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Ana Marie Cox on the Shaky Foundation of Substack as a Business

30 points by Bogdanp 1y ago

techpineapple 1y ago
Why is it that Substack can’t just be run as a 10-20 person small-medium sized business forever? If publishers want to go there for a basic product, and Substack can collect rent from them, what’s the problem?
- senko 1y ago
  > Why is it that Substack can’t just be run as a 10-20 person small-medium sized business forever? They have taken VC money.
- chowells 1y ago
  They took VC funding. That requires them to attempt to grow to the size of Facebook or Amazon, or implode. Merely being profitable forever is not an acceptable outcome.
  - rwmj 1y ago
    There must be an opportunity here for someone who can stand up a medium-sized website and integrate it with a payment provider to take Substack's lunch money?
    - scyzoryk_xyz 1y ago
      I've always struggled to understand this part: what is it that Substack came up with that we did not have earlier? Aren't there a hundred examples out there of medium-sized websites providing a similar infrastructure mix?
      - gregates 1y ago
        Marketing, including paying well-known individuals to switch to their platform. That's funded by all the VC money the smaller fish don't have.
      - kubectl_h 1y ago
        Substack had a few things that worked for it * Patreon kind of sucks for writing / newsletters or else they could have captured part of this market. Medium was supposed to fix this but they had an epic collapse. * Single point where subscribers can manage their subscriptions and preserve a common identity across subscriptions in the comments etc. Again, Medium/collapse. * A rapid adoption of substack by well known online writers with loyal followings. These writers either had their own blogs or were exiting traditional media or getting dumped out by the collapse of online media (gawker network, buzzfeed news, etc). Again, could have been Medium if not for their collapse. * I suspect Substack spent a lot of that VC money guaranteeing 2 years of X revenue for a non-trivial number of high profile writers so they would onboard. Reading this story I didn't realize just how much they had taken over the years (I use to operate in this media space, but haven't in a long time). I'm not sure what the headcount is but that amount of money is staggering and I can only imagine it was all used to acquire DAUs and very little novel technology has been created with it. I think Substacks first 10m/100m (their keep of rev/total rev from subscriptions) was extremely impressive and fast. But also it was a kind of low hanging fruit. There was a market already there for this and Medium/Patreon couldn't capture it. Now if they are really at 45m/450m that is much less impressive. It will be extremely hard to get to 100m/1000m and IMO impossible to get much higher than that with their current approach.
        socalgal2 1y ago
        > could have been Medium Did Medium have a way to pay authors? Maybe it would have been easy to add but saying "A could have been B if only" I think misses the picture. Yahoo could have been Google if only they'd chosen a different algo. Flickr could have been Instagram if only they'd made a mobile app with filters. Etc... I think it's precisely because substack launched with a way to let readers sponser the authors directly they liked that it took off. Medium had a partner program but that's not the same.
        kubectl_h 1y ago
        I'm certainly not arguing against your point. I didn't work at Medium but I had insight into their operations at the time and they didn't really seem to have a coherent vision to make money 12 or so years ago. My comparison of the two is more around their similar goals and audience, which was giving great (or interesting) writers a home for their projects and audiences and somehow make money. Medium was saying the financial part would happen down the line and it was a can they kicked for a long time. Medium seemed more interested in talking about their technology and aesthetics than they did on figuring out the crucial parts. Substack got it right doing what Patreon (and even Twitch) had already proved, people will pay up front for the writers/creators they love. That said Medium did pay higher profile writers and publications to move to their platform (in some cases quite a bit of money) in a similar way that Substack has, which was to dip into the VC funded bank account.
