Substack's Index Fund of Culture (with Chris Best and Hamish McKenzie)

Hey, it's Eric Newcomer. We've got a great episode for you this week. I went to Subsax Offices to interview Subsax CEO Chris Best and co-founder Hamish McKenzie. We had a really fun conversation. The company has released Notes, which is basically a Twitter copycat though. I'm sure they wouldn't want to frame it that way, but a micro social messaging platform which sort of moves them further beyond just publishing newsletters like my own. I recently invested $5,000 in Subsax community round. I published on Subsax, so this is the rare and hopefully just singular case where I don't have true editorial independence. I think that said, you can see I can help myself, but ask probing questions. We talk about the fight with Elon Musk and Twitter. And of course, Chris Best was on the Verge's podcast. I think by Chris's own estimation, flubbed the interview with him about how Subsax would handle racism on his platform. So we get into that. So a fun and timely interview with a company that I think a ton about. So I think you'll enjoy it. Before we get to the episode, I want to thank our sponsor, Vanta, who has been such a great supporter of the newcomer podcast. Newcomers brought to you by Vanta to close and grow customers. You have to earn trust. But demonstrating your security and compliance can be time consuming, tedious, and expensive. Until you use Vanta, Vanta automates up to 90% of the work for the most sought after security and privacy standards. Save time and money on compliance with Vanta's enterprise ready trust management platform. For a limited time, newcomer listeners get $1,000 off Vanta. Go to vanta.com slash newcomer to get started. And I really am deeply appreciative. To Vanta for sponsoring this podcast and would love if you would check them out, vanta.com slash newcomer. All right. Now my interview with Chris Best and Hamish McKenzie, co-founders of Subsax at their offices in San Francisco. Give it a listen. Thanks. I'm in Subsax offices. This is the most compromised episode I could ever have. I've donated, you know, what we're invested. Sorry. I don't invest in $5,000 and obviously, you know, work closely with your platform. But thanks for having me into the office and great to talk to you both. Thanks. Yeah. Yeah. Yeah. There's so much to talk about right now. But notes is obviously sort of the new exciting feature. So I'm curious. Yeah. What's sort of your view on how the notes roll out has gone so far? We're really pleased with it. We're pleased with how the feature works. We've been really pleased with how writers have received it. The launch itself got a little bit more attention than we expected. Is that good or bad? It's not supposed to be good. Yes. I think on the whole that it's good. I think it's on the whole a good thing. Was a little bit of chaos, but we don't mind a little bit of chaos. What was chaotic about it? The problem we anticipated having was kind of like getting everyone to pay attention to this thing you were doing. And we sort of had the reverse problem where all of a sudden everybody was paying super close attention to it. Everybody was heralding it. It is this very exciting thing that was going on, which on the whole is great. It is very exciting by the way. It is very exciting. We were anticipating having to convince people of that. And then it just worked out a different way. Right. Well, I appreciate that you're coming back on a podcast after you were on a podcast before and getting grilled over like the edge case of moderation right after launching like sort of a new social product. So I'm glad you're back in front of the microphone. Yeah. My view on the moderation thing is it's a lot for you. You guys are going to have to like solve this sort of overtime. Do you see yourself as a totally different company now? I guess having a notes thing you've been somewhat resistant to like social or like how much does it change how you guys think about the company with this sort of pseudo social media platform now? I think it's an extension philosophically of a lot of the things that we have already been doing, right? One of the things we've been working on for a while is building up the sub stack network, right? The idea that on sub stack you're independent, you own your connection with your audience, but also you get the benefit of being part of this network, being part of this like subscription network. Thank you, Mr. Jay, is pragmatic engine. Yeah. So recommend. Yeah. So recommendations are a great example of a feature that works in the network where it's like, Hey, you know, writers are recommending other writers. Sort of you've got this network feature, but the humans are in charge of how it works. And we see notes as sort of an extension of that, right? It works the same way people are allowed to. You can share short thoughts. You can share a piece of writing. You can share quotes. You can recommend stuff. Yeah. But it is sort of like this multiplayer piece of the sub stack universe. It definitely means that we have to update our sort of approach on how some of the stuff works, but it doesn't change sort of philosophically what we're doing. Yeah. You guys totally align both on doing it or was it? We argue for years now this. No, we've been since we started sub stack, we thought and wanted to make it a network, not just a tool, but a tool is something you have to start with. But the big game for us has always been how can we make this a network? How can we give people the superpowers of the internet beyond just a simple and elegant and beautiful publishing system that needs to collect money easily? And so notes is a natural extension for us. Writers want to post short things and share casual content and publish some stuff that they don't necessarily want to email to all their subscribers. And I think readers, and I'm both of these people, right? I'm a writer and a reader in this way. Readers want to sometimes snack on stuff from their favorite writers rather than just being these fully immersed experiences with a long form post or a podcast episode. So notes is in the sweet spot for both of those use cases. So far, these social networks are very much defined with how they're designed but by who's on them. And I feel like early on, it's like, oh, it's all writers. So it's a fun little, you know, I like the vibe at the moment. I mean, that's sort of what's funny with the line of questioning about, you know, the level of moderation when right now you have sort of almost like overly polite, like, it's too nice. Yeah. Yeah. But I mean, I'm going to get into the moderation question, but I want to set it up a different way. It's sort of funny, like, you're almost, you're coming into this, like, oh my God, it almost went too big. Like, don't you want it to be as big as possible? And really, like, don't you want to like present sub-sac as like this foil to Twitter or like, isn't this a moment where it's like, you're starting to compete