Founder Mode: Chris Best, Founder & CEO, Substack

0:00I'm Jessica Livingston and Carolyn and I are the social radars. I'm just kidding. You're supposed to laugh because that's how the intro usually goes. It's a recording of me. But of course, we are here live today in front of an audience of Y Combinator founders, alumni who are here for the Y Combinator founder mode retreat. And I'm delighted to have an audience for the first time. Right, Carolyn? It's excellent. We're very excited. Yeah.

0:33And we are here today with Chris Best, the founder and CEO of Substack. And I am so excited to talk to you today, Chris. Thanks for having me. Because I don't know much about Substack. Because you went through Y Combinator in winter 18. Yes. After I had moved to England. So I can't wait to hear your story. What I'd like you to do, if you don't mind, is telling the audience what Substack is. for anyone who doesn't know? Oh, God, this is the one question. It's so hard to answer. Substack is a media network. It's a publishing platform for independent creators. And increasingly, it's a place you can go and find all the smartest and best independent voices in the world.

1:14Everyone seems to be using it. And there's so many interesting things found on it. But tell us how you got started. So I've always been an avid reader. Not an elevated reader, but an avid reader. and consumer of media, and I've always believed that what you read matters. It's not just a way that you spend some fraction of your life in attention, although even if the media you consume was just the time you spent, that's important enough. But the media you consume, and especially what you read, shapes how you think, shapes how you see the world, and changes who you become. It's like you're training data.

1:51And so great writing is this valuable thing. And after I left my first startup where I was a technical co-founder, I was taking some sabbatical. I was taking time off. I was seeing my friends and family and reading books and learning to fly airplanes and all the things you don't have time to do if you're running a startup. And so naturally, I was like, I should write. How hard could it be? I know how to type. Like, I have thoughts that I'm very impressed with. And I started writing what I thought was going to be an essay or a blog post sort of outlining my frustrations with the media economy on the internet.

2:26Basically, this screed that says, wah, wah, wah, you know, the internet came along and smashed all of the business models for culture, and these massive internet-scale networks that have taken its place are phenomenal businesses, but they're driving us fucking crazy. Wah, wah, wah, goes this essay. And I wrote it, and I sent it to my friend Hamish, who's in the audience somewhere, who's my co-founder now, who's actually a writer. He'd been a journalist. He'd written books. He was lead writer at Tesla for a while. And I was like, what do you think? And he let me down very gently. You know, he said, okay, it's 2017, Chris.

3:05And your thesis is maybe newspapers are in trouble. And maybe Facebook is not an unalloyed good. This is not quite the original, you know, brilliant thought. Like, we know this. This is known. This is not going to come as a shock or as a novel insight to anyone. But the more interesting question, like here's how you could improve this essay. Add a section that says, so what do you do about it? How could this be different? Given that these technological shifts have happened, and let's assume that it's played out in exactly the way you're complaining about, where do we go forward from here? And we started arguing about that, and that argument turned into not a finished essay that was any good, but into a company that we built.

3:47What were the first things that you did? You said, okay, that makes sense. What could we do? Then what did you do? So this is our story of what we did, not what I would necessarily recommend that anybody do. But the first thing that we did was write a manifesto. Oh my gosh. Okay. And so Hamish started writing the manifesto. We worked on it together. And I started writing the little blogging software that was going to host this manifesto. Because we're not going to post our founding manifesto on somebody else's software. That would be ridiculous. And you are a programmer by trade. I'm a programmer.

4:20I was a technical co-founder at my last company. We sort of built the things. And so we did that. We wrote this manifesto and I stood up this very simple blogging platform and we published it. And somebody that Hamish knew from his journalism career read this manifesto and said, hey, I think I need this. Like, this is the thing that we, you know, I've been writing this email newsletter and I've been wanting to go paid like Ben Thompson does. But I can't kind of be, you know, I can't be bothered to figure out how to connect all the pieces. Because we'd sort of, at this point, the idea for Substack was both kind of this sweeping, very grandiose idea that I've been trying to put down in this essay of like a new economic engine for culture that creates a new incentive structure that has better emergent outcomes and blah, blah, blah, blah, blah.

