Stagnant Industry Competitors

Austin Rief believes that Morning Brew's success in the newsletter business came largely from competing in an industry filled with legacy players who weren't adapting or using resources efficiently. He sees their advantage as recognizing a simple business model that others overlooked or dismissed.

Key Points:

• Industry Competitors Were Stagnant:

  • "I don't think we were actually that smart, I just think the people around us were really dumb"
  • "We picked the industry with a lot of suckers"
  • "There were a lot of people who started five or ten years before us and they just weren't smart"
  • "They were doing the same thing that they did for ten years"

• Legacy Media Inefficiency:

  • Competitors were "spending millions of dollars putting video on Facebook"
  • "What could you possibly do with a hundred million dollars of funding and what they did is they burned it on fire, flushed it down the toilet and added no value to their companies"
  • They recognized early that "Buzzfeed just doesn't make sense, it's not worth a billion dollars"

• Simple Business Model Recognition:

  • They created "the most basic spreadsheet" showing newsletter growth at 5-10% monthly
  • "Over time you can get to hundreds of thousands or millions of dollars of revenue a month"
  • "I think it was really that simple"
  • "Our model while it seems silly, it actually works... and it made us a bunch of money"

• Current Newsletter Market Challenges:

  • "The value of a subscriber is significantly less than it was when we started because there are so many newsletters out there"
  • New entrants mistakenly think "the same economics exist today because they read a blog post that Tyler Denk wrote in 2018"
  • People focus too much on growth hacks rather than quality: "I'm gonna get to a million subscribers and I'm gonna sell all these ads"
  • "They get to half a million or a million subscribers... and their ads don't sell for $50,000 they sell for $3,000 and the economics don't work"

• Content Quality Is Paramount:

  • "The most important thing... we were maniacal over the content"
  • Current newsletter creators produce "C+ or B- content" while focusing on growth tactics
  • "People aren't focusing on the content, it's all about the content"
  • "That'd be like selling a SaaS product and the code not being variable, the product not working that well"