7 ms·

I read an a16z blog post on the thesis behind their investment in substack, which is the belief that there will be this big “passion” economy where millions of

I read an a16z blog post on the thesis behind their investment in substack, which is the belief that there will be this big “passion” economy where millions of people will be able to make careers out of making podcasts, writing, etc. I don’t really buy it. These things are tools that lower the barrier of entry to creating but that alone doesn’t generate mass demand for creators. You will see power laws apply just like it does in many situations, and there will be a handful of people who can pull six or seven figures in something like writing a paid email newsletter.

Alex3917 7y ago
> You will see power laws apply just like it does in many situations, and there will be a handful of people who can pull six or seven figures in something like writing a paid email newsletter. Sure, but to create a venture scale business you only need a few hundred highly successful ones; you need around 250 power users to create a $100M business.
- LunaSea 7y ago
  That's 200K / power user if you estimate that they represent half your revenue. That sort of amount is not a "power user" but multinational companies that have to be convinced over long periods of time and huge overhead. So that figure is way, way underestimated.
  - Alex3917 7y ago
    They'd represent more like 90% of the revenue, but you're forgetting about the multiple. So call it 36K.
    - coldtea 7y ago
      Still hella hard. And the multiple is only interesting if you intend to go public, sell the company, or something.
- coldtea 7y ago
  >Sure, but to create a venture scale business you only need a few hundred highly successful ones; you need around 250 power users to create a $100M business. And creating "250 power users" at that scale is crazy hard.
Multiplayer 7y ago
I'm a big big fan of the "1000 true fans" concept as applied here. It's not for everyone but.... who knows? If you are persistent and passionate... https://kk.org/thetechnium/1000-true-fans/ https://kk.org/thetechnium/1000-true-fans/ https://seths.blog/2008/03/1000-true-fans/ https://seths.blog/2008/03/1000-true-fans/
- WA 7y ago
  What if 1,000 true fans is already a power law? Doesn’t seem a lot on a global scale, but yet, who can claim to have 1,000 true fans with a paid newsletter? For 1,000 true fans, you probably need 10,000 customers and be exposed to 100,000 people. Because 1% conversion rate to true fans seems about right. Note: this isn’t about strict numbers. 1,000 true fans paying 10 bucks a month might be enough. The same paying $2 a month? Doesn’t pay the bills of a family. I like the concept as well, because it seems a lot more approachable than trying to build a unicorn, but what if only the top 0,1% really get 1,000+ true fans? Still a power law.
  - bryanrasmussen 7y ago
    the 1000 true fans concept is people who will buy anything you put out though, so they should not just be buying your $2 a month newsletter, but also your $15 t-shirts, $2000 speaking engagements and so forth.
  - OnlineGladiator 7y ago
    > For 1,000 true fans, you probably need 10,000 customers and be exposed to 100,000 people. Because 1% conversion rate to true fans seems about right. The rule of thumb for email subscriber to paying customer is actually closer to 1% (compared to your 10%) which just means it's that much harder. I don't think there is a rule of thumb for "true fan" conversion, where it might be as high as 50% for something like Tesla and 1% for something like Comcast.
  - the_watcher 7y ago
    > Note: this isn’t about strict numbers. 1,000 true fans paying 10 bucks a month might be enough. The same paying $2 a month? Doesn’t pay the bills of a family. Really? Maybe not every family (and definitely not in the Bay Area), but those numbers work out to $120-240K/year, with no requirement on where you live. EDIT: I can't be trusted with mental math. Leaving the above unchanged, but it's answering a comment that used different numbers that never actually existed. The correct numbers are $24-120K/year, which is obviously a very different discussion about feasibility.
blntechie 7y ago
> I read an a16z blog post on the thesis behind their investment in substack Substack is like the person who sold tools to the gold prospectors during the gold rush. They will probably do okay.
- soneca 7y ago
  Not a good analogy in this case because they earn a fee on each subscription. Meaning that if no one find gold, they earn nothing.
  - ThomPete 7y ago
    Most didnt find gold either so the analogy sound good to me. Mailchimp, constant contact, campaign monitor.
    - the_watcher 7y ago
      But the people who sold pickaxes to those who struck out made money on those people. Substack makes precisely $0 on a paid newsletter with no subscribers.
      - ThomPete 7y ago
        Yeah but Mailchimp makes lots of money
riffraff 7y ago
I believe both things are true: there is a power law distribution, and there will be millions of people making careers like that. Patreon alone has >100k creators, right? And it's not a super popular platform yet. I think the request for content is already there, and is just being dis-intermediated. Also, I think you are discounting what a lot of "creation" is, as it is a much larger area than is generally considered, IMO. For example, there seem to be a lot of erotica going on in patreon and elsewhere, where models sell prints and special content (e.g... nipples?). Or, there is a ton of videogame streaming going on, which should be considered content creation, and some of the millions of twitch streamers actually make good money. Many people also sell special content connected to their podcast/streaming whatever, I just ended up yesterday on a financial youtube channel where the author has a paid-only weekly chat with the subscribers. The only thing which I think won't increase much is writers self-publishing. That seems to already have been a thing for years now.
- oefrha 7y ago
  > Patreon alone has >100k creators, right? And how many are making a living out of their Patreon? Most Patreons I’ve seen are hobbyists making a few bucks on the side. Those aren’t careers, so the 100k number is meaningless. (In fact, I looked it up, and 100k is the number of “creators” making at least $1, or have at least one patron.[1]) [1] https://techcrunch.com/2019/02/12/patreon-business/ https://techcrunch.com/2019/02/12/patreon-business/ Edit: The TechCrunch article further down claims that Patreon had about 4300 creators earning $1k/mo at that time.
- coldtea 7y ago
  >Patreon alone has >100k creators, right? Most of which make close to nothing (server costs, and way less than 10K/year). >And it's not a super popular platform yet. No, but it's the #1 platform for direct fan support.
IGotThroughIt 7y ago
I am only subscribed to 2 newsletters one of which is by Trevor McKendrick - VP at Lambda school(YC). It's probably one of the few newsletters I'd actually pay for. It's sent out every Monday morning so that's something I look forward to when starting my week. It contains nice information about entrepreneurship, myths of founder stories and other related things. For those interested: howitactuallyworks.com
rokhayakebe 7y ago
I don't know. There are many topics for which I would pay $10/month for a weekly newsletter. Perhaps not an email weekly newsletter, but I always say I would easily pay $10/month for a weekly TWIST Video if they had something behind a paid wall.
deleted 7y ago
[deleted]
yters 7y ago
Most people need to still make the things we need for ordinary life, otherwise we all become starving artists in the 'creative economy'. Can't eat a podcast.
- trynewideas 7y ago
  thanks, I'll use "can't eat a podcast" in the next blue apron ad I have to read on my podcast
stelfer 7y ago
Mark Newman would like a word with you regarding power laws. So would HN, honestly: [2007] https://news.ycombinator.com/item?id=16414279 https://news.ycombinator.com/item?id=16414279

