Rich Habits Podcast Episode 118: Turning a College Side Hustle into $75M with Alex Lieberman
In Episode 118 of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Kroke delve into the inspiring journey of Alex Lieberman, the co-founder of Morning Brew. This episode offers a comprehensive look into how a college-side project evolved into a media empire valued at $75 million. Below is a detailed summary capturing the key discussions, insights, and conclusions from the conversation.
1. Guest Introduction: Alex Lieberman
[01:44] The episode begins with a warm introduction of Alex Lieberman, highlighting his significant achievements:
- Morning Brew: A daily business newsletter that has become essential reading for millions of young professionals.
- Success Story: Scaled Morning Brew from a college side hustle to a $75 million valuation, leading to its majority acquisition by Insider Inc. in 2020.
- Current Ventures: Launched Story Arb, a storytelling consultancy, and remains active as an entrepreneur and investor.
2. Building Morning Brew: From College Side Hustle to Success
[02:30] Alex shares his origin story:
- Early Beginnings: Started Morning Brew (originally called Market Corner) while at the University of Michigan to address the lack of engaging business news accessible to students.
- Initial Struggles: Acknowledges his poor writing skills at the outset and the manual processes involved in distributing the newsletter.
- Growth Factors: Emphasizes the importance of university resources and alumni support in scaling the subscriber base.
Notable Quote:
"I think what made me passionate about Morning Brew was the feeling of momentum. And momentum is the lifeblood of any company."
— Alex Lieberman [08:01]
3. Growth Strategies: Embracing Unscalable Efforts
[08:34] Robert Kroke discusses the foundational strategies that fueled Morning Brew's growth:
- Unscalable Marketing Tactics: Personal outreach to business classes and clubs, using simple methods like passing around paper for email sign-ups resulted in higher conversion rates than digital sign-ups.
- Engaging with Subscribers: Responding to every email, even at the cost of time, fostered a loyal and engaged community.
Notable Quote:
"I think someone that gets a reply from Morning Brew... are way more likely to share the newsletter via word of mouth after they've gotten a response from us."
— Robert Kroke [11:09]
4. Decision to Sell Morning Brew: Timing and Impact
[22:29] The conversation shifts to the pivotal decision to sell Morning Brew:
- Personal Reflections: Robert shares his emotional and strategic considerations, including the allure and risks of autonomy post-sale.
- Motivational Shifts: Post-sale, Robert experienced a decline in motivation as external pressures diminished.
- Alex's Perspective: Alex emphasizes the importance of seizing lucrative exit opportunities to prevent potential future regrets, drawing from his own experience with Silly Bands.
Notable Quote:
"I really love this podcast because scaling Morning Brew to millions of readers was no small feat at all... entrepreneurship is hard, it's lonely, and it comes with endless no's."
— Alex Lieberman [19:02]
5. Life Post-Exit: Navigating Identity and Motivation
[20:25] Robert discusses the challenges of redefining personal motivation after stepping down from Morning Brew:
- Loss of Direction: Transitioning from an operational CEO to a strategic role led to existential questions about identity and future directions.
- Continued Personal Growth: Highlights the journey of self-discovery and the ongoing quest for new motivations beyond previous achievements.
Notable Quote:
"I've grown so much more as a person actually than I have grown as a business person because of this journey."
— Robert Kroke [19:18]
6. Spotting Opportunities and Investment Philosophy
[38:02] Robert shares his investment approach post-Morning Brew:
- Contrarian Views on Angel Investing: Chooses not to engage in traditional angel investing, preferring to invest in his own ventures through his personal venture studio.
- Financial Strategy: Utilizes a diversified portfolio managed by financial advisors to ensure steady, market-aligned growth without the emotional toll of active investing.
- Long-Term Focus: Emphasizes compounding returns and maintaining financial stability over seeking high-risk, high-reward opportunities.
Notable Quote:
"The marginal benefit of making an extra dollar is way lower than the marginal cost and emotional cost of losing a dollar."
— Robert Kroke [42:03]
7. Q&A Highlights: Listener Engagement and Practical Advice
The episode concludes with a lively Q&A segment addressing listener-submitted questions:
-
Creative Cash Flow Strategies:
- Invest in NEOS Funds: For generating passive, tax-efficient income.
- Side Hustles: Simple gigs like bookkeeping can provide additional income with minimal time investment.
- House Hacking: Utilizing property investments to offset living expenses.
-
Crypto Credit Cards:
- Pros and Cons: High rewards potential versus the volatility of cryptocurrency affecting reward values.
- Strategic Use: Ideal for those seeking additional crypto exposure rather than primary investment vehicles.
-
Investing in Your 60s and Beyond:
- Diversification: Emphasis on maintaining a balanced portfolio with tax-advantaged accounts like 529s for grandchildren's education.
- Continued Growth: Encouragement to keep investing and leveraging compounded growth for a secure retirement.
Notable Quote:
"If you're able to get up a blended rate of 2 1/2% bitcoin back on your $30,000 a year, that's about $750 worth of bitcoin at a level price."
— Austin Hankwitz [50:53]
8. Key Takeaways and Final Thoughts
Austin Hankwitz and Alex Lieberman wrap up the episode with reflections on the importance of:
- Taking Risks Early: Especially during college when the cost of failure is lower.
- Consistency and Simplicity in Investing: Leveraging compounding and maintaining a disciplined investment approach.
- Personal Growth Through Entrepreneurship: Viewing business-building as a path to personal development beyond financial gains.
Final Notable Quote:
"Investing isn't an action movie... keep it simple, let compounding do the work and be consistent. You will build wealth. It's inevitable to build wealth."
— Alex Lieberman [42:56]
This episode serves as a valuable guide for aspiring entrepreneurs and investors, offering real-world insights into building a successful business, making strategic exits, and maintaining financial growth. Alex Lieberman's journey from a college-side project to a multi-million dollar enterprise underscores the power of perseverance, strategic thinking, and the right support systems.