How I Built This with Guy Raz - Substack: Chris Best and Hamish McKenzie

Episode Date: May 12, 2025

Substack was founded to create an escape vehicle for writers: Chris Best and Hamish McKenzie imagined a world where writers didn’t have to rely on legacy publications or corporate advertisers, but could instead create a more direct and meaningful relationship with their audience. Despite early skepticism, Chris and Hamish were confident that many people would pay a few dollars a month to subscribe to their favorite newsletters, on subjects ranging from politics to sports to tech. Today, Substack has over 35 million active users, and while many of its offerings are free, a number of its content-creators make upwards of $500,000 a year.This episode was produced by J.C. Howard, with music by Ramtin Arablouei.Edited by Neva Grant, with research help from Iman Maani.You can follow HIBT on Twitter & Instagram, and email us at [e-mail]. Sign up for Guy's free newsletter at guyraz.com and on Substack.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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Airbnb.ca.ca. slash host. It's kind of like it was a good idea for a company and a bad idea for an essay. Like you could tell people this thing and they would give you a blank stare. I would tell people in my life, hey, we're going to make this platform that's going to, you're going to pay for writers on the internet that you really like. And they would look at me like I had horns or they would take pity on me, they would say like, oh, that's so nice. That would be so cool if that worked. But, you know, and I'm sorry to be the one to have to tell you this, you idiot. But like, nobody's ever going to pay for something on the internet. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show

today, how two partners built a getaway vehicle for journalists called Substack, a platform where writers could connect directly with their readers and write pretty much what they wanted. Back when I started out as a reporter, and this is the late 1990s, the idea that some random person with a laptop could reach more people than the New York Times or CNN was absurd. At the time, most people got their information from mainstream sources and a little bit from the Internet. Now, these days, the average evening newscast on CNN gets around how. Half a million viewers, half a million people.

And yet, there are 140,000 YouTubers with audiences at least as big. Once, mighty newspapers, radio news magazines, and TV broadcasts have largely lost their influence and power. And while this isn't a new story, these products have been pushed aside by podcasts, the aforementioned YouTube channels, social media feeds, Twitch streams, and something that's grown a lot. in recent years. Substack. It was founded in 2017 by Chris Best and Hamish McKenzie. At the time, Chris was a tech entrepreneur who had left a once promising startup that would eventually fade away. Hamish was a journalist who wrote mainly about tech and culture for different websites. They had a hunch that people would pay to read the writing of specific writers. But at the beginning, most people were skeptical. Understandably, because newspapers and magazines were

hemorrhaging paying subscribers. What Chris and Hamish were offering was a platform that would make it easy to basically run a small publishing business. With almost no technical skills, anyone could write an article, insert photos and videos, publish it to the internet, manage a mailing list, and accept payments all in one place. Slowly, they started. started to attract writers. First, a few obscure ones, and eventually some pretty heavy hitters like Andrew Sullivan and Matt Taibi. The business model is pretty straightforward. The writer can charge a monthly subscription fee, usually five to eight bucks, and Substack takes around 10%. Now, today, it's estimated that more than 50 Substack writers earn over half a million dollars a

year from paying subscribers. And recently, Substack announced that it has about five million total paid subscriptions. For some journalists who used to work for big publications, Substac has become a lifeline. But the company has also taken a pretty strong position on free speech. It means that with a few exceptions like calls for violence or pornography or spam, substack will let you write basically whatever you want. And the founders have big ambitions for what they expect Substac to become in the future. In a few minutes, you'll hear from Hamish, the other founder, but first to Chris Best, who grew up in the suburbs of Vancouver in the 1990s and early 2000s. Chris got his degree in engineering at the University of Waterloo in Canada.

The most important thing about Waterloo, though, is not actually what you learn in the classes is the fact that they have this mandatory co-op program. You basically go to school for four months, then go and work at a job for four months. Oh. So what kind of jobs would you do? Oh, I mean, my first one, I was working in a, in a, in a, bearing factory in Stratford, Ontario. Like ball bearings? Ball bearings.

Oh, yeah. That's serious engineering right there. Yeah. I mean, I wasn't doing the serious part. I was doing the like little programming and honestly being pretty useless. But I mean, I learned a lot. I learned that I didn't want to work in a ball bearing factory in Stratford, Ontario. Fair enough.

Yeah. All right. So you're, you are doing this program. And while you're there, there's a, I guess you meet this guy named Ted Lingston. Yeah. who's like a roommate or he becomes a friend. And he's somebody, I guess, you start to talk with about maybe coming, like a cool idea. Tell me about these conversations you guys start to have.

Yeah, it wasn't very serious at first at all. It started out just kind of as like a project. It was like, hey, let's build some stuff. Let's hack on some things. We were building, you know, the original thing we started working on was a music player for the BlackBerry. I don't know if you remember that. The phones with the keyboards. Everybody are members.

What BlackBerrys were, of course, course, I had one. And it was, of course, a Canadian company. So you guys originally had this idea to build an app for the BlackBerry that was like a music app? Yeah, we were building a music, we actually built a music app. We were like, hey, we'll go in and make this thing that's way better. Way better than what? The insight that we had, which sounds very stupid to say out loud now, but was novel enough at the time was, hey, this new device, the smartphone, which for a while, it was basically only like, you know, bankers on Wall Street that had BlackBerry's, and this was going to, like the smartphone was going to take over. This is the new center of your life. And so the

idea that you have your music collection on your computer and then sync it to your phone is the dumbest thing ever. You should be able to stream any song you want at any time. So it's like way better than like syncing your music from the computer. Right. And it was supposed to be a way for people to share music legally? Yeah, it was basically Spotify. It was basically like an early version of Spotify. Okay. And we got stuck in negotiations with the record labels, like universal and stuff.

Yeah. And I think we were sort of just like, oh, we'll get there, we'll get there. And then while we were basically waiting for that, we ended up making a messenger on the side. A messaging app. A messaging app. We're like, what else can we do? What else are these smartphones going to matter for? and, you know, BBM Messenger had been a huge deal at the time.

And so we built a messaging app that would pair with the music app. So we built this messaging app almost as like an accompaniment while we were sort of waiting for these record deals to come through. And that thing blew up. Huh. It hit at just the right time and went totally insane. And we went through a period of sort of surprise crazy growth. And just to be clear, I think it was similar, a little bit similar to WhatsApp, right?

It was very similar to WhatsApp. We were basically WhatsApp before WhatsApp. This is, I think this is called Kick, right? You call it, it's called Kick Interactive, and the app is called the Kick Messenger app, K-I-K. K-I-K, yeah. And so you were essentially the C-T-O and the co-founder of this thing, and I guess Ted was also a co-founder, or the founder, too. Yeah. And he kind of, and the CEO, and he kind of oversaw.

saw like the fundraising and that sort of the business side of it? All the fundraising, all the business side. And to be honest, it was really his vision. He sort of had a strong sense of what the product he wanted to bring into the world. And he was driving, driving a lot of it. And so between 2010 and 2015, I mean, you guys had started, I mean, you're getting investors coming at you. This was the hottest messenger app. By 2015, it was very, very much. valued it over a billion dollars. You had 100 employees. This is no joke.

