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Austin Rief20 December 2022

Austin Rief: Building Morning Brew, The Ultimate Guide to Building Newsletter Businesses, Side Hustle Ideas, & More

5Frameworks
12Insights

Frameworks in this episode

Finance6 steps

Rief's Post-Exit Boring Money Allocation

Take half the chips off the table, put roughly ninety percent of the proceeds in deliberately boring assets, and spend only on what you genuinely care about.

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Strategy5 steps

Rief's Three-Category Newsletter Map

Sort any newsletter idea into one of three structural categories before you write a word, so you know which economics you are signing up for.

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Marketing6 steps

The Line-by-Line Competitor Teardown

Print your newsletter and your best competitor's side by side every morning and argue line by line about which sentence is better.

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Entrepreneurship5 steps

The Save-Money-or-Make-Side-Income Filter

In a downturn, only start businesses that either save companies money or earn individuals side income, and ignore everything that only helps someone grow.

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Leadership5 steps

Write Grow Sell and the Great Wall of Opens

Compress the business into three verbs and one daily number written on a physical wall, so every person knows what the main thing is.

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Explainer· 3

Explainer08:00

Horizontal B2B newsletters versus vertical subscriptions

Rief explains why Morning Brew and The Hustle diverged strategically. The Hustle stayed in one space and verticalised into subscriptions and services like Trends, which was viable because its content had an edge and a tone aimed at entrepreneurs. Morning Brew's general business tone was not specific enough to support a general subscription or event, so instead it went horizontal, launching separate B2B newsletters for retail professionals, HR professionals and other job titles. The economics were remarkable: they could pre-sell a B2B SaaS advertiser into a new newsletter so it was break-even before the writers were even hired. Rief's conclusion is that his route was easier to get to $100 million of revenue and Parr's route was easier to get to a billion, but would have taken another eight to ten years.

  • Morning Brew's general tone blocked the subscription and events path
  • New B2B newsletters were pre-sold to advertisers and break-even before hiring writers
  • Rief's route reached $100M faster, Parr's route had the higher billion-dollar ceiling
  • The Hustle's edge and entrepreneur audience is what made Trends possible

“it was the craziest business where we'd launch a newsletter and it be break even before we even hired the writers because we pre-sell an…”

Austin Rief · 09:00

“our opportunity was easier to get to 100 million of revenue yours was easier to get to let's call it a billion dollar company”

Austin Rief · 09:30
#b2b-media#business-model#newsletters
Explainer13:30

Why the media business is simple but not easy

Asked about Industry Dive, a roughly $600 million company that is mostly a newsletter business, Rief defends the model while explaining why it is brutal to run. The playbook is very well defined and there is no crazy technology involved, just great content, resonance and ads sold into it. The difficulty is scaling across many verticals, because each one adds writers and salespeople and therefore fixed cost. With a large fixed cost base, the distance between a 20 percent profit margin and a 20 percent loss is very short. Unlike B2B SaaS, where renewals lock in 100 to 110 percent of next year's revenue, ads reset to zero every year, making it a permanent grind. His suggested way to compete with dry B2B publishers is to treat B2B readers like consumers, the way Milk Road does.

  • The B2B newsletter playbook is simple but operationally unforgiving
  • Every vertical adds writers and salespeople, so fixed costs stack
  • Flipping from 20 percent margin to a 20 percent loss is easy in media
  • Ads have no renewal base, unlike SaaS where renewals lock in next year
  • The competitive angle is treating B2B readers like consumers

“I think their business model is simple but it's not easy I don't think what they did was easy at all”

Austin Rief · 13:30

“you're a B2B SaaS company you have locked in 100 or 110% of your revenue the next year because of renewals every day with ads…”

Austin Rief · 14:30
#media-economics#b2b-media#advertising
Explainer18:30

Inside the ad agency black box and brand budgets

Rief describes the split between two ad worlds. Morning Brew started in direct response, selling Casper and Away placements on click-and-convert math, charging $800 for something expected to generate $1,000. Being in New York opened up the media buying world, where budgets are $5 million from the biggest brands rather than $100,000 from Casper. He argues the industry is a black box intentionally, inventing new terminology every year the way finance does, to keep outsiders out, and that it runs on relationships rather than logic. Sam Parr recalls being too embarrassed to admit after six months that he did not know what an RFP was, and Rief tells the story of receiving a million-dollar RFP from Discover's CMO while living in his frat house as a senior, when the whole company was not worth a hundred grand.