5:08That was in your manifesto? It was not very well, but the energy for all of that was there. Did you call it Manifesto? We referred to it as a manifesto among ourselves. We had the grace not to put manifesto in the title, I'm pretty sure. That's what I was wondering.

5:26So we had this very grandiose idea, but we also had this very simple kernel to begin with. We're like, okay, the smallest possible instantiation of this harebrained scheme is like a service that makes it dead easy to make a paid email newsletter because that is the smallest instantiation. People are going to be able to use the internet to go independent in a new way. There's a different business model. There's already people doing this. Their incentive structure is different and better. They want to make things that cause people to fall in love with the work they're doing and want to retain and give them value rather than just get as much attention as possible.

6:01And that's where we started. We wrote this manifesto. We got our first customer. We applied to YC. We had really good timing. Can I ask a quick question about Hamish? Because I believe he was a writer at Pando Daily. Might he have been creating this for his own use? Like, did he want to leave and be an independent journalist? You'd have to ask him that. I certainly think he was creating something that he himself wanted. Like, he knew he's a writer. He lived this thing. He'd gone and written a book and had the heartache of doing that. He'd been trying to craft a career as a professional writer and journalist.

6:36And so he was the class of person that was going to be the initial customer for this. I don't know whether he planned to quit and go start his own at some point. He hasn't yet. And if he still has plans, he hasn't told me. Who was your first user? So our first real user was this guy named Bill Bishop, who wrote a newsletter called Cynicism. It's a terrible pun. and it's a newsletter about China for like an international business and government audience

7:07and he'd like, he wanted to go paid with it. It was like widely respected and we just, he's like, yeah, okay, if you want to build a thing that lets me charge for this, you can build it and so we applied to YC with this idea. We put on the application form, you know, we're making$0 in revenue and then between the interview or the application, the interview, we launched this first customer bill and I think he made like a hundred grand his first day. Really? And I was sitting there on this like hacked together, like, you know, light stripe wrapper that I'd written. And I was like, is this good? I think this might be good.

7:44And so we show up for the YC interview and they say, well, it says here you make zero dollars. And I said, ah, I have an update on that. Like, here's what's happened. And very memorably, I think it was maybe Jared who told me oh you got that you got one customer if you just get like two or three more like that you're gonna be golden like this is gonna be you know you're sailing do you remember this Carolyn you were in I was in the interview and Jared and Dora were also in it and I don't actually remember this okay but I went and read I mean I went and looked at it and we were all pretty excited about you guys so it must have been like super positive that you had glad to hear these updates how did this writer make a hundred grand well cuz Because he'd been doing it for years.

8:23So he was like, there was probably like five people on earth who were like the perfect early customer for this thing that just already needed it so much. And so he was like, he had all these users who had wanted to pay him. So it wasn't he was starting, it wasn't he was growing. He was like, he literally just sent them an email being like, this costs money now. And they're like, here's the money. Wow. Wow. And how did you get him? Hamish knew him. And we flew down to DC and like talked to him and convinced him and brought him on. And of course, they're like, oh, you just got to get two or three more like this.

8:54He was our biggest customer for years. We did not taste success like that again for many years. And I sometimes joke, you know how they say that professional gamblers often start their career with a winning streak? And of course, that's just selection bias, where people who start their career with a losing streak don't become professional gamblers. I kind of feel like Substack's like that a little bit. Like, we had that early win. We were like, oh, this is going to be so easy. Like, off we go. And it did not turn out to be that easy. but that initial push gave us a lot of courage to go for a long time.

9:24So you apply to YC, you get accepted. Do you remember anything from that winter that was pivotal for Substack's growth and success? There is one thing I remember where every week we would meet with Jared, and he would say, have you launched it yet? And we would say, well, no, we have good reasons why. Because at the time, if you wanted to make a new substack, I had to input it into the database. I was like, yeah, talk to me, and I'll launch for you. And he's like, have you launched it yet? And I would say, well, no, but here's why first we have to blah, blah, blah. And eventually, he just completely shamed me into it.

