The Product Review: Substack
How did Substack ignite an independent media movement (and disrupt Medium)?
Substack. It pierced through the tech media noise. It is draining the incumbency power Medium held while pursuing a much bolder vision of independent media and employment rather than merely online publishing. It transcended being relegated to the graveyard of writing tools. It is the preferred writing platform for the Internet and critically, and increasingly, newly-independent journalists. It is not just a product but it is now a movement, absorbing, amplifying, and transforming independent media. Over time, as indicated by investments in podcasting and platform services, it will expand: journalism, blogging, video media, podcasting, music and more. Every other week a big name journalist from Big Media announces their newsletter. Every other day, a regular industry person with a sizable social media following announces theirs as well.
How did Substack do this?
Background: 3 Years from Founding to Inflection
It came out of nowhere in 2020 even though it was founded in July 2017, went through YC in January 2018, and announced a $15.3M Series A from a16z in July 2019. Writers like Ben Thompson had been thriving but it remained unclear if he was the exception. Writers for centuries - like Kafka and Atwood - held day jobs just to be able to burn the midnight oil. What if these minds had been able to write free from a side hustle? Substack launched with Bill Bishop/Sinocism, with 30K subscribers, added names like Emily Oster and Sarah Bessey, and increasingly, added writers fleeing establishment outlets like Ali Griswold, Eric Newcomer, Casey Newton, and Andrew Sullivan. This is all in addition to empowering non-journalist writers like Lenny and Dan/Nathan.
No doubt the pandemic accelerated its trajectory by keeping everyone at home -- converting talkative and opinionated Twitter personalities and actual journalists into Substack writers and giving the quarantined intelligentsia something to read. It has become a status symbol, not yet a verb but definitely a noun: “I am starting a Substack.” The multi-decade decline of traditional media combined with some losses of journalistic independence created alternative demand. Instead of coffee meetings and social dinners, people channeled newfound free time or need to make an income amidst an unprecedented crisis to become solo publishers: vertically integrated from writing to publishing to subscriptions, all from living rooms, donning sweatpants.
This is less of a product innovation. It is a cultural and business model innovation.
“Columnist Matt Taibbi left Rolling Stone in April to write on Substack full time. Andrew Sullivan did the same last week, leaving New York Magazine to resurrect his blog the Dish. Joan Niesen, a Sports Illustrated staff writer who was laid off in October, shortly after the magazine’s sale, started a free Substack newsletter last week.” — The Washington Post, July 2020
October 2018: 25K paying subscribers
March 2020: The Dispatch, built on Substack, passes $1M in revenue
July 2020: 100K paying subscribers
September 2020: 250K paying subscribers ($7m rev. across top 10 publications)
Analysis: Substack added 2x the paying subscribers in 3 months this year (Q3’20) than they did in 21 months (October 2019 - July 2020). 2x the growth in 1/7th the time. Wow!
What I find most interesting is the emphasis on the relationship between the business model and culture creation. I am optimistic Substack’s model realigns incentives:
“‘…people who are attracted to the idea of owning their relationship with their audience.” [Chris] Best argued that this approach avoids the incentives that have pushed online news in the direction of “cheap outrage, attention and addiction.”… It’s just a better model for creating culture.” — TechCrunch Interview, July 2019
Summary: An Insurgent Product That Meets Critical Real-Life Needs That is Focused on Innovation over Competition
Writers want distribution. Substack empowered you to build it reliably by leveraging your network and brand instead of hoping and praying to the algorithm gods of social media and blogging platforms, and editing for virality. It is portable and relies on a primitive that is here to stay: email. This model also means writers have direct relationships with customers / fans: the readers. This is both economically and spiritually a more attractive relationship structure.
Writers need income. No other blogging platform has made it so easy to get paid by your true fans. While other services focused on views, clicks, and claps, Substack integrated with Stripe and is putting cash in hands. Founded by a mix of technologists and journalists, Substack’s DNA can deliver writer income.
Writers need business infrastructure: Innovations like legal services and fellowships met deep, off-screen, unmet needs beyond a typing interface.
Medium stopped innovating. Substack stepped into the void: email delivery; subscriptions; scheduled posts. There was a gap very few people saw. Even if Medium isn’t a long-term competitor, it was boxing out the foothold until now.