with Twitter? Are you not willing to lean into the like, direct competition with Twitter? So I'd say there's a way that we do want to draw that contrast, right? Like, we see this as almost like a battle of competing philosophies or systems. Like the big vision of what we think of sub-sac as is this new economic engine for culture, right? We're like, okay, there was this old class, the first generation of social media companies got built on this one model. Everything had to be free. There was this big land grab for attention. Yeah. And these giant sort of attention monster money printing, ad-fueled set of companies grew up in this age and were tremendously wildly successful at what I did. And I think in retrospect, that had certain consequences. It destroyed a lot of the business model for sort of written culture and smart content without adequately replacing it with something. It created a bunch of incentive systems that pull in a certain direction. No matter what your intention is, if the way you make money is maximizing time spent and engagement because you're selling ads, the things that you end up optimizing for pull in a certain direction, it has certain consequences. We see sub-sac as a whole, as being created kind of in opposition to that trend and kind of in the vacuum that's created by the evolution of that whole ecosystem. Like, the way I think of this is everybody's sort of having to become TikTok, right? Like the natural perfect version of the super attention monster social media. People what they want. But what they want in what way, right? What they want in their basis, in their lizard brain. Right. And the thing that's, you know, the old version of us, you had to click on it. The new version of us, you just don't even have to click on it. You're just like, it's just there. You're sort of staring at it mesmerized. You go there thinking it's going to take three seconds and you spend five hours. It's the perfect, it's the logical conclusion of that whole business model of that wave interacting with the audience, we think that there's like this tremendous thing that's working there and it's going to pull everything that's in that mode of working in that same direction. You know, Instagram is going to have to become more like TikTok. Twitter is going to have to become more like TikTok. And if you as a reader want something else, you're going to feel increasingly ill-served. Right. And so there's going to be this new space where you say, what if I want to go somewhere where I can use my attention wisely, where it's giving me what I want, not in sort of the back of my lizard brain of like, what will I not click ahead on, but what are the things that I value? What are the things that I might choose to, you know, sit back and subscribe to on a Sunday when I'm thinking of how I want to stay well-informed? Or what I actually want to pay for the sub-sus. Some people need sub-sus. I want to be aspirational. Or it's like, this is the stuff I want to support. Like people are supporting them and it's also, yeah, it's sort of a reason. Like this is. Yeah. So, you know, we're helping you, ideally we're helping you construct for yourself the media diet that you want. We're helping you put the things in your mind that you aspire to put there to become more the person you want to be, as opposed to kind of like eroding your defenses to turn you into the person that your basis self wants. Those are different things. So in that grand battle of ideas, then yeah, I think Substack is an anti-Twitter. I think it is an anti-Tiktok. I think it is an anti-It's. It's a different idea to all those things. Substack as a whole is built on this different economic system where we don't need to keep you glued to the thing. We want to find you things that you decide you care about enough to pay for. That's not just a different way to make money from the same stuff. It's the kind of things that you make, as you know, when you're trying to succeed in that system are just different and better, better by, you know, who says better, I say better, I think it's better. So it is different in that way. The other way that you could construe it though is, and the way that I think a lot of people wanted to construe it is it's like, oh, like we're mad at Twitter. This is a new thing. This is the new Twitter. Everyone's going to leave Twitter and come here. And that's how it's going to work. And I just, that story to me doesn't ring true. It's not the thing that we're building. I sort of think of it as even if we could do that, we wouldn't want to because that's not the thing we set out to build. But I also don't think that that's how these things work, basically. There's so much to tease about. I mean, in some ways you were the free speech, arguing for free speech before you had like the Musk, Elon coming in and making Twitter pro free speech. So then there's like in terms of like the branding of the platform and the openness, there's sort of like a complicated positioning moment. For us free speech has never been out branding. It's just something that's taken stakes. Really? There was a point though, like where a lot of the conversation around sub-stack was about like free speech. People do focus on it a lot and we are proud to defend free speech. But we're not like rumble in which we come out and say, we are the free speech platform. We're a platform where free speech is protected and defended and that's important, but that's just table stakes for a good ecosystem for conversation, for discourse. And we're willing to stick up for it in a pinch as we've shown, but it's not kind of, we see it as necessary but not sufficient to making something great. Where is the brand is just like the writers or what is the first thing you want people to think about when you talk about sub-stack? I do think it's the writers. I mean, nobody comes to sub-stack because they want to get more email. Right? Right. It's not a problem people have. Nobody comes to sub-stack because they don't have enough stuff to read because it really is, first and foremost, it's what's going to appeal to the writers. The deal we can offer to writers is look, you're going to be independent. You're going to have editorial freedom. You're going to have ownership of what you're doing. You're going to have a direct connection with your audience. Yes, you're going to have free speech. You're going to be able to write the things you want to write. But it's this package of things that's like, you're going to be able to do the work that you believe in. If you do a good job, you're going to be able to make a living, maybe a fortune doing this thing. And the independence that buys makes it very compelling for readers because the thing that readers are looking for is not a theoretical platform with XYZ. It's like, where am I going to get the smartest, best, most trustworthy, the things that I value as I decide to value them? Right. Yeah, we started like before we settled on a new economic engine for culture as the