Substack got lucky, and so did Margins

Hi. It’s Can, on Substack about Substack.

Saving the world, one mail at a time


It's been around a year and a half since Ranjan and I started this Substack. It was before when newsletters, at least in our small corner of the internet, were called Substacks.

Ranjan and I met in New York City after my cold email and we hit it off immediately. A couple of months later, as the tech two dudes we are, we started a podcast and even recorded two episodes. But then, I decided to leave New York for business school in Singapore. It was around this time that Substack was becoming a thing, and Ranjan, already knee-deep into the world of newsletters, suggested we pivot to email. The rest is history.

Just one more to go…


Primarily thanks to Ranjan's wildly popular posts about food, arbitrage, and especially food arbitrage, we've become one of the top free newsletters here on Substack. Our pieces have spread far and wide. We've both been quoted both in international media as well as our favorite niche newsletters. We even made friends! There's simply no denying we've been nothing but wildly successful beyond our initial goals.

Yet, that might be more because we really had no goals to begin with. We started this partly as a joke and partly to get into the writing habit (and keeping our friendship, love you, bud). Even though we've made valuable professional contacts here, neither of us made a single dollar off of Margins. You could even argue, we are the worst at this. In fact, we almost actively try to undermine our success. We make it as hard on ourselves as possible to acquire readers by rarely including a subscribe link or a button. We make no attempts to send the emails at optimal hours and our social media strategy is me making bad jokes on Twitter and selectively retweeting the praise while ignoring the criticisms. I habitually submit our pieces to Hacker News, but it’s rarely a traffic driver. Yet, it works?

It is amusing to think that we are a Substack story because we don't care about making money here. But what if writing is your full-time job?

Our readers love us…


I'm old enough to have created websites by hand. A website I created more than 20 years ago is still inexplicably live at the same address. It was always clear to me that the Web, which started out not with a browser but a browser-editor hybrid (confusingly named WorldWideWeb), was meant for creators. It just was never clear if these creators would ever get paid for their work.

Substack aims to change this by allowing you to charge for your newsletter. It's hardly the first entrant in this space. There have been many others, from the once-tiny Tinyletter, which was an early internet darling to billion dollar companies like Mailchimp (which now owns TinyLetter). Yet, you really discuss monetizing any sort of content on the web today without hearing about Substack. Here is my hot take: The real magic of Substack is that they got everyone talking about Substack.

There's no gossip like media gossip and no tea like media tea. The recent Columbia Journalism Review piece on Substack ruffled some feathers in predictable quarters for its grim outlook. The piece is great, and I implore you to read it in its entirety. In it, Chang makes the case that Substack works for a tiny few, that the company's no-thumbs-on-the-scale approach only reinforces the existing power dynamics in the media as opposed to balancing the playing field as its founders intended.

The guys devised a system of taking a 10 percent cut from subscriptions (Stripe, the credit card service that processed the fees, would take 2.9 percent, plus thirty cents per transaction), which they felt tied them to the writers. They reached out to Sethi, a developer they knew from Kik, to build out the technology. Their tagline was “We literally only make money when the writers do.” Substack’s mission, announced upon the company’s official debut, sounded more grandiose: “When it has reached maturity, the subscription-based news industry could well be much larger than the newspaper business ever was, much like the ride-hailing industry in San Francisco is bigger than the taxi industry was before Lyft and Uber,” the founders wrote. “Democratizing this subscription-based future will enable more writers to earn more money by writing about what truly matters. It puts the media’s destiny into the right hands.”

In the language of Silicon Valley, where Substack is based both spiritually as well as physically, the company is nothing more than a platform that brings two parties together and takes a cut from whatever transaction they happen to make. This is Silicon Valley 101 stuff. Just like eBay provides the sellers with buyers and buyers with the items, Substack brings together the writer and the reader. Just like eBay allowed beanie babies around the world to find new homes, Substack could allow you to write something as eccentric as Zillow-browsing and potentially make a living out of it. The internet makes the previously unscalable scalable, and Substack is how you achieve that scale as a writer. But the reality is more complicated.


It's tempting to buy into this analogy. Marketplace-washing is a good way to explain, for example, as Ranjan likes to point, what is really a societal arbitrage play. You could even consider my former employer, Uber, a marketplace where riders put out offers for transportation from A to B, and the drivers bid on those. As one side gets bigger, it attracts more of the other. Competition eats away the profit margins, which attracts more buyers. More buyers mean more sellers, even at a smaller take-home, and everyone wins, including the marketplace. Or rather, especially the marketplace.

Silicon Valley loves digital marketplaces, because when it works, this stuff really works. There's a lot of money to be made, at whatever minuscule your rake is when you can charge millions of people, the Planck's constant of the marketplace pitches of the world.

