
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.
New firepower
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.
Don’t already have a Substack publication? Start one now.
(Thanks to Alex Kantrowitz for the picture.)
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Well this is great for you and reassuring validation for Substack. But I'm starting to develop an allergic reaction to VC-backed media companies. I'm willing to be proven wrong on my fear that the desire for growth will blind you to maintaining the alignment of incentives. But that is the fear. Can you write about you're thinking about making this a *sustainable* as well as profitable business? Can you keep showing us that you have the alignment of the readers and writers front and center, and not your next round of funding or potential exits?
Hi Amir, thanks for this comment and these questions. I completely understand your skepticism, or uncertainty... or need for extra reassurance. I've had those same feelings since the very day we started Substack. In my past career, I was a reporter at PandoDaily, a site that covered startups and VC, and I focused a lot on media tech startups. I've seen a lot of media-related startups come and go, a lot that have come close to succeeding but fallen just short, a lot that promised a lot and delivered nothing, and a lot that took on too much venture funding and imploded, spectacularly or otherwise.
Any skepticism about the impact of venture funding on the media is warranted. There have been some horror stories, especially recently. I've had many friends affected – through layoffs, company closures, tightened competition in the freelance market, exploitation of writers' labor, and so on. (Lots of writers on Substack have experienced these things first-hand.) I've seen startups, flush with cash, come in and promise the world to writers, only to take it all away because of a change in business model, or a decision to chase a bright new thing, or because a grand plan didn't work out.
So, why should anyone trust us to be any different? Well, for a start, we're not owed anyone's trust, and we don't expect to just be granted it. It's something we have to earn and then keep proving that we deserve. We are still a very young company and there will be lots of challenges ahead. We can't just say "trust us!" and hope for the best, so all we can do for now is show that we know what the pitfalls are, and that we'll do everything in our power to avoid them. Time will tell how successful we have been in staying true to that (and you can come back to this post and call me out on it!).
But in the meantime, we've had a business model that works from day one. We only make money when Substack writers make money. It's in our interest to help writers thrive. For Substack, the business model has always been fundamental to what we do. Even on day one, we were hell-bent on not being a "get users first and figure out how to monetize later" kind of company. That dynamic has been corrosive to media.
We've also been anti advertising since the start. That's the reason we built Substack – to provide an alternative to the model that dominates today, one that's based on dominating attention, on addiction, on scale, on aggregation and advertising, and one where only the tech platforms can be kings. Subscriptions align incentives between Substack, writers, and readers. With subscriptions, your product is quality. And with subscriptions, millions of writers covering millions of niches can make meaningful income without having to have giant audiences.
Finally, Substack is a platform for writers to build on. It is not a media company. We build tools to support many, many publishers rather than create content to distribute. The business questions for a platform company are very different to those faced by a media company. We're a lot more like Shopify than the New York Times. Having this funding will help us build more tools that are directly in the service of helping writers. Helping writers succeed is not a choice for us – if we stop doing that, we lose the right to exist.
Thanks, Hamish, couldn't have asked for a better response. I'm excited for Substack and the joy and value you will unlock with it.
I'm glad to have come across such an great question and - as Amir says - a response that couldn't have been better. Thank you, both.
That's what youtube thought it was..a platform. It is of course. But what if your platform is what allows actual neo nazis to spread their word, as well people who get labelled 'nazis' when they are in fact just loud mouthed and annoying..or just not suitably progressive. What if the mob come for you and try to hold you accountable for harbouring and profiting off such "undesirables"?
I hope you can navigate such challenges as Substack clearly has the right intentions.
This is a great question I’d like to hear your thoughts on, too.
My suggestion is that the three of you use this $15 million to buy some shoes.
How will the shoes help writers?
We rely on you guys and can't afford to have you on medical leave for avoidable foot injuries.
In that case, a pre-emptive action is necessary, I'll recommend #HappyFoot twice a month. Health they say, is wealth. :)
Burn. LOL
And design while running?
So happy to be part of this journey :)
Y'all, I spoke with your CEO some time ago about our Asian American newsletter that has since gone defunct, though it may have had life had Substack been around when we started it :) I'm so glad for your success and hoping for the best for the future.
Bring it back!