  • Direct response ads run on click math, brand ads run on relationships
  • Rief believes the jargon exists deliberately to keep outsiders out
  • Media budgets are use-it-or-lose-it, which pushes buyers to spend
  • Discover sent a million-dollar RFP while Rief was a senior in a frat house
  • At four million subscribers, shifting perception for half a million people is genuinely valuable to Visa or Amex

“it really is a black box and I think it's one of those things where it's a black box intentionally so people can't get in”

Austin Rief · 19:00

“we had been doing it for like 6 months and I was like hey guys at this point I'm a little bit too afraid to…”

Sam Parr · 21:30
#advertising#media-buying#sales

Story· 4

Story00:00

Morning Brew at $75M revenue, and the PDF it started as

Austin Rief opens by putting numbers on Morning Brew: roughly $70 to $75 million of revenue that year, double-digit profit margins, and about 250 people. The origin is far less polished. Rief went to the University of Michigan after being rejected by Duke, had no idea what he wanted to do, and followed the herd into corporate finance because that is what everyone at Michigan did. He then stumbled onto Alex Lieberman, who was publishing something Rief will not even call a newsletter, a Word document exported to PDF and attached to an email, called Market Corner and far more markets and finance oriented than Morning Brew would become.

  • Morning Brew was doing around $75 million of revenue with double-digit margins and 250 staff
  • Rief went to Michigan after a Duke rejection and defaulted into the finance track
  • The original product was a PDF attached to an email, called Market Corner
  • Alex Lieberman was two years older and already publishing before Rief joined

“70 75 million of revenue this year uh double digit profit margin 250 people or so”

Austin Rief · 00:00

“I wouldn't even call it a newsletter it was a PDF attached to an email like he actually made a Word document he would PDF…”

Austin Rief · 01:00
#morning-brew#founding-story#newsletters
Story04:00

Manufacturing an enemy: why Rief decided to hate Sam Parr

Sam Parr and Austin Rief spent years as rivals, with Parr saying flatly that he hated Rief and wanted to crush Morning Brew, while Rief says he deliberately turned The Hustle into an enemy. Rief's stated view is that it is always good for a business to have an enemy. Their first enemy was theSkim, but both sides quickly realised you cannot raise $25 million for a newsletter and still have a good exit, so theSkim stopped being the relevant rival. Rief admits he was immature, had no real principles at the time, and built a caricature of Parr as abrasive and aggressive to motivate his team. After both sold, Alex Lieberman called Parr and the rivalry converted into friendship.

  • Rief believes a business benefits from having a named enemy
  • theSkim was the first enemy until both concluded a $25M-raised newsletter cannot exit well
  • Parr admits he wanted to crush Morning Brew and made up a story to motivate himself
  • The rivalry ended in genuine friendship after both companies sold

“I think it's always good for a business to have an enemy and I think in the early days our enemy was the skim”

Austin Rief · 04:30

“I have a lot of respect for this person I don't know anything about their character but I'm going to make up the story in…”

Sean Puri · 03:30
#competition#motivation#newsletters
Story30:00

The lecture hall hustle that produced the first 50,000 subscribers

Morning Brew's first thousands of subscribers came from Rief standing in front of thousand-person econ 101 lecture halls at Michigan, despite hating public speaking. He exploited Michigan Time, the ten-minute gap between the scheduled and actual start of each class, getting up at 10:05 for a class that really began at 10:10. He would pitch, then walk a printed sheet around the room and stand in front of people staring them in the eyes until they wrote down their email. He then sat in the back typing every address in, and when he could not read the handwriting Alex told him to enter all six permutations. That got them to 10,000 or 15,000 at Michigan, and they replicated it through friends at Penn State, Miami and NYU to reach around 50,000 college students nationally.