      - cnst 1y ago
        To me, it seems like they're simply a monetised version of Tumblr, without the newfound censorship that all the other social media companies somehow have to have. I really don't get the whole email thing, though. Newsletters are kinda super annoying to signup for, and then to receive. I've tried the Substack version, and I still don't get it. Even though I do love the mailing lists, but that's not the same as the newsletters.
    - derektank 1y ago
      Ghost exists
    - skwashd 1y ago
      Buttondown already offers this - https://docs.buttondown.com/paid-subscriptions https://docs.buttondown.com/paid-subscriptions
    - akudha 1y ago
      What about https://ghost.org/about/ https://ghost.org/about/ They seem to be doing well, 8.5 million in revenue
  - rectang 1y ago
    I wonder how many profitable, sustainable, rewarding medium-sized businesses that have never taken VC money are utterly invisible to HN. “You know, you could just not take VC money.” “… We don’t do that here.”
- RamblingCTO 1y ago
  VC money and you can't boast to your peers with your monopoly valuation that doesn't have any real merit.
- elicash 1y ago
  There are already small newsletter businesses that offer basic products.
- mcepl 1y ago
  You cannot give millions of USD to potential authors if you are tiny webserver-running small business. That’s what the article was all about.
jeswin 1y ago
> It’s as unstable as a SpaceX launch Hate makes people blind. Starship is failing by design - that's just how they're choosing to develop it. The chopsticks video that we saw earlier was very nearly science fiction. And as far as regular launches go, SpaceX has done more successful launches than any company or nation ever. But more generally, this idea of abandoning an app (or product) the moment you encounter people who disagree with you is disheartening.
- _Algernon_ 1y ago
  >But more generally, this idea of abandoning an app (or product) the moment you encounter people who disagree with you is disheartening. It is a behavior Substack itself encourages by turing itself into a social media platform instead of simply a newsletter provider. Yes, it is useful for building a moat of network effects, but it also forces views and opionions down people's throats that reflect badly on the platform.
- randallsquared 1y ago
  Abandoning a community the moment you encounter people who disagree with you is how one builds a bubble strong enough to say things like the bit you quoted.
  - deleted 1y ago
    [deleted]
  - KerrAvon 1y ago
    [flagged]
  - hiddencost 1y ago
    [flagged]
  - archagon 1y ago
    Why would I spend my precious time wallowing in filth and squalor with some radicalized “influencers” who spout evil nonsense and entirely lack self awareness? I’d rather go read a book and discuss it with some actually intelligent friends.
derektank 1y ago
The network effects of substack seem pretty weak. Authors can use their own domain name and export a list of their subscribers any time. Their value is in providing software that is sticky for writers and solves a lot of the problems of creating and retaining an audience, which they seem to be doing pretty effectively. For better or worse, I don't think substack has much influence on the broader ecosystem either way; it's all down to consumer demand.
karaterobot 1y ago
Here's how little I understand business: $45 million in revenue, earned by taking a totally fair 10% of subscriptions that other people do all the work to get, seems like it ought to be enough. If leadership is trying to scale up to be thousands of employees, or to go public, they are lunatics and deserve to fail. Why not just run a successful newsletter platform?
- add-sub-mul-div 1y ago
