Substack: Chris Best and Hamish McKenzie

29:49Yeah. And he's had this blog for a long time. He had had it for a couple of years, even by the time we came around in 2017 and were paid subscribers. I think he's based in Taiwan, right? Writing this thing out of his bare bedroom in Taipei. And he's just writing about the business models of technology companies. And his model is really simple. He would publish a blog post each week that was his most polished and best work. And that would be free. And then if you wanted more Ben Thompson, if you wanted his view of the world on more things, you could pay a hundred bucks a year and you'd get three more posts by him over email.

30:24And it was a really lucrative business for him. We figured out through napkin math and guessing basically that he was already making more than a million dollars a year from that. And Ben Thompson was telling anyone who would listen, I don't know why more journalists don't try this model because it works really well for me. We even called him up at one point. Yeah, we talked to him about all this stuff. And yeah, he's like, I don't know why more people don't do it. I was like, so what did you have to do? He's like, well, I, you know, I invented the business model from scratch. I did it for a year with no money.

30:53I made my own tech stack and my own cobbled together product and editorial. He sort of like described all of the things that went into him doing it. And he had to be this like triple unicorn of a great analyst and a great writer and a great entrepreneur and a great editor and a great technology wrangler. And we were just like, oh, that's why nobody does this. That's way too hard. He listed on one of his webpages all the tools he uses just to run this thing. And there are like 19 different tech tools that he paid for. Most writers are not technologically savvy and they don't want to waste their time wrangling those different tools.

31:27Yeah, you're a writer. You know how to write something great. That is rare and hard enough. And to expect you to also be this tech genius and this entrepreneur, it's crazy. You should be able to come and type into this box. And if the things you type are great, you're going to get rich and famous. When we come back in just a moment, how Chris learns to push back when people tell him how bad his idea is. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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35:24Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2017 and Chris and Hamish have an idea for a new digital platform for writers. And even as they're talking about partnering on the idea, Hamish, the journalist, is wary about becoming a founder. I knew that that was a stressful life where you could never really switch off. And there would be as many dramas and you're responsible not just for your own job and income, but for whoever ended up working for you and then all your customers and all that kind of stuff. So I was excited to go back to journalism at that time and be plotting my next book and returning to freelancing.

36:04That's what I was really amped up for. But Chris, annoyingly, was coming down to San Francisco every so often in one of these trips. He stayed with me and my wife, I think she was by that point. And once he was excited about that idea after I had prompted him to just invent the new model that was going to save everyone because complaining in an essay isn't enough, he started to go to work on me to convince me that I had to do this with him I had to build this company with him and I was like no no no no no that sounds like a horrible life and I'll just be an a consultant or an advisor and I'll help you along the way and point you in the right direction and he didn't accept that answer and he kept working away at me and trying to persuade me that I had to do this and this is going to be fun and then my wife Steph kind of teamed up with him and agreed that I sort of have to do this because it's too much of a convergence of my interests and experience and the things that I like to do.

37:07Chris, why did you think you needed Hamish so badly? I mean, you know, you were a tech guy and obviously Hamish is a talented journalist and writer, but why were you so convinced that you needed him to start this thing? I mean, I knew nothing about this world. I didn't know the people. I didn't know how they thought. I wouldn't have even known where to start. I can think about things from first principles. And having both halves of the brain, having the first principles understanding, but kind of pairing it with being of that world and knowing the language and knowing the people was actually like the magic that made it work.

37:48so hamish you were so you basically were like okay i'll try this i mean you did not want that life you knew what it was going to entail the like long days the travel the sleepless nights worrying about other people's incomes and you agreed to sign up for this i did and you know i think it's important to mention that i thought that this model that we devised was kind of stupid enough to work it was either it was so simple that it had some obvious flaw that we just had missed for some reason, or it was so simple that it was actually going to work. And if it could work for more than a few people, then I think it could work for many, many people.

38:28And in that world, the difference it could make would be profound. Can I make one point here that I think is really interesting? Yeah, please. You mentioned that thing. It's like, it's so stupid. Like either we're stupid or it's going to work. I definitely remember that. Like the way I would have described it at the time was like, we couldn't talk ourselves out of this idea, but it was kind of like, it was a good idea for a company and a bad idea for an essay, which is how it started. Like you could tell people this thing and they would give you a blank stare. Like I would tell people in my life, hey, we're going to make this platform that's going to, you're going to pay for writers on the internet that you really like.

39:03And they would like look at me like I had horns or they would, they would take pity on me. They would say like, oh, that's, that's so nice. That would be so cool if that worked. But you know, and I'm sorry to be the one to have to tell you this, you idiot, but like nobody's ever going to pay for something on the internet. And people would tell me, people would be like, that sounds great, but I would never pay for something like that. And I devised this like parlor trick where when somebody told me they would never pay for something on the internet, I would say, well, who's your favorite writer?

