The deal between Alex Mather, co-founder, and Adam Hansmann was seen by some as an extraordinary achievement. They built a subscription journalism product from scratch and sold it for $550 million — one of the largest digital media exits of all time.

Other, some of their own investors,The co-founders felt they had left money on their table. Mather and Hansmann give a message to those investors in Mather’s first interview since the sale of the company and fully explain why they sold it. For clarity and length, this interview has been slightly edited.

Alex Sherman, CNBC Alex, I would like to begin with a quote. That was back in late August 2020. You told me at the time, here is the quote: “We don’t think about exit, we don’t see the upside here.” Few companies are doing as much as we do. The New York Times has been the tip of this spear and is growing at an unprecedented rate. The ceiling we are at is unknown. Adam and I can have a conversation when we are confident that we understand our ceiling. However, we are not close to having a conversation.

Six months later, the two of you are still together in talks to merge with Axios soon after that, The New York Times. So my question is: What changed? Or were you coy at that time?

Alex Mather is the co-founder of The Athletic:This was not what I expected but it is very similar to me. This is a case where the New York Times folks got to know us. Like I mentioned in 2020. The New York TimesThis bundle is at the forefront of journalism subscriptions. They were great to work with. This made us very excited about The Athletic’s permanent home at the Times. An amazing bundle that includes a brand standalone. We saw this as an opportunity for us to push our agenda even further. It allows us to focus on what we are best at, which is writing and journalism in sports. This is possible because the institution is completely dedicated to our mission. The landing place for our employees is something we couldn’t be prouder of. The future is our goal and we are just so excited. Things change, so you make adjustments and think back to how the company can accomplish its original purpose. The New York Times seemed like this opportunity.

But, please walk me through it. The talk is where you state that exit planning is not something you are considering. You then have conversations with Axios about merging and going public via SPAC. Let me walk you through the timeline from August 2020 to early 2021 if this is something that interests you.

Mather:While we aren’t going to speak on particular conversations or timeframes, our team did their work, understood the strategic options and really thought about what the product could become. That timeline was clearly established in 2021. All of us know the end.

Adam Hansmann, co-founder of The Athletic Let me know what you think. Our name has been in the media for quite some time. Some of the information was preliminary exploration conversations, and not anything more advanced. Other options were available, many options. It just felt right. It’s all about the Times and what it can do for us. Alex first said it. The Times management has been a total surprise to us. The Times’ management team went above and beyond during our diligence to get to know us. They flew out to San Francisco to do the hard work. Both of us as founders were really affected by it. The Times employs many smart, large-sized teams to tackle the same problems. We might only have one individual working on these issues. This felt just right.

The other thing I would call out is when you can find a partner that actually respects the work that you do and the company that you’ve built intrinsically — I think you can appreciate this, Alex — most companies don’t have the clarity of purpose The Times does. It’s okay for bad media owners to buy or sell media companies. But in this case, it’s just kind of like a perfect fit in our minds in terms of the mission —which is we create journalism that’s worth paying for.

The question is, why would you sell? This was the subject of a lot reporting, in terms of how much money you were burning. According to the reports, you spent $100 million from 2019 through 2020. There will be some who see the numbers and realize that this was not about selling a newspaper. It was an asset in distress that required capital. Are you fair?

Mather:Absolutely. In many ways, we are at an important turning point in our company. We looked at many options and came up with the following: Do our visions and missions align? What is The Athletic’s ceiling? Can we make a deal? There’s just no way that the company can limit its ceiling long-term. The Times provided us with the greatest opportunity to get there faster than any other company, however small that may be. As you move through any strategic decision, you will need to evaluate the possibility of attracting additional capital. There are many options available. We think the simple answer to “Why sell?” is: The New York Times is our favorite newspaper. We were impressed by their mission and the way they fit us into it. They also showed how crucial we are to that mission and how they could supercharge our work. We fell in love and the board supported us.

But there were investors in your own company — I know because I’ve spoken to some of them — who thought The Athletic will be a multibillion-dollar company with time. You could just raise more money and go it alone.

Mather:We believe that The Athletic will earn multiple billions. The New York Times was the most effective way to accomplish that.

This takes your value and places it on New York Times shareholders. Does that sound disappointing?

Mather:Uhhhh ….I understand your question. However, in my mind, there are always 3,000 more things to consider. The New York Times won Adam over, and the outcome made it easy for us to decide.

Hansmann:We had a very positive, productive, healthy dialogue with our board, which was reflected in the boards’ vote. There may also have been some investors who believed there was more potential. This is our opinion. That’s why we are excited to start working and capture it with. [New York Times CEO] Meredith [Levien]Her team. There was an old quote that said that if you told three Chicagoans in 2016 that there were such a situation to build a company worth its worth, but in only one-third of the time, your team is stuck in a pandemic. That’s exactly what we did.

Ok, so please help me to understand the process of going from “we are not even close to thinking about an escape” in August 2020 to “You know what?” Selling the business is best done a year later. In other words, how did you arrive at the conclusion that you could not get there alone?

