Inside the Elon-Substack Drama with Chris Best & Hamish McKenzie
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Hi, everyone from New York Magazine and the Vox Media Podcast Network. This is Elon Musk with 100% less self-inflicted pain. Just kidding. This is On with Kara Swisher and I'm Kara Swisher. And I'm Naima Raza reporting with a croaky voice in the wee hours of the LA morning. But that's not the self-inflicted pain you're talking about. No. You mean Elon Musk's recent interview with the BBC where he noted that his time at the helm of Twitter has been, quote,

quite painful. Yeah, the world's tiniest violin for Elon Musk. I mean, he's created the pain and he's created pain for other people. And then he whines about it, which is very on point. It's a very Trumpian kind of thing to do. He's the victim here, but he's not. He created all this himself. So I'm sorry. I'm not feeling bad.

It was interesting. He's changing the label to the BBC and to NPR from government-funded media to publicly-funded media now. Do you see that as kind of him? Why? Why do it at all? No, I don't think she's messing with them at all. They get very little other funding, NPR, from the government. It's just a stupid game from a childish man. I don't know what to say. He's government-funded. Electric cars get enormous subsidies, and he controls 50% of the electric car market.

He got an original loan for Tesla. He's benefited from SpaceX. He is government-funded, and it's just ridiculous. He is government-funded. He's the most government-funded. In the interview, he said he respected the BBC. He said that he probably shouldn't tweet after 3 a.m. He also said that he's open to selling the company. Sure. So do you feel he regrets this, this contrite attitude?

Well, he was forced to buy it. He wasn't forced to buy it. He signed a contract. He's a grown man. He was forced to say free speech, Kara, in the world. No. That's what he's saying. I mean, honestly, the judge made him. He signed a contract. You know, adults sign contracts, and they are responsible for them. Children try to run out of them. He's recently been throwing toys out of the pram around Substack. That has been his recent... Did you say toys out of the pram? Okay. Yeah. That's a British lady. The BBC. Okay.

You know I'm an Anglophile, Kara. Okay. Thanks, Madonna. Okay, what else? I'm sorry, the pram. Toys out of the pram around Substack. That has been his latest. I've actually been surprised by this, how in the letter to OpenAI, which is a little bit like Ford telling Tesla, hey, take a break, him signing that letter. Mm-hmm.

Yeah.

to bring maximum attention to himself with no self-control after 3 a.m. Or someone who feels threatened by everybody. I mean, what those things have in common is that he also has a narrative in each of these stories, like, Kara, you're an asshole. These guys are cloning his product and, you know...

I don't know what it is in OpenAI. He hasn't said. He hasn't made it explicit. He doesn't get to control it. All of them have to do with lack of control over things and the need to control every little aspect to fight. He likes to fight. So, you know, we don't have to fight with him. We do not have to. But our guests today also are avoiding a fight with him, Chris Best and Hamish McKenzie, the co-founders of Substack. And they just launched a new platform this week called Notes.

which Elon had dubbed a, quote, Twitter clone. And not just Elon, we should say others have also called it a Twitter dupe. It looks a little similar. It really isn't. I actually have been using it. It's not. Explain why you think it's not. Because it's just a way for people to hear about things that are on the network on Substack. Substack is a network of writers of very different kinds in politics and history and this and that. And it's just...

You know, it's just a way to learn about what's in them. And I just, it's fine. It's within that universe, I think. And it could, I guess it could become Twitter, but it's really not. It's just an information network and it's not, it's slightly similar, I guess. Elon coming after them has been, you know, kind of a boon for them, I would say, because it's just gotten a lot of free press. But maybe not good for the writers who felt...

threatened this week. So let's explain what happened with a little TikTok before the interview. Yeah. And it begins a week ago last Thursday when MSNBC journalist Mehdi Hassan had Substack writer Matt Taibbi of Twitter Files infamy on his primetime show.

Let's play a clip. And for context, this is where Mehdi Hassan is trying to point out a glaring error in Matt's reporting. Matt had tried to connect the founding of the EIP to the dissolution of a disinformation board that was attempted under Biden two years later. So not possible because the dates don't line up. Let's hear the clip. That's wrong. Well, that's what they say. You don't need sources, Matt. You could check the EIP website. It says it was created in 2020.

Well, that's the date that I just said. And the disinformation board was 2022. Okay. All right. Well, then that is an error. I mean, it's embarrassing. It's embarrassing. I mean, sure.

without good facts or sources and without disclosures. Yeah, I was astonished always by the sloppiness of the Twitter files, just sloppy. And, you know, whatever your agenda is, you at least have to have the goods. And so it seemed like if they wanted to make these reporters who were trying to

prove something. They went in with an agenda and then they did sloppy reporting on it and didn't have the goods. I thought it was a great exemplar of the format of kind of a newsmaking interview, an audio-visual interview, because...

Many of Taibbi's claims in the Twitter files had been debunked previously, but this was a national audience, and you could actually hear Matt bumbling through incomplete answers. He's trying to shift the question. You could see him, you know, kind of sweating and upset around it. And Mehdi did a very good job of pointing it out. And then the guy didn't have answers. That was what was, oh, they're...

That's not something you should do in your report. Blakeney called it Major Cousin Greg Vibes, but without any of the charm. Oh.