39:30And they'd say, oh, you know, Guy Raz or whoever. And then I would say, would you pay five bucks a month for that person? And they would say, well, yeah, but that's different. Like that's a special, that's a special case. Like that's, it's, it's, it's so-and-so like they're really good. And so I think the, in retrospect, I think we were onto something that like was a good idea, but sounded bad or like, didn't, it, it, it was not yet in the realm of a thing that people would believe, but it was a realm of thing that people would do. Right. So this was, I mean, so basically you're looking at this and saying, well, if you're creating content and you're bringing people to the platform, They should be, the people doing this should have a guaranteed way of reaching those people.

40:18They should own the connection. It should be their relationship. When you subscribe on Substack, you don't subscribe to Substack. You subscribe to Guy or whoever. Yeah. It's an important point because this is 2017 when you're having the conversation and it's even more of an acute issue now, which is that you might have a million subscribers on YouTube. But if YouTube changes the algorithm and stops delivering your videos to people automatically, it might be really hard to make a living off of that. But YouTube still benefits every time you post or Facebook benefits every time you post Instagram and TikTok.

40:55They benefit because they're more eyeballs and they're more advertisers. And this had happened with Facebook pages at this point. They created a thing where people spent all this money getting people to like their Facebook page. on the assumption that that meant they'd built up an audience. And then they said, oh, just kidding, actually. When you want to reach those people, you have to pay again. Yes. And that had worked for Facebook very well. And by the way, I mean, there were other models, Patreon, right, for musicians and artists and filmmakers. Like, that existed. People were being supported for their work through Patreon.

41:30Yeah, Patreon, I think, is a hugely important company because it changed the culture. It showed not only that people will be willing to pay for content online, they'll be willing to pay for the artist or creator who they most love or trust. And we looked at Medium and learned a lot from Medium and took lessons from both of them where they had struggled or what could have been better and got to benefit from standing on their shoulders to design something like the Substack system. I mean, this was one of the things that kind of went into my calculations here. I was like, what if we made something that had a business model from the start?

42:04And we knew it was, and that's actually important because the thing that we were onto at this point, as it was turning from like an essay into a company that we needed to start, was the big idea of what if you completely change the economics of how these platforms worked? The problem with Facebook is not that it doesn't work, right? The problem with Facebook is that it works too well and doesn't serve the people who use it. Yes, it kills all the newspapers, but it's a massively successful business that takes advantage of the scale of the internet. So what if you could design a new economic engine, a new incentive structure that could harness the scale and network effects of the internet, but then actually paid money to the people who were making the culture.

42:55And at the same time, we had this thing that we could hold in our hand that was like, what if we just made it like a hundred times easier for the next Ben Thompson to do a paid email newsletter? Yeah. So Chris, you're in Kitchener in Canada and Hamish, you are in San Francisco and you obviously you're communicating every day, but Chris, you are on your own starting to build the platform? You're just working on trying to create this thing that would become Substack? Yeah. I mean, it was pretty simple to start. It was just a website that could host some content. And I mean, the thing, none of it was rocket.

43:38Like none of it was technically rocket science. It wasn't like we were building some software that only we could have built. But it was just like the putting it together and having it actually work the right way was the new thing. And I mean, by the way, it turned out to be pretty hard. Like it was, I think we were right about some of the core insights. We got some early breaks that really helped. But it was, it took, there was a whole series of things that we had to kind of like believe and act on for long periods of time that is, it's hard to do. Yeah, and like 2017, writers were not the sexiest customer base in the world.

44:20No one thought they were going to build a billion dollar tech company by serving writers. In fact, people were forsaking writers, forsaking the media, turning their back on that. They'd given up on that. So, all right. So you are building this, Chris. And Hamish, you are kind of trying to drum up potential people to join this platform. And it officially launches in 2017. Before we get to that, up until that point, right, because I think you guys really kind of decide, let's do this in July. So that summer of 2017, you guys are really working on building this thing because you're going to launch it in October.

44:55You probably didn't need a whole lot of money at this point, right? I mean, you had a little bit of money from your time at Kik, Chris. So were you able to use some of that money to just finance what needed to be financed initially? Yeah, I put in a little bit of money to basically like pay the hosting bills. And, you know, we bought a domain and there was but it was sort of like minimal at that point. And given and we've had this conversation with co-founders many times, given that, you know, you're initially kind of this idea that you have in your head. Hamish helps you to kind of refine it.

