Sam Parr, Founder & CEO of The Hustle sits down with Alex Mather and discusses how he has built The Athletic into a media empire.
I’m a big fan of our next speaker. Are there any subscribers to The Athletic in here? There’s a few, not many. Hopefully you all subscribe after this. Coming up, we have Alex Mather. Alex Mather launched The Athletic in 2016. In that short amount of time, they’ve hired close to 500 journalists.
For those of you who don’t know, I don’t know if Alex will agree with my description of it, but as a fan, it’s just a higher end athletic news publication. They have close to a million subscribers already who pay $60 a year. They’ve raised almost $100 million in funding. They’ve done all this in the last less than four years.
Sam Parr: Okay. Like I said, I’m a big fan of The Athletic. One of the reasons why I’m a big fan is because we also have a media company. You guys are based in Silicon Valley. They’re not very friendly to media necessarily, but you’ve scaled something to be quite large. I don’t know if the valuation is public, but the reported numbers was 4 or $500 million.
Alex Mather: No comment.
Sam Parr: Yeah. You don’t have to comment, but that was the reported numbers. Tell me. We were backstage. We were talking about the early stages. Tell me what was the first six months of the business like?
Alex Mather: A grind. The way I would describe it is you wake up every day, and you find a boulder, and then you try to push it up a hill, and then you fall asleep, and that boulder rolls back down, and then you wake up, and hopefully you can push it a little further.
Alex Mather: It’s basically every single thing. It was just my cofounder and I, and a few of the journalists that we had signed up. Every single thing.
Sam Parr: Let’s talk about that. You talked about signing a journalist up.
Alex Mather: Yep.
Sam Parr: That’s an easy thing to skip over.
Alex Mather: Yeah, sure.
Sam Parr: Because a lot of people always say, “Well, how did you afford your first hire?”
Alex Mather: Yeah. My cofounder and I met at a company called Strava, which is also a subscription business. I think you’ll hear from one of the cofounders of Strava later today, Mark. At Strava, we learned a lot about the subscription business. We had saved up enough money to go out on our own, and quit our jobs, and do this crazy thing. My cofounder, Adam, comes from finance and McKinsey.
Sam Parr: It wasn’t millions of dollars in savings.
Alex Mather: No. Tens of thousands.
Sam Parr: Tens of thousands.
Alex Mather: We were both getting married at the time. If anyone knows of the taxable issue with employee stock options at startups, when we left Strava, we had a pretty big tax burden for money that would not be liquid. So lots of headwind financially, but really great fiances at the time, and now wives, and let us take the chance.
Alex Mather: We quit around this time in 2015. I hadn’t written a line of code in 10 years, and I had to build a site from scratch, and figure out how to do all that.
Sam Parr: But you use WordPress.
Alex Mather: Yeah, we use WordPress, but we still wanted to build a custom experience on top of it, build a subscription business on top of it.
Sam Parr: And you made it.
Alex Mather: I made it.
Sam Parr: Wow.
Alex Mather: None of that code is in production now though, luckily.
Sam Parr: In the first three months of business, you guys had tens of thousands of dollars that you personally funded the company with.
Alex Mather: While we were out raising money, yeah.
Sam Parr: While you were out trying to raise money. You hired a few writers all with that money, right?
Alex Mather: That’s right. We had no idea how to hire a journalist, so we went to the worst place possible, LinkedIn. We thought that that was a viable place to email them. I think maybe one out of every 200 responded. He was our first employee. We realized the power of Twitter for journalism at that moment, where it was much better to DM a journalist. They would get back to you immediately. Whereas LinkedIn, they might check monthly. We were able to hire a few folks that had gotten let go from ESPN. ESPN was divesting away from local. They were based in Chicago. We had no idea where to launch, and so we chose Chicago.
Sam Parr: You guys didn’t start with a lot of money.
Alex Mather: No.
Sam Parr: And you hired these people.
Alex Mather: Yeah.
Sam Parr: Two of them?
Alex Mather: Three.
Sam Parr: Three of them. You didn’t tell me how much they earned, but let’s just say that it was like 50 grand.
Alex Mather: Something like that, yeah.
Sam Parr: Okay. That’s a $150,000 a year in costs. Now, if you’re not paying yourself any money, add an additional 30% for miscellaneous. That means your run rate was short.
