Episode Summary
Executive Summary: This podcast episode covers Nextdoor's SPAC merger with Khosla Ventures, Nancy Pelosi's controversial stock option trades, and an interview with Morning Brew co-founder Alex Lieberman. Lieberman details Morning Brew's journey from a college project to a $75 million acquisition by Insider, emphasizing their growth through paid acquisition and referral programs. He also discusses his angel investing strategy and views on crypto.
Main Topics: Nextdoor's SPAC Merger (Priority: 5/5): Nextdoor is going public via a SPAC with Khosla Ventures, valuing the company at $4.3 billion. The deal includes $686 million in proceeds and a $70 million PIPE from investors like T. Rowe Price and Tiger Global. The company has 60 million verified users and 27 million weekly active users, but concerns exist about their DAU calculation methodology. Nancy Pelosi's Stock Option Trades (Priority: 4/5): Nancy Pelosi and her husband purchased millions in call options on Apple and Amazon in May/June 2021, disclosed in July. Critics allege potential insider trading due to timing with government contracts (e.g., Pentagon's Jedi contract cancellation benefiting Amazon). The segment questions whether politicians should trade options and proposes reforms like restricted trading windows. Morning Brew's Growth Strategy (Priority: 5/5): Alex Lieberman explains Morning Brew's growth from 35,000 subscribers to 3 million through paid acquisition and a referral program. They optimized for high-quality subscribers (those opening 5 of first 10 emails) and found email newsletter ads most effective. The referral program drove 10% of subscribers to refer others, using low-cost rewards like mugs and t-shirts. Angel Investing Approach (Priority: 3/5): Lieberman shares his angel investing strategy: writing many small checks ($10k-$15k) to refine his thinking, using decision journals to track reasoning. He focuses on tier B deal flow initially, believing he needs experience to distinguish tier A. He values operators who can add value beyond capital, such as through Twitter followings. Crypto and Web3 Perspectives (Priority: 3/5): Lieberman compares current crypto hype to the late 1990s internet bubble, noting both promise and scams. He has bought Bitcoin but lacks high conviction, seeing it as 50-50 chance of becoming digital gold. He finds Ethereum interesting but struggles to separate signal from noise. Media Business Models (Priority: 2/5): The podcast contrasts old-school newsletter distribution (Qmail servers, T1 lines) with modern tools like MailChimp. Lieberman emphasizes Morning Brew's focus on curation and remixing over original reporting for their daily newsletter, while their B2B newsletters (e.g., Marketing Brew) require deeper reporting.
Key Arguments: Nextdoor's DAU calculation is overly generous by counting email opens as active usage, unlike Snapchat or Twitter's stricter definitions. Politicians trading options creates an appearance of impropriety, even if legal; proposed solution is restricted trading windows with automated execution. Morning Brew's success came from focusing on high-quality subscribers (measured by early engagement) rather than cheap, disengaged ones. Referral programs with low-cost rewards (merch) can drive significant organic growth, as 10% of Morning Brew's subscribers referred others. Angel investors should write many small checks initially to learn, using decision journals to track reasoning and improve pattern recognition. Crypto's current state mirrors the late 1990s internet bubble, with many scams but potential for lasting value like Google/Amazon emerged from that era.
Data Points: Nextdoor SPAC valuation: $4.3 billion - Double their last private valuation of $2.1 billion in 2019 Series H. Nextdoor 2021 expected revenue: $178 million - 44% increase from $123 million in 2020, implying 24x price-to-sales ratio. Morning Brew acquisition price: $75 million - Sold majority to Insider (Axel Springer) in 2020, five years after founding. Morning Brew subscriber growth: 35,000 to 3 million - From August 2016 to time of interview, with key inflection point from 100k to 1M in 2018-2019. Referral program participation: 10% - Over 300,000 of 3 million subscribers referred at least one person. Cost per subscriber (paid acquisition): $6-8 - For high-quality subscribers (opening 5 of first 10 emails), versus $1.50-2 for low-quality ones. First ad revenue: $800 per newsletter - Sold a package of three newsletters for $2,400 total in early 2017. Nextdoor verified users: 60 million - Requires physical mail verification to join, making users highly valuable. Nextdoor weekly active users: 27 million - But DAU calculation includes email opens, which critics consider generous. Pelosi's Amazon call options: 50 calls, strike $3,000+ - Bought May 21, 2021 when Amazon closed at $3,250; later traded at $3,696.
Pivotal Quotes: "We had 35,000 subscribers, weren't monetizing, but we were like, we have enough confidence from looking at other newsletters, whatever, that we think we can convince advertisers." — Alex Lieberman: Describing the decision to quit his job at Morgan Stanley and pursue Morning Brew full-time in August 2016. "The worst things about these transactions is that they were done in May and June, but disclosed in July. Incredible when elected officials are using highly leveraged options on maybe private information." — Jason Calacanis (quoting Unusual Whales): Criticizing Nancy Pelosi's stock option trades and the delayed disclosure, suggesting potential insider trading. "och, I think there's a 50-50 chance that Bitcoin is going to be digital gold. I don't right now think it's going to be a medium of exchange. That said, though, if I think there's a 50-50 chance, one would argue that I should put 50% of my net worth in it. I'm not putting 50% of my net worth in it." — Alex Lieberman: Explaining his cautious approach to crypto investing despite acknowledging its potential.
Implications: Nextdoor's SPAC highlights the trend of venture firms using SPACs for non-portfolio companies. Politicians trading options may face increased scrutiny and potential regulation. Morning Brew's playbook (paid acquisition + referral programs) remains viable for newsletter businesses. Angel investing requires disciplined learning through many small bets.
About This Week in Startups
Jason Calacanis covers startups, tech, markets, media, and all the hottest topics in business and technology. He also interviews the world’s greatest founders, operators, investors, and innovators.