I don't know. It was a very good interview by Mehdi of someone who didn't deserve the quality of interview he got. He was given every chance. He took that publicly funded media training and used it against Matt Tobey. So the next day, Friday, Matt then tweets the quote that, of all things, he's learned that Substack links were blocked on Twitter. Oh, wow. And he couldn't believe it.

I couldn't fathom. As someone who had been covering Elon, he just couldn't see it coming. It's crazy. He said users couldn't like, couldn't retweet, couldn't reply to posts with Substack links and that if they clicked on the Substack links and tweets, they were told they were potentially spammy or unsafe and

Which, of course, would be a problem. I mean, leaving Tybee aside, there are a lot of people who rely on Twitter to promote their work on Substack. Surprise that a snake is a snake. What a surprise. This is just the kind of – I'm sorry. These people, they just shoot themselves in the foot over and over again, all of them, and then blame everybody else but themselves for their idiocy. So I don't know what to say. There's nothing to say about someone like that.

But it is problematic, you know, if Elon is suppressing links of sub-stack profiles. Oh, well. He came under fire for it when he tried to do that with Instagram and Mastodon, etc., because he was afraid of the European regulators coming back. Sure. But you know what? Actually, someone who's been around the block, Twitter did just this to Instagram many years ago. They blocked Instagram links, and you couldn't see the pictures. And suddenly you could—it didn't block the links. They blocked the ability to put a picture up.

That the picture would appear in the tweet rather than just the link. And so it happens. You know, you own this platform. You can do what you want. That is the one thing I think. But you can't, you know, virtue signal that you're open to everybody. That's what you can't do if you're going to just play like everybody else, which is capitalism, which is, oh, you're hurting my business and I'll cut you off.

I think it's also bad business practice in this day and age. Look, maybe in the early days of the internet, it's a little different beast, but now we're used to the idea that you can be ubiquitous. You're not like limited to a certain platform. You know, data portability isn't what we'd like, but we expect that everybody is everywhere. Sure. You know.

And that's just been the way of... Yeah, but you don't expect... Look, he owns it. He can do what he wants. It's not great. It's not... It's just... It's no surprise that he would turn on the people who were slavishly licking him up and down and kick them in the nuts. So there you go. Well, according to Elon, who we don't have a real comment from, but he did tweet three things of varying veracity, he said that the Substack links were never blocked, which reporting from The Virgin, New York Times contests that, you know, it seems that they were in some way suppressed or throttled.

Two, he said it turns out Tybee is or was an employee of Substack, which we know not to be true. He was an early Substack Pro contributor. And three, Elon claimed that Substack had tried to download a, quote, massive portion of the Twitter database to bootstrap their Twitter clone.

Which Substack CEO Chris Best has denied and which we're going to ask Best about in the interview that people are going to hear in a minute. Yes. We had an interview with him a year ago and we talked about a lot of things and now including their business and whether they're going to sell. And now we're going to do an update in the wake of this controversy. Well, it's certainly an interesting time to reconnect with Chris Best and Hamish McKenzie. Let's take a quick break and we'll come back with the interview. ♪

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So I'm going to get right into it. You guys have been in the thick of it for the past year. You laid off 14% of your staff. You just launched a new feature called Substack Notes, which looks a lot like Twitter. And you found yourself in a bit of a war with Elon Musk, which welcome to the party. It's fine. You'll be fine. Hamish, can you give me a quick recap of what happened between Substack and Elon in the past few days? Well, we've been working on this product called Notes, which is to help people share and

published short form content, casual content, recommend great writing and great work across Substack. And we announced that and Twitter didn't respond very well to that announcement. I think they saw Substack Notes as a direct threat or a competitor, which is not actually a sentiment we fully share.

But they responded by blocking or throttling Substack links on Twitter by shadow banning effectively the term Substack and Substack's accounts. And that led to an outcry. Writers protested and reasonably so. And that's all cleared up as of now, correct? At the moment, it looks like things are back to normal. But we can't take anything for granted. We've already seen that

that platform will make decisions that might drop at any moment and

unnecessarily consistent with its stated principles. Yeah, unhinged is a different word for it. Anyway, Elon tweeted a few things of which, Chris, you've said none were true. His main claim was that, quote, Substack was trying to download a massive portion of Twitter database to bootstrap a Twitter clone. Chris, you've already said you used the Twitter API for years and believe you were in compliance. But I want to know, are there any changes? Have you used the API? It's not true at all.

You know, we use the Twitter API like anyone else who uses it to help writers. And so there's just not really, there's no truth to it. So explain what that is for people who don't quite understand what the use of something like this is. You have to pretend you're not an engineer, Chris, and speak to real humans. Oh, man, I have to. Okay, I'll look up for my shoes for a second. Okay, all right. So an API lets different services talk to each other. Mm-hmm.

And so, for example, if I'm somebody who uses Substack and I want to, you know, log in with Twitter or link my Twitter account so that I can automatically share things that I write, or if I want to look up, you know, which of the people I'm following have a Substack that I might want to subscribe to. There's a bunch of sort of like features that are specifically provided by the API that Twitter, you know, used to want you to use, which Substack has been using for ages, just the normal way.

The normal way, which is essentially cooperation between sites when you want to cross post and various things. And are there any changes to the types of data you're downloading whatsoever? No. Why do you imagine he tweeted this and put this out there? He was trying to show that you were trying to steal something. I don't really even quite know what he meant by that.

