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Podcast

Building Substack- Reinventing Culture Through Subscriptions

The a16z Show

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  • Initial Rejection
    • Andrew Chen initially rejected Substack’s offer to host his blog.
    • Years later, he approached Substack, recognizing its success and becoming an investor. Transcript: Andrew Chen Or you can tap the I wanted to say one really funny thing, which was how I originally met the Substack team, which was I have been writing a blog now for like almost 15 years. And when these guys were going through Y Combinator, Hamish actually reached out to me. So this is Chris’s co-founder. And he said, can I meet up with you? I was like, great, let’s do it. I always love meeting founders. And then he gave me a pitch to my blog over to Substack. And I was like, no fucking way. Never going to do it. Chris Best You don’t know how much money you could have made if you had done that. Andrew Chen Yes. Well, that’s actually very much true. I actually very much regret this. And so don’t be like me. Instead, be like all the other smart people. And so what ended up happening was I said no. But then years later, I started to see, of course, Substack all over the place on X and so on. And then I approached Chris and Hamish and Jay. And I was like, hey, I have a new job now. I can give people money. It’s a really cool superpower. Would you like some money? And Chris says, no fucking way. It actually, I think it took maybe six months for us that he finally would allow us to… Chris Best It was time to build. What can I say? (Time 0:02:29)
  • Kik’s Origin
    • Chris Best co-founded Kik, a messaging app, with Ted Livingston while in college.
    • Initially, they built a music player for BlackBerry, then pivoted to messaging. Transcript: Chris Best Yeah. Well, I went to University of Waterloo for college. We did the co-op internship program where you have six real jobs when you go to school, which is nice because then you can afford to go to school and you do real things. I got kind of like a taste for building and I was sort of bored at the fake learning thing and always really liked the really making something thing. And I got into the kick thing by accident. I was just hanging out with Ted Livingston, who was the CEO. And we were just tinkering. We were just building some stuff. We weren’t really sure exactly what we were making at the start. We started out building a music player for the BlackBerry. Very Canadian. Andrew Chen Very Canadian. Very Canadian story. Chris Best And we ended up building a messenger that had an absolutely wild arc. I learned a lot. It’s funny, I think, being sometimes the technical co-founder, you experience things in a weird opposite land. Like we went through a period where we were doubling our user base every four or five months for like several years. And the way that I experienced that at the time was like, oh, this hurts and I’m not getting to sleep at all. And we’re all dying and we’re 23 and we have no idea how to scale a service like this. And we’re flying servers around because we didn’t know to use AWS because we’re idiots. And it was a bazillion years ago. And of course, now I’m like, oh man, that’s the luckiest thing we ever could have had happen to us. But at the time, I was like, this sucks. I don’t get to sleep. We’re working hard. (Time 0:04:21)
  • System Design’s Impact
    • Building a large online system teaches you about human nature and system design’s impact.
    • The same users can experience a platform as heaven or hell depending on its rules and incentives. Transcript: Chris Best Of going to class. Andrew Chen Okay. So after Kik, you have the messaging app wars, et cetera. And then eventually, you decided to move on and talk about early days of, okay, you’re going to start a new company, you want to do a bunch of things differently. What were some of the lessons you took out of Kik? And how did that inform how you picked the Substack idea in the first place? Chris Best There’s a lot of positive stuff I took from Kik. Even I think, having been somewhere where we built something that had that kind of traction made me believe that it was possible and understand like what pieces have to come together For something like that to happen and understand the impact that you can have when you make one of these online systems that everybody’s spending their life in. Like I gained a big respect at Kik both for human nature, like the people using your software at scale are going to do all kinds of strange things and can’t change who they are too much. And you shouldn’t try. But nonetheless, when you’re designing the systems that people are spending their lives in online, you can make a heaven or a hell out of the exact same people. (Time 0:08:39)
  • Early Success
    • Substack launched with Bill Bishop as an early adopter and investor.
