Ana Marie Cox on the Shaky Foundation of Substack as a Business

https://newsletter.anamariecox.com/archive/substack-did-not-see-that-coming/

by Bogdanp • 12 months ago

30 42 12 months ago

newsletter.anamariecox.com

Why is it that Substack can’t just be run as a 10-20 person small-medium sized business forever? If publishers want to go there for a basic product, and Substack can collect rent from them, what’s the problem?

senko2• 12 months ago

Why is it that Substack can’t just be run as a 10-20 person small-medium sized business forever?

They have taken VC money.

chowells• 12 months ago

They took VC funding. That requires them to attempt to grow to the size of Facebook or Amazon, or implode. Merely being profitable forever is not an acceptable outcome.

rwmj• 12 months ago

There must be an opportunity here for someone who can stand up a medium-sized website and integrate it with a payment provider to take Substack's lunch money?

rectang• 12 months ago

I wonder how many profitable, sustainable, rewarding medium-sized businesses that have never taken VC money are utterly invisible to HN.

“You know, you could just not take VC money.”

“… We don’t do that here.”

RamblingCTO• 12 months ago

VC money and you can't boast to your peers with your monopoly valuation that doesn't have any real merit.

elicash2• 12 months ago

There are already small newsletter businesses that offer basic products.

mcepl• 12 months ago

You cannot give millions of USD to potential authors if you are tiny webserver-running small business. That’s what the article was all about.

jeswin• 12 months ago

It’s as unstable as a SpaceX launch

Hate makes people blind. Starship is failing by design - that's just how they're choosing to develop it. The chopsticks video that we saw earlier was very nearly science fiction. And as far as regular launches go, SpaceX has done more successful launches than any company or nation ever.

But more generally, this idea of abandoning an app (or product) the moment you encounter people who disagree with you is disheartening.

_Algernon_• 12 months ago

But more generally, this idea of abandoning an app (or product) the moment you encounter people who disagree with you is disheartening.

It is a behavior Substack itself encourages by turing itself into a social media platform instead of simply a newsletter provider.

Yes, it is useful for building a moat of network effects, but it also forces views and opionions down people's throats that reflect badly on the platform.

randallsquared• 12 months ago

Abandoning a community the moment you encounter people who disagree with you is how one builds a bubble strong enough to say things like the bit you quoted.

archagon• 12 months ago

Why would I spend my precious time wallowing in filth and squalor with some radicalized “influencers” who spout evil nonsense and entirely lack self awareness?

I’d rather go read a book and discuss it with some actually intelligent friends.

KerrAvon• 12 months ago

I agree that hate makes people blind, which is why you need to get off X. That line doesn’t imply anything other than that SpaceX launches are unstable! The explosions are a highly notable feature of said launches.

lapcat3• 12 months ago

That was just a metaphor, a throwaway line in the article, no more important than Stephen Miller's marriage. It's peculiar that this is the subject you chose to expand on in the comments.

derektank2• 12 months ago

The network effects of substack seem pretty weak. Authors can use their own domain name and export a list of their subscribers any time. Their value is in providing software that is sticky for writers and solves a lot of the problems of creating and retaining an audience, which they seem to be doing pretty effectively. For better or worse, I don't think substack has much influence on the broader ecosystem either way; it's all down to consumer demand.

karaterobot• 12 months ago

Here's how little I understand business: $45 million in revenue, earned by taking a totally fair 10% of subscriptions that other people do all the work to get, seems like it ought to be enough. If leadership is trying to scale up to be thousands of employees, or to go public, they are lunatics and deserve to fail. Why not just run a successful newsletter platform?

add-sub-mul-div2• 12 months ago

Greed doesn't have to be the same thing as the ambition it takes to start a company like this, but in practice it pretty much always is.

danpalmer• 12 months ago

It’s interesting you say the 10% is fair. I think some disagree.

In short they are selling web hosting and card payments, which are most likely worth far less than 10%. However, they’re clearly going for being a Brand that people want to publish under. Substack is worth 10% because it’s Substack, not for the tangibles they provide.

Now that leads to the question: what do they need to do to be a brand people want to be a part of? Is censorship part of that? Maybe, maybe not.

