Newsletter Math Spreadsheet

This transcript discusses how newsletter founders used simple financial modeling to validate their business models despite industry skepticism.

The Power of Simple Newsletter Math

• Both Morning Brew and The Hustle founders used basic spreadsheets to validate their newsletter business models
• The spreadsheets showed how newsletters with consistent growth could become highly profitable
• This approach contradicted conventional wisdom in media at the time (2015-2017)

Key Components of the Newsletter Math Model

• Subscriber growth rate of 5-10% month-over-month
• Stable CPMs (cost per thousand impressions) for advertising
• Simple projections showing path to significant revenue
• Austin: "It was the most basic spreadsheet of newsletter subscribers grow five or 10% a month and CPMs stay flat"
• Sam: "I had the exact same spreadsheet"

Research Methods to Validate the Model

• Sam researched CPM rates by:
  • Listening to interviews with industry experts like Ben Lehr
  • Meeting with Business Insider reporters to get traffic numbers
  • Asking specific questions about tech website traffic (80 million visitors)
  • Using these data points to triangulate realistic projections

Industry Context

• Most media companies were focused on Facebook video, spending millions
• Austin: "I don't think we were actually that smart I just think the people around us were really dumb"
• They identified an industry with "a lot of suckers" - established players doing the same thing for 10 years
• They questioned valuations of companies like BuzzFeed while others believed the hype
• Their simple model proved more sustainable than flashier approaches

Results

• The model worked despite seeming "silly" to industry observers
• Austin: "Our model while it seems silly it actually works it worked and it made us a bunch of money"
• Both companies were eventually successful despite initial skepticism
• The Hustle was profitable from early on with minimal staff (Sam and his friend John)