I think there might be people who are listening who remember KIC. Yeah. I mean, at one point there was, I think, 40% of U.S. teenagers were using KIC for a few years. It's amazing. I mean, it had 90 million users by 2013. I mean, this was bigger than the Blackberry Messenger, which had 60 million users. They would eventually sue you guys claiming there was a patent infringement. Yeah.

that, you know, and eventually you guys settled with them. That happened pretty early. So the story actually went, so this blows up. We can't believe it. I'm like, I don't appreciate it the time because I'm not sleeping because I'm trying to keep the servers up. And it's just like crazy. But then the people at Blackberry notice the traffic. A substantial fraction of all pushes going to BlackBerry were just messages for our service.

And at the time, they felt that they had a real strategic, a defensively. strategic thing in Blackberry Messenger, which is basically like their version of like the Apple Messages app. And they flipped on a dime. They went from kind of supporting us and thinking we were cute and fun to saying, no, we're going to kill these guys. And they, they, I got a stack of papers like this alleging all kinds of insane patent infringement like on stuff that was just completely bogus, but just, you know, they just, you're a couple

of people in a startup and they send you this huge stack of paper. But more importantly than that even, they kicked us out of the BlackBerry App Store. They said you actually can't have an app on BlackBerry anymore. And we're going to turn off your push. Wow. So the people who already have the app, they're not going to get their messages on time. And if you're a messaging app and your big drive is your half on BlackBerry and half on iPhone, if you lose half your users, you don't actually lose half your users.

is you lose like 95% of your users, because the whole point of the thing kind of goes away. Meanwhile, there's this little other cross-platform messaging app called WhatsApp that kind of like trucks along through this phase, and they kind of go on to build like an awesome, amazing thing that, you know, sold for $20 billion or something. Yeah, by Facebook. And by 2015, I mean, actually, I think you guys had like two, over 250 million users. I mean, massive.

So it went almost, went up to, a million users, almost back down to almost zero. But we did. We built it back up from almost nothing to get very big again. And essentially, the great good fortune was that Blackberry started declining very rapidly. And iPhones, of course, just made them obsolete. Yeah, it turned out in the long run. The BlackBray didn't actually matter. And this was a, again, a major app. It's almost impossible to believe that something with almost three, hundred million users doesn't exist anymore today. Yeah.

But you're there grinding away. And by 2017, I guess you decide you're done. You're maybe burned out and you want to go. Tell me what was going on. I mean, I'd been there for, I guess, eight or eight-ish years. You know, after we sort of had this BlackBerry thing, we had this messenger that was growing. But we never really figured out what's the business model for this thing. What are we going to turn it into? Like, what does this thing become? And we eventually made the decision to launch like an early

crypto thing. A cryptocurrency in part to raise money? In part to raise money and in part kind of like as a in answer to the question, what do you do if you have a very popular messenger that lots of people use, but you don't know how to make money from it. Right, you weren't making money. It was a free app, yeah. It was a free app. So you're thinking, well, let's use it. Let's start a cryptocurrency because we've got hundreds of millions of people using it.

So maybe they'll buy it. Yeah. But I didn't, that wasn't what I wanted to work on. Yeah. It had been, you know, I'd been there for a long time and so I left. Were you able to personally make any money from the company? I mean, you had investors. Were you able to take some money off the table?

I made some money. And it was enough that it changed my relationship with money, I would say, from somebody that never, you know, was always kind of like scrabbling by to figure out how I'm going to like pay rent to, hey, I've got kind of like some room to maneuver. It was definitely not like set for life money. And it was definitely not, I think, what some people imagine from a company of that scale. Right. Okay. So you are, let's pause here for a moment because this is. where, you know, eventually we'll circle back and with Hamish.

Hamish, I want to bring you in and ask you a little bit about your life before you and Chris met. I know you grew up in a small town in New Zealand, right? Yeah, that's right. It's called Alexandra, 5,000 people. The nearest town that anyone's ever heard of is called Queenstown, which is kind of thought of as the adventure capital of the world. Got it. I know that eventually. you went to university and you wound up getting a master's degree

in journalism and pretty soon after I think you started your career you moved to Hong Kong and started working there as a writer tell me about how that happened and what did you do that? I did end up going to Hong Kong and my logic was

this was 2006 and China was on the march China was on the rise the Beijing Games were two years away and I thought I could go to Hong Kong learn Chinese and report on the rise of China as a foreign correspondent. Smart move. I mean, could have been great. Yeah, it could.

It didn't really work out like that. Instead, I ended up, I just had enough money in my bank account to last a month there. But I did find a job after trying in a bunch of places, and the job is writing for this freebie entertainment magazine, sort of writing about the bar scene and writing about pop culture in Hong Kong. And I guess in that magazine is called Digital Media. Yes, that's right. By 2008, I think you helped to launch Timeouts version in Hong Kong.

Yeah. My friend got deeply familiar with my work, and then he got tapped to be the editor of Timeout in Hong Kong, which we were about to launch this Time Out in London, and had been around for 40 years, Time Out New York. And so he liked my work and asked me to come in and be the music editor, basically at the start, later moved on to other things. So this really is kind of like, I mean, you're still young, right? You're still in your late 20s at this point, but working in like music, entertain,

like music and entertainment journalism, right? Because timeout's more about culture. It's like what's on, what's going on, nightlife. That's right. That's right. I did get to also be the online editor in the days when people thought of the web as a separate kind of entity from the magazine. And I got and then became the features editor as well.

And as a features editor, I also reported. And so I got to write big sort of think PC culture pieces like what's the difference between an expat and an immigrant. That was one of my big pieces. Right. And as an online editor, I got this exposure to what it's like to build a website, especially one that is oriented around listing everything that's going on in the city, which was quickly to become obsolete as the smartphone apps took over.

All right, so you stay there for a couple years, and 2010, you leave. You moved to the United States. Why and where did you go? Leading up to the last year of my time in Hong Kong, I started a relationship with an American girl who lived in the Washington, D.C. area, and her name is Steph, she's now my wife. but Steph got into law school and was most interested in this law school at the University of Maryland, which has its campus in downtown Baltimore. And so we moved there and I just thought of it as another interesting adventure.

Around 2012, you started working for the tech blog Pando Daily. And one of the things you start to cover is Tesla and SpaceX. And I guess this kind of catches the eye of an edit. editor at Faber and Faber. And they said, hey, do you want to write a book about Elon Musk? Yeah, this is 2012, 2013, where people in Silicon Valley sort of knew about this guy, Elon Musk, but he hadn't become an outside phenomenon yet. The Model S had come out in one car of the year in 2012. And they also created this thing called the Supercharger, which would allow you to charge up your electric car for free and fast, and it could be powered by sunlight. And I was saying,

why aren't more people hyped about this guy who's managed to land these rockets? Oh, sorry, was making these successful launches and was on the way to figuring out how to land them. And had created these amazing electric cars that were winning best car of the year award and could run on nothing but clean energy. And so I wrote a bit about those things. And this editor in the UK, Julian Luce is his name. He's like, do you think there's a way to do a good book about this guy? And do you think you could get him to cooperate?

And I was kind of working out of my spare bedroom and boxes. shorts in Baltimore. And I thought, yeah, let me see if I can do that. And so I got in touch with Elon through his mother's website. She's a nutritionist. Had listed her email address there. And it led to a conversation with Elon, who I actually knew already had liked one of the pieces I'd written because his PR person had told me he liked that piece. And so I thought, maybe I have a shot of getting his attention. And he ended up on this phone call with me. You got a call with him asking if he would cooperate for a biography. That's right.