Alex3917 7y ago

> You will see power laws apply just like it does in many situations, and there will be a handful of people who can pull six or seven figures in something like writing a paid email newsletter. Sure, but to create a venture scale business you only need a few hundred highly successful ones; you need around 250 power users to create a $100M business.

LunaSea 7y ago
That's 200K / power user if you estimate that they represent half your revenue. That sort of amount is not a "power user" but multinational companies that have to be convinced over long periods of time and huge overhead. So that figure is way, way underestimated.
- Alex3917 7y ago
  They'd represent more like 90% of the revenue, but you're forgetting about the multiple. So call it 36K.
  - coldtea 7y ago
    Still hella hard. And the multiple is only interesting if you intend to go public, sell the company, or something.
coldtea 7y ago
>Sure, but to create a venture scale business you only need a few hundred highly successful ones; you need around 250 power users to create a $100M business. And creating "250 power users" at that scale is crazy hard.

Multiplayer 7y ago

I'm a big big fan of the "1000 true fans" concept as applied here. It's not for everyone but.... who knows? If you are persistent and passionate... https://kk.org/thetechnium/1000-true-fans/ https://kk.org/thetechnium/1000-true-fans/ https://seths.blog/2008/03/1000-true-fans/ https://seths.blog/2008/03/1000-true-fans/