Substack now has the cool / rebellious factor as people leave old media, giving it a tailwind amidst a once-in-a-century pandemic when people are reading/writing at-home, losing jobs and seeking replacement income, and seeking meaning in culture production as we confront how short life can be
1. Create a new business model and build a brand
Substack is unlocking independent media. Through legal services, a grant program, and a platform that is focused on delivering actual income to creators, Substack is creating an entirely new form of employment that enables passionate creators to untether themselves from the platforms of Big Media. Media outlets don’t take back your credibility or your Twitter followers when you quit. As writers and Substack combine to have the content, distribution, and general infrastructure, new media wins.
In media, brand is everything. The NYT’s brand (mostly) engenders trust, for example. This gives an unfair advantage from a subscriber growth lens as well as the recruiting of top writers. Substack (already) has an edginess to it that makes it a brand people want to be associated with, rather than a brand that wants people to be associated with it. In other words, people are pushing themselves into Substack rather than Substack having to pull people in with paid marketing and desperate growth hacks to increase its ‘supply’ side of the market. Long term, this may be mean that writing continues down a path like business software of bundles + best-in-class additions: people subscribe to bundled subscriptions (G Suite / NYT), and they add in ‘best in class’ (Slack / various Substack newsletters). This is also true for video entertainment: people pay for Netflix but also buy one-off videos from Amazon.
The media also loves to write about…the media. So every time a writer starts a newsletter, or every time Substack hits a new milestone, it is newsworthy! I don’t think that quite qualifies as a growth hack but definitely one benefit of a media tech startup.
2. An Open Field Masquerading as Crowded to Armchair Analysts: Substack is to publishing what Zoom is to videoconferencing...the opportunity everyone ignored.
People tend to think certain markets are not worth pursuing because they fail to imagine the opportunity. VCs and advisors pass on deals because of ‘crowded markets’. Many people, myself included, wrongly bet against Zoom unseating WebEx. Even if you thought WebEx would stumble, there was also Google Hangouts, Microsoft Skype and Teams, BlueJeans, GoToMeeting, and many others waiting in the wings to collect the spoils. Why Zoom? Of course, Eric Yuan had been the architect behind WebEx, so maybe it’s no surprise that he would be the one to successfully unseat it. Maybe as others saw a crowded market, he saw a large hotly-pursued market ripe for change.
Ultimately, Zoom will do more than replace WebEx as we see innovations like Zoom Apps and new takes on how to use video technology to solve new problems. Likewise, Substack may have partial competitors but appears to be pursuing a bolder vision.
Blogging seemed solved. Medium. Wordpress. (Tumblr?) But this isn’t about blogging.
Besides direct competitors, you could use microblogging through Twitter, distribute to your professional network on Linkedin, or be visual with Instagram. “Writing on the Internet” just simply didn’t seem like a problem that needed another solution. Moreover, people believed that as old media faltered, it meant the death of journalism. It is much harder to imagine a renaissance than a downfall. It requires optimistic imagination. Substack is creating a new model of independent media that happens to also weaken ‘competitors’. How could those in the U.S. with such fervent belief in the freedom of press expect journalism to just, go away.
Writing platforms mainly provided two benefits: a tool for writing and distribution. The earlier players did some of this. There was a lot of innovation on writing tools: simpler and more beautiful tools. But that didn’t put food on the table for writers. Those platforms never successfully nailed distribution or writer income. Distribution usually was driven by ‘hits’, where a post would go viral, and a writer would hope to be able to turn the views that became followers into a base. No one cracked monetization. Just like Zoom truly solved the audio and video packet loss that would cause jittery and confusing video calls, or joining a meeting (Can you remember when that was still a problem? 13 digit join codes!) Substack entered the field focused on delivering a product that delivered happiness for writers as Zoom did for workers. It is not a very complicated product — but there is misguided worship of complexity. Much as guilds protect knowledge and invent jargon to keep others out, technology companies often pride themselves on how complex a system they can build. But communities care about value creation, and Substack enables writers to create value.
“We’re conscious of the writers depending on a reliable and stable Substack for their income,” McKenzie said. “We don’t want to go out there and do a bunch of crazy startup stuff.” - TechCrunch Interview, July 2019
3. Take a core value proposition others only deliver intermittently, then guarantee it. Substack’s approach to email distribution is the guarantee.