Alex Mather: Yeah, very short. Three months, four months.
Sam Parr: Great. When you guys launched, you told me the first year only ended up with 3,500 subscribers.
Alex Mather: Yeah. We launched in January of 2016, a couple months after we had started to build the prototype and hire people. I think they came on staff end of December, mid-December. We launched at the end of January of 2016. We knew pretty quickly, from fundraising, that we weren’t going to be able to raise until we had some traction. So we had to launch as soon as possible. We launched in January, and we applied to YC in March. Our first angel investor, or pre-seed as they’re now called, Charles Hudson invested in April. So we survived the first three or four months of post launch with some money from them. Actually, the other cofounder of Strava invested as well, not Mark, Michael.
Sam Parr: Your first year, you ended it with 3,500 subscribers.
Alex Mather: That’s right.
Sam Parr: Which might be only like 20 grand in revenue, right?
Alex Mather: Yeah. I think it was less.
Sam Parr: But not a lot.
Alex Mather: Very little revenue
Sam Parr: At the end of year one, how many employees did you end with?
Alex Mather: I think seven. Very few companies talk about year one. We call it year zero, because it is really a grind. You’re just figuring out product market fit. You’re just figuring out do we have a company here, or do we have a cool product, or do we have something, maybe a hobby business. You’re evaluating that every single day, emotionally, financially. So year zero, we very rarely even think about at this point.
Sam Parr: Did you think it was going to work?
Alex Mather: I’m the optimistic cofounder. I knew within the first couple hours that we had product market fit. I think the biggest question for us, and there’s probably one big question for every company in the first year, was could we hire the right talent. We realized pretty quickly, if you got the right talent, people would pay for that person. The biggest question for me was were we going to be able to raise enough money to hire the best talent in the world.
Sam Parr: People talk about that a lot. They say you have to hire the best.
Alex Mather: Yeah.
Sam Parr: I was listening to a podcast where someone I admire said that he tries to hire people who he would work for.
Alex Mather: Right.
Sam Parr: When I went through this, and I still go through this, I’m thinking I have to hire someone who’s better than me, and that hurts your confidence a little bit, or it’s a weird thing. You’re like, why is this person going to work for me, when I’m trying to say I should work for them?
Alex Mather: Yeah. I like to think back to when I was an engineer. I would say, if there’s any engineers out there, they’ll probably agree with this, that your best engineering comes from pure laziness. You’re like, “Oh, I don’t want to do something over and over, so I’m going to build something that does that for me.” I think entrepreneurship is probably similar, which is, I’m not a details guy, and I don’t think many entrepreneurs are detail oriented. We are in our own way, like probably OCD and ODD and all those things. But our details are different. So I try to hire people that are great at very specific things.
Sam Parr: But when you hire them, what made you think that they were going to buy into what you were saying? Because journalists, historically, they’re a very opinionated bunch. That’s their job.
Alex Mather: Yeah, definitely one of the bigger challenges of the company, this is probably a theme we hear over and over at this conference, which is like, “Hey, we’re two tech bros launching a media company.” “What on earth are you thinking? Why would we want to work for you?”
I personally have hired a 150 journalists. My cofounder, same. We have now 500 journalists. It’s a process. You make so many mistakes in recruiting. Some are just how you pitch and how you think about it. But pretty quickly you find what resonates with your audience.
What really was resonating was, if you look at journalism as a category now, there’s been such a fight to be bombastic, to take a huge side on something, whether it be the color of a dress, or a political party. Most journalists actually don’t want to do that. They want to be a record keeper. They want to be in the locker room to report things.
We found pretty quickly, our pitch was around, “Hey, do the best work of your career.” That was pitch point number one. Number two is we’re going to focus on building a sustainable media company, which means we’re going to do everything in our power as founders to make this thing profitable as soon as we can, at a scale that works for our investors.
Sam Parr: The first year, you got 3,500 subscribers. You’re not going to be profitable that way, at least not yet.
Alex Mather: No.
Sam Parr: Where did those 3,500 come from?
Alex Mather: Chicago and Toronto, the two cities that we had launched coverage in. We were very local in the beginning. We took a city on. It was at the time when Uber and Lyft and others were really starting to get big and hit their hockey stick growth. Something that I had really admired about those businesses was, if you can figure out one city, you can figure out the unit economics, you can figure out the playbook for marketing, for hiring, for the core product. Then you just repeat, and you can go into other areas and repeat.