The other interest related piece that is topical at the moment is whether Substack might be worth 10% for card payments alone if certain publications would be unable to use payment providers otherwise. Porn and gambling sites often pay that sort of rate because it’s hard to get a payment provider. Maybe laundering nazi sympathy in with a bunch of tech blogs is worth 10% to them.

Kwpolska2• 12 months ago

Running a successful platform is not enough for VC grifters who funded them, the only thing that matters to VC is growth.

senko2• 12 months ago

"Grifters" a bit harsh, considering they used VC money to become successful in the first place (see other comments).

Presumably they knew the deal.

barrrrald2• 12 months ago

This post didn't age well – 3 weeks later Substack announced a $100m fundraise at $1.1b valuation. [1]

Ana's contention that Substack is "rickety" seems motivated by her conviction that they should adopt a more assertive, aggressive censorship regime, and that "we need a world where a social safety net protects risky writing".

There are certainly many interesting questions about the future of media and Substack's business – but the parade of people saying it can't succeed without more moderation keep being proven wrong.

[1] https://www.nytimes.com/2025/07/17/business/substack-fundrai...

elicash2• 12 months ago

This post linked to a different article (former Bloomberg reporter) that said it expected this round to be at $750 million ($50 million above the previous valuation).

And so yes, that's significantly less than it ended up being, $1.1 billion, but I'm not sure it impacts the argument being made. Except that the multiple would be even greater!

add-sub-mul-div2• 12 months ago

She specifically talks about what happens next after raising that $100m. The higher valuation creating more urgency to be profitable, which could lead to a descent into Twitter-style outrage engagement stupidity, influencers, etc.

If she's wrong about anything, it's that you can assume enough people will leave a declining platform to keep it from staying alive.

nova22033• 12 months ago

Counterpoint:

https://finance.yahoo.com/news/timeline-softbanks-bets-wewor...

DoctorOW• 12 months ago

At no point in this post does she even write the word "censor"/"censorship". The post relentlessly criticizes Nazis but wanting silence to her dissent isn't pro-speech, it's just pro-nazi.

I'm really sick of this argument. You never see free speech extremists defending anti-fascism or even questioning the decisions of governments as long as they're right wing.

lapcat3• 12 months ago

This post didn't age well – 3 weeks later Substack announced a $100m fundraise at $1.1b valuation.

From the article: Newcomer says Substack is “pitching investors on a round between $50M and $100M that would value it above its roughly $700M last round price.”

Also: And if Substack does manage to raise that $100M they’re looking for now? Things will get worse.

barrrrald2• 12 months ago

The implication of her article is that they’d have a hard time raising that money and/or that they somehow aren’t doing well - I don’t see any evidence of this cited anywhere in her post.

jemmyw• 12 months ago

I don't think moderation has anything to do with it and it's not the core of the argument in the article. They've taken a huge valuation and investors will want a return on that. The problem is that there's just not that much loyalty in this space. I don't care where the content is hosted as long as it's not annoying, content makers don't care so long as they can make money. When substack starts needing to extract value they have to do it in a way that's annoying and chances are high we see the next platform appear. We've seen it before.

It would be lovely to see a platform get big taking a sustainable approach. But that investment money buys marketing and hype.

dash2• 12 months ago

I feel ambivalent about Substack's Notes (its version of X/Bluesky). On the one hand, the signal/noise ratio is higher than either X or Bluesky. On the other hand, I can see signs of the social media engagement farming nonsense that I've come to dread.

But, I can just click on the "Following" link to avoid it. In fact, I can even set that as my homepage. So, so far, it's not that bad. And I continue to enjoy the diversity of writers; and am much more worried by virtuous scolds than by neonazis.

throw_m239339• 12 months ago

The problem isn’t just that Substack makes money off Nazis, it’s that they don’t seem to care who they make it from.

Ana Marie Cox can move to Medium, they have that "diverse and inclusive" editorial policy she is seeking, we all know how "great" Medium has been doing...

anamariecox• 12 months ago

In case you thought I might be obsessive for no reason, with some personal history about my long tour of new media stutter-steps: https://newsletter.anamariecox.com/archive/why-i-keep-writin...

Ana Marie Cox on the Shaky Foundation of Substack as a Business

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