Substack can evolve into a marketplace

2020-12-15 2 min read

    When I first heard of Substack I wasn’t too impressed. I fell into the usual engineering trick of thinking it’s something that could be “built in a weekend” but there’s a lot going on behind the scenes. Last week I listened to an interview with Substack’s CEO, Chris Best, which made me realize the scale and scope of Substack’s ambitions.

    At the most fundamental level it’s a product that allows writers to publish a newsletter - taking care of all the mechanics to let writers write. Yet I naively assumed this was just a text editor (think Medium), coupled with payments (Stripe), all hooked up to email (Sendgrid).

    What I did not realize was that Substack also has a service, Defender, that provides legal services to its writers - in particular defending them against libel suits. And that’s just the start, the interview had a good discussion around Substack’s evolution and how it may end up offering, behaving, and operating like a large media company. That may mean that their economics will look more akin to a publisher than a tech company. Yet it may also mean that the services they offer will be higher touch than a typical platform.

    The conversation had me thinking around what are the areas that Substack can get more efficient at scale? Legal protection may be one such area where many writers subsidize the few high-risk ones and yet similar to insurance this may lead to a bit of selection bias where the riskiest writers flee to Substack driving their legal costs up. Arguably any service can be done cheaper at scale since you’re able to leverage your size for better rates or volumes but typically quality suffers.

    I wonder if they may end up with a marketplace model - a writer can sign up and have a barebones newsletter with no human touch. Yet if they want legal support they can pay extra and choose from a variety of lawyers. Or if they want an editor they can find a match on the editor marketplace. An illustrator? You can find one on the illustrator marketplace. A fact-checker? They have a marketplace for that too. All models carry some risk but this may be a way to get better economics while providing reasonably strong services.