45:26How did you know you you had some money to put in and Hamish probably didn't have a whole lot of cash to put in because you're a working journalist. how did you guys have that delicate conversation about okay here's how we're gonna you know split the company how did we have it you insisted on splitting that evenly based on past lessons and ideals you developed for yourself since so that was it and we're just gonna split it yeah that's right you well what happened is that my grandmother had recently died and passed down some money i was I had no money. I paid a check to paycheck with my wife in 2017.

46:07Yeah, like you're probably putting in$10 ,000 at that point for you would have been just like. We couldn't do that. We couldn't do that. And this is why Steph's support was so important. She was okay with the risk. And luckily I had this inheritance money from my grandmother that I spent all on. I spent all of it to just cover my salary for a few months before we raised a proper round of money from more friends and family that could help us start to pay ourselves a little bit of a salary. All right. So that summer, you're working on it. And by October of 2017, you're ready to officially launch.

46:42And you've got this guy, Bill Bishop, who you knew him from your time in Asia. Hamish, he had been writing about China. and he agreed to because i guess this was a free blog that he was writing and he agreed to join substack and start charging yeah he accidentally had a really successful free newsletter he'd been running it for five years he'd never really made money off it except for doing a couple of donation drives he was paying a bunch of money to send the emails yeah and so bill had been talking in his newsletter that i was a reader of he had been talking about how he's going to introduce a paywall soon he's going to introduce a paywall soon he'd been talking about that before we started substack and i'd been noticing that he kept talking about it but never getting around to it and so halfway through his process there i jumped into his inbox and said my friend and i are starting this thing which is kind of like we'll take care of everything for you this thing that you're describing that you want to do so you can just worry about the writing would you be interested in being a guinea pig for this and he luckily said yes and so we got to launch with kind of the ideal first customer the perfect first publisher that happened in october 2017 and did you at that point chris moved to california or were you still in canada i was still in canada we launched bill and we'd also applied to yc so y combinator you should talk about how you're a Paul Graham fan and that was part of your inspiration for writing these essays.

48:14I'd been a Paul Graham fan. I'd been the founder of Y Combinator, obviously. Yeah. Yeah. And so we applied to YC with Substack. And I remember the timing because on the application to YC, it said, how much money are you making? And we said, zero dollars. And then between the application and when we came in for the interview, Bill's launch happened. And we had no, I had no idea what to expect, but he made like six figures his first day through this like duct taped, like stripe setup that I had built in the preceding weeks. But we just woke up and we were like, huh, like, I think this is, this seems good.

48:51Is this good? This seems really good. All of a sudden, more than a hundred thousand dollars of revenue, annual revenue based on his, oh, his single. In like a day. It was just like that. It just like you watch, it's like boom. boom. And so we went a few, like, you know, a few days after applying, we flew down and went to the YZ interview and they were like, you know, it says here you're making zero dollars. And we got to say, oh, actually, and I think it contributed to a sense of real momentum. And it was, it was sort of funny because our advisor, Jared, looked at that and he was like, oh, this is going to be easy for you guys.

49:23Like you just, you have one customer that did this, you just need like four or five more of these and you're going to be like sailing off to the races and raising money. It's going to be so easy. Meanwhile, it took us years to have that kind of success again. It was very, like, we just had that perfect, you know. Not quite, not quite years, not quite years. It was not quite, but it was much harder than we thought it was going to be. It was much harder. It wasn't as simple as get the next four Bill Bishops. There weren't the next four Bill Bishops, but it gave us such a burst of confidence that we were on to something that it sort of helped sustain us, I think, through the next phase.

50:00All right. So you get into Y Combinator, obviously big deal because now you're going to get exposure to big time investors and you're going to get mentorship. And I'm assuming that's when you move to California, Chris. Yeah, I came down for YC. We did the thing. Okay. So you're now together. In 2018, you did raise some seed money and you got some interesting investors who, who I guess were interested in, in this. And I imagine Y Combinator being part of Y Combinator was certainly helpful. Yeah. The YC, we did the YC demo day thing. And I think I would characterize us as being kind of like, we were not one of the, obviously the hot companies that everybody's clamoring for, but we were also, you know, we raised around, we were not one of the struggling ones.

50:47We were kind of just like middle of the pack. Yeah. Yeah. I remember on the first demo day we did, which is the one that's for YC alumni, Emmett Scheer came up to me and he said - Emmett Scheer, co-founder of Twitch, who was on the show a couple of years ago. Yeah. He's like, I look at you guys, I'm really excited about this idea. I think you guys are like Twitch, but for journalists and I want to invest. And so we got him as an early investor. And then there's a bunch of people who sort of saw the same thing around that time. And so by the time we finished YC at the end of March, we had 7 ,000 paid subscriptions across the network that we could point to and say, look, this thing is working.