The reason investors give a higher valuation multiple to companies with recurring revenue over those with one-time transactional revenue is that it is reliable. It stacks over time. Users like products and value propositions for the same reasons. Products that get better over time tend to win - Amazon makes it easy to reorder, Google Photos lets me find any memory from the last decade, and Substack builds my distribution one email address at a time. Sometimes such value propositions also become ‘switching costs’ for platforms, but Substack doesn’t seem to be focused on holding users hostage.
Value propositions that stack over time are things like the SEO I get from my Substack posts (or any blog post) over time. Things like subscribers to my newsletter growing over time. Substack has tapped into distribution as an accumulating value proposition rather than a one-time variable reward value proposition like with Medium. Writers want creativity in ideas but not in business performance. I can’t guarantee every post will go viral and reach a million users because my Substack goes to 50 people, but I dependably know that I will have dozens of people or whatever my email subscriber reach is. I can see open rates and know that my words mattered. I get way more “Hello!” and “Thank you!” emails from Substack than I ever did on Medium.
Here is the difference. I am not earning any real income but I know my stuff gets read.
Medium Stats:
Substack Stats:
This was actually when I went to Substack. I had published a few essays on Medium in 2020 after returning to writing and there was no distribution. Low trust, I had no loyalty. So I tried Substack and have not looked back since — but it’s early days since every few years seems to bring a new writing and publishing platform of the times.
Substack took something I hoped for from other platforms and turned it into something I expect. This is key for something like a writing platform that people invest into: all the time to write, format it just write, and share those links with your followers. With Medium, every time you publish, you would have to hope and pray it would get picked up by the algorithms. What serious writer -- let alone a content marketer -- would settle for that? With delivery to loyal subscriber inboxes, Substack guarantees you that your posts actually will be read even if it means hijacking the sacred inbox of readers. The difference is that those loyal readers are true fans and/or paid subscribers, so the inbox is not being violated (mostly). In fact, in my view, the unsolicited emails Substack itself sends about new content you can discover are more unwanted than writer posts, but it’s experimenting in ways to increase distribution.
4. Watch the Throne: Medium Stopped Innovating
Activity != innovation. While new features appeared, writing technology (e.g. Medium) stalled while other culture technology was thriving (e.g. Instagram and TikTok). Why?
Culture wasn’t standing still in the last 5 years. But some platforms were, and this opened the window to unseat something occupying mindshare that may have blocked the space necessary for Substack to be able to assert its vision of independent media.
In my career, I have seen countless companies have its moment in the sun only to be cast aside or outright shamed when it’s no longer the golden child. One minute everyone praised “Move Fast and Break Things” for its rebellious and entrepreneurial spirit, the next moment everyone realized that society was breaking and the new Big Blue had flaws. Medium was never the untouchable Big Tech company but it was presumed to be the default way to write on the Internet just a couple of years ago. It felt like that problem had been solved for the foreseeable future. Ev Williams had built Blogger, then Twitter, then Medium, disrupting his prior creations again and again. Medium had been built during and after the mobile and cloud shifts, so it didn’t seem like there was a paradigm shift to enable something like Substack. Maybe paradigms had been too narrowly defined, and beyond just technological shifts, we need to see macroeconomic and culture paradigms. Medium lost its preference among writers.
Rather than the public and the media turning on the company, the company simply lost its way. In 2011, as Jay-Z shared: "It's just protecting the music and the culture. It's people that's in the forefront of the music. 'Watch the Throne,' like protect it. You just watch how popular music shift, and how hip-hop basically replaced rock & roll as the youth music. The same thing can happen to hip-hop. It can be replaced by other forms of music. So it's making sure that we put the effort into making the best product so we can contend with all this other music, with dance music that's dominating the charts right now and indie music that's dominating the festivals." Medium did not watch the throne. Most companies forget that (real) people are at the forefront.
Medium had ‘Letters’ in 2016 but never invested in real newsletter functionality
Medium added features like paywalls but didn’t make writing easier. Ironically, it penalized readers like me while also failing to enable me to earn writing income
Medium emphasized publications but left distribution anemic for independents
Medium also took steps that just didn’t seem aligned with writers, down to a terms of service change that seemed to risk the heart of a writer’s work: content rights.