It's hard to tell if Substack really fits into this mold yet. A marketplace, or a platform, needs to provide value to both parties to be successful. eBay finds sellers buyers from around the world, and Uber pings drivers who are available right then and there. Substack's value to the writers is clear (though more on that later) but what it does for readers is much less so.

Think discovery. The team has built some discovery tools like leaderboards, but like any ranked list, they risk incentivizing getting on the leaderboard more so than writing good stuff. The company acknowledged this moral hazard almost immediately, but unclear how they plan on solving this.


Reader experience is another. The scale part of Substack's premise comes from using open and widely deployed internet technologies. Email is both personal (lots of money) and widely available (from lots of people). But that openness also means that you relinquish a lot of control. As a reader, I don't care where my newsletter comes from or really what it looks like, as long as it's readable.

Between discovery and reader experience, Substack has very little leverage against its readers. Since the writers also own their email lists, it's hard to argue if Substack owns any part of the relationship. While other platforms rely on billions of transactional relationships, Substack aims to form a stable connection between the two except it can do very little if that connection happens to move from its platform to another. The easier it is to move to Substack, the easier it is to move out also.


The company obviously knows this. Substack is officially working on a reader product called Inbox. While I've yet to see it, it seems likely that it'll be used for discovery (and thus advertising) of new newsletters and content also. But there is a delicate balance. Just like Uber, willingly or not, hurt public transport options in some places, Substack risks undemocratizing a reader experience that was built on open and free technologies the moment it takes you from your inbox to its Inbox.

Moreover, the company's "open" technology and its journalistic ethos present another problem. Since the writers own their email lists, it's trivial for a writer who no longer wants to write on Substack to take their writing somewhere else. The subscription mechanisms Substack provides are plentiful but they are hardly strategically valuable assets. It's unlikely someone could build the entire Substack product in a week. It's fathomable and somewhat demonstrably possible to do so in a month, as Justin Gage demonstrated. Another friend of mine, Justin Duke, runs an entire newsletter subscription company as a side project while being employed at Stripe. Obviously, some of those are explained by the surprising industriousness of various Justins; it brings into question whether this stuff is that hard to build in the first place.

The challenge and the opportunity of Substack are that it is by design an internet company that uses open and freely available internet technologies. It is such a thin layer that it is barely there for both sides, making it immediately replaceable and extremely invaluable. The company pays hundreds of thousands of dollars to big names to get its name across and acquire mindshare in a market where switching costs zero. But those barriers that it needs to erect are the same ones that will make the experience less native to the technologies it is built on and the spirit of openness and decentralization it embodies. RSS did not die because of Google Reader's demise, but Google Reader's dominance made it easy to kill. A Substack Inbox that owns all the newsletter could pose similar risks.

I don't want to be hard on Substack. As I've mentioned in the beginning, I owe a lot to the company. I've even found my previous job (and possibly next, TBD) through a friend who read one of my old pieces. In fact, the people I spend most of my "online" hours with are the same people I've met through my writing, though I imagine my Twitter habit might have played a role.


The biggest accomplishment of Substack so far is to make so much of the media conversation about itself. That itself may not be a bad thing. Sometimes you need a shock to the system which can shake things up in surprising ways, even though the shock itself had nothing to do with the results. While I'm generally unclear on what Bitcoin provides, I recognize the breath of fresh air it blew on financial products. Covid itself did the same for many industries. No reason to believe that Substack's aggressive foray into newsletters might be the kick in the butt newsletters needed to become a thing again.

This is where Substack lets writers — of all kinds — directly connect with their readers. Because email is an open platform, it’s durable: It was invented almost alongside the early days of the internet, and is here to stay. It’s also portable: You can take your email addresses with you if you switch providers, offering a degree of control beyond what social media and even RSS offered in terms of audience portability (as I and many other niche content creators on the internet learned the hard way). The timeframe for building relationships over email is practically infinite; it’s not limited by how long a platform survives or switches its business model.

Whether that itself is a "venture size opportunity" remains to be seen. The company has raised more than $16M from brand name investors, which ups the ante quite a bit. Substack has been trying to establish itself as a refuge to many high profile writers by both giving them straight-up cash but also promising other trappings of working at an established organization such as legal defense and healthcare benefits. Some of that spending might be explained as go-to-market expenditures, but whether they will scale remains another question.

My co-host Ranjan argues Margins got an initial boost in media people's hearts and minds by being early adopters of Substack. While I am generally the more navel-gazing, if not pandering one of our duo, here I disagree with him. I believe we just got lucky. We had no goals and still don't. We could have written our pieces anywhere and used any other competing newsletter tools like Patreon or Medium's Newsletters or Revue or Ghost, or self-hosted Ghost or god knows what. Sometimes, you just get lucky. We did. I sure hope Substack doesn't blow its luck.