10:03He's like, you guys are being complete idiots here. Launch your goddamn service. That was important. Had we not done that. Tough love from Jared. I mean, he said it. He did the gentle thing where he causes you to realize yourself how much of an idiot you're being. And then we did, and if we hadn't launched it, it wouldn't have worked, I'll tell you that much. Did you launch that during the three months? Yes. Okay. And then did you do okay at Demo Day? Were there people that were interested in it? Yeah, there was people that were interested. I kind of feel like we're maybe like somewhere in the third quartile.

10:36Maybe we're the median company in our batch at Demo Day. It's sort of my emotional recollection of it. I have no data on that. So we were like, it was good. We raised a round. It was a good thing. We had, you know, there was Believers, but we were not one of like the hot companies. I mean, we're still not. There's still companies from that batch that are crushing it. Then tell us about like sort of the next biggest thing that happened in your growth, because you're huge now. Yeah. I mean, there's just been a, there's been a series of eras, right? So I mean, leading up to demo day, I remember we, we didn't have a group subscription feature, but there was one customer that was selling a lot of group subscriptions.

11:13So we just manually went and sold a bunch of group subscriptions to these like bankruptcy firms in order to make our like demo day numbers. That was pretty fun. And then we were just grinding for a while and trying to like get people, you know, get people to join, you know, convince early customers to start and become sort of lighthouses and then sort of tip them over and sell them on the religion of this thing that we were doing. We ended up getting preempted in our Series A kind of unexpectedly because we tried to recruit Andrew Chan to write for Substack. Because he'd been at Uber, he had this really good blog, and we kept trying to recruit him to come work at Substack.

11:52Eventually he joined Andreessen Horowitz and called us up and was like, okay, I'm not bringing my blog over, but do you want to come talk to us? We were like, no, leave us alone, we're busy, we don't talk to investors. He's like, oh, come have dinner with Mark. Come do the thing. And so we ended up like getting kind of like preempted in our series A and having a whole thing there. But yeah, we grew the thing. There's lots of twists and turns. We have a little bit less time than usual. So what I would love to get to, and I know Carolyn's interested too, we want to ask you about when you launched sort of a Twitter competitor.

12:26But since this is the founder mode conference, we want to talk a little bit about founder mode because there is a clear definition for it. It's things you can do as a founder CEO that a hired manager wouldn't or couldn't do. But we're not really sure what that means in practice. So we're kind of collecting data here today that we're hoping to share with the world. So I know, I think these two stories converge, like examples of you being in founder mode and some drama with Elon Musk converge. So that could be a very time efficient thing to do, don't you think? Yeah. Well, OK, so here would be my answer to the founder mode thing, which is I think one thing we've been able to do is have kind of a long term principled vision for why we're making the thing we're doing and what the actual center of the idea is and why it ought to win.

13:28And to be kind of like very sort of long-term greedy about that. And then to take seriously the consequences of what that theory about the world actually means, which I think is not every startup is like this. Like I think a lot of people pivot and discover things and we've definitely, we're learning stuff all the time, but we started the company with this very grandiose idea and manifesto and all this stuff. and so we sort of knew that we wanted to build this new you know at every stage the product has been this there's a handle you have to give people a handle to it of how to understand it but the thing that we've always felt that we were building is this new economic engine for culture and we wanted to be able to like create a platform that could spark a renaissance basically and we're not supposed to be the heroes of that thing it's supposed to be the people who are the writers the creators the people making and living in the culture that's the exciting part and so we're like we had this idea like we have to make this economic engine and the system and the social contract we make for it has to be better and that's what pulls people in and then it has to actually work.

14:25It has to actually compete and be a good product that people willingly adopt because it's great. And so along the way, we knew we had to do those things and we would discover pieces that we were missing. And so one big piece at the start, we were this tool. You could host a blog, you could run an email newsletter, you could charge subscriptions. Once people found you. They could fall in love with you and pay for you and that was great and everything worked. But the flaw in that system was where did they find you? Yeah. Where did they find you? On every other social network. They found you on Twitter.