mission, which is an updated mission. We sort of shopped around or said a lot that we were trying to build a better future for writing. So that system that can help writers pursue the work that they really think is important and be able to support it by making money from reader subscriptions, it's central to why we built substacking. You can see it in every post that we've written in the history of our amazing blog on substack.com. I love you're on my newsletter promoting yours. That's all of my substack dream right now. You should also check out newcomadocco.com. You're like, Eric, you need to sell the actual newsletter better than this podcast. Yeah, please make sure you use mentions and all the cross posting features and publishers. Put us in as podcast guests in the UI. We love that. Are you trying to move beyond writing? I mean, obviously you just put in a video embedding feature, you know, this podcast is published through a sub stack, but like, is it truly like video and well, I guess, Eric, you build a writing already where you host a bunch of people who are not expressly just writers writing more and writers always be part of the DNA of substack and will always be central to our identity. But we're starting to say more and more writers and creators or culture makers generally because some people are on substack and they think of themselves as podcasters primarily or video makers primarily or their sort of shepherds of a community. And I think we think there's room for that to expand over time. And so I personally have a broad definition of writers. I think a podcaster is a racer, I think a movie maker is a racer, but we want to have an expansive tent that people can see themselves as part of. And we think the sub stack model can support all these kinds of creators. Yeah. All right. So back to notes, which I'm super interested in. I've been giving all my feedback and like totally iterating. To me, I think I made a note at one point basically being like, you should give things that like help writers that get the pain audience, right? Or I think one of the complication of notes is this idea that you want the sub stack platform to reward people who are writing stuff that like people are willing to pay for. But then on notes, you don't want to just, I don't know, handicap any new writer and stuff that for being able to build a following because I happen to be earlier than them. How do you think about using the actual like money as a signal on notes while still keeping it sort of a platform that's appealing to other people? Great. That's a good question. You've thought about this, right? Yeah. Yeah. This is certainly something you're thinking about. We do think that the money is this important signal. And for example, you know, we have best seller badges on sub stack where if you have a certain number of paid subscribers, you get a little thing. You know, the purple badge, which is 10,000 paid is almost like more of an incentive to get to 10,000. I mean, I want the money on. Forget the money. Who cares about that? The purple badge. The purple badge. All right. That's amazing. You can't hear my tent and fingers on the audio recording, but that's unlocking my memory. I think you might have a camera. Oh, yeah. My camera. Don't forget. That thing works really well. And I think that there's a lot that we can do, you know, when we show leaderboards of what are the top sub stacks in this category, we rank it by paid. That's a deliberate thing, right? We actually way back in the day we had one that was ranked by like how many people liked it. And then there was instantly there was people gaming it, right? You get someone that coming in and doing fake stuff or putting fake signups on their email list. And the beautiful thing about the paid subscriptions is it's like, yeah, go ahead, game it. Like figure out how to get to the top of this leaderboard. Whatever you do, that thing is pretty good. The thing that we don't need to do is sort of like treat that as, you know, it's not like having a lot of paid subscriptions gives you this magical superpower that, you know, you get this amplifier where no one else is ever going to be heard. The people who have the big subscriptions already have large committed audiences. And that's the thing that matters. We want it both to be a place where you sort of get credit for that, where you can have those signals of this is where I'm on subject. This is all these things. But also where if you're someone who's just getting started, you know, you're not shut out for it. Right. Well, I guess to me, I don't have a content moderation problem on my sub stack because people pay for it. If they like it, like I'm responsive to what readers want. And like the reason I'm successful in some way is that it's not like unbearably crass. Like it goes beyond what any platform would reasonably moderate, right? It's like, oh, you have to be proactively good and appealing. So I guess the question is like, are there pieces of what make like sub stack work and sort of self moderating in a way that you can bring to notes? Or I feel like when you're pushing with the like, I don't know, it's a free for all on a like, on every edge case, I'm going to defend what people can say on notes. Yeah, are you like embracing like the writer piece of it? Or you know, I'm saying there. Yeah, maybe you're pointing out there's a difference between sort of taking a stance in favor of free speech and a free press and not wanting to have like a centralized sort of like censorship system. There's a difference between that and saying anybody can say everything in any circumstance and that's going to be fine. Right. Because that latter one is going to lead to a thing that sucks, right? Like you have a comment section, you're such like you can limit it to page subscribers, you can kick people out, you can set rules on whatever. And there's a little bit of like, it's your house, it's your rules. To me, that is not only consistent with the sort of free speech principles, I actually think it's like a necessary, the two have to go together. If you're going to have a thing that says we're going to have a place where you can say what you want, part of that freedom is to say, I'm going to be able to set the norms in my space with my community and we're going to be able to have a space that's not only, as you say, prevents the things that everybody everywhere agrees we don't want, but I can set the rules in my house to be very stressed. And therefore the people that come to your comment section can choose to be part of the community that's got this like very specific norm and set of values. And that is actually very valuable. That actually does a better job of creating a space that people want to be than if substacks said, everybody has to be polite to whatever the global substacks that it is. Because nobody wants to listen to some company, but it's like, okay, we can organize around like a creator. Exactly. Like, if we wanted to set up an instance and set