Explaining a16z's Investment in Substack

The current unbundling phase is unsustainable and the long-term media business could look more like the past newspaper model than expected

Companies like Memberful, Patreon, Ghost or others could become the platform that Substack is aiming to build

There may be fewer niche communities online and lower intent to pay for a subscription

High-performing creators may churn from Substack to build their own cheaper backend

Journalists might want to be under a brand instead of on independent platforms

Consumers may not be willing to pay subscriptions for writing. Or, there may not be a combined $1B/year of demand for writing subscriptions

Email could be the wrong entry into paid content. Audio, video or something else could be a better wedge

Email subscriptions don’t have network effects by themselves. Right now, there isn’t a large switching cost for a creator to leave Substack – the creator owns their email list and content. The interesting part, however, comes in when the platform provides enough value that a writer would lose subscribers by switching platforms and when subscribers ... See more

Substack has a business model that creates unique unit economics. Substack isn’t trying to build the next The Economist or The Athletic. It’s not branded; the consumer doesn’t need to know what Substack is. Instead, the growth will come from consumers resonating with individual creators.