WA 7y ago
What if 1,000 true fans is already a power law? Doesn’t seem a lot on a global scale, but yet, who can claim to have 1,000 true fans with a paid newsletter? For 1,000 true fans, you probably need 10,000 customers and be exposed to 100,000 people. Because 1% conversion rate to true fans seems about right. Note: this isn’t about strict numbers. 1,000 true fans paying 10 bucks a month might be enough. The same paying $2 a month? Doesn’t pay the bills of a family. I like the concept as well, because it seems a lot more approachable than trying to build a unicorn, but what if only the top 0,1% really get 1,000+ true fans? Still a power law.
- bryanrasmussen 7y ago
  the 1000 true fans concept is people who will buy anything you put out though, so they should not just be buying your $2 a month newsletter, but also your $15 t-shirts, $2000 speaking engagements and so forth.
- OnlineGladiator 7y ago
  > For 1,000 true fans, you probably need 10,000 customers and be exposed to 100,000 people. Because 1% conversion rate to true fans seems about right. The rule of thumb for email subscriber to paying customer is actually closer to 1% (compared to your 10%) which just means it's that much harder. I don't think there is a rule of thumb for "true fan" conversion, where it might be as high as 50% for something like Tesla and 1% for something like Comcast.
- the_watcher 7y ago
  > Note: this isn’t about strict numbers. 1,000 true fans paying 10 bucks a month might be enough. The same paying $2 a month? Doesn’t pay the bills of a family. Really? Maybe not every family (and definitely not in the Bay Area), but those numbers work out to $120-240K/year, with no requirement on where you live. EDIT: I can't be trusted with mental math. Leaving the above unchanged, but it's answering a comment that used different numbers that never actually existed. The correct numbers are $24-120K/year, which is obviously a very different discussion about feasibility.

blntechie 7y ago

> I read an a16z blog post on the thesis behind their investment in substack Substack is like the person who sold tools to the gold prospectors during the gold rush. They will probably do okay.

soneca 7y ago
Not a good analogy in this case because they earn a fee on each subscription. Meaning that if no one find gold, they earn nothing.
- ThomPete 7y ago
  Most didnt find gold either so the analogy sound good to me. Mailchimp, constant contact, campaign monitor.
  - the_watcher 7y ago
    But the people who sold pickaxes to those who struck out made money on those people. Substack makes precisely $0 on a paid newsletter with no subscribers.
    - ThomPete 7y ago
      Yeah but Mailchimp makes lots of money

riffraff 7y ago

I believe both things are true: there is a power law distribution, and there will be millions of people making careers like that. Patreon alone has >100k creators, right? And it's not a super popular platform yet. I think the request for content is already there, and is just being dis-intermediated. Also, I think you are discounting what a lot of "creation" is, as it is a much larger area than is generally considered, IMO. For example, there seem to be a lot of erotica going on in patreon and elsewhere, where models sell prints and special content (e.g... nipples?). Or, there is a ton of videogame streaming going on, which should be considered content creation, and some of the millions of twitch streamers actually make good money. Many people also sell special content connected to their podcast/streaming whatever, I just ended up yesterday on a financial youtube channel where the author has a paid-only weekly chat with the subscribers. The only thing which I think won't increase much is writers self-publishing. That seems to already have been a thing for years now.

oefrha 7y ago
> Patreon alone has >100k creators, right? And how many are making a living out of their Patreon? Most Patreons I’ve seen are hobbyists making a few bucks on the side. Those aren’t careers, so the 100k number is meaningless. (In fact, I looked it up, and 100k is the number of “creators” making at least $1, or have at least one patron.[1]) [1] https://techcrunch.com/2019/02/12/patreon-business/ https://techcrunch.com/2019/02/12/patreon-business/ Edit: The TechCrunch article further down claims that Patreon had about 4300 creators earning $1k/mo at that time.
coldtea 7y ago
>Patreon alone has >100k creators, right? Most of which make close to nothing (server costs, and way less than 10K/year). >And it's not a super popular platform yet. No, but it's the #1 platform for direct fan support.

IGotThroughIt 7y ago

I am only subscribed to 2 newsletters one of which is by Trevor McKendrick - VP at Lambda school(YC). It's probably one of the few newsletters I'd actually pay for. It's sent out every Monday morning so that's something I look forward to when starting my week. It contains nice information about entrepreneurship, myths of founder stories and other related things. For those interested: howitactuallyworks.com

rokhayakebe 7y ago

I don't know. There are many topics for which I would pay $10/month for a weekly newsletter. Perhaps not an email weekly newsletter, but I always say I would easily pay $10/month for a weekly TWIST Video if they had something behind a paid wall.

deleted 7y ago

[deleted]

yters 7y ago

Most people need to still make the things we need for ordinary life, otherwise we all become starving artists in the 'creative economy'. Can't eat a podcast.

trynewideas 7y ago
thanks, I'll use "can't eat a podcast" in the next blue apron ad I have to read on my podcast

stelfer 7y ago

Mark Newman would like a word with you regarding power laws. So would HN, honestly: [2007] https://news.ycombinator.com/item?id=16414279 https://news.ycombinator.com/item?id=16414279