A few weeks ago, we hosted a discussion thread in which we asked writers what features they’d like to see in Substack. We got hundreds of responses, asking for everything from image captions to a mobile app. We were energized by the discussion, and just a little intimidated. To build something great, we have to stay focused and say no to a lot – there’s no way around that. But on top of that, we’re a team of just three people – Chris, Hamish, and Jairaj – doing everything from building the product to working with writers to customer support. We often wish we had the resources to move just a little bit faster.
Well, that wish has come true.
We started Substack because we wanted to build a better future for readers and writers. Today’s media environment is built on warped incentives, with writers and publishers forced to compete for people’s attention. Many who succeed under the current model are the ones willing to hunt for clicks by fomenting outrage or catering to the lowest common denominator. Many writers and outlets have become convinced that the only path to success is through reaching an audience of millions. It can be hard to see a way out.
So many writers – whether they be journalists, authors, bloggers, academics, analysts, or industry insiders who share their insights with others – are forced to play a game where they don’t control their relationship with their audience, don’t always get paid, and have to worry about almost everything but their writing. Many writers are treated more like content gatherers than storytellers, sent to carve off slices of human attention to feed into a social media machine that seeks to addict rather than enlighten.
But in every crisis there is opportunity. We believe that good writing, in all forms, has value, and that it doesn’t have to be given away for free. Substack is based on the simple idea that a reader can make an intentional choice to subscribe to a writer they trust to provide value. We give writers the tools to publish to email and the web and build an audience that they own. It’s free, and writers can add paid subscriptions whenever they want (or not). The only way we succeed is if writers using Substack succeed – we take a cut of their subscription revenue – and writers only succeed if their readers are happy. Everyone’s incentives are aligned. If a writer chooses to leave Substack, they can take their mailing list and content with them.
Subscriptions are powerful because they allow people to decide what they do or do not want to receive, and the economics are such that the audience numbers don’t have to be huge to be meaningful. If you can convince a thousand people to pay you $10 a month, you have enough to make a living. Even if your work resonates with only a small audience, you can still unlock tremendous value.
And with Substack, you can have your cake and eat it. This model isn’t about shutting off access. You can publish posts that are free or only for paying subscribers. The free stuff affords you the opportunity to reach a wide audience, attracting readers to your voice, worldview, and quality of thought. And the subscriber-only content allows you to make money from the people who are deeply committed to you. Substack provides the tools for payments, publishing, analytics, and other resources to help you grow your audience. In other words, we do everything but the hard part: the writing itself.
In October 2017, we watched in amazement as our first customer, Bill Bishop, publisher of Sinocism, brought in six figures of revenue on his first day with Substack for his previously free newsletter. Bill’s launch was soon followed by Kelly Dwyer’s The Second Arrangement and Daniel Mallory Ortberg’s The Shatner Chatner, which convinced us that it was worth trying to make Substack work for many more people. Today, we have writers and topics ranging from crypto (Anthony Pompliano) and race and digital sociology (Tressie McMillan Cottom) to AI (Azeem Azhar) and Victorian literature, psychoanalytic theory, and trans femme style (Grace Lavery), and many more. Some writers have gone full-time on their newsletters and are making hundreds of thousands of dollars a year. More than 50,000 people now pay to subscribe to a Substack publication.
But we’ve done all this with limited resources. While we graduated from the winter 2018 batch of Y Combinator and subsequently raised $2.2 million in seed funding, we’ve spent the last year working out of Chris’s living room in San Francisco. Now it’s time to add some firepower.
Today, we’re announcing that we’ve raised $15.3 million in a Series A funding round led by venture capital firm Andreessen Horowitz, with participation from Y Combinator, an existing investor. Andreessen Horowitz’s Andrew Chen will join our board.
We’ve known Andrew since before he joined Andreessen Horowitz because he has a widely read blog with a large mailing list. As with the other investors who had shown interest, we initially told Andrew we weren’t looking to raise money right now (a deal like this wasn’t really part of our calculus). But he proceeded with a charm offensive that included introducing us to the firm’s entire editorial team and a dinner with Marc Andreessen, who shared our conviction that we’re building something that matters. By the time we got to the term sheet, the entire process had taken less than a week – pretty much a best-case scenario for a company that wants to stay focused on building.
Through the discussions, we saw that Andreessen Horowitz cares about media. The firm has had a culture of writing from the beginning, but they’re also serious about editorial. Five years ago, they hired Sonal Chokshi, a former senior editor at Wired, to build the editorial operation, including growing the a16z podcast. A couple years ago, they hired Hanne Tidnam, a former senior editor at Princeton University Press who managed the literature and arts book lists there, and they have hired other editors since. Both Sonal and Hanne have been hugely helpful to us already.
We know that Silicon Valley venture capital and the media have often not mixed well, but we are committed to getting this right. We have a business model that works and that aligns our incentives with the writer’s. One of our founders, Hamish, is a journalist and author himself. We will never build ad tech into Substack, and we know that the media can’t be saved by algorithm. This Series A will help us to make substantial investments in our product, team, and network of readers and writers. It will allow us to build critical infrastructure, from get-togethers to fellowships, to help writers succeed and readers get the best possible media experiences. And it will let us continue to democratize the tools that writers need to create independent businesses.
To all the writers who have put their trust in us: thank you. You are what makes Substack what it is, and we are determined to do right by you. Our focus remains the same as it was on day one: building a sustainable company based on a model that’s simple and fair.
We believe that letting writers connect with their audiences on their own terms, and letting people subscribe to and support writers directly, puts the power where it belongs: in the hands of readers and writers. It's a model that can help build a better culture. That's why we make Substack, and we hope you’ll join us as we take it to the next level.
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