We had learned a bunch in Chicago. We learned what stories work, what type of writer works, and how do we repeat that in other cities. So at the end of year one, yeah, we only had 3,500 subscribers, but we had the beginnings of a playbook that we could then apply to the rest of the world.
Sam Parr: Now, less than four years from, well, it’ll be four years in January.
Alex Mather: Yeah.
Sam Parr: So almost four years, you’re at close to a million.
Alex Mather: Yeah.
Sam Parr: What changed that allowed you to go … You went from 3,500 into, I think year three, you were at 500,000. Year two, you were at 100,000, right?
Alex Mather: Yep. A lot of it is geographic expansion, like I just mentioned. Our staff went from 7 to 75 to 200 now to 500 in terms of our editorial, our newsroom. So a lot of it is just that editorial expansion. Now we’re in Canada. We’re in the UK as of three months ago. A lot of it’s that, but it’s also just figuring out what works, and building a growth team, and building all the things inside the business that really make it hum.
Sam Parr: You guys do a ton of paid marketing. I see this all the time. You offer a dollar trial.
Alex Mather: Yup.
Sam Parr: Then you also offer a discounted first year.
Alex Mather: That’s right.
Sam Parr: I don’t know what else you do, but I see those two all the time.
Alex Mather: Yep.
Sam Parr: Are you able to make your money back on the first year?
Alex Mather: I would say 50% of our paid marketing is paid back in the first year. The rest of it is not. It really depends on the type of campaign we use. But we look at 365 day conversion, so that is, yes, the first year in terms of elapsed time, but it’s two swipes of the credit card for our subscribers, because most of our subscribers, about 97% of our subscribers pay annually.
Sam Parr: One thing that I’ve learned is, and this is for anyone that has a subscription business, is I actually spoke to you guys, and I spoke to eight or ten other information subscription companies, and they all told me the same thing, which was if they started over again, they wished they would never have had a monthly plan in the first place. They wish they only had annual.
Alex Mather But if you talk to businesses like Netflix and Spotify, they would say the opposite. Monthly gives you pricing power. No one is like … I don’t think Netflix is going to launch the $200 a year annual plan, right? It’s more palatable to pay monthly. Same … I worked for Comcast very early in my career. Comcast, I don’t think is going to launch the $2,000 a year annual plan. If you think about ARPU and raising prices over time, monthly is a really attractive place to go. But our price point is such that annual is really palatable.
Sam Parr: Something that you guys have is you can actually share your articles, and then it hits a paywall if someone’s not subscribed. What type of content converts best?
Alex Mather: Yeah. This is an obsession. Yeah, this is an obsession of ours. The first point is it’s evergreen content. You’re just going to get much more life, obviously, around an evergreen story.
Sam Parr: This is stuff that comes from search?
Alex Mather: No. It’s just a story that’s always relevant. We did a story on Kawhi Leonard, that if you’re an NBA fan, you’ve heard the term “board man gets paid”. Well, we did that journalism.
Sam Parr: What was it called?
Alex Mather: “Board man gets paid.” He’s kind of a quirky dude, and he would say weird things in college. That was one of the things he would say. So we did a story on that during the playoffs last year. That story drives dozens of subscribers every single day now, because people are interested in Kawhi Leonard.
Sam Parr: Where do they find that?
Alex Mather: We put paid marketing behind it on Facebook, on Snap, on Twitter.
Sam Parr: Why did that do best? Is there a certain emotion?
Alex Mather: I think there’s a bunch of things, but if you can find a very passionate audience. It’s not a generic story of a little league team or something. If you can find an audience for an article, Tom Brady, Kawhi Leonard, Alabama, something like that, find an audience, and something that is funny or unique generally works. Our saying internally is, “The more phone calls you make, the more subscribers you’ll drive as a reporter.” If it’s well reported, unique things, people pay nine months since the story was produced, or six months since the store was produced.
Sam Parr: Wow. Not a lot of people here are in the media world. They have other types of software companies or product companies. Our company is in San Francisco. We get asked all the time, from people who want to learn from us just for content marketing, and they’ll say something like, “I’m going to launch a blog post this month.” And I’m like, “Yeah. That’s not going to do it.”
Alex Mather: No.