It's hard to speculate why he's doing what he wants to do. Have you heard anything more from him or anyone has Twitter reached out to inform you that you're not in compliance? Because you said, if we're not in compliance, let us know. We haven't had any specific complaints from them. And to be honest,

To be honest, my read is that he's just esteemed about it. Because you did notes, essentially. But Hamish, the whole commotion started the day after Matt Taibbi went on the Mehdi Hassan show and did a disastrous interview, I think we can all agree. You don't have to agree, but I think he did, that made his Twitter files reporting look shoddy. I think, is he not your most popular Substack user? No.

No, I don't think that's true. He is a prominent and very successful Substack writer, but he's not at the top of the charts. Top of the charts. He's among the top of the charts. Heather Cox Richardson is the number one by revenue. She's the top of the politics charts. What have your conversations with him been? Because one of the things he did is he said, I'm going to be using notes and I'm not using Twitter anymore. Talk about that relationship between Twitter and Substack's top writers, because there's a number of them. Our conversations with writers are generally...

How can we help you figure out how to be good at Substack? We don't advise on editorial matters or trying to interfere in any way like that. And when there's something like this that blows up between...

a prominent tech figure and a prominent writer, we try to stay out of the way as much as possible, except to be supportive from the Substack side when they need it. But the difficulty that you've been having with Elon specifically, I wouldn't say Twitter, I think it is Elon, because Elon equals Twitter these days, is that this beef is causing problems for your writers because they're trying, one of the issues is getting people to subscribe. Yeah, it sucks. So explain that.

Well, yeah, we wouldn't have a problem. Well, we wouldn't have much of a problem if the beef was just between the two companies or if Substack was the target. But we do have a problem with it when it's the writers who are being made to pay the price. So we try to be supportive for writers. We're trying to reassure them that we're taking all the steps we can to resolve this in as peaceful a way as possible and to help them get full functionality back for sharing their stories.

And we're trying to make sure that Substack is a good, trustworthy, and reliable partner. Has Twitter been a very important marketing tool? I'm sure you know this for writers there. Yeah, Twitter and all the other social platforms. Heather Cox Richardson, her big audience is on Facebook. Twitter has very little to do with her success on Substack. Instagram is also really big. Twitter's important. There's a lot of writers and readers on Twitter. We would not like...

Twitter to go away as a source would be fine if it did. I think writers would really appreciate having it though. And we want to make sure that we do everything we can to keep it in the system, keep it in the game for writers. And this is to get people back to subscribe. Yeah. Writers are doing amazing work on Substack. Writers are not the best at self-promoting or marketing. And so social media is a way that people can find out that they are doing amazing work. And so we want to maximize those channels and maximize those ways that people can get their work discovered.

So it's useful in that sense, for sure. So is everything, Chris, back to normal, 100% back to normal in that relationship so far, or you just haven't heard further? We haven't heard further.

Now, Taibbi said he's leaving Twitter for subsect notes, as I noted. This is after Twitter reportedly shadow banned his account and after Elon tried to lure him to Twitter exclusively. Are you surprised? Because Twitter had had the review, which was a competitor to you and didn't really work out and they closed it down. How do you look at that? Is that a revival of review, essentially, Chris? Yeah.

They've announced other features that are competitive. I'm not sure how to look at it, to be honest. What about you, Hamish?

Yeah, I understand reviews sort of felt like a little bit of an afterthought for them. It wasn't deeply integrated into the product. I think it does make a lot of sense for Twitter if they wanted to go this way to build long form directly into the product and make it sort of one click simple for people to subscribe. I can see why Twitter would want to pursue that opportunity. It's a good business and it's helpful for creators and writers.

But I do think Twitter is going to have a hard time just sort of introducing it. It's been a different kind of business for 15 years or so now. And it's not trivial to just turn on a dime and, you know, strap an electric motor to an internal combustion engine. I think that's actually the key point here. Because there was a window of time. Facebook did bulletin. Yeah, they did. Twitter did review. I think like the Atlantic did a newsletter. Like a couple people were like,

I think there was a bunch of people that looked at Substack and thought, something is working over there. It must be newsletters. It must be the email piece of it. And so if we just make a thing that's like the email piece of it, then we'll have a Substack and there you go. And I think while the email piece of it is an important piece

component of what Substack is, the core of Substack is not about email and these letters per se, right? It's about the subscription network. It's about the direct connection between writer's

Content creators, people that are making publishing on Substack and their audience, email is one of the vehicles for that. Podcast subscriptions are another. And of course, the paid subscriptions, right? The idea that people are paying directly for things they deeply value makes it a different kind of thing. Yeah, and they're not particularly media companies. That's the other thing. They kind of – you know that expression, wah, wah.

It was sort of like, why would you do that? And unless you were paid, and then if you're like paid by them extra to go there as sort of a signing bonus of some sort. And it seemed to me that if you're really good, you don't really need to be paid to go somewhere. That, you know, it's like buying your friends. That's what I...

described it to them when they approached me and I was like, you have to buy your friends? That's sad and pathetic. Which I thought was kind of an interesting... I mean, I see why they're true. How much did they offer you? Quite a lot there, Chris. You never did, but that's okay. I mean, Hamish, that... We should have talked earlier about this. I didn't realize you were on the market. No, sorry.

I like where I am. Anyway, as I've said, a year ago, Hamish, your then VP of comms, Lulu Chang-Meservey, I think that's right, tweeted, Substack is hiring if you're a Twitter employee who's considering resigning because you're worried about Elon Musk pushing for less regulated speech. Please do not come work here. So do you regret holding him up as a champion of free speech? I don't want to talk about— Shutting yours down.