the rules of politeness in your comment section, the best we could do is kind of take an average of what everybody substacks wants. I'll tell you from experience the result of that is you will please nobody. And the best you can hope for is to have people that are equally mad on kind of every side of everything. Whereas if we say, look, you're going to be able to set the rules. You know, now not everybody in your audience will be perfectly happy with that, but it's your house. You can do it and people can choose to be a part of it and you can create something and somebody else can have a different space that has different norms. And that's good. Not only is it okay, it's actively good. Now the challenge with something like notes is how we're like, okay, so now there's two writers interacting with each other. How does that work? Right? There's places where people are allowed to publish your thing. Like, how does that work? And the approach that we take with this is we want to figure out how to take the parts of that former system that work and apply them to this new world. We want to leave the case where the writers and the readers are in control. And this leads to things that are actually dramatically different than what other networks have done. For example, when you do a post on notes, it's your space. You set the rules the same way people commenting on your post works the same ways if they're commenting on your newsletter post, right? You can go and delete people who comment on your post. You can delete their comment. You can block them. You can ban them. You can have this level of control where you say, this is my space. Within my space, we're going to kind of go by these rules. And we're still figuring out all of the, like, there's a lot of different parts that go into that. What does it mean over here? And what does it mean if somebody does this and that? But in general, that's the principle we're applying. We're kind of trying to say, look, we want you to be able to set your sort of rules of engagement. Like, who do I want to see? Who do I want? How do I want to be able to interact with people? And we want that to make kind of like a force feel that governs your experience on sub stack. And that can be much more specific to the kinds of things you want to do. It's not just like whatever, don't call me names. You might say, hey, I want everything to be really productive, which is the kind of standard that would be untenable to have as like a global rule. To be clear what I want from my notes, I want it to be like, you know, an enders game where, you know, Valentine and like Peter Wig and our writing on like the global forum. This is like, you know, and I want to come to the right end. I want to be able to take advantage of the fact, okay, I have a pretty successful tech one. Like, but now do I get to, I get to argue about like politics or whatever with the other, you know, I feel like that's the dream. And so to me, you think you should become the hedgeomon? Yeah, exactly. Right. Exactly. Just for having such great writing. Yes, to me, that means that it's like a pretty like buttoned up. I mean, they're not boring, but that it's, you know, I, that's why the, when you hear like it's going to be totally unmoderated. It sounds like the opposite of what most of the writers want, which is they want to be in a place where they're like taken super seriously and like influencing the culture. You know what I mean? Yeah. I mean, I think there's a difference between being able to set norms and participating communities that have very strong norms. And the idea that the way to get there is centralized censorship. Yeah. And I think we've come from an era where those two things have been kind of conflated and people think that the only way to get a platform to have a certain characteristic is to have a really strong sort of like centralized set of like, all right, here's the governing rules that affect everybody. We just don't think that's worked very well. We think there's something better that can be made here. So, you know, you got sort of pounded on the racism on the platform question. As your answer at all changed to what Niele asked about what you do about sort of a racist incident on the platform? No, it's basically the same answer. I mean, I think I did a very bad job in that interview. But I think the answer is, look, we do have a content policy. It's by design, like it allows a lot of stuff that we don't like. It bans only very like extreme things. If people are putting things that are against the overall content policy, they get taken down by us. However, that allows a lot of things that we find very objectionable. Then we try to build a system that puts people in control of what they see and who they interact with. Hey, Mitch, you worked with Elon. Right? You're at testing. Did you interact with him personally or? Yep. He hired me. Yep. So what's it like? You guys can't decide whether you want to be total foils to him or not or like, what's it like to be in a pseudo competitive situation with him at the moment? I try to think about Elon as little as possible. I've been thinking about substac all the time and what we're trying to do here is not build the anti Twitter or build the anti Instagram or anything like that. We're trying to build the first substac and the vision for what we think it can become is an amazing, beautiful thing. And it's bigger and more important than social media, like a social media for text or a social media for pictures or a social media for video. I spend all my time thinking about how to make that thing a reality. And it's hard just thinking about that. It's hard just to get to year five of a network that lets writers publish directly to the audiences and serves so far mostly just writers. So I don't, yeah, I'm not thinking about it. I mean, I totally ignore that not thinking about them piece. I mean, an awkward thing about the argument at the moment is like Twitter in some ways is trying to switch to like just charging people instead of attention. The argument Twitter is trying to kill a subset. Yeah. I mean, what do you make like the blue strategy to meet? I mean, it's paying the company rather than a writer or like, how would you distinguish like the blue strategy from your approach and like how that plays out sort of differently in the product? Either of you can answer it. Blue strategy feels totally different. It's more like medium on Netflix. Yeah, it's like you're paying for the platform. I do think in general, anything where we're setting writers up to make money from what they're doing, we're in favor of this is, you know, a very important piece of what sub-stack does. It's not the only thing that sub-stack does. And this is something that, you know, we've had people try to copy sub-stack in various ways over the years. And often what happens is they'll look at one piece of the pie and think that that's what it is. So we went through a wave where a bunch of people looked at sub-stack and