Marketwise: a consumer business with 30% FCF, 25% Growth and 90% Retention

October 16th, 2021

Note: This is an incomplete draft of an analysis. I found this company and spent a couple hours researching and writing and wanted to get something out online. I might clean it up eventually, or maybe not.


  • Marketwise is a business that offers financial education and products to consumers. They operate 12 brands right now, most of them being investing newsletters that give stock tips in a specific sector or strategy. The business has grown tremendously over the past few years both before and during Covid.
  • The business is incredible. They operate at 82% gross margins and a 30% FCF margin. Their LTV / CAC is >5x and their customer retention is 90%.
  • Currently they have 12.0m free email subscribers. The quality of these subscribers certainly is in question: some of them were acquired for <$0.20 off of politically charged or greed-based marketing campaigns. However, a decent amount of them are qualified leads nonetheless.
  • They have various stages in their funnel. The majority of their paid subs have an LTV <$600, while there are still a solid amount that have between $600 - $5,000 or >$5,000 in lifetime spend. Breakdown here:
  • The funnel for these works like this: they all target the same demographic. This is older white males who are conservative and Christian. They run paid ads across a number of different platforms and using a number of different strategies, again many of which trend into the "scammy" category. They know this demographic very well and they know how to get them to click on things and buy things. Their target customer has a lot of anxiety about the market and also has lots of money in their portfolio.
  • Notably, the company doesn't have sophisticated data tracking or attribution. Copywriters at the company are very well paid and for many years the company ran off of a monthly budget / planning process which lead to VERY short term thinking. It resulted in an incredible direct response company but also shows part of the opportunity.
  • Another interesting anecdote: from a Tegus interview with the former CMO, they had this thesis internally that conservative white boomer males were the main demographic. They confirmed this: about 70% of customers were conservative. But that left 30% of the customers who were liberal. Obviously, liberals may tend more towards the non-profit / etc. ethos and might not be as good of customer, but the company basically did nothing with this data to even test that thesis. No marketing campaigns to see if liberals acted the same as conservatives. It's a good anecdote that sums up the DNA of the business and culture. (Also a testament to how phenomenal of a business it is if they can do so well without it!).
  • Often a lead gen asset like an ebook or long video is the first sell. Oftentimes it's free. The initial funnel sells into a cheap newsletter product, usually $49 or $99 per year. This is the majority of their subs.
  • From there, the customers are on the newsletter and are getting stock tips. This is where it gets kinda interesting. About 2-3 months after signing up, there would be another upsell to something else (I can't quite figure out what the upsell is to: it's either to another newsletter or to another product, need to do more research). These upsells were in the $300-$5,000 range.
  • The upsell worked very well. The psychological mechanics for this were twofold. First, once people spend a little bit of money with you they are more likely to continue spending money with you. So getting them into the funnel with the $49-$99 product actually made them more likely to buy a $1,000+ product. The second reason is that if a newsletter writer gives you a stock tip, and you invest in the company, and the company goes up, the customer is really happy. The analyst made them money! The upsell after that is ridiculously easy. "I just made you $50k off of this tip: want to buy my $2,500 product for the next tip?". Additionally, it creates a really strong connection between the customer and the analyst that can last a very long time.
  • This propensity to buy more from analysts that make good predictions about stocks that go up actually works in favor of the publisher. You don't need every analyst to do well: you could basically feed them some customers and if the analyst does well and the customers make money from the stocks, the analyst continues and can continue to upsell. If the analyst picks bad stocks, no worries. It's not possible to win every time. However, since they don't engage a set of customers like a winning analyst does, you can cut the analyst and move on.
  • A few other things to note:
  • There's a vast difference between the types of business content. There's content that people read because they want to feel smarter, there's stuff that will help them in their careers, there's stuff to help them get a job, there's stuff that will help them connect with customers and then there's stuff that will help them make money (either through investing or entrepreneurship). The nuances here are important because of what creates trust in a consumer. Stock picking as a category is well suited to this because there's a clear way that people can make money and attribute that to the content, which forces the trust mechanism.
  • It's unclear how analysts are compensated exactly. One of the benefits of staying on the platform, though, is that there's a really wide reach across all of the newsletters and Marketwise is really good at upsell and promotions.


  • There's a big opportunity to do something like this for the next generation. As mentioned, Marketwise doesn't have the DNA to A) focus on other demographics / psychographics or B) take a data-driven approach to growth since they are so copywriting-driven. The opportunity is to build a Marketwise for millennials. You could do this either in the exact same way -- with newsletter -- but also millennials have a more hands on approach to everything and an education-focused company where the trust is built by "this analyst taught me something and I made the choice to invest in a stock and it went up" instead of "this analyst told me to buy something and I did and it went up". This is as reliable of an outcome but is more empowering which is what millennials want.
  • There would need to be two core competencies of the business: data-driven performance marketing (including messaging and upsells), and talent management / content creation.
  • This also makes more sense as there continues to be more investable assets for people. It probably ends up being a mix of content and education, but people want to know the frameworks for investing in stocks, venture, crypto, art, collectables, NFTs, etc. It makes a lot of sense for these to be under one umbrella and a continuous email list being built.
  • [Many more ideas and thoughts here but have other work to do right now]

Further reading here (and the backup for why these kinds of businesses are even worth pursuing):

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