I don't want to talk about that particular guy. Yeah, all right. Okay. We don't regret standing by free speech, even when it was difficult and even when we took a lot of heat for it. And it would be good if others who are presiding over other major platforms had the same level of reliability and commitment to that cause. So I think my...

There's lots of tweets in history that lots of us probably regret, but we don't regret the principle of standing by free speech. I know you don't want to talk about it, but did you misjudge the commitment to free speech? Because to me, I've been around the block with Reddit. I've been around the block with Mark Zuckerberg on these things, and they tend to shave things off.

to their own purposes and change over time. Talk about how yours has changed. - Our principle and our commitment to it hasn't changed. Those other platforms are compromised by their business models. If they are trying to preserve free speech, they're just gonna have a very difficult time because of the way their platforms are designed. And in this particular case with the latest owner of Twitter taking over,

At that point, it was promises. And now we're seeing what the actions are like and the actions don't match the promises. So I think we can sort of discount our feeling on reliability on that front. So talk about how you look at it now. Is it the exact same thing? Has it changed? It obviously changes as developments happen. You know, when Mark started to see

Holocaust deniers. I'll move to Mark. You don't have to talk about Elon. But he and I had a back and forth about Holocaust deniers. And I said, you're going to take them off at some point. And he goes, never. And then, of course, he did two years later after a lot of damage. Same thing with Alex Jones. They were all like, never. And I'm like, you will. And they did.

And obviously the insurrection was another place where people suddenly had to shift around and figure out what to do. They didn't – neither Twitter or Facebook I think wanted to be handmaidens to sedition or seem like it or be adjacent to it. How do you look at that, the changing, shifting nature of it? Is it only because of their business plans or is there bigger issues? Part of what we've done with Substack is we've tried to build –

from the ground up, a business model and a product, a structure of the network that can support free speech without being in conflict with the business. The fact that when you subscribe to somebody on Substack, you're not subscribing to Substack, you're subscribing to them. And the fact that we are not

trying to get maximum engagement to put ads next to whatever you have in your feed, it just makes it fundamentally different. And we are strong believers in the principle that

Even speech that we don't agree with, even speech that we don't like, even speech that we think is off base and wrong is worth having and it's worth preserving this commitment to letting people write what they want to write. And we think that we can create a platform and a place where that actually works, which would be kind of a new and exciting thing. Each of the people I discussed, whether it was Twitter before Elon or Twitter Elon or Mark Zuckerberg –

Snapchat had this. They all did. Instagram certainly did. Is there a point where you're like, oh, no, we can't do that? We have argued about this on Twitter. Everybody. Is there a no, we're not going to platform this? Yeah. If you want to look to a counter example, you could look at WordPress, which has a more radical position on free speech than even Substack does. And WordPress is not constantly caught in arguments over content moderation. No.

And they haven't changed their principle over time. That's because Matt Mullenweg is nicer than you two. But no, go ahead. Sorry. I'm teasing. That's a low bar now. We're within one standard deviation. I'm teasing. But it's because the model of WordPress sets you up to succeed in that way, whereas the model of Facebook and Twitter where you're having stuff forced down your throat that you didn't ask for, it changes the dynamics of the relationships. Yeah.

And so I think Substack is a lot closer to WordPress in that sense than it is to Facebook and Twitter and YouTube. Well, you are a step away from them. You're more editorial than they are, for sure. They feel more like, here's the Windows operating system. Or maybe you don't think that. Well.

Well, certainly both of those companies have run programs that- That's correct. They're into editorial in a major way. Certainly. You know, if, I don't know, I'm going to use the old Hitler example. If Hitler had Word, he'd use it to write Mein Kampf. But you know what I mean? Like you wouldn't blame Word for it necessarily, or the way you wouldn't blame a pencil and paper. Are you different than that in that you do have a more editorial slant, or maybe you don't think you do at all still? I think we're much closer to an operating systems than something like Facebook is, which who's-

recommendation engine is driven by, um, engagements and what is going to keep people maximally peaked. So that lets you out of a lot of things then. Is there anything that has pushed you? Like we're not going to let them use our pencil and paper. Is there not anybody that you wouldn't do that to? We have a, we have a content policy. You can read it on the website. It's, it's deliberately leaves a broad swath for, uh, people that we disagree with or, or don't like. Um,

And we construe it very narrowly, but there are things that are prohibited. And for example, you're not allowed to have porn on Substack, not because we necessarily have a moral objection to it, but just because we don't think that we can, you know, that's the thing that we're trying to support with this platform. We spend all of our time, you know, building a porn platform when that already exists elsewhere. So there are, you know, there are, we're not, we do have rules, but we take a very strong default stance in favor of freedom of the press. And whoever it happens to be.

Like right now, if Alex Jones, he doesn't have a Substack, but if he did, that's fine by you, for example. We don't think that we are, you know, as great as we are, as great as we believe ourselves to be, we random people who run a tech company, we don't think we should be in the position of deciding, you know, what's true, what's fair, what's allowable to say and talk about, especially for people who are saying, hey, I want to sign up and read this.

Is there anyone, Hamish, that you have? I mean, I don't mind making choices. I'm perfectly fine with it. But I have operated an editorial situation, you know. What we're doing here is creating a platform for people to build media businesses. It's not the same as running a newspaper and running a magazine. Mm-hmm.

