Most entrepreneurs struggle to raise venture capital and those who raise find it hard to generate sales and scale their businesses. This case study reveals the step-by-step blueprint of a successful startup founder and will help you get the inspiration and ideas you need to grow your startup.
Alex Lieberman, the founder & CEO of the newsletter Morning Brew, 25 years old, succeeded in hitting 8-figure in revenue with over 2 million subscribers in just five years WITHOUT taking on any outside money!
How does a college graduate with no business experience whatsoever manage to climb a steep ladder and position himself as a brilliant and successful entrepreneur getting impressive media coverage by Forbes 30 under 30?
He had no outside money, no business connections, and had never run a business before; in fact, it was a side hustle for him…he didn’t invest 100% of his time in this venture and yet could accomplish what few do.
I’m in contact with many bright entrepreneurs who raised millions of dollars in venture capital backed by top VC firms; most of them have 3 -7 years in the market without getting any real business progress.
If venture capital is not the answer to success (I’ll even argue that it will lower your chances of success), then what is it?
Listen to him…and let’s explore it together.
The basis for this article comprises a few sources (listed at the end of the post) and some research done by your humble writer. It will shed some light on the actions and state of mind taken by the Morning Brew Founder.
I hope it will give you some inspiration and practical ideas you can implement in your startup and grow it in the right direction.
The Start – Picking A Niche In A Well Saturated Industry
Many think they should come up with something special no one else has seen before. Any VC will tell you that you need to be disruptive, change your market entirely, or create a new one.
We all learned that we should operate in a blue ocean with little to no competition to gain massive success, right?
Well, the truth is far from that, and I see it repeatedly.
“It costs too much to be a pioneer when the road is already paved, “Gary Halbert.
10X Growth Con Russell Brunson 3 Million Dollar Presentation
“My cofounder Alex Lieberman and I started Morning Brew five years ago with a simple idea—to make business news more interesting for young people.
We began with two guiding principles:
- We wanted to write our newsletters in a conversational tone.
- We wanted to write for intellectually curious readers.
Turns out, that was a pretty good recipe. What started off as a side project to help out classmates at the University of Michigan has turned into a global community. ” Morning Brew Co-Founder Austin Rief.
The Business News industry is a highly competitive, mature one, with proven demand and supply and a working business model (no market education is needed here..).
The problem was that it hadn’t changed for decades in terms of layout, UI, and how you consume it.
For the millennial generation, young business school graduates, business owners, and entrepreneurs who needed to stay up to date with the business world, the WSJ and alike were a must-read but an annoying experience.
Step 1: Superior Product
The first milestone in the Morning Brew success was building a superior version of a product that is already selling well.
“I asked students how they kept up with business news, and they all had the same canned answer,” Lieberman, now 25, recalls. “They read the Wall Street Journal and such but had no time to read it cover to cover.”
In late 2014, Lieberman started to send his friends a daily PDF newsletter that covered all the important business news of that day, a digest version of a full-blown business newspaper but with a unique tone and investigative writing.
After four months, his subscriber list grew from 50 to 1,000 people.
20% of them used to send him feedback, the engagement level was high, and that’s where he realized that there was a healthy appetite for his product.
“Most importantly, until the 1,000 subscriber mark, Alex treated the newsletter like an evening hobby, not even a side hustle.
Only after he realized there was a real hunger for content like his did he seriously start considering the newsletter as a means to build an audience.” Alan Trapolionis – Medium.
Instead of running to raise venture capital like most entrepreneurs with only vision and a dream often do, he first made sure that he had a strong proof of concept.
It’s an important lesson to all entrepreneurs not to waste years and millions of dollars working on developing a product to find out that no one wants to use/buy it (I’ve seen it so many times..)
Important note: two years left before Lieberman and Rief could work on Morning Brew full time—Lieberman left Morgan Stanley in 2016, and Rief joined following his graduation in 2017.
Raising Money?
It took them three years to decide and raise money from friends and family (no VC money to date).
“Lieberman and Rief have decided to put further funding on hold, aware of the drawbacks of raising capital. (Recent layoffs at Vice Media and BuzzFeed, which raised $1.4 billion and $500 million, respectively, highlight the struggle to meet sky-high expectations from investors.)
“At one point, we were considering taking a larger round of funding after the friends and family round, but we learned from other companies that have failed,” Rief says.
“Instead of growing at an extremely rapid pace that burns a lot of capital, we opted to create a profitable business and grow with the revenue that the newsletter produces.” Hayley C. Cuccinello, Forbes
Step 2: Irresistible Offer
Lieberman’s offer was brilliant: get a daily, well-designed business newsletter to your inbox for free and become smarter in just 5 minutes. For Millenials, it was a slam dunk.
Look at their homepage (yes, it’s a screenshot of the entire homepage).
How strong is it, right?
No confusing text
No bunch of crappy content
No Nav Bar
No Footer
One strong call to action. That’s it.
So different from 99.9% of websites out there,…loaded with useless and boring information that is far from being a conversion-focused website.
Step 3: Diversified Traffic
1. Word of Mouth + Direct Outreach
In their early days, they leaned heavily on word of mouth. Since their product was so good, 15% of new subscribers came from friend recommendations; this is the power of a superior product, it does the work for you (at least partially).
But it was not enough for Lieberman. He also printed fliers and handed them to the students at the Business School of Michigan.
He printed out interview questions and business riddles and gave the answers to those who subscribed.
Leiberman and his co-founder Rief also spoke at business classes and clubs; naturally, this is where their prospects were.
These hard-earned tactics (direct outreach + word of mouth) led to 100,000 subscribers.