51:26This thing is going somewhere, at least somewhere relatively interesting. Well, let me ask you about the business model and the math, right? So the model, if I understand it correctly, from the beginning and even until now was the writer gets – basically, you guys get a 10 percent commission or whatever. Plus there's going to be the payment processing fees, which is another 2 percent or something. And so effectively, the writer is getting about, let's say, 85 to 87 percent of the total revenue. you. How did you work? I mean, that math is like, by any account, very beneficial to the writer, right?

52:08They're getting a good deal here. Like if you compare that to any other platform, right, the writer's doing really well. But it means that your margins are really thin. Like, how did you come up with that math instead of let's say 20 % or 25 %? Well, it's interesting. You know, it starts out as a really great deal. And coupled with that, By the way, everything else is free. So we're not charging you SaaS fees to host a website, to send email to any size. Like everything else costs nothing. We wanted to be in a world where we would only make money if the people actually made money. I didn't want to be in the business of like selling people a dream of doing this thing.

52:49And they would pay us, but then they wouldn't make money. And well, tough for them. And then it's a great deal at the start. And then you start to get, you know, by the time you're making millions of dollars a year, that 10 % starts to look substantial. You start to think, wow, that's, aha, I see. Right, but that was going to take a while. And I think even now, it's a very small number of people who are making over a million. A small, you know. Not as small as you might think anymore, but it scales, right? Like we really want you to succeed. At the very start, we only handled, only paid newsletters, only paid subscriptions.

53:23And then we very quickly figured out we had to have, if you're going to have a paid newsletter, You need free subscribers as well, and we have to handle those. And then we very quickly figured out if you're going to become a paid newsletter, you're going to start as a free one. So we should make it so that anybody can use it for free. And that became like a big piece of how the top of funnel kind of worked for us. All right. So here's my question. Initially, right now, this is – you're getting some momentum, right? Why Combinator? Obviously, there's – people are starting to believe in you. But I just want to be clear about something to people listening, which is Y Combinator, we know about the Coinbase's.

54:02We know about the Airbnbs. We know about the Instacart. But most of the companies that come out of Y Combinator don't end up making it. I mean, the founders might go on and do something else. So just being in Y Combinator is a guarantee that it's going to work. And so we see these headlines every day. So-and-so company was – your own company, Kik, was valued at a billion dollars at one point. Knowing now you are the CEO of this company, you've learned a lot of lessons because you were the CTO of that business. What was the sort of the primary kind of lesson that you took from that experience that you were like, we're not going to do that here?

54:40Because I saw what happened and it ended up going south. I think it's probably two things that I think about a lot. One was just have a business model. It seems fairly straightforward. It seems unkind in retrospect to say, oh, we just had this theory of like, we'll get a bunch of users and then we'll figure out the business model. But you have to remember that worked for some of the biggest companies in the world that worked for WhatsApp who sold for$22 billion. So I don't think it's like, I don't say that as a criticism to say we were stupid for thinking if we got a whole ton of users, we would be able to turn it into something that was not a ridiculous way to operate.

55:20but it did leave me determined to operate in a different way this time and to have an idea from the get-go of like what is this business and then the other one that I think about a lot is like there's this saying in Silicon Valley that is keep the main thing the main thing and we we went through this at Kik where I think even after like I think we were always kind of unmoored we were always thinking about like and because we didn't have a business model we're like what are we going to turn this into. But there was a lot of kind of like trying to figure out the next thing instead of making the main thing actually work.

55:56And I think with Substack, we're trying to do the opposite of that. We're trying to have, there's like a core of what Substack is and like, that's the thing.

56:07When we come back in just a moment, Elon Musk comes back into the story, this time to make Chris an offer that he can and does refuse. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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58:57Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2019, and Chris and Hamish have built a solid scaffolding for Substack. Writers offer their content for free or for money. In Substack, it's a cut of the subscriptions. But now the question is, how do they get more writers? We looked for people that we thought weren't being well served by the dominant media structure, but actually had interesting things to say and had a devoted audience. And so it wasn't necessarily the people with the largest audiences. Maybe they'd have a smaller following on Twitter. Twitter was a common hunting ground in those days.

59:34but the people who were following them were really paying attention to what they had to say and we developed this tool that allowed us to put like fire emojis beside the names of the ones who had these really devoted audiences and so if you had like a richter scale you have three fire emoji was 10 times as good as two fire emoji yeah so if you had one fire emoji you're like your your your audience didn't really care that much about what you're saying if you had three fire emoji okay, like we're pretty sure you're going to work on Substack. If you had four FireEmergy, we knew you had the kind of audience that would really respond well to you going independent and would have this direct relationship with you and could help make you get rich with this model, basically.