  • Michigan Time's ten-minute gap gave them a free slot before every lecture
  • Rief hated public speaking and used that as a reason to extract every email
  • Illegible addresses were entered as all six permutations rather than dropped
  • Michigan alone produced 10,000 to 15,000 subscribers
  • Friends at Penn State, Miami and NYU replicated it to roughly 50,000

“if I'm going to this lecture hall and I'm going to talk in front of a thousand people I bet get every damn email”

Austin Rief · 30:00

“I would just stand in front of people and just stare them in the eyes until they gave me their email and I'd sit in…”

Austin Rief · 30:30
#growth#cold-outreach#morning-brew
Story32:30

Alex Lieberman's thousand-DM arithmetic for a hundred advertisers

Rief says he learned hunger from Alex Lieberman, who broke goals down into raw arithmetic. When Rief said they needed a hundred advertisers that year and had zero and no idea how, Alex's answer was that he would go on LinkedIn and not sleep until he had messaged a thousand companies, on the assumption of a ten percent reply rate. Rief found the number crazy, and Alex's response was simply that this is what it takes, so they should start working. They sat drinking beer cranking out cold DMs, to the point where Rief says he must know the head of growth at every New York direct-to-consumer company. They would laugh when a prospect replied telling Alex that this was his ninth email and he had to stop, that number eight was fine but nine was too far.

  • Alex reverse-engineered 100 advertisers into 1,000 outbound messages at a 10 percent reply rate
  • The volume felt insane to Rief and obvious to Alex
  • They worked through cold DMs together rather than hiring for it
  • Prospects replied asking Alex to stop after eight or nine follow-ups

“I'm going to go on LinkedIn and I'm not going to sleep until I message a thousand companies and we'll get a 10% reply rate”

Austin Rief · 32:30

“we would get excited when someone responded to be like hey Alex this is your ninth email you got to stop following up”

Austin Rief · 33:00
#cold-outreach#sales#founder-hustle

Takeaway· 2

Takeaway33:30

What an eight-figure exit at 25 actually feels like

Rief received the wire from selling a majority of Morning Brew at 25, during covid, while living in his childhood bedroom sitting next to his parents as his mother cooked meatloaf. Everyone asked what he was going to do now and he had no answer. He calls it unbelievably anticlimactic. What he does value is the early win itself: the swagger, confidence and brand it gave him, which he says lets him get into any room and get in touch with almost anyone. He has no regret about selling, answering the question instantly, and structured the deal to keep meaningful upside rather than a token earnout, expecting the remaining business to sell for hundreds of millions.

  • The wire arrived while he was in his childhood bedroom during covid
  • He describes the moment as unbelievably anticlimactic
  • The real payoff was confidence, swagger and access, not the money itself
  • He has zero regret about selling and expects the rest to sell for hundreds of millions

“it was the most anticlimactic thing ever it was unbelievably anticlimactic”

Austin Rief · 34:00

“getting a win early in life is so important right just having that swagger that confidence that brand allows me to do so much that…”

Austin Rief · 34:30
#exits#wealth#founder-psychology
Takeaway57:30

Wealth is time, and the barbell between passive income and a multi-billion swing

At 28, Rief defines wealth entirely as having time and spending it how he wants. He can already do that, but chooses to spend it on Morning Brew because he sees not just 2x but 10x of remaining opportunity, and says the day he stops seeing that, he will change. His picture of a rich life at 35 or 40 is a six-month trip, three months in Europe and three in Southeast Asia, the gap year he never took because he drove from Michigan to New York and started working the next day, plus time with family and the freedom to drop $500 or $1,000 on an adventurous activity on any given day. Asked about ten years out, he describes a barbell: either passive income and a casual 20 to 25 hour week, or all in on something with multiple-billion potential. He explicitly does not want the middle game, saying he wants a home run or the peanut gallery, not a double. Sean bets he will never sit in the dugout.