  Greed doesn't have to be the same thing as the ambition it takes to start a company like this, but in practice it pretty much always is.
- danpalmer 1y ago
  It’s interesting you say the 10% is fair. I think some disagree. In short they are selling web hosting and card payments, which are most likely worth far less than 10%. However, they’re clearly going for being a Brand that people want to publish under. Substack is worth 10% because it’s Substack, not for the tangibles they provide. Now that leads to the question: what do they need to do to be a brand people want to be a part of? Is censorship part of that? Maybe, maybe not. The other interest related piece that is topical at the moment is whether Substack might be worth 10% for card payments alone if certain publications would be unable to use payment providers otherwise. Porn and gambling sites often pay that sort of rate because it’s hard to get a payment provider. Maybe laundering nazi sympathy in with a bunch of tech blogs is worth 10% to them.
- Kwpolska 1y ago
  Running a successful platform is not enough for VC grifters who funded them, the only thing that matters to VC is growth.
  - senko 1y ago
    "Grifters" a bit harsh, considering they used VC money to become successful in the first place (see other comments). Presumably they knew the deal.
barrrrald 1y ago
This post didn't age well – 3 weeks later Substack announced a $100m fundraise at $1.1b valuation. [1] Ana's contention that Substack is "rickety" seems motivated by her conviction that they should adopt a more assertive, aggressive censorship regime, and that "we need a world where a social safety net protects risky writing". There are certainly many interesting questions about the future of media and Substack's business – but the parade of people saying it can't succeed without more moderation keep being proven wrong. [1] https://www.nytimes.com/2025/07/17/business/substack-fundraising-social-network.html https://www.nytimes.com/2025/07/17/business/substack-fundrai...
- elicash 1y ago
  This post linked to a different article (former Bloomberg reporter) that said it expected this round to be at $750 million ($50 million above the previous valuation). And so yes, that's significantly less than it ended up being, $1.1 billion, but I'm not sure it impacts the argument being made. Except that the multiple would be even greater!
- hiddencost 1y ago
  [flagged]
  - SilverElfin 1y ago
    Yes, censorship. Which is a bad thing. Ideas, even disagreeable ones, should be permitted. Otherwise you don’t have a real democracy.
    - _Algernon_ 1y ago
      That's no longer a justification once you have algorithmic amplification which Substack introduced with its Twitter immitation. At that point they ceased to just tolerate these ideas but to amplify them. At that point they carry more responsibility, and people rightly blame them for it. Free speech is fine. A private company handing nazis a megaphone and not accepting criticism for it is not.
    - 1y ago
dash2 1y ago
I feel ambivalent about Substack's Notes (its version of X/Bluesky). On the one hand, the signal/noise ratio is higher than either X or Bluesky. On the other hand, I can see signs of the social media engagement farming nonsense that I've come to dread. But, I can just click on the "Following" link to avoid it. In fact, I can even set that as my homepage. So, so far, it's not that bad. And I continue to enjoy the diversity of writers; and am much more worried by virtuous scolds than by neonazis.
Invictus0 1y ago
[flagged]
throw_m239339 1y ago
> The problem isn’t just that Substack makes money off Nazis, it’s that they don’t seem to care who they make it from. Ana Marie Cox can move to Medium, they have that "diverse and inclusive" editorial policy she is seeking, we all know how "great" Medium has been doing...
anamariecox 1y ago
In case you thought I might be obsessive for no reason, with some personal history about my long tour of new media stutter-steps: https://newsletter.anamariecox.com/archive/why-i-keep-writing-about-substack/ https://newsletter.anamariecox.com/archive/why-i-keep-writin...