1:00:17And let's say a prominent writer, I mean, has a million subscribers. They really just need a fraction of those people to pay them a monthly fee to make significant money, right? I mean, the math is clear. Totally. It's surprising how much we had to make that obvious to writers, actually, over the course of the years. They're used to dealing with huge numbers in terms of audiences, but getting paid pennies as a result, whether by an employer or through the revenue share agreements of those other platforms. And we would have to say to them, look, if you get a thousand paid subscribers and they're paying you 50 bucks a year, do you know how much money that is?

1:00:55And they're like, look, that's enough to live on. And it wasn't always obvious to people. People didn't take that step. And then we're like, if you get 10 ,000 paying subscribers, paying 50 bucks a year, that's enough to actually like really make serious money and change your life. Half a million dollars. Yeah. That's no joke. It's surprising how much you have to do that multiplication for people. Like it's not that they can't do it themselves, it's that they won't do it. And the number of times I've had a conversation that's like, you know, so-and-so has 10 ,000 subscribers paying. Uh-huh. They're charging a hundred dollars a year.

1:01:23Uh-huh. So they're making a million dollars a year. What? And it's sort of like, you know, you could have got there yourself, but you sort of have to like point out what's happening. Very fortuitously, you had raised money in the summer of 2019, which would come into great use, I'm sure, by COVID. You raised$15 million, it was led by Andreessen Horowitz, but you've got the pandemic. And this really is a turning point year for you. I mean, in many ways, I think you would both agree because of circumstances beyond your control. On the one hand, you've got the pandemic. A lot of the social media companies were, as many of them have admitted, cooperating with the government to de-platform specific people who were talking about who were opposing COVID vaccines, for example, or people who were writing about what was perceived to be misinformation.

1:02:16Right. And so there's this kind of all these things happening in the background. On the one hand, the social media companies are deplatforming and banning people. On the other hand, prominent journalists are losing their jobs or are feeling under pressure. And so, yeah, you start to get people coming to your platform. Matt Taibbi, Andrew Sullivan, Barry Weiss, leaves the New York Times, starts a sub stack. It was a big pull forward for us. I mean, we grew something like 6X in that first year of the pandemic. I had this speech that I would give to people at the time. I was like, think of Substack as your getaway vehicle.

1:02:57You don't have to get in it right now, but like fuel it up. Have the engine idling, like create your account, like claim your handle, have this thing ready just in case something unexpected happens. And if you're in the media in 2020, that wasn't like that didn't sound crazy to you. And then sure enough, you know, over the, we had that conversation with Andrew, it was expected to be months. You know, he calls us after a weekend and basically says, you'll never guess what happened. And we were like, you know what? We actually might be able to guess what happened. And, you know, he was out. He'd been fired.

1:03:28Well, he resigned under jurors. Yeah, sorry. I shouldn't say fired. This is in 2020. This is in 2020. And there was a moment where a lot of those kinds of people you're talking about, but the people who are, you know, the recalcitrant voices that don't like being told what to say and were kind of like not going with the program were both the people who are selectively the most interesting to read, the people you actually would care about and want to fire. Or sorry, you'd want to subscribe to them if you're a reader, but there was a moment where a lot of them got either fired or pushed out or had some kind of moment where they were suddenly unwelcome in the institutions they'd made a home in and invested in.

1:04:13And so we had done a bunch of things like having a stance on freedom of the press and on how it was the right way to approach content moderation that were very non-obvious and non-consensus at the time, that we took a lot of heat for, that we would not have been willing to take a lot of heat for, that we not have a theory about what was happening and what mattered and why, that set us up to be the platform that those people could trust when that moment hit. I mean, a big part of it is the business model, right? Like the fact that we was paying subscribers, we didn't have advertisers who were getting spooked and boycotting us, bringing us under pressure.

1:04:58I think we were not yet at the size where we were getting the government attention than the Xs and Metas were of the world. And let's be honest. I think objectively, voices that all of us here could agree were objectionable, like people who are racist or spewing conspiracy theories that we may find objectionable. There was a lot of pressure to deplatform people who I'm sure even both of you personally thought, I'm uncomfortable with this person. So how did you do the gymnastics in your brain at the time when the culture was somewhat different to say, nope, we're still going to let that happen?

1:05:41Well, the conversations at the time, because we were confronted with this kind of thing in small ways and then bigger ways and then more public ways that led to us reaffirming our belief and our position on it. and cause us to do things like write down and publish our view of this, like why we have a hands-off stance on content moderation, which doesn't mean no stance at all. We still protect the platform of the extremes in line with the First Amendment. No incitements to violence, no spam, no doxing, et cetera. You say, et cetera, so just to be clear, no incitements to violence, no spamming people, and no doxing.