I was pitching him the idea of this book. But Elon said, I don't know about the book. Maybe. But would you be interested in a job at Tesla? And I thought, well, that sounds like an insanely interesting opportunity. I could sort of go into Tesla. This is my idea at the time. I could go into Tesla and be like an in-house journalist telling the story of this company

that has so many fascinating assets. specs and so many moving pieces, and I can help the world see that electric cars might be actually a good thing for the world. Yeah. So you accepted this job, and did you move to California with your then-girlfriend now-wife? Then-girlfriend now-wife, constantly amused by that description. Yes, that job required me to move to the Bay Area. All right, so this is 2014, and this is still, I think, before the Model 3 is, is been released. Yeah. January. And I remember I profiled Tesla maybe in 2009. Gosh, it was a long time ago.

It was like when the roadster was still, you know, there was their car. Yeah. And so it was a different company, right? Like you probably saw Elon Musk regularly. Yeah, I saw him in the office regularly. I think there were like some thousands of people by the time I was there. So it was substantial. But I also was in meetings with Elon and I had a couple of one-on-ones with them.

I started off when I went into that company, I start off as like teachers pet, but like, as is what happens with many people, sort of quickly became pursuant of non-grada to Elon. But what, what happened? A bunch of things. I had worked on a report with one of the engineers about the batteries and how much cleaner they are than gasoline powered cars. And the report didn't come out the way he wanted, it wasn't written, and the way he wanted

or edited in the way he wanted. I took over the social channels for tests. I just learned did some tweets that he didn't like. I got an angry email from him once about the state of the tweets. And they're sort of just contributed to a deterioration in the relationship. But to be clear, I mean, it sounds like you were a big believer in what he was trying to do. I mean, you would eventually write the book about him. He didn't cooperate.

But, I mean, it was about this revolution in electric cars. And, I mean, it sounds like you really did believe in what he was trying to do. I'm still a believer in that. I still think that electric cars are a much better option than internal combustion engine cars. And I believe that Tesla has made an amazing and important contribution to the world in accelerating that transition away from fossil fuels towards a cleaner energy economy. I don't think that can be denied by anybody, even people who hate Elon Musk. All right.

So you're there for a year. You leave. You write this book. and I guess shortly after you leave, you get some consulting work at this company called Kick Interactive. Tell me how, and because now we're going to come together with you and Chris, how did you get work that? Were you just looking for work? Were you looking for consulting work?

So what happened is while working on the book, wanted to figure out a way to pay my bills. And I thought maybe I could work half-time at KIC, and I'd liked KIC because I had become friends with Ted Livingston. And so I thought, maybe if I can get in and work with Kirk, I can be closest guy, Ted. It's a much more Canadian culture. It's totally different from Tesla, which was messy and cutthroat and had to like throw over on under the bus kind of culture. And at Kirk, I became friends with Chris. Can I tell one story from that period? Yes. So Hamish did a bunch of stuff. And probably in the natural course of things, we would not, we would not have interacted that much because Ted was really the face of the company.

But he had a weird, I don't know, quirk of his personality or preference or something where he really didn't want to go on TV. Like he didn't like being on video. Right. So he's like, Chris, you got to go do the, like, be the representative of the company in video appearances. Right. And I was like, you know, the CTO, like technical co-founder that was used to just

hiding in a back room. Yeah. Right. And Hamish was kind of assigned to shepherd me through this process. One time I remember in particular, do you remember the time I had to go on Squawk Box? Yeah, Squaw. It was for the CNBC wanted to have one of the founders of Kick. Chris got assigned to do it, and I got assigned to be his handler for it.

And Chris is a little bit nervous about it, feeling a little bit uptight. I could see. And so it was 8 o'clock in the morning. And I thought, well, I think Chris should have a beer before he goes on. on that might just help him listen them up. And so he had an 8 a.m. Corona. And I joined him as an act of solidarity. And then he went on the interview and crushed it.

And from that moment on, became a media hero for KICK. Wow. So you guys, you're the editorial, kind of an editorial advisor at Kik, Hamish. And you get to know, Chris, because you're helping him prepare for interviews. And you just become friends, basically. Exactly. meantime and this is I guess you're there over to your period Chris you are starting to kind of think about transitioning out and you leave in early 2017 and just to kind of take some time off and what did you want to do during that year off mostly I just wanted to give myself some space like I had you know I'd done this crazy thing I should take some time live my life you know do some of the things that I would have done if I'd had spare time over the past eight years. Anyway, one of the things that was on this

sort of bucket list was, you know, maybe I should write. And I had enough of sort of like the programmer's hubris where I was like, I know how to read. I know how to type. Like, I should write. Surely I would be good at that. And I started writing sort of an essay or a blog post or a screed outlining my frustrations with the media economy on the internet. It was very very, pretentious. It was very, there was a lot of like, Facebook is driving us crazy. Twitter is dividing us like, wah, wah, wah, wah, wah. And I sent this essay to Hamish because I'm like, here's my friend who's actually a writer. And he let me down very gently. We joke about this. He was like, okay, like, it's 2017. You're writing this essay, the thesis of which is like maybe the internet is

bad for newspapers. Like, we know. This is not new information. But if you wanted to make this good, the more interesting question you should be asking in it is, so what? Like, let's assume that all of these things you're whining about are correct. How could it be different? I should mention, by the way, that Hamish disputes my interpretation of that essay. Yeah, oh, yeah, it was not a piece of shit. It was a very good essay, and it was very well argued, and I gave him a series of bullet points of feedback, mostly praising it, and then one of the bullet points that was like, well, can we push this further, you know, people who work in the media know that these are the problems, but no one has a good idea of what the solution is.

What's a solution? Yeah. Yeah. And so that's what led to Chris. We had this conversation about Chris is the systems thinker and the genius who is mostly responsible for the substack model. And the core insight he had was that you should make breeders, the customers, instead of advertisers the customers.

And if you change that core dynamic, especially if you monetize a relationship over time, through enough subscription then different things are possible right but despite the world knowing that these there are these grand problems with the business model that supports media even some of the smartest most well-funded minds and organizations weren't quite figuring it out and it was starting to feel like maybe this thing is all just going to crumble and we're all going to live in the Facebook world now yeah but there was one bright spark and it was a really small bright spark. And it was a guy named Ben Thompson who writes a publication called Stratacchari, which is the worst name in media history. Yeah. And he's had this blog for a long time.

He had it for a couple of years, even by the time we came around in 2017 and were paid to subscribers. Right. Writing this thing out of this bare bedroom in Taipei. And he's just writing about the business models of technology companies. And his model is really simple. He would publish a blog post each week that was his most polished and best work. And that would be free. And then if you wanted more Ben Thompson, if you wanted his view of the world on more things, you could pay $100 a year

and you'd get three more posts by him over email. And it was a really lucrative business for him. We figured out through napkin math and guessing, basically, that he was already making more than a million dollars a year from that. And Ben Thompson was telling anyone who'd listen. I don't know why more journalists don't try this. model because it works really well for me. He was called them up at one point.

