8 min read

An ode to Substack

A deep dive on how Substack is reimagining content distribution - giving back power to the creator!
An ode to Substack

Humanity’s success has always revolved around our ability to band together in large groups and work towards audacious goals. Whether it be building the pyramids or putting a man on the moon. But there has been one key enabler to these large-scale collaborative pursuits - trust! More so, trust in institutions. Institutions like religions, constitutions, governments, universities, banks & media houses have served as society’s familiar (trustworthy) faces in a world otherwise filled with strangers.

In startup and VC parlance, Institutions were the key reason humanity could blitzscale

Until 2021. A year which saw everyday Redditors take on (and nearly bankrupt) large hedge funds & saw cryptocurrencies explode as vehicles of protest against centralized monetary policy. Across these themes, one trend is clear, public trust in institutions is at an all-time low.

People increasingly trust individuals and their ideas vs. institutions and their agendas

In fact, of the largest public institutions that come to mind - ‘the Press / Media’ ranks the lowest in public trust! 👇🏻

Source

And that brings us to the company we discuss today - Substack! A lovechild of tech and media, champion of the individual, and a facilitator of unfettered thoughts and conversations! (@ NY times 😉) Here’s how Substack grew to 500k paying subscribers, 10s of millions of readers, and a valuation of $650M! Let’s jump right in...

Paid subscriptions have exploded over the last year! Source: link

💌 Subscribe to my newsletter!

The rise of the individual creator has also seen their audience of loyalists prioritizing the author over the platform.

One listens to Joe Rogan - it doesn't matter if he's on YouTube or Spotify.

While individual creators still had to rely on the traditional information distribution platforms that Social media had become, direct-to-reader channels were set up by pioneers like Ben Thompson of Stratechery and Jessica Lessin of the Information.

Stratechery provides an analysis of the strategy and business side of technology and media, and the impact of technology on society.

These writers created mailing lists for sending out newsletters via email and hosted archives on websites for easy discovery. By signing up on the website, readers could bypass ‘the attention-centric’ algorithms that made Twitter and Facebook their money and establish direct correspondence with their author of choice. With the idea of steering clear of the often divisive content promoted on social media in the name of clickbait, the intrinsic value of journalistic content, and direct access to trustworthy individuals, internet readers were more than happy to shell out monthly/annual subscription fees to their favorite handpicked creators. The subscription business model to distributing content was back!  

Make it simple to start a publication that makes money from subscriptions.

It was this mission of democratizing the subscription model with which ex-teammates from Kik interactive - Chris Best, Hamish Mckenzie, and Jairaj Sethi, founded Substack. In October 2017, Bill Bishop, the renowned China expert generated 6 figures in a single day 🤯 when he used the private beta product to move his audience to Substack. Bill could:

  1. Use the inbuilt editor to create, publish and send email (the ultimate distribution channel with 3.7B users worldwide) newsletters
  2. Use design templates to optimize for the reading experience
  3. Segment content into free and paid
  4. Connect a Stripe account to collect payments for subscriptions to the paid sections (paying 10% of revenue to Substack and 3% to Stripe)
  5. And use sharing features to promote content outside the platform

Deriving from the huge success that Bill and other early beta customers had, substack is today used by independent writers across the globe with newsletters going out every hour on topics ranging from crypto to premier league soccer. The platform was also developed to cater to adjacent creator use cases including podcasting, comic creation, local news publications, and finance & investment writing. Full-time writers create hundreds of thousands of dollars a year with a paying audience base north of 500,000 active subscriptions.

"All Substack publications without exception will have subscriptions, and we will not accommodate ads in the design of our publishing system. Publishers will own their data, which we will never attempt to sell or distribute, and we won’t place ads next to any of our own or our customers’ product"

🧩 Becoming an all-in-one solution

The biggest advantage of running a business on a platform like Substack is the ability to go to sleep knowing that a team of super talented folks is working towards enhancing yours as well as your customer's experience. Substack took this a notch higher with a private beta test that wouldn't end till the perfect experience was delivered to their design customers. Meeting their customers' expectations, (and often exceeding them) Substack continued to deliver with delightful feature launches shipped every quarter. Here's our pick for features that can be attributed to Substacks meteoric growth rates:

CTA's: Substack's CTA's are optimized for one of the best Impressions-to-conversion/engagement rates across CMS platforms. The author can place buttons that allow the reader to subscribe, share, comment, and more while viewing a post. Substack also provided easy embeds which can be used for increasing audience counts. Make sure to give ours a spin 👇🏻😋

Analytics: Substack provides a range of useful metrics that allows the creator to measure performance (acquisition and engagement) and funnel-manage new and existing users. Substackers can also attribute new traffic to their source, re-engage cold users with retargeting emails, and do much more using the creator dashboard.

