling. 

The number three thing that helped us achieve our goal with selling Morning Brew is dogfooding from day one, Austin and I were our customer. We were 20-something-year-old business students that wanted a better alternative to traditional business content, so we were creating a product that literally solved their own problem. Think about how big of an advantage that is. We could always start the conversation of how could our newsletter be better by starting with ourselves rather than reaching out to our audience. Of course we did that, but Austin and I were our biggest critics and we could critique our product all the time on demand. We would always say, if this newsletter doesn't keep us engaged from the first word to the last word, we can't expect it to keep anyone else engaged. Since we literally have a vested interest in reading this thing from beginning to end. I know several founders that have built remarkably successful businesses, even though they are not their customer, but for us being our customer has continued to be a massive advantage for Morning Brew.

Next up, number four is independent thinking. One of Paul Graham's most popular blog posts ever is called “How to Think For Yourself,” which basically says that for most types of knowledge work, especially building a business or a product, thinking for yourself is a prerequisite for being successful. This means having both novel thoughts that generally are at odds with what most people think or with what consensus is, and having correct thoughts allows you to succeed because you're likely betting your business or your career on your novel thoughts. I'll link to that essay in the show notes so you can check it out. But basically, Graham goes on to talk about how there are different ways to cultivate being an independent thinker.

And he says how the most effective technique is to be unaware of what conventional beliefs are, basically saying, be naive. And this is exactly what Austin and I were. We were naive. We had never spent time in media or built anything in media, so we didn't know how things were supposed to be done. If we had, we likely would have tried to build a newsroom and hire exclusively traditional journalists. And we definitely wouldn't have started with newsletters since most people in the industry believed email was an antiquated technology that was dying. But for us, newsletter was just the obvious choice. It was cheap. People opted into it, and it was a medium of communication that our classmates were already used to using. Independent thinking through being naive is what allowed us to launch a media business in a fashion that no one else would have dared to try back in 2015.

Next up is the dichotomy of patience, number five. What does that mean, dichotomy of patients? Basically Austin and I were short-term inpatient and long-term patient while building Morning Brew. What that means is we felt such conviction and passion for our vision of making the business world more engaging and accessible that no matter how long it took to realize that vision, we were committed to it. But at the same time, we were restless about the business growing in the short term. As we created content, we didn't wait for the audience to grow or for people to get passionate about the brand. We willed our audience into existence by doing everything imaginable, scalable and unscalable, to get eyeballs on our newsletter from going into classrooms and pitching Morning Brew to answering questions on Quora to drive subscribers, to responding to every single reader email, to holding tailgates outside of the New York Stock Exchange to packing of Lopes with reader swag, our team was relentless and impatient about forcing growth.

Number six, and finally, is luck. And to be clear, these six decisions and traits are not listed in order of importance. Without luck, there would be no Morning Brew. I have two thoughts on luck. First, you can increase your luck surface area through hard work, relationships, and deep thought. But number two, there are aspects of luck that you cannot control that make or break your business. Austin and I were lucky that we started working on Morning Brew in college so we didn't have to worry about generating revenue for way longer than most startups can handle. And the only reason for that is because we were students.

Austin and I were lucky that email as a medium and a business model absolutely blew up in the years following our launch. This was due to the rise of theSkimm, The Hustle, traditional media companies like the New York Times placing bets on newsletters and venture-backed startups, raising a ton of money around newsletters, best example is Substack. That was something that was totally outside of our control. And finally, Austin and I are lucky that we are two white male founders from privileged backgrounds that had no problem raising capital because we had a network of wealthy individuals that we could access. Without luck, there would be no Morning Brew.

And those are the six decisions and traits that I believe allowed Morning Brew to sell for millions and what created the foundation for our business to ultimately one day be a billion dollar company. And with that, I would love to hear from you. This show has been growing like absolute crazy these last few months, and we have so many new listeners. I would love for you to reach out to me, introduce yourself, tell me a little bit about yourself and why it is that you listen to Founder's Journal. I will make sure to respond to everyone who messages me. Shoot me an email to alex@morningbrew.com or DM me on Twitter @businessbarista. Finally, if you enjoyed the episode, please pound the subscribe button, whether you listen on Apple, Spotify, or another podcast player, getting people to subscribe as the number one way to grow a podcast. And one last thing, our show is produced and engineered by Dan Bouza. Our associate producer is Bella Hutchins. Brian Henry is our executive producer. Alan Haburchak is Morning Brew’s director of audio. Holly van Leuven is our fact checker. And I'm your host, Alex Lieberman. Thanks again for listening. And I'll catch you next episode.