14:58They found you on Facebook. They found you on LinkedIn, it's increasingly now. All these places. And so that meant two things. That meant that our little beautiful city we were trying to build was downstream of the toxic sludge incentive factory of everywhere else. Because if you wanted to be great on Substack, you had to first be good at Twitter, or you had to first be good at Facebook. It also meant that if Mark had a fit of peak inside of no more politics for a while, and you're a political writer on Substack that guts all your traffic from Facebook, it's a real problem. Or, as it turned out, if Elon buys Twitter and decides maybe I want to buy Substack and maybe if I can't, I'm going to kill those guys, it creates a real problem.

15:41That sounds like an interesting story. So. Are you open to sharing? Yeah. So when we realized this, we started, and this is maybe the founder mode part, is we started working on this. We had this cool business that was like this two-sided marketplace that was growing. And at the time it was like, we went through a period that was super hot and flush market and people throwing money at us. But we knew that if we didn't build this network in the long run, that was going to be a very hard thing to do. But in the long run, if we didn't do it, it wasn't going to become the real thing. So we started investing in stuff that I think was not something that you would do if you were just trying to maximize even the next couple year value of the business.

16:23You wouldn't say, we have to go and build a mobile app. That was something that's obviously very hard to do. we had a theory we thought was convincing for why we needed it in the long run but it was a hard thing to believe in a lot of people we told about it didn't think it was a good idea I think PG might still think it was a bad idea he's told me a few times one of us will be right in the end so we built this mobile app we built this short form feed we realized hey this is just what's we need the thing that is fun to come to and pay attention to Yes, we want to have this better system that makes good use of your attention, but you can't have to be a monk to use Substack.

17:07We built this short form feed. We built this mobile app. We were about to launch it. At the time, I think, I'm trying to remember all the ins and outs of this, but Elon had bought Twitter. I think he was already getting sick of running it and was looking for something to do. and you know he had this very strong stance on free speech freedom of the press we had also have we like have did had had and still had like a a similar view that you know free press is essential to a free society um so he i mean he called me up he's like hey you want to come meet and i was like yeah okay i'll do that um and i went i went and met him at at the old twitter hq at like midnight or something.

17:56No way. Of course. At midnight. Yeah, you know, very dramatic hour. And talked to him. He's a fascinating guy. Anyway, the long and short of it was he's like, you know, would you consider, you know, joining forces? Like, you know, let me buy Substack. Come run this Twitter thing. And, you know, that would be cool. And I said, okay, let me think about it. Did he talk numbers? No, no, no. I was like. Just the concept. conceptually. And this was like weeks before we were like, not even weeks, days before we were going to launch this thing that looks a lot like a Twitter competitor. Oh my God. And so when we went to launch it, as I was still in this little gap, I just let him know.

18:45I was like, hey, just so you know, we're launching this thing. We've been planning it for a while. It's like, this is just like a part of our long-term strategy we're not trying to be a competitor and fight and we're very aligned in a lot of like the things you're you know a lot of the principles of things and he was like don't watch it and I was like no like this is after the meeting or during the meeting this is after okay okay so you haven't told him no yet you just gave him a heads up about the mobile I just a heads up and we launched it. I'm not going to not launch it. And he was very unhappy.

19:26How did he express his unhappiness? Well, you might remember this. There was a week where you couldn't say the word substack on Twitter. So if you said the word substack, your tweet would just, nobody would see it. And so people started treating us like Voldemort. They would be like, the platform that cannot be named is where my article is. But not only that, so you couldn't say the word Substack, you couldn't search for the word Substack, and I think to this day, I think only us in the New York Times got this treatment, where if you did somehow accidentally find a link to a Substack article and clicked it, it would redirect there, but it would take five seconds.

20:09Oh, he punished you with slowness. That's a very serious thing. If your links take five seconds, five seconds is an eternity. Yeah. And I think he made some accuses. He sent me mean texts and got very angry. And I think he took it as a no. I was just going to say, was he like, deals off? Consider it over? In stronger terms than that. Oh, okay. Wow. So you weren't intimidated? I wouldn't go that far. I mean, I drive a Tesla. I had moments where I was like, will he kill me?