said, ah, email in these letters. That's what's going on over there. Email in these letters are so good. Facebook did this. Twitter bought a different company, a bunch of, I think the Atlantic did something. There's like, okay, newsletters. We're going to, we're going to make a newsletter thing and that's going to be it. And the newsletter is very important. It's a big part of what a sub-stack is, but it's not the whole thing, right? The whole thing is it's your publication. You own the connection with your audience. People pay you directly. You have this independent site that you can do. You can leave sub-stack with your audience. You can bring your audience to sub-stack. This piece of ownership and control. I feel like I can't underline enough. It's easy for people to abstract away, but the fact that, you know, I could walk away is key to the relationship working well, you know, yeah. It's the difference between me saying, come on, trust us. And me saying, okay, trust us. We know we have to keep and earn your trust because you can leave. Those are just different relationships to be under with a platform. It is fundamentally different. And so, you know, I think with Blue, it's not really even the same thing at all. There's some other monetization tools that Twitter is testing that we're excited that they're doing that. I think it helps people pay it, but it's still not the same thing. Right. Now they're trying to create a crater. Part of your delicate dance with Twitter is it that you think your sub-stack writers are still dependent on Twitter for audience? I don't think they're dependent on it for audience, but I think they are dependent on it in other ways. Let me put it this way. A lot of writers are just heavy Twitter users. You just like it. Right. It takes up a lot of their mind share. A lot of our customers are all... Well, they use it a lot in spite of not liking it. Or they use it a lot in spite of not liking it or they convince themselves that they need to use it and then because they want to use it a lot. And even though, like, if you look at exactly the traffic stats, like how much traffic is coming from Twitter, it's really not that much. I don't know if it's... If you see this in your numbers, but... It's like five maybe for me. I mean, obviously my actual newsletter, people underestimate just what a large percentage it is because you're sending it to everybody every time. So that's the... Yeah, emails you mentioned. Right. And then direct. And obviously, Google search is actually becoming a better one over time. Google search is over what... I mean, we've added a bunch of network features that are an order of magnitude more than the actual traffic. But all of that said, it's still a major place where people are spending a lot of time. It's still like a quality of life thing. It just sucks. It sucks when you can't embed your tweet in your sub-secures letter. Like, that should just work. Right? It sucks that I can't... It doesn't... Sometimes it messes with my link when I share it. It's just a link that's working right now. It's painful. What's your view? What's your sense of how throttled it is? I do think that there is some throttling going on. I think the previews are not being unrolled in some cases and I think in some cases, it's... The distribution is different. You know, Andree St. Horowitz is a major sub-stack investor and a Twitter investor. Have you tried to ask them to broach a piece or anything like that? I mean, we've been talking to them about this stuff. We're very much in favor of a piece. We didn't start any of this. We don't think that it makes any sense, frankly, for Twitter to be feuding with sub-stack. We'd love to not have any of this annoying bugs for writers, but at the same time, it is kind of out of our control. Just today, like coming into this, like, talk with Collison saying he's going on Twitter and there's still this sort of... Platforms are identified with the huge creators on top of them. What sort of sub-stacks view right now in terms of like courting writers? This is going to lead us to the financials that you disclose. What's the view on sort of hand-picking writers and the strengths and weaknesses of that for your strategy? We have always taken an approach of going in recruiting specific writers right from the start of sub-stack. When we've always had the same way that readers don't come to sub-stack because of sub-stack, they come to sub-stack because of writers, I think the same is true of writers in general. There's in every kind of pocket of people, the people that come to sub-stack come because of other people who are on the platform. We've gotten to the point now. I think we used to worry a lot in the early days about getting identified with some particular slice. You get a pocket of this type of people and then it's like, well, all of this people are on sub-stack or all of that people on sub-stack. I think we've successfully got to the point where it really does feel like sort of an index fund of culture. You have a bunch of different slices from all across the map. People still have these opinions. I'll often hear someone say, oh, sub-stack, that's all the people of XYZ. But that's just their world. They just happen to know all of those people and it's one of many worlds. I think recruiting writers, helping them come to sub-stack, helping them succeed remains a core part of what we do. The piece where something that has changed over time is in the past we've experimented with using money as a way to help accelerate that, which is something that we did pretty extensively a couple years ago, I think with great success. We no longer have to do, basically. Sub-stack was not a big believer in new country. You guys were willing to give me advance, but you were not like, oh, we're going to break. You might have been sort of tail and it was the particular timing of that, if I remember. I did it anyway. What we did in a lot of those cases was try to push people to not take in advance, because the deal is better if you don't. The deal is you keep 90% of you right now. Right, right. You're sort of screwed himself. I think your glacier says on the record, I've been very happy. Yeah, he's very happy. But you made a smart choice by comparison. Well, the thing to remember with all of those in glacier is everybody, it reverted to the normal sub-stack. So it's not like an ongoing thing, but there was sort of like a moment where like, let us help you get the start so that this thing can sort of turn over. You can see it working. We've done enough of that that people see it working now. And I don't think we have to do that anymore. But you're out sort of still recruiting writers to come on. It's just not financial. Yeah, we were always trying to sort of unlock new pockets of writers and look for people who sort of fit the characteristics of who might succeed on sub-stack. But we're not paying advances. And partly that's because the markets change and we've been more cautious with our resources. Partly