Shah put his money where his mouth was when HubSpot acquired media company The Hustle for $27M in February 2021.
It’s since grown its newsletter lineup, most recently adding Mindstream.
So why acquire media companies?
It’s customer acquisition cost (CAC)/lifetime value (LTV) arbitrage.
If you’re selling SaaS or financial services products, you are working with customers whose lifetime value is often incredibly high.
At the same time, the cost to acquire customers (CAC) in an intensely competitive space is often also very high.
Conversely, for media companies who monetize through non-recurring advertising, events, educational courses, brand partnerships, native advertising (sponsored content), or e-commerce, LTVs are generally dramatically lower.
And the cost of acquiring their audiences with great content can also be incredibly low.
So the big and simple opportunity here for acquirers is the arbitrage that exists on both sides.
Buyers have higher LTVs and also have higher CACs relative to media/community properties.
Where else have we seen this happen?
Here are a few select examples:
- JP Morgan bought restaurant discovery platform The Infatuation (2021)
- Robinhood bought MarketSnacks (2019) and Chartr (2023), building out its media portfolio
- Semrush acquired the SEO blog Backlinko (2022), SEO community Traffic Think Tank (2023), and Third Door Media (2024)
Check out a list of recent transactions here.
But…
It doesn’t always work out.
Most notably, JP Morgan acquired financial planning platform Frank to gain access to its audience of 4M+ college students, but it turns out the majority of those users were fake — Frank’s founder allegedly created nearly 4M fake accounts right before the sale.
Other relationships have also soured — for example, gambling company Penn Entertainment divested from Barstool Sports. And some internal media companies like a16z’s Future have been short-lived.
Media is hard too.
