The AMO Show

Craig Fuller, Founder & CEO of FreightWaves, didn't have a clear path to media. His background was in the trucking business. But when he identified an opportunity to launch a futures market around trucking, he recognized that there were major gaps in the news & data around trucking. So, he launched FreightWaves.

In this episode, we discussed a variety of topics, but a few things jumped out.

On pivoting post Covid

Events were a big part of the business, accounting for half of the revenue in 2019. It was expected that it'd be another major component in 2020, but due to Covid-19, it was forced to pivot.

The company had already started introducing TV-quality content from its studio in Tennessee. It shifted its event to fit within the TV experience. The majority of the sponsorship dollars were absorbed into commercials on the show. On the attendee front, FreightWaves was able to keep the majority of its revenue by shifting them all to research subscriptions.

Ultimately, FreightWaves was able to give sponsors exposure to nearly 100,000 viewers rather than the 2,500 that they expected to have at the physical event.

On being valued as a data company

More than half of the revenue at FreightWaves comes from traditional media sources: advertising on the site and video and subscriptions. However, the company has been able to raise tens of millions of dollars because FreightWaves is also in the data business.

When investors look at the business, they see the entire community across media, data and events and were willing to value the business much higher than if the company had just been a traditional media company. Data multiples are higher than media.

That has then allowed FreightWaves to play a bit of an arbitrage game where it can acquire smaller pure-play media companies at lower multiples compared to the multiples it raises.

On media creating negative net CACs for data

Customer acquisition costs (CACs) is effectively the amount of money that a company spends to acquire a new customer. For traditional SaaS companies, these can be incredibly high, but it's worth it because the retention is high enough that returns accrue over time.

However, FreightWaves has a new metric it tracks called net CACs. Because users are being monetized with the media business before they get a subscription to the SaaS data platform, FreightWaves actually generates strong cash flow while also earning free advertising for its data products.

This is the unique opportunity that a media/data blended company can offer that a true SaaS company can't. The media brings the audience in, FreightWaves monetizes with traditional advertising and then it also promotes the data business to those same users.

Austin Rief is cofounder and COO of Morning Brew, a 2,000,000+ subscriber newsletter company with additional vertical brands covering various niches. It started while he and his cofounder were in college and it has been growing incredibly fast over the past couple of years, generating eight figures of revenue.

On the differences between the newsletters

In the early days (and still to this day), the Morning Brew team was incredibly focused on the growth of the number of subscribers and fanatical about the open rates. As Austin explains, he doesn’t know any newer media company that has thrived without an obsessed audience.

However, with the vertical newsletters, they dive much deeper into the numbers. They don’t just want to know that a lot of people are opening, but are specific about understanding who is opening.

Additionally, they see these vertical newsletters as an opportunity to dive much deeper in the types of offerings they provide to readers and advertisers.

On the future of Morning Brew

Morning Brew has changed quite a bit over the years, from being a single newsletter to now sporting a podcast and multiple verticals. The company intends to expand into a couple of additional verticals over the next year, but Austin made it clear that they’d only expand if they could cover something to the utmost degree.

Looking forward, Austin also sees Morning Brew being a hub with a variety of different spokes across podcasts, newsletters and subscriptions. He expects users that fit within their target psychographic to come to Morning Brew to choose what they want: marketing, personal finance, podcast, newsletter.

On creators being sheep following the herd

Austin has been unabashedly outspoken about the fact that too many creators are sheep following the herd when it comes to subscriptions. What he’s most excited about is operators turned creators building businesses that rely on models that work for their brand versus just trying to slap on a subscription.

One of the main points that Austin did mention is that the best products that do launch will come from people that used to work within the industry they write about—operators that understand how to run a business. They come with a baked in network of people that can help with the early growth of the product. 

Adam White, Founder & CEO of Front Office Sports, is as unlikely a media operator as there ever was. FOS started as a college project that Adam hoped he would be able to leverage into a job. When that failed, he figured he might as well see where this could take him. So far, that strategy is working.