And I think we've seen attempts to build a better content moderation policy, build a better content moderation engine, pour more and more dollars into it, build more and more sophisticated technology into making these things that can make sure that no one says the wrong things and people only say the right things. And I think we've got a lot of evidence now that it's not working very well. In fact, I think there's evidence that it may be backfiring. The problems of division and polarization and trust

in our society and not improving despite a number of years now when some of the most powerful and rich technology companies in the world have poured resources into this problem. And so our approach is not like we're going to make a more sophisticated content moderation policy and be better at picking the bad guys and the good guys and the other ones. Our approach is address it at the root.

Well, it does let you out of a lot of hard decisions, though. I mean, you've given writers guaranteed minimums. You do recommend writers. It's not precisely windows we're working with here. Does it let us out of the decisions or does it give the decisions back to writers and readers? Right.

Right? Like the recommendation feature on Substack is a power that writers have to recommend each other. And as we build the network, we're building more and more of this. I think it's important to draw a distinction between moderation, which is I have a publication, I have a Substack, I'm a reader, I have an audience, I have a community that I choose to be a part of. Help me curate that and help me find the place I want to be or help me make my publication, my editorial decisions the way that I want versus censorship, which is when you have a platform coming in from the top down and saying-

here's what you're going to have and here's what you're not. And we think that we can build moderation on Substack in a way that puts the writers and readers in the driver's seat in a way that will work much. Not only is it sort of like convenient for us, but we've designed it to be the thing that the Substack, that the model pulls towards because we think it's the right thing to do. We've had five years of Substack now and it's going pretty well. Like we expected these questions to be more of a burden on us every day and like they're not the sort of crisis that they are for other companies.

We'll be back in a minute. Talk about Substack Notes. First, Chris, in terms of a business and why you think it's important and what it is. And when I say it's sort of like Twitter, it's not quite the same thing. It's sort of like saying tastes like chicken. What is it precisely from your conception? So we've been building this subscription network where there's ways that writers can promote each other, where readers can discover new things. And Notes is kind of like our next step.

along that journey where you can kind of, you know, you've always been able to, for a while you've been able to recommend publications on Substack. And Notes is a place where you can basically recommend anything, right? You can recommend posts, you can recommend quotes, you can recommend comments, and you can just share, you can share short posts, you can share short ideas.

And so it's a place where you can sort of publish to the broader network on Substack and have your things travel beyond your existing subscriber audience so that you can reach people who might like your stuff and want to subscribe. Mm-hmm.

And we don't see this as being a replacement for existing social networks. It's not a replacement for Twitter. It's not a replacement for Instagram. It's a way of sharing stuff, a way of communicating that's built on this completely different business model. It's built on the Substack business model, which is paid subscriptions, not ads, where people have direct relationships with the people they subscribe to. And do you need to subscribe to a writer's Substack to follow them on notes or comment on their note? No.

Yes. At the moment, yeah. Yeah, because? Because this is a subscription network and this is the thing that we want. You can be a non-paid subscriber, correct? Correct.

So you're trying to create a virtuous circle. Why don't you look at, hey, look at this. I like this. Stuff like that. Exactly. Yeah. And for writers to talk to each other about their ideas, about their posts, about what's going on, it creates this interesting – it's less of a single-player game. It creates this interesting world of ideas where people are talking with each other about what they're writing, sharing with each other's audiences. Yeah.

makes for powerful stuff. So how do you avoid some of the toxic clickbait behavior you see on Twitter here? Is this meant to be a more, hey, go gal kind of thing or not? That's the sense I'm getting, that you want it to be a supportive thing when on Twitter, it's not so supportive and they use a lot of pretty toxic things. Some of them do. I think the most important thing to understand here is the thing that Hamish said about what is the fuel of this, right? Because on social networks,

Ultimately, the fuel is attention because you have an ad model that you're trying to grab as much of people's attention as possible and then resell it as a commodity to advertisers. Or say you've had a really difficult upbringing and you need the attention, but go ahead. Go ahead.

Whatever the reason, attention is the thing. And if you talk to someone who's worked on products like the Facebook newsfeed, they'll tell you if they create a thing that gets someone to read a long-form article or watch a long-form video and you put that in the newsfeed, that tanks their metrics.

They say, oh, you went and got them to deeply engage with this idea. That's terrible for us because it means you're going to scroll less. It means you're going to see fewer ads. We're going to lose money. Right. You're enjoying the content rather than being enraged constantly. Yeah. Like you found something that you deeply value and that there's no way to have that signal for that to make money.

in that universe. And so on Substack, we have a different model. On Substack, if you are going into notes and then you find a post that you love and you want to go read 5,000 words, we're winning. We love that. That helps our business model. We want to encourage deep engagement because that means that you might actually go and give your email to that person. You might go on to pay to subscribe to them. So arrangement is not helpful here. Yeah.