Mather:That conclusion is not accurate, however. I think our conclusion was our fastest, most efficient way to achieve what we want to achieve, which is a long-lasting journalistic brand in sports — we felt that The Times won us over on how they can help us achieve the mission. You know what? We can make it work for the VC community and investors. But not everybody will agree. Every company you sell has a million people with opinions. It was too much, or too little. A year and a quarter is a long time, but I find it to be incredibly reflective. Things change quite quickly. We took about a year to evaluate all options. In the end, the New York Times felt like the right home.

Would you be able to give more detail on exactly what The New York Times is able to do for you, which makes them the most suitable option? Is it that they have the greatest potential to grow subscribers? Oder is it more about the content?

Mather:It’s a very exciting area to be working in. We both agreed on one thing: The core of our work remains unchanged. It is the same group of top sportswriters. They are able to achieve the highest level of success in their careers because we support them. Since the time they were hired in 2016, we promised that we would continue that promise. This commitment by the Times to continue investing in this is very important. This is a requirement for us.

We were amazed at a number of areas as we met the executives and other employees. Number one is their audience. They are able to reach more people each month than any other media outlet, which helps us reach as many fans as possible. And then you can kind of click your way down the funnel — just excellence in every area. Adam pointed out that there might be five people involved in a particular project, while someone is working part-time on it. It was fun to start matching up our teams, and we were so excited to see the potential to grow. What should we do with intro offers? What is the best way to convert people? Is it possible to think of the funnel as a whole and win over users and subscribers by focusing on its top.

This is something we’re working on over the next couple of years, but the bundle — I don’t think it’s been talked about enough, just how exciting the bundle we’re building is. The world’s essential news bundle includes all the news The New York Times has to offer in politics, world news and science. I could go on forever. Think about the services we provide to sports fans anywhere on the planet. This is a vital bundle.

Are you sure that The Athletic will be included with the package at no extra cost?

Mather:The details are still unknown at this time. It’s something we are still trying to figure out, but it is our intention to be a part over the next few years. Absolutely. We don’t care as much about how it fits in. Our main concern is making fans happy. They might have already signed up for The New York Times. These people might be able to help another subscribe to The New York Times. Wordle and crosswords might appeal to them. We think that the combination of all the items we have is unparalleled.

It was due to the fact that you had 1 million subscribers when we last spoke in 2020. According to me, you’ve now got 1.2million subscribers. This suggests that your growth has slowed from the previous month. Did this happen because of your realization that a single product might not be able to reach the entire market you wanted?

Mather:It’s possible, I think. As a long-term part of their bundle, we saw an easier, more efficient method with The New York Times.

Even though there were discussions between you and them back in the spring, they ended up selling to The New York Times. So I’m curious to hear from both of you how you strategically thought about that — coming back to the table and then ultimately striking a deal.

Hansmann:It was mentioned that there had been a report in spring about Axios having conversations. This was followed immediately by “hey, we are talking to The Times.” The things were happening very quickly. The Athletic can speak only for me. One thing kept leading to another. We wanted the chance to chat. Alex mentioned that both as founders as well as with the board we desired a process in which we considered all options. This was in contrast to picking up the telephone and continuing conversations in unrelated order. It’s important to be as thoughtful and as informed as you can, considering the importance of such a decision.

The Times team wanted to reach the right level of conviction, and that was my opinion. For us it was like taking time in 2021 to really think and not jumping at the chance given all of this.

Mather:Timing is absolutely everything. We spent lots of time in Q3 and Q4 with them, and fell in love.

Did they also want to force The New York Times’ price to go up? It was, in the end, raised through that process.

Mather:To confirm previous conversations, I cannot comment on that material.

What will this transaction mean for The Athletic’s coverage?

Hansmann:It will be the same standard as always. Alex, do you think that you subscribe?

That is what I do. The product is my favorite. It’s a great product.

HansmannWe don’t intend to go back. It’s actually the reverse. We are looking to expand the reach and invest in coverage. That is what we see as an asset. Like you, I’m not a 49ers fan. I am a Bengals fan.

Congrats.

Hansmann:We are grateful. There is a large editorial presence in each local area that covers individual leagues and clubs. Two Bengals reporters are assigned to us. Every word that they publish is mine, particularly this week. This was even true when the team was just 2-14. It is important to focus on areas that are strong. The Times is a great resource to help us rise even higher. The Daily is their leading audio brand. Their newsletter business is growing. They are active off-platform — their data products, in terms of the election needle or the COVID tracker or even some of their sports products — they have world-class capabilities top to bottom. They want us to take their lessons and possibly apply them in our own ways. Spelling Bee is a passion of mine. Perhaps there is a sport crossword, sports Spelling Bee or something similar. We can learn so much from their mistakes. Let’s continue to offer our customers the same service we have always offered.

Do you guys plan on staying put?

MatherThis company is a great place to work. Adam and myself have personally hired many of these people. Our pride is immense in the company we have built and how people treated us. We are proud of where we have been. We intend to continue seeing a lot more of this through.