Stumbles like these just accelerated the descent:
Simply look at the homepages. It is apparent which company is prioritizing writers. This marketplace dynamic is similar to Amazon’s investment in sellers mixed with the governance dynamic of democratically-elected leaders needing to serve constituents. Substack is focused on enabling its writer partners and serving them as constituents.
In the same period of time, Substack was launching key product after product:
For clarity, every blogging platform launched features in the same time period. Maybe more, faster. But activity != innovation. Substack has been launching what matters. It seems less focused on competing as a blogging site than building something new.
5. Keep the product simple. Invest every design and engineering resource in value, not novelty.
Write on your terms. Publish. Earn income.
Honestly, that is the secret sauce in my view. It’s build for independents. Simple.
The best strategies are often simple. Occam’s Razor. Amazon gives you the widest selection at the best price with the most convenience. Netflix gives you the best personalized content you can access from any device. Zoom helps you schedule and have a meeting easily. That’s it. People criticized Amazon for years for not adopting the latest UI trends. It didn’t matter. Even when there is wild complexity under the hood to make customer simplicity possible, the end-state needs to nail the basics.
In many ways this mirrors life and the tenets of democratic political science: give me food, shelter, and purpose, and I am good, or life, liberty, and the pursuit of happiness. It is basic even though it is wildly hard to actually achieve.
I can easily create a publication with three clicks
I can write, schedule, and publish a post with no friction
I can see stats for every post like open rates including how many times per reader
I can see stats for traffic to know Linkedin works way better for me than Twitter
It took me 5 minutes to add a Stripe account and make my first $10 (thanks NA!)
This focus on a product supporting writers leads to writer outcomes like these:
Take a look at some of the core product flows:
The publication setup:
The writing interface:
The publishing interface:
Just like people said when first using Dropbox or Apple Face ID: it just works.
Risks and Opportunities
Substack Fatigue: The core of Substack distribution is currently email subscriptions. Yet many early adopters are people who are actively seeking Inbox Zero and are busy, intellectual people who don’t have time to read everything. As more writers migrate to Substack, how will Substack maintain high engagement, which is critical to the virality of content, reader love, and writer incomes? Fortunately the business model doesn’t require virality as much as quality. However, even as a fan of the company, I have 9/10 newsletters I am subscribed to on a Gmail filter that skips the inbox; I am basically hoarding digital culture.
Lack of distribution: I get many emails from Substack promoting writing on the platform and the first action on its homepage is a Twitter integration to help new readers find and follow readers. Clearly, Substack is trying to help its writers find more readers. Without being able to help its writers with distribution, success on Substack from a reach and revenue perspective will be largely driven by writers with audiences off-platform, such as celebrities and people with social media audiences where they can republish the Substack links and drive traffic. One danger here is that Substack writers fall prey to creating content for virality and reach, not quality, and the platform moves with it away from the mission. Without being able to drive distribution, the added value is limited: writers can’t build large audiences to generate livable incomes and spread ideas farther.
Right now, distribution as an unknown is still like pushing a boulder uphill.
Lack of monetization: The company is premised on the idea that people are willing to pay for good content either because the believe the content is that good or they spiritually want to support independent journalism. If only a few writers can make livable incomes (e.g. 1% writers) compared to many (e.g. 20% writers with the rest either failing economically or not doing it for money), then Substack will remain just a publishing platform rather than a sustained movement and a gigantic business opportunity for not just writing but independent media and new forms of culture creation. Personally I subscribe to many newspapers such as NYT and The San Francisco Chronicle, but I pay for zero newsletters including those written by good friends I should be supporting.
The good news is that each of these risks are risks for Substack writers (and to some extent, Substack readers). Those aligned incentives mean that some very talented writers along with the smart people behind the company are all rowing together. Prior attempts at this have failed in part due to misalignment, such as when a publisher is purely focused on reputation maintenance not revenue or reach, or when a technology platform monetizes through ads or centralized subscriptions that leave writers behind.
Closing: Substack is enabling independent media
I am optimistic about Substack. Media is complicated: the New York Times is thriving while local newspapers continue to close left and right. Social media is distorting our lived realities while it also helps connect people around the world. I believe that the fundamental alignment between Substack, its writers, and its readers creates the systematic structure necessary for better cultural and economic outcomes. We’ll see!
Thanks Sanchan Saxena for the inspiration behind this essay!