    • He earned $100,000 on his first day, giving Substack early momentum. Transcript: Andrew Chen I forgot what the order of magnitude is, but a lot of money. And then tell us about day one of Substack. I think you had like Bill Bishop, you quite a famous writer, and he was involved quite early. I think he was like one of the seed investors and he was making good money on Substack from the early days. Help us imagine what like kind of year one was like. Chris Best Yeah, well, I’ll give you the potted founding story, which was I wasn’t actually planning to build a company yet. I was taking a year off. I’d planned to give myself basically a sabbatical. I’d been grinding pretty hard at the last startup. I wanted to live my life and pursue my hobbies. And I’d always been an avid reader. I grew up in a house full of books, and I’ve always thought that what you read, the media you consume, shapes how you think, shapes how you see the world, sort of shapes who you are. And so great writing and great culture is valuable. The same way that you might write a piece of software and change how a million people do their jobs, you could write a great essay and change who a million people are. And that thing is this inherently valuable, wonderful thing. And my answer to that was, I should be a writer. I should start blogging. Cool, this is going to be one of my things that I do in this sabbatical that I take. And I wrote what was going to be an essay or a blog post or a screed or something. It was like outlining my frustrations with the media economy on the internet. I was kind of like, wow, wow, the internet’s killed the business model for traditional media. And maybe social media is not, you know, an unalloyed good, et cetera, et cetera. And I sent it to my friend Hamish, who’s a really a writer who became my co-founder. And he let me down very gently. Andrew Chen And Hamish, by the way, he’s like a published author. He like wrote a book on Tesla. Chris Best He’s a journalist. He worked at Tesla. He has worked for a lot of the top publications in the world. And he was like, dude, it’s 2017. And your point here is maybe newspapers are in trouble. And maybe social media is a mixed blessing sometimes. We know this is not the brilliant new idea that you think it is. However, a more interesting version of this thing might be, so what? Let’s say that all of these things you’re whining about in this dumb essay you’re writing are true. What would you even do differently? And we started arguing about that. And that’s the thing that became the kernel of the idea for Substack. And as we talked it over, we realized that it was simultaneously like a very ridiculously ambitious, grandiose idea. Like maybe we could reinvent the business model for culture on the internet and create an entire new economy of writing and media and video and things based on the idea that people pay For things they value that could cause all these new things to exist, blah, blah, blah, blah, blah. And also there was this very simple MVP core of it. That was like the very first instantiation of that idea that was basically paid email newsletters. And that thing was the very simplest version of this very large idea. But that thing, I was like, I bet you I could build that in the weekend. And he was like, I know this guy, Bill Bishop. I know a couple of people, like a couple of my friends would probably use that tomorrow, if only it existed. So we had this like small group of people initially for whom the simple thing that we could build was like the cure for cancer. And of course, I couldn’t build on a weekend. I was a little bit optimistic. It took me a few weeks, but we built an early version of it. We actually started out, the very first act we did was publishing a manifesto. I don’t recommend this, but we, on this little CMS that I was hacking together, we like wrote our founding document of what we were doing and why. And I think Hamish sent that to Bill and a couple of other people. And it hooked us up with our first customer, who was someone who had been writing a email newsletter for years for a big international business and government audience and had been wanting To charge money for it, but couldn’t figure it. He was like the perfect early customer. And we launched with him in October, 2017. And it instantly worked. He made $100,000 his first day. And I was just sitting there being like, is this good? By the way, startups always work like this, it turns out. You build something in a weekend, you make $100,000 in the first day. You know what it is, though? If you ever talk about professional gamblers, every professional gambler has a story where at the start of their career, they go on this huge winning tear. And the reason this is true, obviously is because everybody who starts their careers as a professional gambler on a losing tear does not go on to become a professional gambler. And so we did this thing where we’re like, I wonder if this crazy thing we’re working on is going to go anywhere. And our first customer, we got super lucky in addition to being very smart and hardworking. And it really worked. And we were like, oh shit, we’re doing this. And we like got into YC. And I remember very clearly in the YC interview. So first of all, when we applied, we put on the form, we have $0 in revenue. And then we interviewed four days later and they were like, it says you have $0 in revenue. And I got to say, oh, actually, there’s been an update in the past four days. There’s been a hundred thousand dollars. And that seemed very good. And I remember the thing that they said to us, they were like, oh, this is going to be easy. If you just get four or five more customers like this, you’re going to like raise your demo day money. The whole thing’s going to go like you’re off to the races. We’re like, great. This is going to be like smooth sailing from here on out. It took us like three years before we ever got another customer that was that good. They were the best customer. They were the biggest customer and the fastest launching customer for so long. And there was such a long time where that early win overshadowed everything else we did. And we were gradually like, oh my God, did we make a terrible mistake building this thing? Is it going to work? But that initial success, I think, gave us enough energy momentum to keep going. And of course, eventually it turns out there’s lots and lots of people who go on to make millions of dollars on Substack and that thing has really worked. But if we didn’t both, I think, find the right hole in the universe and then get a little bit lucky, I don’t know if we would have done the thing. (Time 0:11:11)
  • Product over Tech
    • Prioritize product over technology; choose tech that serves user needs.