Sam Parr: It’s not like you just do a blog post a month. I tell them how sites like Gawker and BuzzFeed, how they work. I’m like, “You know that their writers do five articles a day.” Then you were telling me that you’re like, “We actually have our writers not write that much. It’s only one article a day.”
Alex Mather: Right, or four articles a week. But we have $100 million to spend on writers.
Sam Parr: Yeah. But still people are shocked. You guys have 550 employees, 500 of them are creators, writers, and each one produces four a week?
Alex Mather: Something like that. I wish we could get that much out of them, but we get about a 1,000 to 1,200 a week.
Sam Parr: So then if someone is trying to learn from that, what’s your process like? Do you have an editorial meeting every single day?
Alex Mather: Oh yeah. We have almost a hundred editors, so almost 20% of our newsroom is editors, and they’re meeting every single day with their teams. This is an incredibly complex operation. Putting one blog post out to the world is very, very silly.
Sam Parr: Yeah. People don’t … I always tell them, I’m like, “If you’re going to do that, don’t do it. You’re just going to look dumb.”
Alex Mather: Yeah. Or just going to waste time. I don’t worry about looking dumb. I worry about wasting time. Don’t waste time. Find someone like you to go through. Go through Hustle or through this channel. Go through a podcast that is relevant for your audience. Don’t write. That world is so far gone with how much content is produced on the Internet now that you’re not going to break through. VCs all think they can break through, and it’s all the same crap. I would just very much dissuade you from writing a blog post.
Sam Parr: Yeah. When people say that, I’m like, “It’s doesn’t work that way. You got to have a plan of attack. You got to have some distribution lined up. It’s not as easy … It could start that way, and you can learn along the way, but it’s definitely not that simple.”
hen you guys are deciding what to cover, you have probably two things that you have to worry about. One, pleasing your audience, and two, growing your business.
Alex Mather: Yep. That’s the Silicon Valley part of our business. Obviously, we’re a media company in one way. In the other way, we’re a data company. We’re constantly obsessing over what produces and what doesn’t on what channel.
Sam Parr: Do you tell your team, “All right, try all this new stuff. Also make sure we’re handling this baseline stuff.”
Alex Mather: Exactly. We have a content analytics team. They’re basically, every single day, they’re talking to a dozen or so writers, each person and saying, “Hey. We’re seeing this work in this market. This Oakland Raiders writer did this one thing, maybe it’ll work in Philadelphia. Try that out.” There’s just constant communication. We have an entire organization built around learning what works on Twitter, what works on Facebook, what works on Snap. That’s how we make sure we get … We call it getting all the water out of an article.
Sam Parr: What is something that you know now that you didn’t know when you started about the types of content that performs best?
Alex Mather: Yeah. Evergreen always performs. I think it really is being unique, but it comes back to something that’s probably not about the type of content. It’s the people. I heard you mention it earlier, which is hiring the best people. You hear people say that over and over. You heard the vomit emoji comment around your vision, and talking about that over and over. Well, I think another thing to talk over and over is hire the best people.
The worst people are easy to fire. The best people, you get 10X out of them. The middle people is where you run out of money, where they’re just good enough every quarter to be like, “Oh, well. It’s a real pain in the butt to hire, so whatever.” But fire them. You’ll be doing them a favor long term, because they’re not working out at your company. But the best thing you can do is just constantly obsess over hiring the best people. If anyone out there is great, we’re hiring. It’s really hard to hire the best people, and it’s really hard to keep that bar.
Sam Parr: You guys hired 500, almost 600 … Well, you probably have hired 700 people in the last four years, given that you have churn.
Alex Mather: Yup.
Sam Parr: How many meetings a day do you take?
Alex Mather: Me personally?
Sam Parr: Yeah, because if you’re constantly interviewing people, you a day …
Alex Mather: I’m generally later in the process. Two to three probably.
Sam Parr: Two to three a day?
Alex Mather: Something like that. Two a day, 10 a week is right.
Sam Parr: Before you were big enough to have someone to help you hire people …
Alex Mather: It was … We have an office in San Francisco, and it has a roof deck. We ran out of space. It was last year this time. The fires were up north, and we’re literally on the roof deck with masks on, 10 of us on the phone with people talking. It’s just nonstop recruiting.
Sam Parr: Your process is you go on Twitter, you DM them on Twitter, and then try to get them on the phone, try to sell them.