30 points by Bogdanp 1y ago

Why is it that Substack can’t just be run as a 10-20 person small-medium sized business forever? If publishers want to go there for a basic product, and Substack can collect rent from them, what’s the problem?

senko 1y ago
> Why is it that Substack can’t just be run as a 10-20 person small-medium sized business forever? They have taken VC money.
chowells 1y ago
They took VC funding. That requires them to attempt to grow to the size of Facebook or Amazon, or implode. Merely being profitable forever is not an acceptable outcome.
- rwmj 1y ago
  There must be an opportunity here for someone who can stand up a medium-sized website and integrate it with a payment provider to take Substack's lunch money?
  - scyzoryk_xyz 1y ago
    I've always struggled to understand this part: what is it that Substack came up with that we did not have earlier? Aren't there a hundred examples out there of medium-sized websites providing a similar infrastructure mix?
    - gregates 1y ago
      Marketing, including paying well-known individuals to switch to their platform. That's funded by all the VC money the smaller fish don't have.
    - kubectl_h 1y ago
      Substack had a few things that worked for it * Patreon kind of sucks for writing / newsletters or else they could have captured part of this market. Medium was supposed to fix this but they had an epic collapse. * Single point where subscribers can manage their subscriptions and preserve a common identity across subscriptions in the comments etc. Again, Medium/collapse. * A rapid adoption of substack by well known online writers with loyal followings. These writers either had their own blogs or were exiting traditional media or getting dumped out by the collapse of online media (gawker network, buzzfeed news, etc). Again, could have been Medium if not for their collapse. * I suspect Substack spent a lot of that VC money guaranteeing 2 years of X revenue for a non-trivial number of high profile writers so they would onboard. Reading this story I didn't realize just how much they had taken over the years (I use to operate in this media space, but haven't in a long time). I'm not sure what the headcount is but that amount of money is staggering and I can only imagine it was all used to acquire DAUs and very little novel technology has been created with it. I think Substacks first 10m/100m (their keep of rev/total rev from subscriptions) was extremely impressive and fast. But also it was a kind of low hanging fruit. There was a market already there for this and Medium/Patreon couldn't capture it. Now if they are really at 45m/450m that is much less impressive. It will be extremely hard to get to 100m/1000m and IMO impossible to get much higher than that with their current approach.
      - socalgal2 1y ago
        > could have been Medium Did Medium have a way to pay authors? Maybe it would have been easy to add but saying "A could have been B if only" I think misses the picture. Yahoo could have been Google if only they'd chosen a different algo. Flickr could have been Instagram if only they'd made a mobile app with filters. Etc... I think it's precisely because substack launched with a way to let readers sponser the authors directly they liked that it took off. Medium had a partner program but that's not the same.
        kubectl_h 1y ago
        I'm certainly not arguing against your point. I didn't work at Medium but I had insight into their operations at the time and they didn't really seem to have a coherent vision to make money 12 or so years ago. My comparison of the two is more around their similar goals and audience, which was giving great (or interesting) writers a home for their projects and audiences and somehow make money. Medium was saying the financial part would happen down the line and it was a can they kicked for a long time. Medium seemed more interested in talking about their technology and aesthetics than they did on figuring out the crucial parts. Substack got it right doing what Patreon (and even Twitch) had already proved, people will pay up front for the writers/creators they love. That said Medium did pay higher profile writers and publications to move to their platform (in some cases quite a bit of money) in a similar way that Substack has, which was to dip into the VC funded bank account.
    - cnst 1y ago
      To me, it seems like they're simply a monetised version of Tumblr, without the newfound censorship that all the other social media companies somehow have to have. I really don't get the whole email thing, though. Newsletters are kinda super annoying to signup for, and then to receive. I've tried the Substack version, and I still don't get it. Even though I do love the mailing lists, but that's not the same as the newsletters.
  - derektank 1y ago
    Ghost exists
  - skwashd 1y ago
    Buttondown already offers this - https://docs.buttondown.com/paid-subscriptions https://docs.buttondown.com/paid-subscriptions
  - akudha 1y ago
    What about https://ghost.org/about/ https://ghost.org/about/ They seem to be doing well, 8.5 million in revenue
- rectang 1y ago
  I wonder how many profitable, sustainable, rewarding medium-sized businesses that have never taken VC money are utterly invisible to HN. “You know, you could just not take VC money.” “… We don’t do that here.”
RamblingCTO 1y ago
VC money and you can't boast to your peers with your monopoly valuation that doesn't have any real merit.
elicash 1y ago
There are already small newsletter businesses that offer basic products.
mcepl 1y ago
You cannot give millions of USD to potential authors if you are tiny webserver-running small business. That’s what the article was all about.

jeswin 1y ago

> It’s as unstable as a SpaceX launch Hate makes people blind. Starship is failing by design - that's just how they're choosing to develop it. The chopsticks video that we saw earlier was very nearly science fiction. And as far as regular launches go, SpaceX has done more successful launches than any company or nation ever. But more generally, this idea of abandoning an app (or product) the moment you encounter people who disagree with you is disheartening.

_Algernon_ 1y ago
>But more generally, this idea of abandoning an app (or product) the moment you encounter people who disagree with you is disheartening. It is a behavior Substack itself encourages by turing itself into a social media platform instead of simply a newsletter provider. Yes, it is useful for building a moat of network effects, but it also forces views and opionions down people's throats that reflect badly on the platform.
randallsquared 1y ago
Abandoning a community the moment you encounter people who disagree with you is how one builds a bubble strong enough to say things like the bit you quoted.
- deleted 1y ago
  [deleted]
- KerrAvon 1y ago
  [flagged]
- hiddencost 1y ago
  [flagged]
- archagon 1y ago
  Why would I spend my precious time wallowing in filth and squalor with some radicalized “influencers” who spout evil nonsense and entirely lack self awareness? I’d rather go read a book and discuss it with some actually intelligent friends.

