Interview: The Substack Story, So Far

An interview with a co-founder about "an antidote to the prevailing media environment"

Hamish McKenzie is having quite a year. In early November, his book about Elon Musk and Tesla — “Insane Mode: How Elon Musk's Tesla Sparked an Electric Revolution to End the Age of Oil” — was published. I reviewed it here, and also provided subscribers an interview with McKenzie about Musk and the book.

McKenzie was also a co-founder of Substack.com, which I’ve selected as my Site of the Year, to complement my Book of the Year. As you’ll see, Substack has an all-star cast of product and technology people behind it, with a serious mission at its heart.

This interview covers what motivated and inspired the founding of Substack, its rapid growth, and where it may be headed from here.

Q: Tell me a little about your background, especially how a writer and journalist became a tech entrepreneur.

McKenzie: I was a journalist, having run the student magazine at Otago University in New Zealand (my home country) and then doing a master’s degree in journalism at the University of Western Ontario in Canada. I worked in magazines in Hong Kong, then as a freelancer and tech reporter, for PandoDaily, in the US. At Pando, I wrote a few things about Elon Musk and he ended up hiring me to be Tesla’s lead writer in 2014. I left the next year to write “Insane Mode,” and worked part-time in communications at Kik, a messaging app company, while writing the book.

At Kik, I became friends with Chris Best, who was one of that company’s founders and its chief technology officer. By the middle of 2017, Chris had left Kik and I had finished writing the book, and we were thinking about what was next. We both cared a great deal about how the breakdown in the media business was having negative consequences in society, so we decided to try do something about it. We created Substack to change the incentives for writers, so they could get paid by their readers instead of advertisers. We wanted to flip the attention economy on its head.

Since then, we managed to convince our friend Jairaj Sethi, a senior developer from Kik and the best Chris has ever worked with, to join as the third founder. We also hired Nathan Baschez, who built the first version of Product Hunt and previously founded a mobile storytelling startup called Hardbound, as the first employee.

Q: Substack seems to be almost a counter-narrative of what has become the de facto model of Internet publishing. It’s not free, but rather depends on the viability of the subscription model. It doesn’t use a newsfeed or an app, but instead relies on direct email push delivery. It doesn’t leverage the crowd, but instead supports the value of expertise. Take me through the steps that led you down this less-traveled road.

McKenzie: Yes, Substack is intended as an antidote to the prevailing media environment. We started thinking about what would ultimately become Substack when Chris, the CEO, was writing an essay about how online advertising and the rise of tech platforms had led to this world in which it was more profitable to spread sensationalism, outrage, and divisiveness than it was to spread truth, and so instead of having reasonable discussions we are all just shouting at each other on Twitter. Chris asked for my feedback on the essay and I said that he ought to put forward some ideas for how these problems could be addressed. When we started thinking about it, we realized that we’d be better off building a company than publishing an essay. Our goal was to do something very basic: make it simple for a writer to start an email newsletter that makes money from subscriptions. We were inspired by the success of Ben Thompson’s Stratechery, a paid newsletter about the tech industry.    

Q: What has the general reception of Substack been like? Has it met your expectations?

McKenzie: The response to Substack has wildly exceeded our expectations. We built Substack hoping that it would work for our first publisher, Bill Bishop, who writes the Sinocism China newsletter. Bill got to six figures of revenue on his first day, and we thought, “Well, this could be something.” Since then, we’ve been through Y Combinator, raised $2.2 million in seed funding, and attracted a group of writers that I am still amazed are on Substack, including Daniel Ortberg, Nicole Cliffe, Judd Legum, The Browser, Matt Taibbi, Phil Plait, Tressie McMillan Cottom, Mara Wilson, Luke O’Neil, and others too numerous to name. It’s such an honor to help these writers publish directly to their audience and make money from it. Even if it all one day falls apart, we’ll look back on these days and be grateful for the opportunity to have done this.

Q: How did you test the product and the overall concept?

McKenzie: Ben Thompson’s been telling people for a long time that his model for Stratechery works and other people should copy it. Few people had, so we decided to try make it a lot easier for other people to try. Our “test” of the concept was to just go ahead and launch a very simple version of the product with Bill Bishop. We’ve spent every day since then improving it.

Q: Some of your authors have seen their newsletters scale rapidly. What seems to separate the immediate hits from the rest?

McKenzie: The immediate hits tend to come from writers who have an existing audience of devoted readers. For instance, Bill Bishop had been publishing Sinocism as a free newsletter for five years before he came to Substack. Judd Legum, who publishes the politics newsletter Popular Information, had 280,000 Twitter followers and a reputation built from being the editor-in-chief of ThinkProgress. But others have built success quickly from focus, dedication, and serving a starving market. For example, the newsletter Petition, written by an anonymous expert, covers the bankruptcy, distressed assets, and turnarounds industry, which is not well covered by the mainstream press. That newsletter, which has lawyers and investors as its core subscribers, started late last year from zero and is now a big financial success on Substack.

Q: Substack is just over a year old, and the site for authors/publishers says much of it is still in beta. How long did it take to create the initial production version? What’s the process for build and release now? What does the roadmap look like?

McKenzie: My co-founder Chris built the first version by himself over the course of several weeks in which he isolated himself in his spare bedroom, grew long fingernails, didn’t shower, and subsisted on stale bread and water — that sort of thing. He’s a wonderful developer and product thinker, and just happens to be great strategist and business mind.

Our development process these days is on a two-week cycle. Every other Monday we have a planning meeting in which we put all potential tasks on a whiteboard, rate them by how hard they are to build, and then prioritize according to need. In these earliest days, priority has always gone to the things that help existing publishers increase their subscriber bases and make more money.

I don’t have many details to share on roadmap, but, on top of general product improvements we’ll be continuing to focus on helping publishers grow their businesses, which will ultimately entail more features that help newsletters get discovered.

Q: Do you see other business model extensions — like advertising, sponsorship, or donations – being introduced to Substack to help authors generate more revenues?

McKenzie: We’re not in a hurry to extend beyond subscriptions. We believe subscriptions alone are very powerful and benefit from intense focus. Things like donations and advertising can distract publishers from attracting new subscribers and keeping existing subscribers happy.

We believe that advertising and subscriptions are actually often in conflict. We don’t want publishers to trade one off for the other. We have no plans to ever build ad tech into the product. Ads got us all into this mess in the first place, so we want to build something better. Focus is important for that.

Q: Any other developments planned for Substack you’d like to mention?

McKenzie: We’ve done a lot in the first year. On top of building out a solid core product, we’ve added group subscriptions, gift subscriptions, coupons, subscriber-only comments, and myriad behind-the-scenes features that help everything work smoothly. Things are going well, and we are delighted with the writers who are using Substack and doing some of their best work. We’re not trying to do anything particularly fancy from here — we just want to keep building on the foundation that’s already in place.


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