1:06:16So you can't expose where people live or personal information about them if you don't like them. Those are red lines. If you do any of those things, you're off. Right. And so our view of the world was not that the way to address these problems was to devise more sophisticated content moderation. We'd seen the attempts of the other social media companies to do that. They've invested billions of dollars on this. They come up with these policy documents that are hundreds of pages long. Yeah. And it doesn't appear to us like it has actually helped misinformation problems or it's helped reduce the level of harassment or it's helped increase trust in the media ecosystem writ large.

1:06:56Our view of things is the way to solve these kinds of problems, address them or mitigate them is through changing the business model, changing the kinds of behaviors and content that can succeed on the platform. And so the theory is like, people are writing a lot of nonsense. They're just not going to succeed on Substack because it's not an outrage machine like social media. It just doesn't work in the same way where that actually is successful. To me, that's probably too rosy. I sometimes think of Substack as an index fund of culture. There's like whatever people are willing to pay for, whatever people are interested in, there's going to be that thing.

1:07:36I don't think our role as a platform on the internet should be to tell you what's right and what's wrong or who to trust and who not to trust. And it's a seductive idea that it should be that role. And a lot of platforms took that stance and it just didn't work. But you guys have responded at times. Like there was an article that you know about. It was written in Atlantic in November of 2023. It was called Substack Has a Nazi Problem. And this writer identified, I don't know, 15 or 20 newsletters that use Nazi symbols. You guys did ban some of these newsletters. So what was the reason behind that?

1:08:16So, I mean, our stance on this is, look, we have a set of content policies. If something comes to our attention that is against the broadly applicable substact rules, we're going to take action. But we're not changing what we enforce based on pressure. Because as you know, I read a lot of sub-stackers and I really – and I pay for a bunch of them. And based on what I see, I still feel like the best or most prominent writers tend to be iconoclasts. Now obviously there are some who are on the left. But I find that the ones that I seem to feel like are more successful are like maybe on the sort of the libertarian center right.

1:09:02Is that fair? Would you say that's fair? You should look at the leaderboards of Substack, which is ranked by revenue. And in the US politics category, for example, you'll see a diversity of perspectives represented. And there's like some of the top ones are like very hard on the left. Some of them are very hard on the right or libertarian. I think there's a true mix, but I actually don't know that one dominates the other. Okay, let's go back to our old friend Elon Musk who Hamish. you first encountered back in 2014, I think, when you started to profile him and then would eventually work for him.

1:09:40He comes back into your world less than 10 years later. He buys, of course, Twitter, which becomes X. Now, I think fair to say one of the, if not the most influential sort of social media platform in terms of shaping policy because it's clearly read in the White House. And he buys it. And one of the things that happens in 2023 is you guys launch Notes, which is sort of a short feature where you can do short-form content, you know, to your followers on Substack. He basically says, look, this is a Twitter clone. And he kind of, you know... Completely flips his shit? Well, he... Is he fire a shot across the ballot?

1:10:28Like he basically says, anyone tweeting out a Substack link, we're just going to block those. Even mentioning the word Substack was briefly – if you search for Substack, it wouldn't work. Yeah. To clarify, there are plenty of people who – to link their Substacks on Twitter or X now. It's very common. And so that's obviously no longer the case. But let's just talk about – and, Hamish, I would love to hear your take on this because he's somebody you really did admire for the work he did around – around electric cars. And I think that you felt this way, but all of a sudden, you're on his radar as an enemy.

1:11:05And that's no joke. Yeah, it's an unusual and uncomfortable experience. I continue to believe that about SpaceX and Tesla and some of the other things he's been involved in. He was instrumental in starting to open AI as well. These are major contributions to the world. But that doesn't mean that he doesn't have some personal shortcomings and social shortcomings that show up in other ways so it sort of sucked at the time i think he misunderstood and misinterpreted the thing we're doing by launching this notes feed which is only similar to twitter in the way that an electric car is similar to a gasoline car the steering wheel looks the same and the wheels look the same and there's a windshield etc but the thing that powers it is ultimately creating a totally different product that is better for the end consumers and better for the world and the sub stack feed is not twitter but it's this subscriptions machine basically that helps the independent writers and creators of the world find new audiences and retain them and just just to slightly back up for a second um i mean i should mention that that right around this time uh elon musk actually made an offer to to buy you guys out and i think i think the way this started is that right before you released notes uh you called him like and and you guys or let him know that you're going to do it as a courtesy i guess and and what you had like a call with him and told him that yeah we gave him a heads up as a courtesy that we're launching notes the next day and that you know some people are going to perceive this as a twitter competitor but we don't see it that way i see and he responded by getting chris on a call and saying to him well how about twitter acquire substack and you i'm looking for a ceo to run the company this is before linda uh before linda yaccarina like within weeks actually yeah and and so i'm looking for a ceo to run the company i don't want to be the ceo so how about you come and do that and i'll be the chairman.

