How Porter Stansberry Transformed Big Ideas into Billions with Newsletters

The Rise, Fall, and Battle for a Comeback at MarketWise

Porter Stansberry (MarketWise)

On August 2, 2021, Porter Stansberry joined the billionaire club, his MarketWise stock surging to $979 million, boosted by a $44.5 million dividend just a year prior.

But challenges emerged, as huge losses and a painful split with colleagues loomed.

Porter's journey into finance began when childhood friend Steve Sjuggerud hired him, but a dispute with another manager led to Porter's firing at 26 in 1999.

With few options, Porter launched his investment newsletter, pitching fiber optic stocks: 'A New Railroad Across America, Making People Rich.'

He sent it to Bonner, his former employer's owner, with a 24-hour ultimatum. To his surprise, Bonner proposed a new venture. A $36,000 investment gave Porter a 25% stake in what became Stansberry Holdings, later MarketWise.

Over 22 years, MarketWise thrived, with 30% annual revenue and profit growth. They distributed over $500 million in dividends, peaking at a valuation of $4.75 billion.

By August 2021, Bonner's $36,000 investment exceeded $2 billion on the NASDAQ, dividends not included.

In a content-saturated world, MarketWise's formula to turn words into wealth is theoretically simple but exceptionally challenging in practice. They don't just tell you what happened, they tell you what to do about it. Their newsletters combine captivating stories, expert insights, and transparency to provide education and investment ideas.

Targeting wealthy investors over 50, they lure with 'front-end' newsletters like Stansberry Investment Advisory at $99 per year. 'Back-end' products like options trading strategies or resource speculations, priced in thousands, are upsold. Lifetime memberships, fetching tens of thousands, are the ultimate profit centre. Free subscribers are inundated with upsell offers by email.

Stansberry's success lies in fusing research and marketing, blurring the lines between the two. 'Big Idea' campaigns focus on vital issues, adding value while promoting products. For example, the '99 railroad letter sold a tech stock newsletter, while a recent campaign, 'Two Men Destroying America,' delved into the impact of ESG policies on oil and gas firms.

MarketWise copywriters follow David Ogilvy's principles: big ideas spring from an informed unconscious mind. They should make you gasp, wish you'd thought of them, and have timeless quality.

Big idea sales letters are risky like gold prospecting, but sometimes yield remarkable success.

A prime example of this phenomenon occurred in 2010. Following the financial crisis, Stansberry faced a challenging business landscape. Porter harboured deep scepticism about the U.S. dollar, particularly amid foreign wars.

In October, he and copywriter Mike Palmer launched ‘End of America.’ Success metrics are closely guarded, but insiders speculate it attracted over 500,000 new premium subscribers and eventually doubled Stansberry’s revenue. The campaign achieved tenfold more sales than what was previously considered a major success.

"End of America" exemplified how investors were still haunted by the crisis, focused on past problems instead of future opportunities. As readers absorbed Porter’s pessimistic narrative, the stock market was emerging from a generational low. Yet his research's conclusion was accurate: the best way to combat inflation was by investing in exceptional businesses.

MarketWise's triumph extends beyond marketing. Porter focused on research quality, talent, and service to grow lifetime customer value.

Parallels with Canada's venture stock market and investment newsletters are evident. Both exploit trends, target independent investors, and rely on marketing. But, promoted stocks are rarely featured in MarketWise’s pages, due to their illiquidity and risk profile, opening the door for other publishers. MarketWise prohibits analysts from holding covered stocks, building integrity.

During the 2010s boom, MarketWise expanded internally and through M&A. Casey Research was acquired, driving revenue from $12 million to over $111 million.

In 2021, MarketWise went public via a $2.9 billion SPAC, yet controversies led to Porter's resignation. These included a 2003 SEC civil suit, which Stansberry defended up to the Supreme Court, resulting in a $1.5 million fine. In the 2020 Netflix premiere of Unsolved Mysteries, Porter was linked to the 2006 death of his best friend Rey Rivera, who fell from a Baltimore building in an apparent suicide. One of Rivera's final phone calls was made to Stansberry's offices. “It's horrific. You can't even imagine what it's like to tell people I had nothing to do with my friend's death,” Porter told the Baltimore Sun.

With mixed feelings, he reluctantly agreed to resign from the CEO and Chairman position at MarketWise temporarily.

A hand-picked replacement failed to fulfill a promise of a $100 million payment to Porter, profits sank, and dividends ceased. Executives involved in the IPO walked away with over $200 million in free shares, Stansberry alleged.

In January 2023, after an $800 million plus hit to his stock holdings, Porter called for MarketWise's board to step down, sparing only Van Simmons. By September, he returned to the board, and on October 18, after a contentious dispute, he reclaimed the CEO and Chairman roles, as three board members departed. At the same time, MarketWise announced an internal review. MKTW stock has climbed 14% to $1.71 per share since Porter’s reappointment, for a current market cap of $558 million, still 85% below its 2021 highs.

Porter is also planning to sell the research business he founded last year, Porter & Company, to MarketWise, taking a page from Apple founder Steve Jobs's playbook.  When Jobs returned to Apple in ‘96 after famously being forced out in ‘85, Apple bought NeXT, Jobs’ computer startup.

MarketWise, after 24 years, boasts significant assets: 17 million free members, 750,000 paying customers, $187 million in cash (at June 30, 2023), and a unique talent roster.

But problems loom. MarketWise is less nimble and culture has suffered in the turmoil. Plus the outlook for the stock market is hazy, with Porter himself stating the possibility of a further crash on October 19.

The question remains: Can MarketWise regain its strength, and will Porter Stansberry rejoin the billionaire club?

TheBigScore.com is based on publicly available sources and conversations with industry insiders. It may contain errors. Follow Tommy Humphreys on X.com.