Newsletter publisher Morning Brew more than quadrupled its revenue this year to $13 million, profitably. Now it's aiming for another year of growth and plans to branch out beyond advertising.

Morning Brew

Morning Brew.

• Morning Brew is a daily business newsletter started in 2015 by two business students at the University of Michigan, and it now has 1.5 million subscribers.
• It's on track to make $13 million in advertising revenue in 2019, up from $3 million in 2018, with a double-digit profit margin.
• The founders have mostly avoided outside funding that has defined many fast-growing digital media companies.
• Now it's planning to build a team to diversify away from advertising.
• Newsletter companies often hit a wall in branching out to new revenue streams, though.
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Morning Brew is a daily business newsletter started in 2015 by two University of Michigan business students and fraternity brothers, Alex Lieberman and Austin Rief, who wanted to give young professionals a speed-read version of the day's business news.

Today, their free newsletter Morning Brew has 1.5 million subscribers and boasts of a high 40% open rate. It's on track to make $13 million in advertising revenue in 2019, with campaigns from the likes of Fidelity and IBM, up from $3 million in 2018, with a double-digit profit margin, Rief said. Their goal is to make $20 million in 2020.

The founders have grown profitable without taking outside funding that has driven a lot of fast-growing digital media companies.

They took a $750,000 seed round from friends and family in late 2017, and in 2018 looked to raise Series A funding. But after seeing other heavily venture capital funded digital media companies like Mic and Mashable struggle, they said they decided to focus on growing in a sustainable way. The staff is young and numbers just 27, and the content is largely aggregated.

"I think so far we've been proven correct," Rief said.

Initially, they expanded Morning Brew by applying the core newsletter model to retail and tech newsletters. This year they launched their first podcast. In 2020, they plan to add new verticals and newsletters.

"The way my parents view The Wall Street Journal, I want my readers to view Morning Brew," he said.

But revenue diversification is a natural next step for ad-based media companies as Facebook and Google gobble up most of the online ad pie. Rief said the goal for 2020 is to hire a team to develop non-advertising revenue streams.

Newsletters have enjoyed popularity, but what's next?

At a time when people are bombarded by media, email newsletters have enjoyed a heyday because there's a perception of wantedness. Investors have poured money into theSkimm, Axios, and Substack, to name a few.

But today some investors say newsletters are reaching their own saturation point as there are more and more of them clogging people's in-boxes. The lack of third-party measurement is a limiting factor for advertisers.

And the best newsletters tend to be focused, which puts a limit on their growth. As newsletter companies try to goose their audiences with Facebook ads, the open rate often declines.

Newsletter companies often hit a wall in branching out to new revenue streams, though. Case in point is Refinery29. It started in 2005 as a Brooklyn-based newsletter and grew a strong following with its tight focus on up-and-coming designers and boutiques. But things grew hard as it tried different business models including commerce, live events, and advertising over the next 15 years. Refinery29 ended up selling to Vice Media earlier this year.

As for Morning Brew, Rief said the plan was still on building the company without outside investment. But it's keeping its options open.

"We'll never not answer a phone call," he said.