1:13:14And how about you think about that? And so we went on an accelerated process of thinking about that. That seems like an interesting, I mean, an interesting offer, right? He's saying, hey, we'll buy you. And at this point, you know, you'd raise some money and, you know, you're doing well, and he's probably going to offer you a premium. And you could be the head of the whole operation. What did you think, Chris? I guess I tried to imagine that playing out. And I didn't think it would be what I think of as like a CEO role. Like he runs that place now, he makes all the decisions. He's, you know, to my mind, done a lot of things that make sense from his perspective, but would not be what I would see as supporting the cause of free speech or as a, you know, a neutral, independent platform.

1:14:08I got to say, I mean, it's, it was interesting right it would have been like one of the most interesting crazy things to to like contemplate doing but for me ultimately i didn't think it would let us make the thing we set out to make this is on the eve of launching notes and he had saying like well do you want to come in and do this and be part of twitter and we're like hang on we're not going to talk about that right now we need to focus on notes and the next day we launched the notes there's this huge reaction on twitter about Substack being the Twitter killer now. I think he took that launch as a no, which is fair enough.

1:14:44Yeah. And then that's when the bad things happened. And the bad things were him sort of... Him nuking Substack. Yeah, suppressing Substack links, making accusations about how we're using the API. Yeah. We had been using for, since the start of Substack, we'd been using the Twitter API. So you could link, you could sign in with Twitter, you could link your Twitter, and he got really mad that we'd been using this API and sent me a bunch of threatening stuff saying, why are you using this stuff to blah, blah, blah, and got quite angry at me. And I guess at the time, I mean, just to put it in context, I mean, he was, because of the changes he had made at X and sort of the media narrative, and look, you know, I think some legitimate, certainly legitimate blowback and criticism, they were struggling.

1:15:35They were not – there were no advertisers. They're losing advertisers. They were hemorrhaging cash. A lot of people were like, what did he do? Why would he buy this for$44 billion? Why would he buy – now, of course, everyone's saying they're reversed. They're like, look, he's got 200 million followers and he's the most powerful – Basically runs the country. Right, in one of the most powerful voices in the world. So it was a bargain. But at that time in mid-2023, that was the narrative. So I guess from his perspective, he was probably feeling threatened, right? And were you guys worried that those decisions could have a negative impact on your business?

1:16:15I think he overestimated how negative that impact would be. Like he thought he could kill Substack. And he said as much to me. He said to you, we can bury you. Yeah. There would have been a time in Substack's history when that was true. Like if this had happened in 2019 or 2020, like, yeah, I think that really would have like set Substack back a lot. But by the time it went down, the share of Substack traffic that was coming from Twitter had been on a steady decline for years. And I think he thought that it would be like he sort of had the ability to crush us. Basically, it sounds like the only course of action was to just let it pass.

1:17:00It was going to be painful on a certain number of levels, but you just eventually would just pass. Yeah, I think once we did that launch, we were sort of we were committed. So interestingly now, 2025, when Twitter's fortunes have turned and Substack obviously has also grown and is successful, he actually – I've seen him tweet links to Substack pieces. So clearly not an issue anymore. um as of the end of 2024 you had it was reported that there were about 35 million active readers and about 4 million of those people were paying subscribers um probably a little bit more now by the time we're talking i think we can say there's over 5 million now all right 5 million paid subscribers paid subscriptions to be totally accurate it is distinct from subscribers and And that's bigger than, I mean, the Washington Post, the Atlantic, the New Yorker.

1:18:03There's a narrative that you often hear, and I'm sure you've heard from people who really are skeptical of mainstream media organizations. And the narrative is, look, they lied about the Hunter Biden laptop. They lied about COVID restrictions. You know, they told us that there was no lab leak. Like, do you guys think that as we see the influence of big media organizations, the CNNs, the New York Times, the Washington Post's decline, do you think that they're partly responsible for that? Or do you think that it's just that, you know, the business model doesn't work anymore or maybe a combination of those things?

1:18:45I would say it is a symptom of the model, a symptom of the structure, rather than ideological preferences of these publications and the people who run them. And so while I think social media has created opportunity for the skepticism to arrive, it's actually created a market for kind of conspiracy theory against the dominant media. I think it's actually more of a symptom of the structure of that economy. and that in this dismantling of that structure that social media has wrought, there is a whole lot of reorganization and confusion and volatility that is waiting for order to be imposed upon it again in a new way.