Yeah, we talked to him about all this. And yeah. He's like, I don't know why more people don't do it. I was like, so what did you have to do? He's like, well, I, you know, I invented the business model from scratch. I did it for a year with no money. I made my own tech stack and my own cobbled the other product and editorial. Like he sort of like described all of the things that went into him doing it.

And he had to be this like triple unicorn of a great analyst and a great writer and a great entrepreneur and a great editor and a great technology wrangler. And we were just like, oh, that's why nobody does this. That's way too hard. He listed on one of his web pages all the tools he uses just to run this thing. And there are like 19 different tech tools that he paid for. Most writers are not technologically savvy and they don't want to waste their time wrangling those different tools. Yeah, you're a writer. You know how to write something great. That is rare and hard enough. And to expect you to also be this tech genius and this entrepreneur, it's crazy. You should be able to come and type into this box. And if the things you type are great, you're going to get rich and

famous. When we come back in just a moment, how Chris learns to push back when people tell him how bad his idea is. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2017, and Chris and Hamer's, Hamish have an idea for a new digital platform for writers. And even as they're talking about partnering on the idea, Hamish, the journalist, is wary about becoming a founder. I knew that that was a stressful life where you could never really switch off. And there would be many dramas and you're responsible,

not just for your own job and income, but for whoever it ended up working for you and then all your customers and all that kind of stuff. So it was like excited to go back to journalism at that time and be plotting my next book and returning to freelancing. That's what I was really amped up for. But Chris, annoyingly, was coming down to San Francisco every so often in one of these trips he stayed with me and my wife, I think she was by that point.

And once he was excited about that idea after I had prompted him to just invent the new model that was going to save everyone because complaining in an essay isn't enough, he started to go to work on me to convince me that I had to do this with him. I had to build this company with him. And I was like, no, no, no, no, no. That sounds like a horrible life. And I'll just be a consultant or an advisor and I'll help you along the way and point you in the right direction.

And he didn't accept that answer. And he kept working away at me and trying to persuade me that I had to do this and this is going to be fun. And then my wife, Steph, kind of teamed up with him and agreed that I sort of have to do this because it's too much of a convergence of my interests and experience and the things that I like to do. Chris, why did you think you needed Hamish so badly? I mean, you know, you were a tech guy and obviously Hamish is a talented journalist and writer, but why were you so convinced that you needed him to start this thing? I mean, I knew nothing about this world. I didn't know the people.

I didn't know how they thought. I wouldn't have even known where to start. I wouldn't have even known where to start. I can think about things from first principles and having both halves of the brain, having the first principles understanding, but kind of pairing it with being of that world and knowing the language and knowing the people was actually like the magic that made it work. So Hamish, you were, so you basically were like, okay, I'll try this. I mean, you did not want that life. You knew what it was going to entail. The like long days, the time. The, travel, the sleepless nights, worrying about other people's incomes, and you agreed to sign up for this. I did. And, you know, I think it's important to mention that I thought that this model that we're

devised was kind of stupid enough to work. It was either, it was so simple that it had some obvious flaw that we just had missed for some reason, or it was so simple that it was actually going to work. And if it could work for more than a few people, then I think it could work for many, many people. and in that world, the difference it could make would be profound. Can I make one point here that I think is really interesting? Yeah, please. You mentioned that thing. It's like, it's so stupid, like either we're stupid or it's going to work.

I definitely remember that. Like, the way I would have described it at the time was like we couldn't talk ourselves out of this idea. But it was kind of like it was a good idea for a company and a bad idea for an essay, which is how it started. Like, you could tell people this thing and they would give you a blank stare. Like, I would tell people in my life, hey, we're going to. going to make this platform that's going to, you're going to pay for writers on the internet that you really like. And they would like look at me like I had horns or they would, they would take pity on me. They would say like, oh, that's, that's so nice. That would be so cool if that worked.

But, you know, and I'm sorry to be the one to have to tell you this, you idiot, but like nobody's ever going to pay for something on the internet. Right. And people would tell me, people would be like, that sounds great, but I would never pay for something like that. And I devised this like parlor trick where when somebody told me they would never pay for someone on the internet, I would say, well, who's your favorite writer? And they'd say, oh, you know, Guy Raz or whoever. And then I would say, would you pay five bucks a month for that person? And they would say, well, yeah, but that's different. Like, that's a special, that's a special case. Like, that's, yeah, it's so and so. Like, they're really good. And so, in retrospect, I think we were on to something that, like, was a good idea, but sounded bad or, like,

It was not yet in the realm of a thing that people would believe, but it was a realm of thing that people would do. Right. So this was, I mean, so basically, you're looking at this and saying, well, if you're creating content and you're bringing people to the platform, they should be the people doing this should have a guaranteed way of reaching those people. They should own the connection. It should be their relationship.

When you subscribe on Substack, you don't subscribe to Substack. You subscribe to Guy or whoever. Yeah. It's an important point because this is 2017 when you're having the conversation. And it's even more of an acute issue now, which is that you might have a million subscribers on YouTube. But if YouTube changes the algorithm and stops delivering your videos to people automatically, it might be really hard to make a living off of that. But YouTube still benefits every time you post or Facebook benefits every time you post. every time you post Instagram and TikTok, they benefit because they're more eyeballs and they're more advertisers.

And this had happened with Facebook pages at this point. They created a thing where people spent all this money getting people to like their Facebook page on the assumption that that meant they'd built up an audience. And then they said, oh, just kidding, actually. When you want to reach those people, you have to pay again. Yes. And that had worked for Facebook very well. And by the way, I mean, there were other models, Patreon, right, for musicians and art. artists and filmmakers, like that existed. People were being supported for their work through Patreon. Yeah, Patreon, I think, is a hugely important company because it changed the culture. It showed not only that people will be willing to pay for content online, they'll be willing to pay for the artist or creator who they most love or trust. And we looked at Medium and learned a lot

from Medium and took lessons from both of them where they had struggled or what could have been better and got to benefit from standing on their shoulders to design something like the substack system. I mean, this was one of the things that kind of went into my calculations here. I was like, what if we made something that had a business model from the start? And we knew what was, and that's actually important because the thing that we were onto at this point, as it was turning from like an essay into a company that we needed to start, was the big idea of what if you completely change the economics of how these platforms

worked. The problem with Facebook is not that it doesn't work, right? The problem with Facebook is that it works too well and doesn't serve the people who use it. Yes, it kills all the newspapers, but it's a massively successful business that takes advantage of the scale of internet, yada, so what if you could like design a new economic engine, a new incentive structure that could harness the scale and network effects of the internet? but then actually paid money to the people who are making the culture. And at the same time, we had this thing that we could hold in our hand that was like, what if we just made it like a hundred times easier for the next Ben Thompson to do a paid email newsletter?

Yeah. So, Chris, you're in Kitchener in Canada and Hamish, you are in San Francisco. And you obviously, you're communicating every day. But Chris, you are on your own starting to build the platform. You're just working on trying to create this thing that would become substack. Yeah. I mean, it was pretty simple to start. It was just a website that could host some content.

And, but I mean, I think, none of it was rocket. Like, none of it was technically rocket science. It wasn't like we were building some software that only we could have built. But it was just like the putting it together and having it actually work the right way was the new thing. And it, I mean, by the way, it turned out to be pretty hard. Like it was, it was, I think we were right about some of the core insights. We got some early breaks that really helped. But it was, it took a, there was a whole series of things that we had to kind of like believe and act on for long periods of time that is, it's hard to do.