It's not the end goal, right? The end goal is like deep value. And the lion's share of the economic benefit is going to the writers, right? If you're making something that's deeply valuable, you're the one that's keeping the vast majority of the financial rewards, which in turn changes what's possible to do on the platform, right? People are building businesses, livelihoods, fortunes on Substack in a way that just doesn't happen in other places. But Hamish, do you worry about it becoming a toxic clickbait kind of thing that people...

to get people to do that or to get into arguments? Is that something you've anticipated? You'd be a psycho not to worry about that. And we spend a lot of time thinking about it and thinking about the design of the system to try and foreclose the opportunity that that sort of stuff can arise. We're not looking to create like a perfectly sanitized information environment where you never see something that you don't like. But I think by setting up the rules in the first place,

so that they encourage and reward the types of behavior and content that drive subscriptions, that drive these deep relationships. You start off on a much better foot. You've got a much more solid foundation. And when you're not trying to get someone addicted to scrolling a feed and searching in another sort of dopamine hit. And so, for example, one thing we'll introduce soon is the ability for writers to make...

give them a setting so that they can make it so only reply, the replies are only available to paid subscribers, for example. Right, so special. They get special things. You can control how your work is engaged with. And as readers, you can easily block or hide people that you don't want to see. I think in this kind of subscription universe, where it's based more along these deeper relationships, then the whole question around, okay,

things like content moderation changes. It's a different universe to the universe that Twitter and Facebook operate in. Well, there's different incentives to get it because you're probably not going to see a beef between Heather Cox Richardson and Matt Taibbi break out. I'm guessing you're not going to have that. Probably not. Probably not. So maybe, maybe. We can hope. It'll be kind of fun. Yeah, kind of fun. Interesting. I would want to see that, yeah. She'd win, hands down. So getting back to notes, Elon called it a clone of Twitter. I'd love to know...

how each of you would describe it in a very short. Chris? Sure. You're testing our talking points. Go, Chris. That's correct. I am. How would I describe notes in a short talking point? Yeah. Well, Elon's a clone of Twitter, so...

Do something else. It's a place where you can share posts, thoughts, quotes, ideas on the Substack network. Okay. Hamish? I'm just going to double that up. But to address the clone point, I think it's an absurd point, actually. I think that feeds are a common technology of the internet, especially for media on the internet. And to the extent that there are some aesthetic similarities between Substack Notes and Twitter...

It's kind of like saying the Tesla Model S was a clone of like an Aston Martin DB9 when it came out. Sure, it has a steering wheel, it has wheels, it has a trunk, it has windows and seats. But the underlying technology for the Tesla Model S is utterly different in a transformative way.

from the Aston Martin DB9 or any other internal combustion engine car. And that is the innovation. That is the difference. So how many people have signed up for beta and how many assignments have you gotten in the first six hours since it launched?

I'm not sure we have all the numbers yet. We're keeping the servers up as the main focus at this point. Millions? Hundreds? We had some hundreds of writers in a private beta, and it's just gone wide today. And there's, I don't know, many, many, many thousands. It's hard to, maybe many more than that could be. But you presumably want millions, correct? You want millions using it.

Yeah. Right now there's 35 million active subscriptions and about 2 million paid subscribers across the Substack network. And so we'd love this to be a major part of that. Is there a way to monetize it, Chris?

I think the most important way to monetize it is going to be, it's a place where your work can spread beyond your original, your existing subscriber base. Yeah. So people can discover, like, this is the thing. If you have something that's great that people love and are paying for, one of your biggest constraints is like, how do new people find and follow them up with this thing? And recommendations from

other writers that people trust is one of the best ways. Right. You also get, listen, even if Elon annoyed you, you got a lot of publicity for it in general. So whatever. No one was writing about it before, just so you know, which is interesting. People don't tend to write new feature stories. We did expect this to be a much more low-key launch than it has turned out to be. Right. So let's get to the business, actually, because there's lots of ways to do business. You're saying this is going to help our subscriber growth, which is the heart of your business.

You obviously need more money to continue to do that. Last year, you tried to raise between $75 and $100 million. You called that off. And you recently raised money via crowdfunding of users and writers. How did that go? That's gone phenomenally, actually. We've been blown away by the response to that crowdfunding community round. And how much did you raise?

We're not actually allowed. We're still within the regulation crowdfunding thing. So if you want to look at the actual numbers, you have to go to wefunder.com slash substack. We can't talk about the specific- The max is $5 million, correct? The max is $5 million. Legally. And has it been difficult to raise a Series C round or another round?

I will say this community funding ground has gone phenomenally. Over the past year, we've set the business up so that we are not dependent on outside funding, so that we aren't subject to the whims of the market. We actually are fortunate that we have a business model that works and we're in a really strong position to...

fulfill the mission of Substack kind of like regardless of what happens in the market. All right. Well, let me drill down on that. Last Friday on the same day, all the Twitter nonsense is happening. The 2020-2021 financial statements you filed with the SEC for this crowdfunding round were disclosed. They showed you had negative revenue for 2021. In other words, you paid writers more than they paid you. Talk about what that means that you're in a position to be okay without that funding.

So when we were starting the Substack Network, we ran a bunch of programs with the aim of kind of like kickstarting this thing, right? We had a bunch of things where we were- These minimum guarantees, right? Yeah, we had various programs that were in various ways helping writers get started, helping sort of like kickstart this thing. And the good news is that that-

worked dramatically. With that initial momentum that we have, we've been able to build this network effect that's very strong. We've been able to make Substack the obvious choice of where you want to come and be part of the network, do your independent publishing. The network effect is real now. We don't need to spend money to kickstart the thing anymore. Was minimum guarantees a mistake?

