Morning Brew tops 4 million newsletter subscribers as it looks to expand with M&A

Riding its popularity, Morning Brew now has more than 230 employees creating newsletters for retail, marketing, HR and emerging tech. Rief, 27, and co-founder Alex Lieberman, 28, are pushing into podcasts and YouTube shows to extend the brand.

Morning Brew generated about $50 million in sales in 2021, Rief said, more than doubling 2020's $20 million annual revenue. Almost all revenue came from advertising, including ads within the newsletter. The company has been profitable since its inception, with current margins "in the double digits," said Rief.

"We want to make business news more enjoyable to read," Rief said. "We view our competition as everybody and nobody. It's an attention economy, so we are competing with everyone. But in terms of direct competitors, we don't have one."

Many newsletters developed during the Covid pandemic as easy ways of disseminating information to remote, dispersed audiences. Legacy media outlets such as The Wall Street Journal and Bloomberg have thrown resources at them to build loyal audiences and subscribers. The New York Times has more than 71 newsletters, Digiday reported last year. Smaller media companies such as Axios, Politico, Punchbowl and Puck also count on them as ways to extend their reach.

Still, there are signs that newsletter growth has a ceiling. TheSkimm, a media company that targets professional millennial-aged women, made headlines in 2018 with a whopping 7 million subscribers to its flagship newsletter, the Daily Skimm. That number has grown since four years ago, but much more slowly, according to a person familiar with their subscriber figures. A spokesperson for TheSkimm declined to reveal the newsletter's current subscriber numbers.

Morning Brew has an unusual structure that belies its own growth. The co-founders sold a majority stake of Morning Brew to Insider in October 2020, valuing the company at $75 million. Insider, itself, is owned by German digital media conglomerate Axel Springer.

That's set up a business within a business within a business. Rief and Lieberman operate independently within Insider and Axel Springer. They have their own board, made up of executives from both Insider and Axel Springer, including Insider founder and CEO Henry Blodget.

Rief credited the Insider acquisition as a springboard for its recent growth. Since announcing the sale in late 2020, Morning Brew has hired 180 of its 230 employees, which has led to additional verticals and a much bigger presence on TikTok, Instagram and Twitter.

Rief said his company is on the hunt to acquire other media firms to expand even further.

"We want to be doing more of what we're doing now," he said. "We want verticals targeting new industries, and more creators on the platform who speak to money, work life and business news."

Rief declined to comment on any specific targets Morning Brew has identified, though he did say no deal is imminent.

One potential partner could be theSkimm. Co-founders Danielle Weisberg and Carly Zakin have held "dozens of conversations" with merger partners and potential acquirers over the past three years, according to a person familiar with the matter. Unlike Morning Brew, which didn't take any money from venture capital firms, theSkimm has taken about $28 million in venture funding, according to Crunchbase. Those investors want a return on their capital. A representative for theSkimm declined to comment on M&A.

Both companies share a purposefully light tone with a distinct purpose to educate. Rief says the goal is to be "witty," but not "funny for the sake of the being funny."

As Lieberman and Rief have gotten older, Morning Brew's coverage has tracked their life circumstances, first targeting college students interested in business and then speaking directly to young professionals. Today, the average age of a Morning Brew newsletter subscriber is 30. The broader target audience is anywhere from 25 to 40, said Rief.

Rief and Lieberman have already made millions by selling a majority stake in Morning Brew. That's lessened the pressure to expand the company's valuation by moving into subscription products. Valuation multiples for advertising-based new media companies tend to be one times to three times annual revenue, while subscription products -- such as The Athletic -- can command valuations of five times to eight times annual revenue.

Still, Rief said he's open to a subscription-based product once he feels the company is reliably churning out content a dedicated audience will pay for. Meanwhile, Morning Brew has launched an education product, featuring weekslong virtual classes on topics including audience building, storytelling, finance and leadership. Programs tend to cost between about $500 and $2,000, depending on the length.

Morning Brew has also started an events business tied to specific coverage areas, such as Emerging Tech Brew and Marketing Brew, and a commerce site that sells branded coffee mugs, clothes, and other whimsical business-oriented goods, such as a pair of Elon Musk socks with hearts on them.

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