Yeah, and like 2017, writers were not the sexiest customer base in the world. No one thought they were going to build a billion-dollar tech company by serving writers. In fact, people were forsaking writers, forsaking the media, turning their back on that. They'd given up on that. So, all right, so you are building this, Chris, and Hamish, you are kind of trying to drum up potential people to join this platform. And it officially launches in 2017. Before we get to that, up until that point, right? because I think you guys really kind of decide, let's do this in July.

So that summer of 2017, you guys are really working on building this thing because you're going to launch it in October. You probably didn't need a whole lot of money at this point, right? I mean, you had a little bit of money from your time of kick, Chris. So were you able to use some of that money to just finance what needed to be financed initially? Yeah, I put in a little bit of money to basically like pay the hosting bills and, you know, we bought a domain. But it was sort of like minimal at that point. And given, and we've had this conversation with co-founders many times, given that, you know, you're initially kind of this idea that you have in your head. Hamish helps you to kind of refine it.

How did, you know, you had some money to put in and Hamish probably didn't have a whole lot of cash to put in because you're working journalist. How did you guys have that delicate conversation about, okay, here's how we're going to, you know, split the company? How did we have it? You insisted on splitting that evenly, based on class lessons and ideals you've developed for yourself since. So that was it. It was like, we're just going to split it. Yeah. That's right.

Well, what happened is that my grandmother had recently died and passed down some money. I was, I had no money. I had, my, I was paid a check to paycheck with my wife in 2017. Yeah, like, you probably putting in $10,000 at that point for you would have been just like. We couldn't. do that. We couldn't do that. This is why Steph's support was so important, so she was okay with the risk. And luckily, I had this inheritance money from my grandmother that I spent all on, I spent all of it to just cover my salary for a few months before we raised a proper round of money from

like more friends and family that could help us start to pay ourselves a little bit of a salary. So, all right. So that summer, you're working on it. And by October of 2017, you're ready to officially launch. And you've got this guy, Bill Bishop, who you knew him from your time in Asia. Hamish, he had been writing about China. And he agreed to, because I guess this was a free blog that he was writing, and he agreed to join Substack and to start charging. Yeah, he accidentally had a really successful free newsletter. He'd been running it for five years. He'd never really made money off it, except for doing a couple of donation drives. He was paying a bunch of money to send the email.

Yeah. And so Bill had been talking in his newsletter that I was a reader of. He had been talking about how he's going to introduce a paywall soon. He's going to introduce a paywall soon. He'd been talking about that before we started Substack. And I'd been noticing that he kept talking about it, but never getting around to us. And so halfway through his process there, I jumped into his inbox and said, my friend and I are starting this thing, which is kind of like, we'll take care of everything for you, this thing that you're describing that you want to do. So you can just worry about the writing. Would you be interested? been a guinea pig for this, and he luckily said yes. And so we got to launch with kind of the ideal first customer, the perfect first publisher that happened in October 2017. And did you at that point, Chris, moved to California, or were you still in Canada? I was still in Canada. We launched Bill, and we'd also applied to YC. So why Combinator? You should talk about how you're a poor Graham fan and that was like, part of your inspiration for writing these essays. I'd been a Paul Graham fan. I'd been the founder of Y Combinator, obviously, yeah. Yeah. And so we applied to YC with Substack. And I remember the timing because on the application to YC, it said, how much money are you

making? And we said, zero dollars. And then between the application and when we came in for the interview, Bill's launch happened. And we had no, I had no idea what to expect, but he made like six figures his first day through this like duct taped like stripe setup that I had built in the preceding weeks but we just woke up and we were like huh like I think this is this seems good is this good this seems really good all of a sudden more than a hundred thousand dollars of revenue annual revenue based on his own his single in like a day it was just like that just like you watch it's like boom and so we went a few like you know a few days after applying we flew down and went to the YSE interview and they were like, you know, it says here you're making zero dollars.

And we got to say, oh, actually. And I think it contributed to a sense of real momentum. And it was, there was sort of funny because our advisor, Jared, looked at that and he was like, oh, this is going to be easy for you guys. Like, you just, you have one customer that did this. You just need like four or five more of these and you're going to be like sailing off to the races and raising money. It's going to be so easy. Meanwhile, it took us years to have that kind success again. It was very like, we just had that perfect, you know, not quite, not quite years, not quite years. It was not quite years. It was much harder than we thought it was going to be. It was, it wasn't as simple as get the next four Bill Bishops. There weren't the next four Bill Bishops,

but it gave us such a burst of confidence that we were on to something that it sort of helped sustain us, I think, through the next phase. All right. So you get into Y Combinator, obviously big deal, because now you've got, you know, you're going to get exposure to big time investors and you're going to get mentorship. And I'm assuming that's when you move to California, Chris. Yeah, I came down for YC. We did the thing. Okay. So you're now together.

In 2018, you did raise some seed money and you got some interesting investors who, I guess, were interested in this. And I imagine Y Combinator being part of Y Combinator was certainly helpful. Yeah, we did the YC demo day thing. And I think I would characterize us as being kind of like we were not one of the obviously the hot companies that everybody's clamoring for. But we were also, you know, we raised around. We were not one of the struggling ones. We were kind of just like middle of the pack.

Yeah. I remember on the first demo day we did, which is the one that's for YC alumni, Emmett Shear came up to me and he said, Emmishier, founder of, co-founder of Twitch, who was on a show a couple years ago. Yeah, he's like, I look at you guys, I'm really excited about this idea. I think you guys are like Twitch, but for journalists and I want to invest. And so we got him as an early investor and then there's a bunch of people who sort of saw the same thing around that time. And so by the time we finished YC at the end of March, we had 7,000 paid subscriptions across the network that we could point to and say,

look, this thing is working. This thing is going somewhere, at least somewhere relatively interesting. Let me ask you about the business model and the math, right? So the model, if I understand it correctly, from that the beginning and even until now, was the writer gets basically you guys get a 10% commission or whatever, plus there's going to be the payment processing fees, which is, you know, another 2% or something. And so effectively the writer's getting about, let's say 85 to 87% of, of the total revenue. How did you work? I mean, that math is, like, by any account, very beneficial to the writer, right? They're getting a good deal here. Like, if you compare that to any other platform, right?

The writer is doing really well. But it means that your margins are really thin. Like, how did you come up with that math instead of, let's say, 20% or 25%. Well, it's interesting. You know, it starts out as a really great deal. And a couple with that, by the way, everything else is free. So we're not charging you SaaS fees to host a website, to send email to any size. Like, everything else costs nothing.

We wanted to be in a world where we would only make money if the people actually made money. I didn't want to be in the business of like selling people a dream of doing this thing and they would pay us. But then they wouldn't make money and, well, tough for them. And then it's a great deal at the start. And then you start to get, you know, by the time you're making millions of dollars, year, that 10% starts to look substantial. You start to think, wow, that's, uh-huh, I see. Right, but that was going to take, that was going to take a while. And I think even now, it's a very small number of people who are making over a million, a small, you know,

not as small as you might think anymore, but it's, it's, uh, it scales, right? Like, we, we really want you to succeed. At the very start, we, we only handled, only paid newsletters, only paid subscriptions. And then we very quickly figured out we had to have, if you're going to have a paid newsletter, you need free subscription. as well, and we have to handle those. And then we very quickly figured out, if you're going to become a paid newsletter, you're going to start as a free one, so we should make it to that anybody can use it for free. And that became like a big piece of how the top of funnel kind of work for us.