No. It helped us bring in, in an early stage of Substack's life, an enormous range of high quality writers who brought in tens of millions of readers into the ecosystem. Okay, I'm thinking of Spotify, which I would say it didn't work for them. It didn't work for Patreon. But you felt it was an important thing for you.

Yeah, I think it's a key part of the early self-stack history. It was an important thing to do to kickstart the thing. Okay, so cost of doing business. You didn't release your financial statements for 2022 to potential funders. Why not?

We're a private company. We're not. What's that, Hamish? I'm just laughing at you. I was just going to say, because we're not a public company, but your answer is pretty much the same. Yeah, but is it more? You can tell me, though, how much revenue did you generate last year? We could tell you that. It was more. It was more. Okay. Less. It was less. 2022 was a lot different year to 2021. Yeah.

And if you were looking for indications of how the network has grown, you can look at 2 million paid subscriptions, more than 35 million active monthly subscriptions. So better is what you're saying. The top 10 publishers are making 25 million bucks a year between them. Between them, the top 10 publishers. And then it goes down from there.

For peace of mind, we can confirm that each year of Substack has been financially better than the last. Okay. All right. So let me try another way in both your Series B round and crowdfunding round. You've held the company at $650 million. What's the multiple that takes you to $650 million? Just curious from a math point of view. And what's the rationale? I love to know the rationales. Sometimes I say to people, you just made that up. I'm not saying that to you here.

The way to look at a company like Substack, the thing that we're setting out to do is to build a new economic engine for culture. We're building this subscription network that's fundamentally a new –

universe on the internet with different laws of physics and a different way to work. And that's kind of a wildly ambitious thing to do. And it's going to be a little bit like either we're right about this crazy thing and it's going to be tremendously valuable or we're wrong and it's not going to be worth very much at all. And so the way that investors are looking at this is...

Do I believe that story? Is that a thing that I think can happen in the world? And is the momentum I'm seeing with Substack and the Substack model cause me to believe that that opportunity exists and that this company can be the one to help shepherd that revolution? It's not at the stage where you're looking at it like a SaaS company where you're doing multiples of this and multiples of that. It's a different kind of beast. It's more like Facebook in...

the early days of Facebook where you have to look at it and say, what can this thing become? Then something where you're looking at it and saying like, all right, well, I can do perfect cash flow projections and blah, blah, blah. So you're sensing someone's got to do this. And even if Meta killed theirs off bulletin and Twitter got rid of its newsletter product, everyone's like, oh, it's over. I'm like, is it? It's just they're bad at it. I didn't ever think they were going

be good at it necessarily. But at the same time, places like New York Times are figuring out their newsletters. So it's not over from your perspective. Newsletters aren't over. Do you feel like New York Times has figured out its newsletters? I do not. I had written one, so no, I do not. I would say no. I think they're doing it for internal growth. In fact, I know that. They're doing it to satisfy current subscribers, not to grow new ones. That's the way I would look at it. Right.

And that's a mistake. I thought I expressed that to them, that that was a mistake. They needed to attract new. But they, you know, I see why I saw their strategy. I understood it. I just didn't agree with it. But does that mean newsletters are over from your perspective, either of you? Why do you, Chris, why do you think so many gave up? And don't say there's, you're so great, they couldn't compete. This is the story I told a little bit before. I think people who look at what's happening on Substack and think that it's about email are missing the story.

Right. The email is in a very important part of it. The fact that when I give someone an email address, that's like a direct relationship. It's something that I can bring with me. I can bring my email list to Substack. I can take my email list from Substack. The fact that email is a part of it is important. But the actual story is the story of the subscription network.

The fact that people, you know, readers are subscribing directly to writers they trust. They're paying them directly for the things they deeply value. I think that thing is not only not over, it's just at the very beginning of where it can go. My theory on this is actually that

all of sort of like legacy social media is getting pulled into this black hole to be more and more like TikTok over time. Where this is kind of the natural conclusion of the engagement ad model is to say, you know, more and more cheaply compelling, glue you to the thing, whatever's going to like grab you by the lizard brain and get you to watch ads, that's what's going to win. And so everything is either going to have to like turn into, follow that path and turn into TikTok, or they're going to have to create something that's in opposition to that.

and create Substack. So everybody's either going to have to become TikTok or become Substack, and we're already Substack. Okay. That sounds good. So, Hamish, who is your big – what does that leave as your biggest competitor then?

That's an interesting question. Twitter is certainly trying to be a competitor. That would be interesting. Patreon exists and is doing a great job and has a lot of similarities with Substack. OnlyFans, if they could break out of porn, could become a Substack competitor. Discord is doing some interesting things around direct payments and subscriptions. It puts it in an interesting space if you think about Substack as communities, not just publications.

So the landscape is evolving quickly. Twitch, arguably one day, YouTube a little bit. YouTube's adding subscriptions. So there's a lot of it, depending on anybody who wants substantive content, but no direct competitor. The fellow travelers. Yeah, I think this is going to take a little bit of time to play out as people come to understand what a subscription network is and how different it is to a social network.

But those are companies, we do compete with all of them on some level. There's no exact, like we're in a boxing ring together, like training punches. Right. I like fellow travelers. This is a new thing. We're still sort of like exploring the green fields of what this thing is going to become. And it'll be a while before it's sort of like we're running into each other. Is there a weariness of subscriptions that you're worried about? Same thing's happening in streaming, et cetera. Not yet, but it will. Yeah.

