Substack: Chris Best and Hamish McKenzie

Episode Summary

Executive Summary: This episode traces how Chris Best and Hamish McKenzie turned skepticism about paying for online writing into Substack, a platform that lets writers own direct reader relationships and monetize via subscriptions. Their prior startup failures, editorial-tech backgrounds, and belief in a simpler business model shaped Substack’s growth, its free-speech posture, and its clashes with Big Tech and Elon Musk.

Main Topics: From failed startup lessons to Substack's founding (Priority: 5/5): Chris Best’s experience building Kik taught him that growth without a business model is unstable. He and Hamish used that lesson to design Substack around paid subscriptions from the outset, with the writer as the customer and the platform as the enabler. Why online writing needed a new economic model (Priority: 5/5): The founders argue that advertising-driven media and platform dependence left journalists vulnerable. Substack was built to restore ownership, direct audience relationships, and predictable income for writers. Early validation and product-market fit (Priority: 4/5): Substack’s first breakout publisher, Bill Bishop, demonstrated that a newsletter could rapidly generate substantial revenue. This proved the model and helped attract investors and more writers. Growth during the pandemic and media distrust (Priority: 5/5): During COVID, layoffs, moderation pressure, and political polarization pushed more journalists and readers toward independent voices. Substack benefited by becoming a refuge for high-profile writers seeking autonomy. Free speech, moderation, and controversy (Priority: 4/5): Substack’s hands-off moderation stance—limited to clear red lines like violence, spam, and doxxing—became a defining feature and a source of criticism, including disputes over extremist content and platform policy. Conflict with Elon Musk and X/Twitter (Priority: 4/5): Musk saw Substack’s Notes feature as a threat and tried to block Substack links, even suggesting an acquisition. The founders declined because they believed independence was essential to their mission. The future of creator-led media (Priority: 3/5): The founders frame Substack as a broader infrastructure for writers and creators, not just newsletters, and argue that the internet will increasingly support direct creator-to-audience businesses across formats.

Key Arguments: A platform should make readers the paying customers instead of advertisers; that changes incentives and lets writers own their audience. A simple subscription model can work if the product makes it easy enough for writers to publish, collect emails, and get paid. Many writers underestimate how much revenue even a modest paid audience can generate; small subscriber counts can produce full-time income. Substack’s moderation philosophy is not total neutrality, but a limited set of clear rules rather than expansive editorial control. Big media’s decline is primarily a structural/business-model problem, not just a matter of ideology or editorial mistakes. The company’s resilience comes from not depending on one source of traffic or funding and from being able to control its own financial destiny. Elon Musk’s attempts to pressure Substack validated the company’s independence and showed why acquisition would have undermined its mission.

Data Points: Founding year: 2017 - Substack was founded by Chris Best and Hamish McKenzie. Substack paid subscriptions: about 5 million - Reported total paid subscriptions by the time of the episode. Estimated top-earning writers: more than 50 writers earn over half a million dollars a year - The episode cites this as evidence of the model’s success. Typical subscription price: $5 to $8 per month - Common monthly fee charged by Substack writers. Platform take rate: around 10% - Substack’s share of subscription revenue before payment processing fees. Kik peak valuation: over $1 billion - Kik Interactive reached this valuation before declining. Kik users in 2013: 90 million users - Peak scale of the Kik Messenger app. U.S. teen penetration for Kik: 40% - Approximate share of U.S. teenagers using Kik for a period. Kik staff size: 100 employees - Approximate company headcount during its peak era. Substack active readers: 35 million - Reported active readers by the end of 2024, as mentioned in the episode. Substack paying subscriptions vs. major newspapers: bigger than The Washington Post, The Atlantic, The New Yorker - Used to illustrate Substack’s scale in paid subscriptions. Substack growth during pandemic: 6x - The company said it grew roughly sixfold in the first year of COVID. Seed/venture round in 2019: $15 million - Raised with Andreessen Horowitz leading the round. Bill Bishop launch revenue: six figures on first day - The first major paid Substack newsletter immediately validated the model. Y Combinator early paid subscriptions: 7,000 - By the end of YC, Substack could point to this number of paid subscriptions across the network. Social platform comparison: half a million viewers for CNN evening newscast vs. 140,000 YouTubers with audiences at least as large - Used to show how media influence has shifted away from traditional outlets.

Pivotal Quotes: "It was kind of like it was a good idea for a company and a bad idea for an essay." — Chris Best: Best explains why the Substack concept sounded implausible to outsiders but compelling as a business. "What if you completely change the economics of how these platforms worked?" — Hamish McKenzie: He describes the core insight behind Substack: changing incentives so creators, not advertisers, are at the center. "Most people don't do the thing." — Chris Best: Best sums up his view that execution matters more than theory or even luck in creating new companies.

Implications: Substack suggests independent, creator-owned media can scale if distribution, payments, and audience ownership are integrated. Its success points to a future where more journalists and creators bypass legacy institutions and build direct businesses.