A new subscriber is anyone who opened at least 5 out of 10 Morning Brew emails.
You can learn from his marketing efforts that initially, it was all about the founders. Lieberman did it by himself (he didn’t hire sales employees or VP sales) because he was the best salesperson for his product, and he was resourceful and creative due to budget restraints.
I see many startups recruit sales teams even before they have a product – this is one of the biggest mistakes you can make and one that will cost you a lot (time and money).
If you can’t sell your product by yourself – it’s a big red flag.
Word of Mouth and Direct Outreach brought Morning Brew ~10% of its readership.
2. Referral Program
Morning Brew referral program helped them go all the way from 100K to 1.5M in just 18 months (not all growth came from referrals but it was the stepping stone).
The referral program brought Morning Brew ~30% of its readership.
Here are the key takeaways that helped their referral program explode (as taken from Tyler Denk (employee #2 of the Morning Brew) Medium article (see link below):
Start With The Product
“When your product is good enough that people instinctively refer others without any sort of incentive, that’s a strong indicator that you’re ready to build a referral program.”
Before that, don’t try to promote a referral program as it will be in most of cases a waste of your time (and money if you use referral SW)
Morning Brew has implemented a milestone-based referral program, which has a dedicated “Share The Brew” section baked into every single newsletter we send.
The Tech
“Our referral program is entirely custom-built using Ruby on Rails and a few integrations with our ESP (email service provider), Sailthru.”
They are validating the emails with a 2-step email confirmation process. They also have many fake email domains and blocked IP addresses.
Lastly, they provide custom-tailored but basic ‘customer service’ through the admin panel (with Forest Admin integration)
If you are looking for ready-made referral software, that has the same features, give a try to UpViral (I used it and paid for it; this is a referral link)
The Reword
“a milestone-based rewards program that was extremely calculated and demand-driven.”
“At the end of the day, the rewards program effectively incentivizes our most engaged readers to share the Brew with others. In exchange, they’ll get content, community, and swag.”
Pay attention to the mix of rewards; they are not offering only swag but access to exclusive content and private FB groups.
Referral Hub
“central hub where users can learn about the rewards, track their progress, and utilize tools to help them share the Brew seamlessly. The page’s main goal is to educate, motivate, and assist the end user to continue to share our product with others.”
Well-designed, self-explanatory process that removes any friction and encourages the subscriber to share and earn.
One interesting fact was that they discovered that people preferred to share via email rather than social media. Therefore, they placed the email share section above the social one.
It is essential always to keep testing different variations to achieve a higher conversion rate.
Morning Brew Referral Page
Educate-Motivate-Assist
- “you have to put yourself in the mindset of your users. We know our readers are busy, so making the rewards as clear, visual, and repetitive as possible is crucial.”
- “We motivate users by providing a real-time counter that tracks how many referrals someone has, along with some encouragement: “You’re only X referrals away from receiving Y!”
- “make actually sharing your product as easy as possible. The ultimate goal here is to remove any bit of friction.”
Landing Page
“Our landing pages are designed to be minimalist and straightforward. You either sign up or you don’t.”
It is very similar to its homepage: clean, clear, and to the point. It makes it easy for a new prospect to subscribe following his friend’s recommendation.
One important note – they constantly test different variations of copy and image to increase their conversion rate.
Referral link landing page
3. Paid Ads
After they exhausted all the close-to-zero marketing efforts, they started to use Facebook and Google ads. You can see below some examples of their ads.
One of their strategies was giveaways, “giveaways are a bomb when it comes to acquiring new subscribers,” said Lieberman.
One of the giveaways was a MacBook, where they gave away 2 MacBooks to one who referred a friend and to his friend. These campaigns would generate as many as 50,000 new subscribers.
They started with broad targeting of anyone between 18 and 45 in the US with some interest in Business (they didn’t guess..).
Then, they were able to analyze the data and come up with more laser-focus targeting (for example, they discovered that females cost 3x to convert than males).
They split-tested many ad images and copy and produced two that converted best. The reason was that these posts ads looked like standard posts from a friend rather than an ad (which repels people).
Paid ads brought Morning Brew ~60% of its readership.
The Business Model
Here is where most startup fails miserably. They approach almost any industry out there and try to develop as many customized products as possible.
Confucius says, “The man who chases two rabbits catches neither.”
Wrong approach.
Lieberman, on the other hand, was focusing only on prospects who were already buying newsletter promotions.
This way, he didn’t need to convince them about the idea but to give them a good offer.
And his irresistible offer was: you pay only for the number of unique email opens.
Why would anyone turn down such an offer?
Final Thoughts and The SID Method
In this article, I laid down an analysis of the step-by-step taken by Morning Brew’s founder to get its startup from 0 to $13M in sales in just five years without taking any outside money.
On the contrary, many startup founders and entrepreneurs struggle with their sales growth and bringing their message and voice to the market.
They have a dream and a vision, but after a few trials and errors, they often lack time, money, or both.
Here is where the SID method can help you. After analyzing 50 of my clients (startup founders and entrepreneurs) and dozens more, I’ve concluded that all the successful founders and entrepreneurs used the same strategies and tactics, which you can find in the SID method (Superior version of a product that is already selling well, Irresistible Offer and Diversified traffic).
This method helped hundreds of entrepreneurs and startup founders to gain massive success even without venture capital.
If you are stuck and need guidance, let’s jump on a quick call (no obligation, no commitment) and see if we are a good fit.
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Resources
2. Medium Article 1 + Medium Article 2
4. CrunchBase
5. Linkedin