    • Focus on building a desirable product, then address scaling challenges. Transcript: Andrew Chen And you didn’t do mobile. And then by the way, this guy was so against all the algorithmic anything. This is almost like a Luddite startup. Chris Best You know what’s a sexy technology to work on? Email. Andrew Chen Yes, exactly. Exactly. And so maybe two things on this. Why pick from a tech standpoint something that was where you started? That’s one. And then in the early days, as you’re hiring and building out your engineering team, how do you get people excited about the mission and everything when maybe folks come in and they’re Like, okay, well, what’s the technology problem in this? And tell us maybe how the engineering vision has evolved over time as well. Chris Best Technology is a means to an end. And the thing that was so cool about email to us was, this is one of the last places on the internet, especially on your phone, where you can have a direct connection with your audience Without having to install an app. And it’s not mediated by one of the big social algorithms. Yes, there’s like a Gmail priority inbox algorithm, but email was sort of like this really fun hack where early on you could be a writer and have a direct connection with your audience In a way that did actually work on the phone. And it didn’t require that you install a new app because in the early days of Substack, nobody was ever going to install an app. But if you have one newsletter you’re subscribing to, and it’s get this app to get it, that’s never going to work. So we knew that we needed, especially early on, to have a growth loop that didn’t require putting an app in that thing. We wanted to be just as easy as possible. We wanted to be like, hey, you want this thing? What’s your email? Cool. Do you want to pay for it? Give some money. Great, you’re done. So we built that. And this is like working backwards from the customer. We’re like, what’s the thing that’s going to be great? What do we need to build to make that happen? And what’s a great fun engineering challenge is scaling a service that has lots of users because you made something good. That’s a better challenge than figuring out some really cool, deep technological problem and then realizing that you didn’t make something that anybody cares about. Andrew Chen And the tech problems are going to come with scale. Chris Best And now we get to do all that stuff. Yeah, we’re building like crazy machine learning stuff for our recommendation engine. And we’re doing AI video editing for our video platform. And we’ve got an app and it’s wonderful and we get to do all that stuff. But we get there by not focusing on what’s a sexy technology. You focus on what’s a sexy product to build. And then how are we going to let ourselves (Time 0:18:23)
  • Open Internet Fluke?
    • The open internet, allowing anyone to publish, might be a fluke.
    • Closed systems like Microsoft Windows and the mobile duopoly preceded and may succeed it. Transcript: Andrew Chen Move very fast to do that? I wanted to build on one point that you mentioned about the open internet because I think a very interesting argument that we’re so used to the internet being this place where you can Publish anything and anything can happen. I think you could make the argument that actually it’s a fluke. Because prior to the internet, the primary platform was Microsoft Windows. And a little bit Macintosh and Amiga and like all these other things. But Microsoft was a closed system. And Microsoft did a lot of things with their power that caused them eventually to be sued by the DOJ and they became a convicted monopolist on all those things. And then the internet was open. And then mobile is really a duopoly of two companies. And then this new thing that we’re creating right now on top of it, which is all the AI things, you’re like, well, is this going to be a couple really wealthy companies? Or is this going to be something that can be open again? And so one thing with the Substack team that I always admired and something that got me excited about the company beyond just the business being great is that the mission is actually So amazing. And you guys have such a strong philosophy beyond this as an amazing business model for people. You’ve gotten to a point where there’s actually been real scale. There is a mobile app that’s going big time. What are you excited about from a technology standpoint now that you have hit that scale and presumably you are not coding and making all the tech decisions these days? (Time 0:20:40)
  • AI’s Impact on Content
    • AI will drastically reduce content creation costs, increasing content supply.
    • The challenge will shift from creating content to curating attention in an abundant world. Transcript: Andrew Chen Say a little bit about what you think, how it might play a role in the product. And then to the extent that you’re skeptical about any roles that it might play, meaning ways you don’t think people want to consume content or ways that maybe tools won’t be useful. Chris Best I’m a big AI bull in general. I think we are in the early phases of the most important technological revolution of my lifetime. I think there’s going to be, as with any new technology, there’s a hype cycle and a reality cycle. And those two things don’t always match up and they don’t always have a predictable pattern. That’s all true. But I’ve seen enough. This thing is going to change everything. And the way that we think about it, I said it before a little bit, is like creative leverage. I think what’s going to happen is that the cost of creating content, of where things are fussy, when I need to produce things, when I need to do work. I used to have a big team that had to realize this creative vision. The cost of doing that thing is going to plummet to zero. And you’re going to have a massive supply of content of every kind that you could ever want. By the way, that’s not a new trend. That’s just a continuation of a trend that we’ve already been in. Even before AI, we had more content than we could ever want in the whole universe. And the reason that people subscribe to a Substack is not, oh, gee, I don’t have enough emails to read and I wish I could pay money to get some more. The problem you have in a world of abundant content is like, how do I allocate my scarce attention? Right? You know what AI has not given us yet is more seconds to be alive. And so how am I going to spend my time and my life? What kinds of things do I want to put in my mind? If what I read is what I become, who do I trust for that? (Time 0:25:03)
  • Testing AI Tools
    • Constantly test new AI tools to avoid being overtaken by native adopters.