  • Rief defines wealth as time and control over how each day is spent
  • He stays at Morning Brew because he sees 10x remaining, not 2x
  • His rich life is a six-month trip he never took after graduating
  • The ten-year plan is a barbell: casual passive income or a multi-billion swing
  • He refuses the middle game, saying he does not want doubles

“to me wealth is all about having time and spending that time how you want”

Austin Rief · 57:30

“I either want to home run or I want to sit in the dugout and be part of the peanut gallery I don't want to…”

Austin Rief · 1:15:00
#wealth#life-design#ambition

contrarian· 1

contrarian01:30

Being a sophomore is why Morning Brew never raised venture capital

Rief argues that one of the biggest contributors to Morning Brew's success was an accident of timing: he was still in college. In 2015, with BuzzFeed and Vice raising large rounds, he says that if he had been Alex's age they almost certainly would have gone out and raised venture capital. The only reason they did not is that nobody was going to fund a sophomore. Alex went to Morgan Stanley for fourteen months while Rief spent a summer in investment banking and concluded it was miserable, which made going full time on Morning Brew feel like a low-risk experiment he could reverse. His parents accepted it only on the condition that he actually finished his degree, since the idea of spending $150,000 on three years and not completing the fourth drove them mad.

  • Nobody would fund a college sophomore, which forced bootstrapping
  • In 2015 BuzzFeed and Vice were raising big rounds and set the default expectation
  • Rief's investment banking summer made the downside of trying feel small
  • His parents' condition was graduating first, then one or two years on Morning Brew

“if I was his age we probably would have went out and raised venture capital... the only reason we didn't follow that path was because…”

Austin Rief · 01:30

“I got this morning brew thing I might as well do it for a couple years and what's the worst thing that happens I come…”

Austin Rief · 02:00
#bootstrapping#venture-capital#morning-brew

idea· 2

idea46:30

Bootstrapped niche talent marketplaces as the downturn business

Rief's headline business idea for a downturn is that what is old is new, and unglamorous agencies and niche marketplaces are about to come back into vogue. His live example is Oceans, a business he co-owns that sources talent in Sri Lanka, where the presence of Big Four accounting firms means you can poach people trained by Ernst and Young and Deloitte rather than only from local firms, and place them into tech startups. His thesis is that companies which hired a full-time copywriter or marketer in 2021 without thinking now genuinely question every FTE, when they only needed 25 to 30 hours a week anyway. He suggests a content marketing marketplace for B2B companies whose stock is down 90 to 95 percent as another version. Sam Parr raises Toptal, which bootstrapped past $100 million in net revenue on under a million raised, as proof these can be powerful.

  • Unglamorous agencies and niche marketplaces come back in a downturn
  • Oceans sources Big Four-trained talent in Sri Lanka for tech startups
  • Oceans went zero to seven figures of ARR in about eight months
  • Companies now question FTEs they would have hired reflexively in 2021
  • Toptal reached north of $100M net revenue on roughly $800K to $1M raised

“what's old is new and there's a bunch of agencies I think could be really interesting to start right now one is outsourced talent”

Austin Rief · 46:30

“what's interesting about Sri Lanka is they have big four accounting firms right so you can poach people not just from local businesses but from…”

Austin Rief · 49:00
#business-ideas#marketplaces#outsourcing
idea50:00

Morning Brew for AI, and the debate over rolling up tiny AI tools

Rief argues the Morning Brew or Hustle for AI is going to be huge and that nobody has built the brand yet. The bootstrap version is a straightforward AI newsletter with a unique tone that integrates into the audience. His more ambitious version is a small holding company that buys and cross-promotes the many tiny AI tools founders have spun up, each doing $50,000 to $150,000 of ARR, giving those founders an off-ramp and bundling twenty or thirty of them so you promote your own portfolio instead of selling ads. Sean Puri pushes back hard on durability, invoking the Lindy effect: a three-month-old tool at $50,000 MRR may not survive the next model release, everyone is building on the same OpenAI or Stable Diffusion foundations, and tools consolidate into single apps. He compares it to Andrew Wilkinson's line about Thrasio and Amazon FBA roll-ups being like picking up pennies in front of a steamroller.

  • Rief says the AI newsletter brand is unbuilt and the opportunity is large
  • The roll-up version bundles 20 to 30 tools each at $50K to $150K ARR
  • Cross-promotion replaces advertising as the monetisation model
  • Sean's Lindy objection is that three-month-old tools have no proven durability
  • Andrew Wilkinson's picking-up-pennies-in-front-of-a-steamroller line about Thrasio is the cautionary parallel

“I think morning brew or the hustle for AI is gonna be huge”

Austin Rief · 50:00

“he goes yeah it's like picking pennies up in front of a steamroller”

Sean Puri · 54:30
#ai#business-ideas#acquisitions