Switching to substack: is a very handy tool that a Substacker can use to migrate their publication in a matter of minutes.

Substack Discover: is a leaderboard of the top-performing substacks categorized for easy discoverability for anyone exploring newsletter options in their favorite category.

Team editing: Substackers can team up and collaborate on their mission to create awesome content using substacks group editing features including - by-lines, guest authoring, etc.

💻 Atlassian (Jira)
A deep dive on how $1B of capital and a perfectly crafted M&A engine created $40-50B of market cap for Atlassian!
Substack's guest author feature in action 🔥 

Substack Podcasts: Allows the customer to merge the lines between audio and newsletters and run their podcasts on substack. The Podcast feature integrates with the big guns of podcasting via RSS feeds and doubles up as a full-fledged podcast host.

How Calendly will scale to $1B ARR 🚀
Listen now (8 min) | A deep dive on the ‘feature’ that brings home $100M in ARR and the strategies that will get them to $1B!

Substack is flush with more such amazing features (like reader feed, custom domains, and scheduling) crafted with the single focus of providing value to the user at every single opportunity ❤️  

🤝 Creator-success as a service!

Being independent shouldn’t mean being alone. - Hamish Mckenzie

With a transaction-based monetization model, Substack's earnings are directly related to the success of their creators. This justifies substack's investment in programs that not only improved product experience but also enhanced the quality of life of their creators. Dedicated teams were built to run programs encompassing:

  1. Writer recruitment and development: Substack Pro* and Partnership outreach programs introduce and promote substack adoption amongst writers with existing audiences.
  2. Writer services: Aimed to provide adjacent services that improved the quality of a Substacker's life. Services offered include Substack defend, health insurance, image libraries, and design assistance
  3. Writer success: Works with active Substackers and assist them in increasing traffic and building sustainable businesses on the platform
  4. Substack community: focuses on creating educational and onboarding infrastructure that guides a creator and engages them as they grow on the platform. Substack Grow - is a notable contribution of the community program and offers 6 workshops for writers aspiring to grow.

*With Substack Pro, writers are paid an upfront advance aimed at removing hurdles of going independent. This financial security is paid back with an 85% payment of subscription revenues to Substack for the first year before moving back to the standard business model.  

"We like this structure because, while some who get these deals are already well off, it gives financially constrained writers the ability to start building a sustainable enterprise. We take most of the risk for them. In return, their work contributes to the quality of the Substack ecosystem and they become long-term customers." - Hamish on Substack Pro

👋 Meet the crew behind the numbers!

A 4 member team till 2019, Substack's talent headcount has grown to 60+ with 20% (12-15) attributed to acqui-hires.

The tech team: team comprising of engineering, product, data, design, and support specialists has seen sharp increases in headcount fueled by VC fundraise rounds with 80% of the team joining post-2021.

Building subscription publishing software for writers.

The team features tech and product talent sourced from tech companies based out of Silicon Valley. Substack's acquisition of Letter and Cocoon has contributed significantly to the product and engineering functions of the company.

The tech team | estimated using LinkedIn data

The writing team: Substack's growth and business verticals operate with Writer delight as the priority.

Providing writers with everything that they will need to run an independent media business outside of our software.

Dedicated teams run programs around Writer recruitment, Writer success, Writer services, Community, and Experience. Services and Community are lead by experts who were brought onboard post the People & Company Acquisition in 2021.

The writing team | estimated using LinkedIn data

Substack also has strong admin, talent, and legal resources supporting the business 🙌🏻

⏩ Next steps

As Substack enters its next phase of growth, more GTM hires are expected to join the team. VP of Finance, Marketing lead, and Communications manager top the open positions list at Substack. Despite easy-to-switch alternatives in Ghost and Revue, Creator-friendly initiatives and growing popularity amongst readers position Substack to lead the charge for subscription-based content creation. We're clearly big fans of the platform and are super excited that the Top of the Lyne Newsletter can take a ride on the rocketship! 🚀

Substack and Top of the Lyne 😉