In this show, we discussed a variety of important topics, but a few things jumped out.

On building for a prosumer audience

The business of sports as a core topic is a multi-billion dollar business, but there are so many adjacent industries that intersect with sports. This intersection is where Adam believes his company is able to excel the most. Additionally, there are so many job functions outside of core sports that his audience comes from because of a general interest in sports.

This opens up an opportunity for Front Office Sports to generate revenue from more than just endemic and non-endemic b2b advertisers; specifically, he's talking about brand advertisers. In one deal, Anheuser-Busch sponsored one of their awards shows, which would likely never have been heard of from a b2b publication.

The Politico of sports

One of the reasons Adam believes this is the right approach is because he believes he can build the Politico of sports. If you look at Politico's business, it has 100 million people visiting its website, but only about 30,000 are paying subscribers. The secret is that each of those subscribers is incredibly high priced.

The same hopes to be true for FOS. Presently, it hopes to serve this broader audience that works around sports. But at some point in the future, it might identify a new product opportunity that could benefit from a high priced subscription. However, as Adam said, if that's just slapping a paywall in front of their content, he'll be disappointed.

Young startups need to constantly fight for a dollar

We discussed a great story about how FOS launched a podcast that had a crypto advertiser. It had a football player who was a fan of bitcoin that was supposed to be the host. At the last minute, the player backed out of the project, so Adam had to take over because it was a high ticket sponsorship that the company couldn't afford to lose.

Looking at the Anheuser-Busch deal, Adam talked through the execution for the Rising 25 sponsorship that included creating their own soccer team with original kits. The flywheel of media is such that any dollar you bring in ensures that you can reinvest it back into producing better content for your audience, so they’ve had to consistently be creative with their opportunities.

While Covid-19 has certainly had an impact on the business (sports did shut down after all), the business is still expected to grow revenue by 100%. And depending on how Q3 and Q4 goes, it should be profitable.

Brian Dolan, Founder & Lead Writer at Exits & Outcomes, is the first guest on the show and for good reason. He has had multiple careers in media, first working for Fierce Markets (which seems to have trained multiple future operators), then launching MobiHealthNews, which was then sold and, most recently, creating Exits & Outcomes.

In this show, we discussed a variety of important topics, but a few things jumped out.

Having an advisory committee

As Brian explains it, the acquisition of MobiHealthNews was something they hoped would happen, but was certainly not a given. Multiple times he and his co-founder would go out to lunch with executives from HIMSS, but it was only after a few years that the conversations turned more serious.

One thing that Brian admits would have helped was having people that he could call on to help him out. Having people that could relate to the situation would have made things simpler when going through the exercise of getting acquired.

By and large, a tight network of advisors can be invaluable for discussing ideas and getting a gut check on whether an idea is good.

Pricing for subscriptions

The blend of art vs. science for pricing subscriptions was certainly alive during this discussion. The way he did it was straight forward: what were other people charging for similar content? By finding comparable rates, he knew he was in a good place.

One thing Brian doesn't offer that I do is a monthly rate. His logic makes sense: the value of his market research is too high to let someone access it for a month for only $20 and then unsubscribe immediately afterward. At $200 a year, it's still a good value.

What comes next with an idea toward bundling

There are two potential paths he has thought about taking...

The first is that he could go the route of replicating the success he has had with Exits & Outcomes and expand into other verticals outside of digital health. That would require bringing on additional writers and effectively taken a script from FierceMarkets and Industry Dive.

The second (and more likely course) is to find more niches within digital health. Healthcare is a huge industry, so there are plenty of niches within that. It's a more likely way to go that he could continue operating as a solopreneur without needing to bring other people on board.

This second approach would result in a sort of bundle for his subscribers, providing multiple different high-quality digital health insights that would keep his subscribers from leaving.

A Media Operator is a new podcast that expands on the newsletter, found at AMediaOperator.com. This is a trailer to give you a hint of what's to come, but in the coming days and weeks, we'll have additional episodes from leading operators, entrepreneurs and investors in the digital media space.

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