    • Create a dedicated space (like a Slack channel) to discuss and experiment with AI’s potential. Transcript: Chris Best There’s a bunch of interesting stuff there we’ve talked about. It’s all creative tools. It’s all that stuff. The thing that I think is maybe less thought about, but just as important to us, is how is AI changing, like making a company? Because my view on this is I think there’s going to be like a great extinction event where there’s sort of like a pre-AI world and a post-AI world. And companies that are getting started now are going to be native adopters of all of the things that change as that happens. And that happens pretty quickly. And companies that came before by default are going to die, I think, because by force of habit, you’ll keep doing the old thing. And unless you’re willing to remake yourself pretty substantially, you’re going to get lapsed by new entrants that are using these tools natively. And so we’re pretty obsessed at Substack of like avoiding that fate by being constant early testers, early adopters. I think of it as like testing the fences. Because at any given moment, there’s like hype about 20 different things in AI that’s, oh, everyone’s going to be doing this now. And like 19 times out of 20, it’s not there yet. It’s bullshit. People are getting hyped about something. You can do a cool demo, but it’s not real. But then one in 20 times, it’s fucking real. And we cannot afford to miss the one in 20 times. We got to be like, we have a Slack channel called Model Behavior, where we’re just constantly talking about, is this possible now? Does this work now? Can it write tests for us? Can it do this? Can it handle our customer support? Turns out, yes, it can. And I think that’s true in our careers too. I think this is true if you’re like a more senior engineer. It’s very tempting to feel like, oh yeah, I played around with Copilot. It’s not that good. Whatever, I’m not even faster with it. This is all fake. It’s not going to be fake. You got to test the fences. (Time 0:28:02)
  • Two Purposes of Media
    • Media consumption serves two purposes: entertainment and self-discovery.
    • AI excels at entertainment, while Substack focuses on human connection and self-improvement. Transcript: Andrew Chen Do you think people want to subscribe to and follow like fully AI content creators? Or do you think that it matters that there’s always a human in the loop for that authenticity aspect of it? Chris Best I’m not going to say anything’s not going to happen. I have enough epistemic humility and I’ve been surprised enough times by things that have happened that I’m not going to say this is not going to happen or that’s not going to happen. When I try to think about this kind of from first principles, the thing I come back to is like, what is the point of culture? What are we doing here? What do I want from Substack? What do I want from whatever thing I’m using to experience the internet and put media? What’s the point of media? Like, why do I consume media? And I do think one answer is basically solely for its effect on me, right? Like I use media like a drug. It’s like, I watch this thing and I feel good and that’s what I get from it. And I think AI is going to be able to do that really, really well. I think it’s going to be like science fiction wireheading. Like we already have things that are like this. There’s already people that treat TikTok this way where you just switch your brain off or reality TV or any kind of thing, giving me a feeling, making me forget the world. That will happen. There’ll be big businesses built on that. That’s one of the real motivation. It, giving me what I want. But the other point of media to me is learning what I should want. It’s being part of a wider society of trying to figure out who I want to become. Am I like becoming more like the person that I think I should be? Am I understanding the purpose of my life? Am I getting to contribute back positively? Am I connecting with other people who I can live in society with? I basically think both of these things are going to be enormous businesses. (Time 0:31:22)
  • Life-Changing Impact
    • A woman, initially hesitant and needing help, made over $1 million yearly on Substack.
    • This success allowed her husband to quit his job and focus on family. Transcript: Andrew Chen Question for you, Chris. One of my favorite things about Substack, when I talk to people about it is Substack is one of those products where people will literally come up and tell me, this has changed my life, Especially for creators, right? And so I’d love to maybe close on maybe an anecdote or something, a very interesting creator’s experience. I know you have a lot of creators. Chris Best Well, there’s one person in particular that kind of jumps to mind. I won’t say who it is, but there’s this early period where like a butterfly could have flapped its wings and they wouldn’t have started a sub stack, right? It’s like at the very beginning, I’m not even a writer. I don’t know if I want to do this. I don’t know if I have anything worthwhile to do. I don’t know if I can do it. And sometimes you get to just give a little like push. And so there’s this one woman who told us after the fact that she couldn’t figure out how to work our stupid website to start a Substack to the point where she actually paid someone else To set up her Substack for her and then started. And then she went on to make over a million dollars a year on Substack to the point where her husband was able to quit his job and spend time with the family. And it like completely transformed their life. And she’s like doing the kind of work she really believes in. There’s so many people that have something very valuable to give the world if they had a way to make culture and have a real business model for it. (Time 0:35:27)