it's because the network has been bootstrapped now. Things have their own momentum. And we have network effects that add as much benefit for people as upfront cash mine. So like 20% of paid subscriptions across sub-stack come directly from the sub-stack network now. So it's a huge benefit you get just, you don't need all that much more encouragement to come. So you did this community fundraiser. How much did you end up getting? The maximum you can do through a community around is $5 million. Yeah. Do you have the money? I don't even know. I think we're actually not supposed to talk about the specifics of it yet. It's not officially closed. We have the point you're at the right. At first there was like, oh, we're just sort of rethinking about the lots of sort of language games going on and not specific to you. It's just weird. Yeah. Nicely. You can see it. Yeah. I think I expect we'll be able to, but in the meantime, you can go to the page. You can see the things. You can see the thing. We're being very careful to like follow the rules, basically. In 2021, you had negative revenue. You had negative revenue. Yeah, negative revenue, which is different by the way than that's not just a loss. That's technically the revenue itself was negative because the way we get to do some of those. Right. That's why if you like look at it without thinking very much, it seems absurd. Like people who want to criticize your business, it's easy to be like negative revenue. You know, even the top line. But I mean, you know, the story of that was we were spending money to bootstrap this network. We published a bunch of numbers around how that's gone, what that's meant for people. It's pretty clear that it worked. It's that you were sort of taking a loss on these like advances to writers and those come ahead of revenue. And so then you lose money. Totally. Whereas if it was after 2021, it was an especially frothy year as well in the investment market. So it may be an atypical year. Ben Thompson, who I'm sure you guys read sort of, I should have reread it before. But like, I mean, he seems to make like people like me are like suckers for investing in this round. I mean, he was pretty negative. He has sort of a complicated subject view and that on the one hand, I feel like he wants you guys to actually control the list and thinks you should be sort of more controlled or I don't know any response to Ben Thompson's writing on sub-sect. I'll tell you what, we'll work really hard to make sure that it goes your way and I can say that. We can definitely do that. And I have tremendous respect for Ben. Like we looked at him as one of the examples that made us think that starting sub-stack could be worthwhile. We talked to him in the early days of sub-stack. I think a lot of his thinking on this stuff is good, but I think he's wrong about this one. He can sometimes have this sort of like. I mean, he was so successful so early and it's like, he's the one that made it, I don't know, and can be skeptical about how big of a trend it will be broadly or whether he sort of set up a somewhat unique situation. And he's built some cool tools in this mess as well. Right. He wants writers to have their own shots. He's trying to be a good faith critic and a good faith analyst and we agree with him fervently on some things we just disgrace them on. Right. One thing I'm thinking about more is building a publication on top of sub-stack. Like obviously Barry Wace is much further on that journey. There's like what the ball work is sort of a publication. The Anclair is another one. Yeah. Yeah. You got to have the in front of the name. You got to do this. Oh yeah, I might not make it then. The new camera. Add back to the... Yeah, what's the pitch to the publications and how much... I mean, there's sort of a contradiction, right? And I find this sort of recruiting writers at the moment that I'm having to explain. It's like, come to a sub-stack which I'm doing partially for my independence, but then like you're joining a publication or like, how do you think about publications on sub-stack when a lot of the pitch is every person sort of on their own as their own business? I think I look at this through the lens of institutions. And I think especially in the early days of sub-stack, a lot of what was happening was people felt like the... Especially the writers felt ill-served by the existing institutions. Either they weren't aligned with how they wanted to operate or those institutions were struggling and it felt like there wasn't space in the existing institutions for what they wanted to do. And the option was to sort of like go outside and start your own thing and like be independent and create this sort of like external pressure. And I think that's wonderful and necessary. And then the other piece that I'm very excited about that can come from that is the opportunity to build new institutions. And I think you're seeing this, the seeds of this with some of the people, not every... Some people on sub-stack get very successful and make a ton of money and are like, this is great. Right. Like, this is my perfect life. I don't want to be anybody's boss. I don't want to do with this other stuff. I totally understand that and I... Your life could be so easy, Eric. If you just don't invite the others in. We will make sure that sub-stack is great for those people because I think that that's a wonderful thing. But there are other people who say, this actually might be the seed of something new that I could start. I could start a new kind of institution that's grown up in this new world that lives by different rules and I can build something larger than myself and I can give an opportunity to other people to come and be a part of it. And we're really excited about that and we want to make sure that you can keep doing that on sub-stack basically and definitely. And we've put a bunch of work into some of the features that help you with this. We think of it as sort of like media empire mode. It's something that we're actively building. So the more you build it, come and talk to us. We'd love to help you make it wonderful. Right. You're not against all institutions. Just the bad ones. Just the ones that don't use sub-stack yet. Part of what's going on is like, the high profile writers get to put themselves on top of these media institutions in the way that they were sort of buried under management. Yeah. Interesting as a writer from the bias writer perspective to see writers become owners and set the agendas themselves. I think that's a really exciting dynamic that's developing. You can even look at it sort of by analogy with what happened in TAC where it used to be the norm that the people that built the TAC were sort of underlings. And at some point that dynamic kind of flipped and I said, wait a minute, like, these should be our companies. Right. You know, if this was 40 years ago, I probably wouldn't run sub-stack. I'd be like, whatever. I'd need some boss wearing a suit to tell me what to