All right. So here's my question. Initially, right, now this is, you know, you're getting some momentum, right? Why combinator? Obviously, there's people are starting to believe in you. But I just want to be clear about something to people listening, which is, Y Combinator, we know about the coin bases. We know about the Airbnbs. We know about the Instacart. But most of the companies that come out of Y Combinator don't end up making it. I mean, the founders might go on and do something else. So just being in Y Combinator is a guarantee that it's going to work. And so we've seen these headlines every day. You know, so-and-so company was your own company, KIC, was valued at a billion dollars at one point. Knowing now you are the CEO of this company. You've learned. a lot of lessons because you were the CTO of that business.

What was the sort of the primary kind of lesson that you took from that experience that you were like, we're not going to do that here because I saw what happened and, you know, it ended up going south. I think there's probably two things that I think about a lot. One was just have a business model. It seems barely straight forward. It seems unkind in retrospect to say, oh, we just. had this theory of like, we'll get a bunch of users and then we'll figure out the business model.

But you have to remember that worked for some of the biggest companies in the world, that worked for WhatsApp who sold for $22 billion. So I don't think it's like, I don't say that as a criticism to say we were stupid for thinking if we got a whole ton of users, we would be able to like turn it into something. That was not a ridiculous way to operate. But it did leave me determined to operate in a different way this time and to have an idea from the get-go of like, what is this business? And then the other one that I think about a lot is, like, there's this saying in Silicon Valley that is keep the main thing, the main thing.

And we went through this at kick where I think even after, like, I think we were always kind of unmoored. We were always thinking about like, and because we didn't have a business model, we're like, what are we going to turn this into? But there was a lot of kind of like trying to figure out the next thing instead of making the main thing actually work. and I think with substack, we're trying to do the opposite of that. We're trying to have, there's like a core of what substack is, and like, that's the thing. When we come back in just a moment, Elon Musk comes back into the story, this time to make Chris an offerer that he can and does refuse. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz.

So it's around 2019. and Chris and Hamish have built a solid scaffolding for Substack. Writers offer their content for free or for money, and Substack gets a cut of the subscriptions. But now the question is, how do they get more writers? We looked for people that we thought weren't being well served by the dominant media structure,

but actually had interesting things to say and had a devoted audience. And so it wasn't necessarily the people with the largest audiences. Maybe they'd have a smaller following on Twitter. Twitter was a common hunting ground in those days. But the people who were following them were really paying attention to what they had to say. And we developed this tool that allowed us to put like fire emojis beside the names of the ones who had these really devoted audiences. And so if you had...

It was like a Richter scale. Like three fire emoji was ten times as good as two fire emoji. Yeah. So if you had one fire emoji, you're like your audience didn't really care that much about what you were saying. if you had three fire emoji, okay, like we're pretty sure you're going to work on substack. If you had four fire emerge, we knew you had the kind of audience that would really respond well to you going independent and would have this direct relationship with you and could help make you get rich with this model, basically. And let's say a prominent writer, I mean, has a million subscribers. They really just need a fraction of those people to pay them a monthly fee to make significant money, right?

I mean, the math is clear. Totally. It's surprising how much we had to make that obvious to writers actually over the course of the years. It was they're used to dealing with huge numbers in terms of audiences, but getting paid pennies as a result, whether by an employer or through the revenue share agreements of those other platforms. And we would have to say to them, look, if you get a thousand paid subscribers and they're paying you 50 bucks a year, do you know how much money that is? And they're like, look, that's enough to live on. And it wasn't always obvious to people. People didn't take that step.

And then we're like, if you get 10,000 paying subscribers paying 50 bucks a year, that's enough to actually like really make serious money and change your life. Half a million dollars. Yeah. That's no joke. It's surprising how much you have to do that multiplication for people. Like it's not that they can't do it themselves. It's that they won't do it.

And the number of times I've had a conversation that's like, you know, so and so has 10,000 subscribers paying. Uh-huh. They're charging $100 a year. Uh-huh. So they're making a million dollars a year. What? And it's sort of like, you know, you could.

have got there yourself, but you sort of have to like point out what's what's happening. Very fortuitously, you had raised money in the summer of 2019, which would come into great use, I'm sure, by COVID. You raised $15 million as led by Andresen Horowitz, but you've got the pandemic. And this really is a turning point year for you. I mean, in many ways, I think you would both agree because of circumstances beyond your control. On the one hand, you've got the pandemic. A lot of the social media companies were, as many of them have admitted, cooperating with the government to de-platform specific people who were talking about, who were opposing COVID vaccines, for example, or people who were writing about what was perceived to be misinformation, right?

And so there's this kind of all these things happening in the background. On the one hand, the social media companies are deplatforming and banning people. On the other hand, prominent journalists are losing their jobs or are feeling under pressure. And so you start to get people coming to your platform. Matt Taibi, Andrew Sullivan, Barry Weiss, leaves the New York Times, starts a substack. It was a big pull forward for us. I mean, we grew something like 6X in that first year of the pandemic. I had this speech that I would give to people a time.

I was like, think of substack as you're at a guest. away vehicle. You don't have to get in it right now, but like, fuel it up. Have the engine idling. Like, create your account, like claim your handle. Have this thing ready just in case something unexpected happens. And if you're in the media in 2020, that wasn't like, that didn't sound crazy to you. And then sure enough, you know, over the, we had that conversation with Andrews expected to be months. You know, he calls us after a weekend, basically says, you'll never guess what happened. And we were like, you know what? We actually might be able to guess what happened. And, you know, he was out. He'd been fired. Well, he resigned under juris.

He was, yeah, sorry, I shouldn't say fired. This is in 2020. This is in 2020. And there was a moment where a lot of those kinds of people you're talking about, the people who are, you know, the recalcitrant voices that don't like being told what to say and we're kind of like not going with the program, were both the people who are selectively the most interesting to read, the people you actually would care about it, want to fire. You'd want to subscribe to them if you're a reader, but there was a moment where a lot of them got either fired or pushed out or had some kind of moment where they were suddenly unwelcome

in the institutions they'd made a home in and invested in. And so we had done a bunch of things like having a stance on freedom of the press and on how it was the right way to approach content moderation that were very non-obvious and non-consensus at the time that we took a lot of heat for, that we would not have been willing to take a lot of heat for, that we not have a theory about what was happening and what mattered and why that set us up to be the platform that those people could trust when that moment hit. I mean, a big part of it is the business model, right? Like the fact that we was paying subscribers, we didn't have advertisers who were getting spooked and boycotting us, bringing us under pressure.