We're only seeing it growing. We just passed 2 million paid subscriptions. So there's not a need for consolidation, for example, for you. Like you and Patreon, you and OnlyFans, with or without the porn, I don't judge. I think, well, Patreon's got plenty of that too. I think we're a long distance from feeling anything like that. And we think there are a lot of people in the world looking for better stuff to read, better stuff to watch, better stuff to

to listen to and to have deep relationships with the writers and the creators who they care about the most. I think that number is much higher than people might assume at first glance. I was thinking of something like Puck, which is sort of a consolidation version of Substack, right? A curated version of Substack. It's a pretty interesting model. It's a super interesting model. And I think you'll see stuff, people are

Building stuff like that increasingly on Substack. Like you're going to be able to see people that take something that's like, you know, one started as an individual thing and turns into something much larger and kind of like a new generation of...

businesses that get built on the back of this model. Yeah, maybe you could call it a magazine. That could be interesting. Anyway, Chris- Magazine? What's that? Never heard of it. Magazine. Yes, it's this cool thing. I bet it could be cool if you put together interesting writers in a group that was curated. Anyway, last time I interviewed you, Chris, I asked you about the rumors that Twitter was trying to buy Substack. It's kind of funny looking back, but are you talking to anyone these days?

We're totally focused on building a successful independent sub-stack. We've got this thing going, the network's going. Yeah. Is that a no? That's not a no. That's a, you're asking juicy questions and I'm giving you my corporate speak answer, which is we're building an independent company. Hamish, would you sell to Elon? No.

Became a knockin' with a pile of cash. Nothing is more interesting. He overpays, I understand. Go ahead. I'm not sure if he has money left. He has money left. Nothing is more interesting to me than Substack staying independent and building independent. People set up their businesses on Substack thinking that they set up their businesses with Substack and we want to reward their trust.

All right. So that is a no. That is a no right now, unless there was a big pile of money that he showed up with, which he does have, Hamish, just so you know. I know it seems like he couldn't spend any more, but he can, unfortunately. Thank you so much. I really appreciate you guys coming on so quickly and everything. Thank you. Thank you. Thank you. It's on!

It seems like they're talking to someone about acquisition, maybe. Yeah, he was very silent. I don't know, that was weird. I mean, definitely Substack has some challenges as a business, just from the numbers. Yeah. I mean, you and I have seen minimum guarantees game for a long time. Like, you have this two-sided marketplace, and you're trying to subsidize entry for one side, the content, by paying the massive inflated...

amounts of money and the cost of acquisition for those guys is high and then you're hoping to get customers in from them, which may or may not happen. Yeah, we'll see. Spotify's been trying it and didn't work so well for most of the people they did deals with. Everybody tries it. CNN Plus tried it, bringing in names. Whether it works or not and the money is well spent, it's a good question. When asked about his Squillion X multiple, Chris said that the model is going to be binary. It's either going to be a huge success or a huge flop. It seems...

probably right. Do you want to weigh in on which side of the coin this lands? Huge success or huge flop? I think it's a middling success. I don't know. I don't know. There's a third option. You know, I don't think it's ever going to be the biggest business in the world, but it's a good business for publishers, I guess. It's another way to make revenue. And

You know, media is never the biggest business in the world in lots of this kind of media. And so they'll be fine. They're the leader in a small space. He had another dichotomy. He said that kind of media institutions are going to have to determine in this new age if they're going to be a TikTok or a Substack. That was interesting. I kind of

thought that was a bit of a false dichotomy. I think people are going to do both, right? Or something in the middle. I don't think you can make predictions about media. I do think there is a TikTok lane for a lot of people and there's a sub-stack kind of lane, which we're kind of in. But there's lots in the middle and you just have to make products that people like, tell stories that people like.

you know, you can be successful in lots of different genres. Agree. Look at the New York Times, for example. I mean, obviously that's a very different dynamic than the rest of the industry, but they've been able to do video, audio, you know, they're on social. Yeah, for now, although I'd love to see the numbers. I'd love to see the numbers. Well, they, you know,

I think the business side works because they're not just doing news, right? They have crosswords. They have cooking. That's right. But I'd like to see what actually works. I bet cooking does. Yeah, cooking, of course. I think Wordle probably was a nice little thing to bring people into the site at very low cost. I don't know. I'd love to see the numbers. Meredith Levin's not sharing them with me, even though we get along super well.

Well, I don't think she's going to take the bait on that. And I also thought it was funny that Chris and Hamish did not take the bait on Elon. Chris said this guy's steamed about it. Hamish says, I don't want to talk about that particular guy. Yeah, they were making little digs at him the whole time.

He who shall not be named. You were reading it as that. No, he was making digs. He called him the latest owner of Twitter taking over. I felt like we were playing like an Elon drinking game and no one could say the name. Yeah, they were doing what they needed to do. You can hear the interview. You can read between the lines. But Cara, do you want to read us out today?

Certainly. Today's show was produced by Naeem Arraza, Blake Nishik, and Christian Castro-Rossell. Special thanks to Hayley Milliken. Our engineers are Fernando Arruda and Rick Kwan. Our theme music is by Trackademics. If you're already following the show, you get your very own clone of Twitter. If not, sorry, Elon's going to block all

of your links but in any case go wherever you listen to podcasts search for on with Kara Swisher and hit follow thanks for listening to on with Kara Swisher from New York Magazine the Vox Media Podcast Network and us we'll be back on Monday with more