derektank 1y ago

The network effects of substack seem pretty weak. Authors can use their own domain name and export a list of their subscribers any time. Their value is in providing software that is sticky for writers and solves a lot of the problems of creating and retaining an audience, which they seem to be doing pretty effectively. For better or worse, I don't think substack has much influence on the broader ecosystem either way; it's all down to consumer demand.

karaterobot 1y ago

Here's how little I understand business: $45 million in revenue, earned by taking a totally fair 10% of subscriptions that other people do all the work to get, seems like it ought to be enough. If leadership is trying to scale up to be thousands of employees, or to go public, they are lunatics and deserve to fail. Why not just run a successful newsletter platform?

add-sub-mul-div 1y ago
Greed doesn't have to be the same thing as the ambition it takes to start a company like this, but in practice it pretty much always is.
danpalmer 1y ago
It’s interesting you say the 10% is fair. I think some disagree. In short they are selling web hosting and card payments, which are most likely worth far less than 10%. However, they’re clearly going for being a Brand that people want to publish under. Substack is worth 10% because it’s Substack, not for the tangibles they provide. Now that leads to the question: what do they need to do to be a brand people want to be a part of? Is censorship part of that? Maybe, maybe not. The other interest related piece that is topical at the moment is whether Substack might be worth 10% for card payments alone if certain publications would be unable to use payment providers otherwise. Porn and gambling sites often pay that sort of rate because it’s hard to get a payment provider. Maybe laundering nazi sympathy in with a bunch of tech blogs is worth 10% to them.
Kwpolska 1y ago
Running a successful platform is not enough for VC grifters who funded them, the only thing that matters to VC is growth.
- senko 1y ago
  "Grifters" a bit harsh, considering they used VC money to become successful in the first place (see other comments). Presumably they knew the deal.

barrrrald 1y ago

This post didn't age well – 3 weeks later Substack announced a $100m fundraise at $1.1b valuation. [1] Ana's contention that Substack is "rickety" seems motivated by her conviction that they should adopt a more assertive, aggressive censorship regime, and that "we need a world where a social safety net protects risky writing". There are certainly many interesting questions about the future of media and Substack's business – but the parade of people saying it can't succeed without more moderation keep being proven wrong. [1] https://www.nytimes.com/2025/07/17/business/substack-fundraising-social-network.html https://www.nytimes.com/2025/07/17/business/substack-fundrai...

elicash 1y ago
This post linked to a different article (former Bloomberg reporter) that said it expected this round to be at $750 million ($50 million above the previous valuation). And so yes, that's significantly less than it ended up being, $1.1 billion, but I'm not sure it impacts the argument being made. Except that the multiple would be even greater!
hiddencost 1y ago
[flagged]
- SilverElfin 1y ago
  Yes, censorship. Which is a bad thing. Ideas, even disagreeable ones, should be permitted. Otherwise you don’t have a real democracy.
  - _Algernon_ 1y ago
    That's no longer a justification once you have algorithmic amplification which Substack introduced with its Twitter immitation. At that point they ceased to just tolerate these ideas but to amplify them. At that point they carry more responsibility, and people rightly blame them for it. Free speech is fine. A private company handing nazis a megaphone and not accepting criticism for it is not.
  - 1y ago

dash2 1y ago

I feel ambivalent about Substack's Notes (its version of X/Bluesky). On the one hand, the signal/noise ratio is higher than either X or Bluesky. On the other hand, I can see signs of the social media engagement farming nonsense that I've come to dread. But, I can just click on the "Following" link to avoid it. In fact, I can even set that as my homepage. So, so far, it's not that bad. And I continue to enjoy the diversity of writers; and am much more worried by virtuous scolds than by neonazis.

Invictus0 1y ago

[flagged]

throw_m239339 1y ago

> The problem isn’t just that Substack makes money off Nazis, it’s that they don’t seem to care who they make it from. Ana Marie Cox can move to Medium, they have that "diverse and inclusive" editorial policy she is seeking, we all know how "great" Medium has been doing...

anamariecox 1y ago

In case you thought I might be obsessive for no reason, with some personal history about my long tour of new media stutter-steps: https://newsletter.anamariecox.com/archive/why-i-keep-writing-about-substack/ https://newsletter.anamariecox.com/archive/why-i-keep-writin...