I think we were not yet at the size where we were getting the government attention that the exes and meta's were of the world. And let's be honest. I think objectively, voices that all of us here could agree are objectionable, like people who are racist or spewing conspiracy theories that we may find objectionable. There was a lot of pressure to de-platform people who I'm sure even both of you personally thought, ugh, I'm uncomfortable with this person. So how did you, how did you do the gymnastics in your brain at the time when the culture was somewhat different to say, nope, we're still going to let that happen? With conversations at the time, because we were confronted with this kind of thing in small ways and then bigger ways and then more public ways,

that led to us reaffirming our belief in our position on it and cause us to do things like write down and publish our view of this like why we have a hands-off stance on content moderation, which doesn't mean no stance at all. We still protect the platform or the extremes in line with the First Amendment. No incitements to violence, no spam, no doxing, etc. You say, et cetera, so just to be clear, no incitements to violence, no spamming people and no doxing.

so you can't expose where people live or personal information about them if you don't like them. Those are red lines. If you do any of those things, you're off. Right. And so our view of the world was not that the way to address these problems was to devise more sophisticated content moderation. We'd seen the attempts of the other social media companies to do that. They've invested billions of dollars on this.

They come up with these policy documents that are hundreds of pages long. Yeah. And it doesn't appear to us like it has actually. helped misinformation problems or it's helped reduce the level of harassment or it's helped increase trust in the media ecosystem writ large. Our view of things is the way to solve these kinds of problems address them or mitigate them is through changing the business model, changing the kinds of behaviors and content that can succeed on the platform. And so the theory is like if people are writing a lot of nonsense, they're just not going to

succeed on Substack because it's not an outrage machine like social media. It just doesn't work in the same way where that actually is successful. To me, like that's probably too rosy. Like I think there's, you know, I sometimes think of Substack as an index fund of culture. There's like whatever people are willing to pay for, whatever people are interested in, there's going to be that thing. I don't think our role as a platform on the internet should be to tell you what's right and what's wrong or who to trust and who not to trust. And it's a seductive idea that it should be that role. And a lot of platforms took that stance. And it just didn't work. But you guys have responded at times, like there was an article that you know about was there in an Atlantic in November

of 2023. It was called Substack has a Nazi problem. And this writer identified, I don't know, 15 or 20 newsletters that used Nazi symbols. So I was because you guys did ban some of these newsletter. So what was the reason behind that? So I mean, our stance on this is, look, we have a set of content policies. If something comes to our attention that is against the broadly applicable substack rules, we're going to take action, but we're not changing what we enforce based on pressure. Because as you know, I read a lot of substackers and I really, and I pay for a bunch of them. and based on what I see, I still feel like the best or most prominent writers tend to be iconoclasts. Now, obviously, there are some who are on the left, but I find that the ones that I seem to feel like are more successful are like maybe on the sort of the libertarian center right.

Is that fair? Would you say that's fair? you should look at the leaderboards of substack which is ranked by revenue and in the in the US politics category for example you'll see a diversity of perspectives represented and there's like some of the top ones are like very hard on the left some of them are very hard on the right or libertarian I think there's a true mix but I actually don't know that one dominates the other okay let's go back to our old friend Elon Musk who Hamish you first encountered back in 2014, I think, when you started to profile him and then would eventually work for him. He comes back into your world. Less than 10 years later, he buys, of course,

Twitter, which becomes X. Now, I think, fair to say, one of the, if not the most influential sort of social media platform in terms of shaping policy, because it's clearly red in the White house and he buys it and one of the things that happens in 2023 is you guys launch notes which is a sort of a short feature where you can do short form content you know to your to your followers on substack he basically says look this is a Twitter clone and he kind of kind of you know completely flips his shit well he what's is he fire the fire a shot across about like he basically says anyone tweeting out a substack link we're just going to block those. Even mentioning the word substack was briefly, was briefly. If you search for substack,

it wouldn't work. Yeah. I mean, to clarify, there are plenty of people who to link their substacks on Twitter or X now. It's very common. And so that's obviously no longer the case. But let's just talk about it. And Hamish, I'd love to hear your take on this because he's somebody you really did admire for the work he did around electric cars and, and I think that you felt this way, but all of a sudden, you're on his radar as an enemy, and that's no joke. Yeah, it's an unusual and uncomfortable experience. I continue to believe that about SpaceX and Tesla and some of the other things he's been involved in. He was instrumental in starting to open AI as well. These are major contributions to the world. But that doesn't make

that he doesn't have some personal shortcomings and social shortcomings that show up in other ways. So it sort of sucked at the time. I think he misunderstood and misinterpreted the thing we're doing by launching this notes feed, which is only similar to Twitter in the way that an electric car is similar to a gasoline car. The steering wheel looks the same, and the wheels look the same, and there's a windshield, etc. But the thing that powers it is ultimately creating a totally different product that is better for the end consumers and better for the world. And the substack feed is not Twitter, but it's this subscriptions machine, basically, that helps the independent writers and creators of the world find new audiences and retain them. And just to slightly back up for a second, I mean, I should mention that right around this time, Elon Musk actually made an offer.

to buy you guys out. And I think the way this started is that right before you released notes, you called him, like, and you guys or let him know that you were going to do it as a courtesy, I guess. And you had like a call with him and told him that? Yeah, we gave him a heads up as a courtesy that we're launching notes the next day. And that, you know, some people are going to perceive this as a Twitter competitor, but we don't see it that way. I see.

And he responded by getting Chris on a call and saying to him, well, how about Twitter acquire substack? And I'm looking for a CEO to run the company. This is before Linda. Before Linda, Yaccarino, like within weeks, actually. And so I'm looking for a CEO to run the company. I don't want to be the CEO. So how about you come and do that?

And I'll be the chairman. And how about you think about that? And so we went on an accelerated process of thinking about that. That seems like an interesting, I mean an interesting offer. He's saying, hey, we'll buy you. And at this point, you know, you'd raise some money and, you know, you're doing well. And he's probably going to offer you a premium. And you could be the head of the whole operation.

What did you think, Chris? I guess I tried to imagine that playing out. And I didn't think it would be what I think of as like a CEO role. Like, he runs that place now. He makes all the decisions. He's, you know, to my mind, done a lot of things that make sense from his perspective, but would not be what I would see as supporting the cause of free speech or as a, you know, a neutral, independent platform.

I got to say, I mean, it's, it's, it was interesting, right? It would have been like one of the most interesting, crazy things to, to like contemplate doing. But for me, ultimately, I didn't think it would let us make the thing we said. know to make. This is on the eve of launching notes and he'd say, I'm like, well, do you want to come in and do this and be part of Twitter? And we're like, hang on, we're not going to talk about that right now. We need to focus on notes. And the next day, we launched the notes. There's this huge reaction on Twitter about substack being the Twitter killer now. I think he took that launch as a no, which is fair enough. Yeah. And then that's when the bad things happened. And the bad things were

him sort of. Him nuking substack. Yeah, suppressing substack links, acute making accusations about how we're using the API. Yeah. We had been using for, since the start of Substack, we'd been using the Twitter API. So you could link, you could sign in with Twitter, you could link your Twitter. And he got really mad that we'd been using this API and sent me a bunch of threatening stuff saying, why are you using this stuff to blah, blah, blah, and got quite angry at me. And I guess at the time, I mean, just to put it in context, I mean, he was, because

of the changes he had made at X and sort of the media narrative. And look, you know, I think some legitimate, certainly legitimate blowback and criticism, they were struggling. They were not, there were no advertiser. I mean, they're losing advertisers. They were hemorrhaging cash. A lot of people were like, what the, what did he do? Why would he buy this for, you know, $44 billion? Why would he buy? Now, of course, saying they're reversed. They're like, look, he's got 200 million followers and he's the most powerful, probably. That's the country. Right.