Alex Mather: Same story over and over. You just repeat yourself. You try to find what works with the right people. You have to pitch 1,000 employees to get 200. You have to pitch 100 investors to get 3. It’s just a grind.
Sam Parr: I’ll ask one more question and then we’ll have to wrap up. I personally can be quite introverted, and I’m like, “I don’t want to talk all day to people. I need alone time.”
Alex Mather: Yup.
Sam Parr: You’re just on the phone all day.
Alex Mather: I’m an insane introvert. I think that’s part of entrepreneurship. You see a lot of introverted founders. I think it is the mix of being introverted and anxious. Having to talk to people stresses me out, and that’s a good thing. I wake up every day terrified. As soon as I’m done talking to the new people in my life, I can talk to people I know. I have insane social anxiety. I think that is what keeps me going. Once I get done my meetings with new people each day, I’m like, “Once I get done this, I’ll be like …”
Alex Mather: But that anxiety, you can’t start a company without insane anxiety. You can’t do it, because you’re going to quit. If you don’t have that anxiety, you’re not going to go hard enough. You’re not going to take chances. You’re going to obsess over things like dilution or money, like now.
Sam Parr: I always tell people entrepreneurship, it’s really not that hard intellectually. If you want to make money, it’s pretty straightforward, or you just copy someone else. The hard part is the emotion.
Alex Mather: Yeah. Being anxious my entire life I think has trained me well for, I think, what did you call it, a shit hole on the inside. I wouldn’t call it that, go that far. But the way …
I think this is my favorite analogy for startups is I grew up watching and obsessing over NASA. You see the shuttles taking off from Florida. It’s a beautiful thing just seeing this thing go out into space. But then you think about the people inside. You think about every little screw, every little thing on that rocket is shaking. You’re just like … and your mouth is open. Everybody’s got helmets and strapped in.
Sam Parr: Yeah, it’s not pretty on the inside.
Alex Mather: It’s just insane. It’s just this insane moment. Every screw looks like it’s going to pop off at any moment, and some do. You do have this little seed of anxiety that the whole thing’s going to explode at any moment. Then you exit the atmosphere, and it’s really quiet. I feel like we reached that at some point this year, where we’ve exited the atmosphere. We’re done shaking.
Sam Parr: But do you still have the same fear that you had before?
Alex Mather: Now it’s just fear that we’re stuck, lost in space.
Sam Parr: You’re just going to die a long slow death versus blowing up.
Alex Mather: Exactly. We’re not going to explode anymore. We’re just going to be alone for the rest of our lives. That’s the analogy I use.
Sam Parr: Okay, last question. I love The Athletic. I love the business model. I think a lot of people do. I don’t know if you have entrepreneurial ADD like a lot of people do. Knowing what you know now, are there any other industries that you’re looking at as, just from an observer, you’re like, “Man. Our thing should exist in that industry”?
Alex Mather: I look at all the industries that are out there. Like I said, you’ll hear from Mark from Strava, and I’m incredibly passionate about cycling. I used to race bicycles. I love endurance sports, and I love the subscription business model. You build something great that people love, not like they love it, and then they pay you, and then you use that money and make it better and better, and then in 10 years, your competitors are over here, and you’re over here.
Sam Parr: Any niches that you see …
Alex Mather: Think of any niche. I was traveling, and I was in an airport lounge in Switzerland. That’s the hard part of entrepreneurship is you never stop traveling and never stop meeting people. I was in this airport lounge, and there was a magazine. I forget the name. It doesn’t matter the name of it. But the subtitle was High End Shopping for Russians who Speak English in Switzerland. That’s a real magazine. I have no interest in going into that market, although it’s probably quite lucrative.
If there’s passion, and you think you can build a great product, I’m really excited about that. So right now, very, very focused on sports. Long term, I think there’s an opportunity, and whether it’s us or some other companies, Hustle, build something that people really count on every day and love.
I think of it less like SaaS, where it’s they need. I’m personally obsessed with building things people love. It just brings joy to their life. Hopefully if you open The Athletic or if you open Strava, you get joy. It’s a place where you secretly want to spend more money. Anywhere like that, I want to build, whether it be surfing, whether it be fashion. It doesn’t matter. There’s passion. There’s great product to build. I’m really excited about that future.