do. And it just turns out when you let the inmates run the asylum, you get more interesting results. I think the same is going to be true in media. I had never thought about it that way, but that is super interesting. It's like, okay, it becomes much easier to build the actual company. So the core product skills are enough to become like a company. The business friction, the admin friction, the TAC friction, the design friction is removed. So you can just sort of focus on the journalism itself or the writing itself. It opens up new opportunities. How much is like sub-stack the company growing? Or, you know, I wish I'd seen 2022 revenue and like what metrics can you share? I mean, my own free list growing a lot. Obviously, I'm just one business, you know, but like some of my revenue growth is off sub-stack, you know, sponsorships, like events and like that's not probably good for you because I'm going to hire another writer who's going to write more posts that'll probably translate into subscribers, but like how's sub-stack the business doing at the moment? It's doing well. The numbers that we shared are 2 million paid subscriptions. 2 million paid subscriptions. Top 10 publishers make more than $25 million a year. I've paid $300 million out to writers over the course of sub-stack's lifetime. But readers have paid writers that, I should say. I think we crossed, what do we say, 30 million active subscriptions? More than 35 million monthly active subscriptions. Those are the best kind of growth indicators we can give. Obviously, there's so many lever you're trying to pull at the moment. Is it like more writers? It's the existing writers monetizing more. It's like readers coming on. It's readers subscribing to a second publication are like, obviously these are all like, yes, pull all these covers. Yes, yes. Give me a top of those. Like, is there one that's sort of at the top of your mind at the moment? Basically, you're listing all of the ones that are part of the core growth equation for sub-stack. I would say the story of the past year, let's say, has been we took a really hard look at writers coming to sub-stack. How are we going to get more and more writers coming and being able to start and succeed? And kind of the readers getting their second subscription, like growth from the sub-stack network, the place where I'm already a reader who subscribes to one sub-stack, do I subscribe to a second and a third? And how does that happen? And we've made huge gains in both of those over the past year. I mean, you can see this with the growth of the steps at network. 20% of paid subscribers across the network come from the network now. Yeah, and a year ago, it was 8% before that it was 0%. And so that piece of the thing has started working really, really well. So I think we're going to keep doubling down on those areas. And then the other one that's very interesting, of course, is always just like the top line of growth, like how are we letting you bring in readers from everywhere in the world? Right. Do you have a sense of like, how penetrated are newsletters right now? Have you tried to assess what the total addressable market for newsletters is? I mean, I would imagine... Another great Christmas question. Yeah. I imagine like thinking about podcasts and video more, I mean, one sort of negative way to read that is that you think, well, there's only so many people who love to read and pay for reading and like people love to watch TV. Like, is there sort of a limit? This doesn't affect my business because I feel like there are plenty more elites to chase into, but for the big, big pies, they're just like a limit of how many people will pay for newsletters. I think in the long run, is there a limit to how many people will pay? I think of it as like how many people will pay for culture that they care about, will pay for things that they value? I think there is a limit to that. It's not going to be everybody in the whole world. I do think that the limit is going to be sort of hilariously large, basically. But you're saying beyond reading. You're saying also for watching and listening. Yeah, but I think within that market, reading is actually very large. It's like a big piece of that. Like, if you're looking at not just like everybody who consumes media, but who are the people who are going to pay for things that are more valuable, they're much more likely to be readers, they're much more likely to be in that universe. The thing that we keep finding is that there are new pockets of things that we maybe never even would have thought of or guessed that they exist that start to work on substack. And so they'll be neat. I was like, the person publishing some book past its copyright, what was it like? Dracula Daily. Yeah, yeah. But what any other interesting ones? That was interesting. Yeah. Well, even Heather Cox Richardson is the number one winner on substack, is she's a history professor who was publishing books through the academic press set, I think it printed into something. But she wasn't a high-flying journalist or author before she was on substack. But now she's the number one owner. It's new energy that's been unlocked on the universe. The 2017 version of this question we got was, how many other Ben Thompson's do you think there are in the world? How many other Bill Bishops there are in the world? The question we never got was, do you think there's a history professor at a college whose potential has been unrealized? Right. So, yeah, we think it's a massive energy unlocker. Yeah. What's the most successful, like, non-writing substack? There's actually quite a few of the top substacks that either have a podcast as part of it or are a podcast. Like Singal has like a podcast. Yeah, Blockchain reported. The fifth column is on substack. Andrew Sullivan has a podcast that's very good. Michael Schullenberger, who does public, is doing more and more video, which is quite good. Josh Barry's got a couple of podcasts. Josh Barry's got a couple of podcasts. There's actually quite a lot. I'm probably not listening. We can market it from the end of that. Of course, we may be telling people that we've got the best podcast platform for this kind of thing. Right. Really, you've been to Patreon. Everybody wants to talk about Twitter. But, I mean, I just, I think of Patreon as once being the best monetization model. I would be remiss if I didn't say on this podcast. If you're thinking about doing a podcast, you should definitely do it on substack. Get the emails, charge paid subscriptions. It's a tremendous place to. Dildo community around it. There's a lot of people pay while on the podcast right now. Because why sort of, this is where, you know, I want like a YouTube channel or like, in part to bring it back to the Twitter question, there is like, you want some platform diversity as a creator and like, it's like, oh, if Twitter is going to die, then I probably want to be on YouTube. So YouTube is just so good at like, gross in a way that you guys are, you