20:54That's a weird feeling to have. I don't think he would. I still drive it, so I'm not that concerned, I guess. What year was this? Somebody who remembers years told me, was this 2022? Hamish says yes. Okay. Oh, 2022. Okay. So how much traffic did you get from Twitter specifically? Did a lot of leads evaporate? So there was a time, if this had happened to us in 2019 or 2020, it would have killed the company. Because there was a time where all of our growth came from people launching on Twitter. And I think he thought that that was still the case.

21:32Fortunately, Twitter's share of traffic had already been declining. And we'd been building up some network and discovery features. And so it wound up being the case that although it was very traumatic for a bunch of individual writers who had Twitter audiences who were kind of depending on it, if you looked at like our numbers overall, I don't think you'd be able to see where it happened. Okay. Oh, interesting. And it wasn't, it was, it had been like kind of like a multi-year process of just Twitter becoming less and less important as a source of traffic to us. And so it was a big stressful thing.

22:03A lot of people, customers experience that as stressful, rightfully so. But it was not the existential threat to the business that I think you probably imagined that it was. So sort of looking back in hindsight, was it worth doing this? Well, I think it was. And because, and by the way, so we launched this, you know, this notes feed, right, that's got short form, you know, it's got short form things that are kind of like tweets. You can actually link to long form articles. They're well integrated. You can share quotes nicely. It sort of leads you into long and interesting things. And we probably spent two years where that thing didn't work at all.

22:38There was kind of just like this core, hardcore set of like, a few of our most intense writers and sub-stackers were kind of like, there was maybe like a few thousand people using this quiet little corner of the app. It wasn't even the home screen of the app at the time. There was like a second page where it just had this weird little thing. and I think if you were a professional manager, you would kill that thing. It's stupid. It's like it's not working. It's actually, in my view, having built a messaging app before this, it's a miracle it didn't totally die because the expectation is that it just completely dies.

23:14And so the fact that it was like kind of there on life support was pretty, I was like, this is great. And everybody, even at the company, was like, what are you talking about? This is great. Like you got like a thousand people kind of like talking in this stupid second tab of the app. But we believed that it was an essential part of the thing we were trying to create. And so we just kept insisting that it had to work. And we worked on it, and we worked on it, and we worked on it, and eventually we got it working. Justin Kahn was just telling me over lunch that he really likes it. He's really into it.

23:49Hey, we made it. Yeah. So if you had been sort of a non-founder, you hadn't written that manifesto, this thing would have been... I think you wouldn't bill it in the first place. You wouldn't get in a pissing match with Elon, even if it was one-sided. And I guess, is that just getting pissed on? Maybe this analogy is not as favorable to me as I hoped. That may be what it is, in fact. And I don't think you would have kept it up, right? Like, if you're sort of, if you're in the... And it's very reasonable. Well, in most cases, the right thing to do is like, yeah, you try lots of stuff. If you start hitting a wall, it's not going easily.

24:27You give it up. You try something else. We do that all the time. But you have to be able to know the difference between things that you're trying to figure out if they will work and things that you have decided that they must work and that you're willing to apply yourself over a period of years to figure out how to make them work. And I do think that there are great things that you can build that are only accessible in that second mode. I love that thought. That's a good thing that I think everyone can learn from. Just so I have closure, are you still Voldemort on Twitter? No, I think you can say Substack now.

25:02And you can link? I mean, I know links, they don't like that. Links are kind of dead across the board now, so we're sort of like we're in the same boat as everyone else, unfortunately. But you don't have to use Twitter anymore. You can open up the Substack app. Justin Kahn will be there. Right, right. So just, we don't have tons more time, but who is the typical Substack user right now? And what, are you in all different industries and things? What does a normal one look like? There's no such thing as a normal Substack user. I mean, I think of us as like an index fund of culture. And there really is just like a staggering breadth of like what people write about and produce, but there is some common attributes.