1:19:24But that's not going to look like the old system. It's not going to look like a few central pillars who get to be the ultimate sources of truth. It's going to look a lot more distributed. Substack is not yet profitable, which is not unusual. It's going to take some time. Based on your experience at Kik, Chris, you know, right, things can always go south. And obviously you don't anticipate it, but it can always happen. How do you protect the future? How do you build, let's say, the proverbial moat around Substack? There are competitors. You may not consider all the companies like Patreon or Ghost or Medium or Beehive or, you know, some of these other even HubSpot.

1:20:12You may not consider those as necessarily as competitors. But how do you make sure that, you know, the momentum continues and what happened to kick doesn't happen to you guys? You just worry about it very hard. Well, there's two things I would pitch. One is, you know, the advantage of having a business model is you can be in control of your financial destiny. And so we're not running the company to like turn a profit. But the thing that is true, and we've kept true pretty much the whole time is we don't need to raise money again. We're not on this clock. We have like, we are in control of our financial destiny.

1:20:53You have how many employees now, by the way? About 100. Okay, so you're small. I mean, it's small but efficient, right? Because in terms of what's generated, it just takes 100 people to do that. Yeah. But this is part of it, right? It's like you want to be in control of your future. You don't want to be, you know, the best time to raise money is when you don't need it. And so you want to make sure that you're always in that position where you have a path to accomplishing your goals that is not like, you know, if it's possible to build a business this way, which for us it is, It's better to build it where fundraising is an accelerant but not a necessity.

1:21:31So my industry, right, podcasting, has changed so much since it began, you know, back in the day where you had to plug an iPod into your computer and download some weird wonky thing. You know, there are people like Mark Maron and Joe Rogan in the early days, Adam Carolla. Now it's a massive business. And so it's changing, right? The whole – and this is natural and normal. How do you see the Substack model changing? I mean, right now, most people, they might subscribe, they might pay for it, or they might not, but they're getting a thing to their inbox, a letter. There are some people who are also doing audio, some people who are making sort of these videos.

1:22:10So what does it look like? What is a successful, like, Substacker going to look like in, you know, five years from now? there's a lot of other platforms and networks that are built around a format right you know facebook does text and instagram does pictures and snapchat does disappearing pictures and podcasts are for audio and medium is like there's all of these formats other things are built around formats sub stack is built around you it's built around the direct relationship it's built around owning your audience owning your work having your own space on the internet and so we are already live in a world where you can write, you can make a podcast, you can make a video, things that you used to need a studio and special equipment and a team to do are going to become able to be done automatically.

1:22:56You're going to be able to make a very high quality audio video thing from the palm of your hand. And, you know, the thing that we, we want to do in Subsec is just bring all of that power to the people making stuff. All right. When you guys think about your whole journey, right? And, I mean, even the fact that you met, you ended up working for doing some consulting work for Kik Hamish and you were on your way out, Chris. And then you started this thing, which really was kind of weird. And I don't know if – I think a lot of people were skeptical. They were, as we know, as we heard. But now that you – where you've landed, 2025, you're eight years into this thing.

1:23:35how much of where you are now do you attribute to the the grind and the work you put in and how much do you think had the success of it so far has has had to do with just luck and circumstance feels like a yin and yang thing to me totally inseparable that the luck has to go with the talent and talent has to go with the luck and the greatest successes come when those two elements are perfectly in a mutual dance with each other yeah when we're starting the company it was the the two of us and we got the opportunity to build this thing and it started to show some early signs of success i said to chris like how can we get to do this how come like not everyone else is trying to like build this kind of company or takes advantage of this like very obvious thing and these like dynamics and his answer was actually similar to what you said in your question was like not many people have the ability to do this thing.

1:24:32Not everyone happens to be in the right position to do it. Chris? Is it luck or is it hard work? I think it's mostly a third thing, which is just doing it. Most people don't do the thing. Once you decide to do it, you need to work hard, you need some luck. But most of the great things in the world that don't exist are not because of a lack of talent or because of a lack of luck, but because of a lack of people setting out to do hard things. That's Chris Best and Hamish McKenzie, co-founders of Substack. By the way, Substack has become the go-to launchpad for a new generation of media brands, including some big ones like the Free Press and the Dispatch.

1:25:19Both sites, not surprisingly, were founded by veteran journalists who left big companies to move to Substack. The latest, former Washington Post columnist Jennifer Rubin's publication called The Contrarian founded just days after she quit.

1:25:56by Neva Grant, with research help from Iman Ma 'ani. Our engineers were Patrick Murray and Jimmy Keely. Our production staff also includes Catherine Seifer, Casey Herman, Alex Chung, Sam Paulson, Chris Messini, Carrie Thompson, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

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