know. And we would encourage you to be on YouTube. We encourage, you know, if you publish your podcast on sub-second, goes to all the podcasts, goes to Apple podcast, goes to Spotify, you should take clips and put it on YouTube. You should take clips and put it on TikTok. We want you to put it everywhere. Just as you want to put it everywhere. Because it becomes the sort of top of funnel for the thing you're making. If you do monetize it with paid subscriptions, there's a cool feature on sub-stack which allows you to put a like an audio pay wall into the episode. So you send it out, it still goes out to all your main listeners. And then at 20 minutes in, they might get you interrupting them saying, hey, this is supported by subscribers. This is the only reason this exists if you want to subscribe. Yeah, you don't have to, but some people are building the tools to let you do so. And they're working really well. It's a secret killer feature that we haven't marketed well. I think you don't know about it. There's some scale I will. Right now I just like want to grow it. I want these subscribers to subscribe out of the goodness of the hearts. So, pay for the subscribe for the paid stuff. I mean, I believe in pay walls. Honestly, like my readers convert when they hit a pay wall. Like I surveyed them and I thought a larger percentage would say, oh, it's like the goodness of my heart. Like I believe in you. But they're like, no, it's like I want this stuff. But like when you deliver this stuff, I like pay for it. Especially if you're getting your company to pay for it, it's easier to justify if some of the stuff is pay wall, it's kind of like a business expense. How ideological are you guys on ads right now? I feel the temperature change, you know, your views on ads. Is that wrong? Or where are you on advertising right now? I'll give you my view on this, which I would go back to that kind of like grand battle of empires picture that I painted at the start of this. To me, one of the big reasons I wanted to work on sub stack, the thing that I think is fundamentally different on sub stack is that when you do advertising in the way that the big social media platforms did, when you say, okay, our business model is we're going to aggregate a bunch of eyeballs and then we're going to sell off those eyeballs as a commodity so that the way that you're selling the ads are based on who the person is that's watching it, not based on what they came here for. Those things are totally disjoint. It fundamentally undermines the value of the content that you have on the platform because the only value of it to the platform is that people are there. And so if you make something that's as cheaply addictive as possible, like that's how you win, that's how that dynamic gets created. And so that's the thing that sub stack is kind of created in direct opposition to. The whole thing we want is that when you come to sub stack, we're not valuing you based off of the time you spend. We're not trying to get you tricky when to clicking on things so that you do an ad impression and then that goes into money somewhere where subscriptions are very aligned with this where you're saying, hey, we want to find you something that you value enough to pay for. And you're very much in conscious control. I sometimes joke that people will hate read things, but they won't hate pay for it. The question that feels interesting to me is, is there something that aligns with that universe? Right. That's when you feels like a more of an open question. It seems like a long way to say we're no longer totally opposed. I'm not even trying to bait you. To some degree, as a creator, or whatever I am, selling ads independently because they're super tailored to my newsletters, like fine, I'm not necessarily begging you guys to get in it, but it does feel just like looking from a business like hybrid. You want sub stackers to make more money because then they're more likely to do it and like hybrid businesses are better than pure subscription businesses. It's not totally clear that that's true, but I think the thing you're pointing out here is like, ultimately, what do we want? We want writers to succeed and we want them to succeed in an ecosystem that supports them doing their best work and that aligns the incentives and makes the people who are concealing at the customer. That's why subscriptions have been such a strong match and that's kind of like the North Star that we'll keep following. Is sub stack at a point where it could survive without more venture funding or like, yes. But I mean, do you think you will raise more venture funding? I think the best place for a company like Substack to be is the place we're in, which is where like, look, we have everything we need not just to keep going but to win without further outside capital. And should we find ourselves in a position where it makes sense to take more investment to accelerate, that'd be a great option to have. If not, we've got everything we need. That's kind of where we're happy to be. Are you guys personally close to many consumer founders or it feels like it's been a sort of brutal period for like the consumer startup? And obviously- Well, like the clubhouse guys rose so hot. We just, I think, paparazzi just shut down. There was like a sense that- Do you even know what paparazzi is? I think it was like one of the, I think it was a benchmark. It was like one of the sort of, it was a teen photo out. You know, there have been several, I think, be real as past its peak. I mean, Substack was always- Cameo. Yeah, yeah, exactly. I mean, to some degree, Substack has been sort of a tool for creators and so hasn't been always been a pure consumer company though now with notes, it's more hard to argue that it's more expensive. I think the money makes it different. The money makes it slower to build but also more enduring. It's not the same as kind of like a social media app where everybody kind of like hops into it and says, this is fun and then kind of bounces. It's like, you know, first of all, you can't build a subscription business as quickly as that as you probably know. It can be fast but it's not going to be, you're not going to get a million subscribers overnight. But then once you have it, you've got something that people deeply value. We think of it as a subscription network, it's a different kind of thing than a lot of the sort of free consumer stuff. Wow. Great. Thank you so much for coming on. Thanks very much. Thanks for having us. Slash, coming to visit us. That was our episode. I'm Eric Newcomer. This is the Newcomer podcast. Thank you so much for listening. Thanks to Vanta for sponsoring the episode. Shout out to Tommy Herron, our audio editor, Riley Kinsello, my chief of staff, and Jung Chomsky for the wonderful theme music. Check out our YouTube channel, Apple Podcast, and of course, go to the sub stack, Newcomer.co. Thanks so much for listening. See you next week. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye. .