Congratulations! From the perspective of you guys as founders, it's a HUGE accomplishment to be recognized in this way, and hats off for all of your hard work on building this really,really good product that "just works" for content producers. I've recommended Substack to at least three other people so far as a way to write newsletters, and am excited about the growth of the community.
From the perspective of a paid newsletter writer (and, as such, stakeholder in the company's success), however, this gives me enormous cause for concern, knowing what Silicon Valley in general and venture capital specifically tend to do to content businesses over time (Tumblr, Digg, Reddit, etc.).
I believe you guys strongly believe in no ads/no algos ethos, but I'm not sure that the pressures of the VC money will allow you to continue to act that way in the long term - of course I'm always optimistic! I realize there's nothing you can specifically say to assuage some of these very vague concerns (yet), but I did want to voice them initially as something that immediately came to mind upon reading the announcement.
I'm hopeful that all my fears will be baseless and that the money will allow you to continue to grow your team and keep building up the product (and give the three of you some breathing room! :).
Thanks!
We're totally sensitive to this concern. I agree that there's probably nothing we can say to assuage this, but hopefully there is something we can do: continue to build a company that serves writers and readers well, and has a model that works. We'll give it our all.
The "just works" comment: YAS! Offering services or products that just freaking work is so wonderful and often under appreciated until you experience it. My sentiments exactly. :-)
Congratulations--I am in line with Bill Bishop that it's obvious the worth you are creating and thus, foolish for an SV company such as a16z not to see it; but, I am both nervous and excited to have this much SV cash supporting my pub's foundation. Please keep being the realiable team of dudes and a dog whose balance sheet leans more toward principles than principals.
"Balance sheet leans more toward principles than principals."
Thats actually great sentence. (Saved)
Very well done guys! Competing in this media environment is brutal and access to capital is a must if the company is to survive long term. It's a fantastic product you've built and a first rate community. Big congrats.
More money is better than less money. Congratulations and hope the new guy works out.
I hope so!
This is huge, I'm so thrilled for y'all, you have a wonderful product and delighted you folks have the accelerant!
Congratulations! I really enjoy using Substack for my newsletter (and just started the paid option for people) — looking forward to seeing what comes next!
Congrats y'all! (I'm from Georgia :) Seriously, this is wonderful news and it's nice to see that kind of money going to help a company that's doing something as worthwhile as what you guys are building. Excited to see what the future holds.
Congrats, A16Z is smart to recognize the value in what you are building
This is so exciting for you guys! I can't wait to see what new awesome stuff you come up with. Substack has been super great thus far and this will only give you the ability to do more. I'm excited to see what you do. 💕
Congratulations on your raise!
I totally love the dog. What is his or her name?
Thanks! Her name is Cassie, and she is a very good dog.
Boop boop!
Great news congrats and please checkout my newsletter https://trendslates.substack.com where I cover commerce daily from Amazon to Zulily.
This is huge! Such a big win and confirmation for the power of editorial newsletters.
Congratulations! I know that taking VC investment always has pros and cons. But, it gives me confidence that the funding will provide you with a lot more runway to continue to develop and grow Substack. It makes me feel great about choosing you for my newsletter!
What is the money going to be used for?
More seriously: hiring a few people so we can build stuff faster. Looking for more ways to help writers get started and continue to grow.
Shoes, according to @Judd's comment
I have troubles in convincing people pay for my newsletter. Any trick or recommendation? Is there a way to make sponsors pay for newsletter rather than readers? I never thought you were 3: I've read about you on a famous Italian magazine and I supposed you were a big company. By the way in your success you should include also the writers in Italian language. You are an international company as a matter of fact
Congrats fellas! Please let me know how I can help :)
Congrats! This is great news
https://setu.substack.com/p/are-you-using-insta-till-date-grow?r=7riec&utm_campaign=post&utm_medium=web&utm_source=copy
I need some help to spread my write.
Could anyone help me out.
you can check out my Article. Link is above !!!
Thanks :)
It's very clear that writers own the content, but who owns the subscriber data? Substack? The writer or both?
Can we get a referral system under the special offers? I feel like incentivizing users to refer friends (and say get a month free) would be a kick-ass feature with lots of potential.
It would be cool if you could allow subscriptions for less than $5 a month. No one is going to pay $5 a month for my emails :( you can get a whole Medium subscription for $5 a month haha
I'm impressed and challenged by your commitment!
Glad to see you're using Macs, and gladder still to see Cassie in the frame!