But it’s not going to be the same. It’s going to be different.

Mather:No matter how many people you work with, there is always a boss. David PerpichThe Times and a board. It is a great opportunity for us to work with someone who has a clear vision of what we want and the resources they have to get us there.

How did you inform former and current employees of The Athletic about the payouts they received from this agreement?

Mather: I believe we’re done. They were paid.

The Athletic’s pricing and promotions were something that I always wondered about. This was dependent on when I signed up. Since then, I have been a subscriber to The Athletic for some time. I only pay one dollar per month. In business school, we learned about Groupon Theory, which states that if you pay a lower price it is difficult to transfer the payment into something much more expensive. What were some of the pricing and promotions that you tried? Did that teach you anything, or was it something else you learned along the way?

Mather: Yeah. As a company, we were quite experimental. This is evident even in the streaming space. This is what we’re doing together as we create a new subscription world. Any company doing this kind of thing is prone to a lot of experimentation. Think about Amazon Prime’s beginnings and the way it was originally done. Now it is done in a completely different manner. The slow price rises and Netflix’s beginnings are just two examples. As a company, we’ve been open to experimentation. The Times folks were great to get to know. We loved sharing our notes.

It’s been only eight days since the deal was closed. We’ve had time to get in touch and share our notes. The product is still in its early stages, so we’re constantly learning how to bring more people into it and what price points are most affordable. It’s the one thing I get most excited about. I’ll use streaming as an analogy. After a hard day of watching dramas like “Seinfeld”, my wife and I like to clean our palates. You watch “Parks and Rec”, or “Seinfeld”, and you don’t see any commercials. It’s Netflix, Hulu, or some other streaming service. The first commercial hits and then you return to viewing linear television.

There are few outlets that offer such comprehensive coverage of a variety of sports as we do. This bundle is amazing. Then think of The Times’ bundle. This is how you start to consume news. Listen to our podcasts, use our cooking products. After you become accustomed to this bundle, it won’t be hard for you to return to commercial-free “Friends”. We were drawn to The Times because of these notes about how we can reach more people.

Do you have any lessons you wish you had learned?

Mather:Every error is an opportunity to make improvements. This is what I’ll say to any employee, whether they are the first or last. Every mistake can be a learning opportunity. We couldn’t be prouder.

Do you think there is anything that can be done to help employees fearing for their jobs after the merger? Especially for a company which has not turned a profit yet.

Mather:The business is growing and we are just so excited. We want to make investments in our team as well as in the company. Since day one, we have been open with all of our employees.

Although I’m not trying to make a big deal about the mistakes, it is obvious that you built this company and then sold it. You guys tried out different markets and decided there was not enough interest. We may have grown too quickly. It’s possible that we will need to reduce some coverage. Some people may have to be let go. We may have to let people go. that time during the pandemic where you guys had some layoffs. Are you able to think of a lesson in how to grow your business?

MatherLearn from everything. You are the tip of the spear. This means you have to learn a lot and make lots of mistakes. However, you try your best and handle all situations with integrity and grace. It’s not possible to grow a company to the level we achieved or to reach one million subscribers without making mistakes. There are no regrets.

Hansmann: Yeah. The goal is to grow The Athletic’s workforce and make The Times more valuable. Of course, there are always mistakes. But, I really hope the legacy is we worked our a***s off, we’ve created a product that people love, and always tried to do the right thing by the staff.

Is there anything you can offer someone thinking of building a subscription-media business? Your exit is one of our most memorable in the industry.

Mather:This is a huge topic. Many tips. The most important thing is to not be afraid of charging your subscribers for any content that you produce. Before you begin charging, you won’t know what to charge and how to make it work. There is a lot of fear in media. It’s like saying, “Hey, if you put up a payment wall, it will make me lose my entire audience.” The New York Times or The Athletic are two examples of this.

Hansmann: The Times still has to be proven right about this acquisition. There is still some doubt about the market addressable for paid journalism. Even though The Times and The Athletic refute that. It’s something that I can tell people: we are proud to prove this thesis because it is true.

What is the addressable total market for subscription-sports journalism?

MatherIt is absolutely within the tens or millions. We believe media will continue to move in the same direction long-term. The Times is very open about claiming that the English language has a combined audience of anywhere from 125 to 135 millions people. Meredith is absolutely right when she states that.

The Athletic will remain a standalone product, right?

MatherThe goal of the company is to keep it a stand-alone product, but add them to their bundle. This was an important part of our selling the company the New York Times.

Which items are you going to purchase with your new money?

Mather:This is for moms.

Hansmann:Joe Burrow, I have a Joe Burrow shirt.

Do you have any final thoughts before we end? Because look, there’s been one, at least, that’s been public saying we feel like this company sold too soon. Do you have a message for the guys to take away from this?

Mather:They are my only thanks. All of this is beyond my ability to handle. Thank you for your support. It has been an amazing journey. Every one of them has played an important role in this journey. We are all proud, and I am sure they are too.