Big news yesterday from @sarafischer about HubSpot acquiring The Hustle for $27m. The reason? It gives HubSpot an incredibly engaged audience that it can, over time, introduce to the HubSpot suite of products. It's potentially a very smart play.

But first... the numbers.

There's some contention about the $27m figure. Axios reports that it's $27m. But Tucker Max, an early investor in The Hustle, says the number is not right. https://twitter.com/TuckerMax/status/1357150172678148096

I'm inclined to agree and let's make a few assumptions... The newsletter is probably a $6-9m business (1.5m subs, 40% open rate, RPM of $60). Trends has 11,000 people in Facebook group. Do they delete people if they churn? That could be a $2m business.

If we assume $8-11m in revenue + profitably and give it a similar revenue multiple as what Axios reported The Brew got, it's a 3.75x multiple. That means the price should've been $30 to $41m.

However, the terms of each deal are completely unique.

Let's talk deal logic...

This could turn out to be a very good deal for HubSpot. In 2019 (we're days away from 2020 numbers), it spent 50% of its total revenue on sales & marketing costs (it has been coming down the past few years).

According to the 2019 annual statement, Hubspot earned $9,920 on average per customer with a 99.9% subscription dollar retention rate. If it signs up 2,721 people from The Hustle to the average subscription size, it pays for the $27m and then has a long LTV.

With 1.5m+ subs, that is a 0.18% conversion rate. I've seen Sam's copywriting. He could probably get that done tomorrow.

And none of this takes into account that The Hustle is profitable with ads, subscriptions, and events in the future. By the way, HubSpot does events too.

This is a brain dead simple deal for HubSpot to do. Rather than paying to talk to The Hustle's audience, acquire the audience entirely and call it a day. The long-term benefits far outweigh the upfront cost.

And HubSpot's not the first to do this kind of deal. In March 2020, Mailchimp announced that it was acquiring Courier Media. The release stated: "Since 2013, Courier has empowered the next generation of entrepreneurs..."

Sound familiar?

All in all, I'm excited for the team at The Hustle. I've been a fan of them for a long time. We should always celebrate media companies that grind it out, get profitable, and get a great exit.

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