In one of the most powerful voice in the world. So it was a bargain. But at that time in mid-20203, that was the narrative. So I guess from his perspective, he was probably feeling threatened, right? And were you guys worried that those decisions could have a negative impact on your business? I think he overestimated how negative that impact would be. Like, he thought he could kill Substag. and he said as much to me.

He said to you, we can bury you. Yeah. There would have been a time in Substance history when that was true. Like if this had happened in 2019 or 2020, like, yeah, I think that really would have, like, set Substack back a lot. But by the time it went down, the share of Substack traffic that was coming from Twitter had been on a steady decline for years. And I think he thought that it would be, like he sort of had the ability to crush us. Basically, it sounds like the only course of action was to just let it pass. It was going to be painful on a certain number of levels, but eventually it would just pass.

Yeah, I think once we did that launch, we were sort of, we were committed. So interestingly now, 2025, when Twitter's fortunes have turned, and Substack obviously is also grown and is successful. He actually, I've seen him tweet links to substack pieces. So clearly not an issue anymore. As of the end of 2024, you had, it was reported that there were about 35 million active readers and about 4 million of those people were paying subscribers, probably a little bit more now by the time we're talking. I think we can say there's over 5 million now.

All right, 5 million paid subscriptions. It paid subscriptions to be totally accurate, as distinct from subscribers. And that's bigger than, I mean, the Washington Post, the Atlantic, the New Yorker. There's a narrative that you often hear, and I'm sure you've heard from people who really are skeptical of mainstream media organizations. And the narrative is, look, they lied about the Hunter Biden laptop. They lied about COVID restrictions. You know, they told us that there was no lab leak. Do you guys think that as we see the influence of big media organizations, the CNNs, the New York Times, the Washington Posts decline, do you think that they're partly responsible for that?

Or do you think that it's just that, you know, the business model doesn't work anymore or maybe a combination of those things? I would say it is a symptom of the model, a symptom of the structure rather than ideological preferences of these publications and the people who run them. And so while I think social media has created an opportunity for this skepticism to arrive, it's actually created a market for kind of conspiracy theory against the dominant media. I think it's actually more of a symptom of the structure of that economy and that in this dismantling of that structure that social media has wrought, There is a whole lot of reorganization and confusion and volatility that is waiting for order to be imposed upon it again in a new way. But that's not going to look like the old system. It's not going to look like a few central pillars who get to be the ultimate sources of a truth. It's going to look a lot more distributed.

Substack is not yet profitable, which is not unusual, right? It's going to take some time. Based on your experience at KIC, Chris, you know, right? Right? Things can always go south. And obviously you don't anticipate it, but it can always happen. How do you protect the future? How do you build, let's say, the proverbial moat around substack? There are competitors. You may not consider all the companies like Patreon or Ghost or Medium or Beehive or some of these other, even HubSpot. You may not consider those as necessarily as competitors. but how do you make sure that, you know, the momentum continues and what happened to kick doesn't happen to you guys? You just worry about it very hard. Well, there's two things I would pitch.

One is, you know, the advantage of having a business model is you can be in control of your financial destiny. And so we're not running the company to like turn a profit. But the thing that is true and we've kept true pretty much the whole time, is we don't need to raise money again. We're not on this clock. We have like, we are in control of our financial destiny. You have how many employees now, by the way? About 100. Okay. So you're small. I mean, it's small and but efficient, right? Because in terms of what's generated, it just takes 100 people to do that. Yeah. But this is part of it, right? It's like you want to be in, you want to be in,

you want to be in control of your future. You don't want to be, you know, the best time to raise money is when you don't need it. And so you want to make sure that you're always in that position where you have a path to accomplishing your goals that is not like, you know, if it's possible to build a business's way, which for us it is, it's better to build it where fundraising is an accelerant but not a necessity.

So my industry, right, podcasting, has of changed so much since it began, you know, back in the day where you had to plug an iPod into your computer and download some weird wonky thing. You know, there's, there are people like, Mark Merrin and Joe Rogan in the early days, Adam Carolla. Now it's a massive business. And so it's changing, right? The whole, and this is natural and normal, how do you see the substack model changing? I mean, right now, most people, they might subscribe, they might pay

for it or they might not, but they're getting an thing to their inbox and a letter. There's some people who are also doing audio, some people who are making sort of these videos. So what is the, what does it look like? What is a successful, like, substacker going to look like in, you know, five years from now? There's a lot of other platforms and networks that are built around a format, right? You know, Facebook does text and Instagram does pictures and Snapchat does disappearing pictures and podcasts are for audio and medium. Like, there's all of these formats. Other things are built around formats. Substack is built around you.

It's built around the direct relationship. It's built around owning your audience, owning your work, having your own space. having your own space on the internet. And so we are already live in a world where you can write, you can make a podcast, you can make a video, things that you used to need a studio and special equipment and a team to do are going to become able to be done automatically. You're going to be able to make a very high quality audio, video thing from the palm of your hand. And, you know, the thing that we want to do on subject is just bring all of that power to the people making stuff. All right. When you guys think about your whole journey, right,

And I mean, even the fact that you met, you ended up working for doing some consulting work for Kymish and you were on your way out, Chris. And then you started this thing, which really was kind of weird. And I don't know if I think a lot of people were skeptical. They were, as we know, as we heard. But now that you where you've landed, 2025, you're, you know, you're eight years into this thing. How much of where you are now do you attribute to the grind and the work you put in and how much do you think had the same? success of it so far has had to do with just luck and circumstance. It feels like a yin and the yang thing to me, totally inseparable, that the luck has to go with the talent and talent has to go with the luck. And the greatest successes come when those two elements are perfectly in a mutual dance with each other. Yeah. And when we're starting the company, it was the two of us and we got the opportunity to build this thing and it started to show some early signs of success. I said to Chris, like, how can we get to do this?

How come, like, not everyone else is trying to, like, build this kind of company or takes advantage of this, like, very obvious thing and these, like, dynamics. And his answer was actually similar to what you said in your question was, like, not many people have the ability to do this thing. Not everyone happens to be in the right position to do it. Chris? Is it luck or is it hard work?

I think it's mostly a third thing. which is just doing it. Most people don't do the thing. Once you decide to do it, you need to work hard, you need some luck. But most of the great things in the world that don't exist are not because of a lack of talent or because of a lack of luck, but because of a lack of people setting out to do hard things. That's Chris Best and Hamish McKenzie, co-founders of Substack.

By the way, Substack has become the go-to launch path for a new, generation of media brands, including some big ones like the free press and the dispatch, both sites, not surprisingly, were founded by veteran journalists who left big companies to move to substack. The latest, former Washington Post columnist Jennifer Rubin's publication called The Contrarian founded just days after she quit. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And also, please sign up for my newsletter at gairoz.com or you can find it on Substack. This episode was produced by J.C. Howard with music composed by Routin Arablui.

It was edited by Neva Grant with research help from Imman Ma'ani. Our engineers were Patrick Murray and Jimmy Keely. Our production staff also includes Catherine Seifer, Casey Herman, Alex Chung, Sam Paulson, Chris Messini, Carrie Thompson, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Build This.