Building Substack: Reinventing Culture through Subscriptions

Andrew Chen: In a world of abundant content, how do I allocate my scarce attention? We're so used to the internet being this place where you can publish anything and anything can happen. I think you could make the argument that actually it's a fluke. The same way that you might write a piece of software and change how a million people do their jobs, you could write a great essay and change who a million people are. We're now in an era where you're not going to be able to build a billion active user ad-supported thing. If what I read is what I become, who do I trust for that?

Andrew Chen: If you're a listener here, you've likely heard of the company Substack. And you almost certainly have read something on Substack. But today, you'll get to hear about the very origins of this company. Why in 2017 did Chris Best and his co-founders choose, of all things, to target a technology originally developed in 1971, over 50 years ago. That is, of course, email.

Andrew Chen: Sitting down today with Chris is A16Z general partner Andrew Chen, as they traverse through the future of media and curation, but also what changes with the latest technological wave, artificial intelligence. Even before AI, we had more content than we could ever want in the whole universe. Chris, by the way, was also a co-founder of Kik for nearly a decade, a messaging app that he helped scale to hundreds of millions of users. So there are plenty of war stories throughout.

Andrew Chen: By the way, this episode was originally recorded during our last Tech Week in San Francisco. So as you plan for the new year, new dates for Tech Week have already been announced. We're going back to New York in June and back to San Francisco and L.A. in October. For more information and to stay posted on hundreds, if not thousands of events to come, plus any other cities where Tech Week might be going, head to tech-week.com. That's tech-week.com. Or you can tap the link in our show notes.

Andrew Chen: As a reminder, the content here is for informational purposes only. Should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com slash disclosures.

Andrew Chen: I wanted to say one really funny thing, which was how I originally met the Substack team, which was I have been writing a blog now for like almost 15 years. And when these guys were going through Y Combinator, Hamish actually reached out to me. So this is Chris's co-founder. And he said, can I meet up with you? I was like, great, let's do it. I always love meeting founders. And then he gave me a pitch to move my blog over to Substack. And I was like, no fucking way. Never going to do it. You don't know how much money you could have made if you had done that. Yes. Well, that's actually very much true. I actually very much regret this. And so don't be like me. Instead, be like all the other smart people.

Andrew Chen: And so what ended up happening was I said no. But then years later, I started to see, of course, Substack all over the place on X and so on. And then I approached Chris and Hamish and Jay. And I was like, hey, I have a new job now. I can give people money. It's a really cool superpower. Would you like some money? And Chris says, no fucking way. It actually, I think it took maybe six months for us that he finally would allow us to... It was time to build. What can I say? Anyway, so that is the backstory of how we met. Eventually we did. And then now my blog actually does run on Substack. And it's wonderful. And I wish I'd migrated earlier.

Andrew Chen: And so, Chris, my first question to you is, you are CEO of Substack. But actually, you had this whole other life before this, where you were an engineer. People almost don't know that you built a multi-hundred million user product before all of this, but as CTO. So tell us about the whole journey.

Chris Best: Yeah, well, I went to University of Waterloo for college. We did the co-op internship program where you have six real jobs when you go to school, which is nice because then you can afford to go to school and you do real things. I got kind of like a taste for building. And I was sort of bored at the fake learning thing and always really liked the really making something thing. And I got into the kick thing by accident. I was just hanging out with Ted Livingston, who was the CEO. And we were just tinkering. We were just building some stuff. We weren't really sure exactly what we were making at the start. we started out building a music player for the BlackBerry. Very Canadian. Very Canadian, very Canadian story. And we ended up building a messenger that had an absolutely wild arc. I learned a lot. It's funny, I think, being sometimes the technical co-founder, you experience things in a weird opposite land. Like we went through a period where we were doubling our user base every four or five months for like several years. And the way that I experienced that at the time was like, oh, this hurts and I'm not getting to sleep at all. And we're all dying and we're 23 and we have no idea how to scale a service like this. And we're flying servers around because we didn't know to use AWS because we're idiots. And it was a bazillion years ago. And of course, now I'm like, oh man, that's the luckiest thing we ever could have had happen to us. But at the time I was like, this sucks. I don't get to sleep. Like we're working hard.

Chris Best: And when you started, you were actually coding, how did the job evolve and change? And how did you stay, you know, involved, like close to the metal or not, or become a manager? Tell us about your technical journey there.

Chris Best: At Kik, I started out just writing the code, ended up building the engineering team as we grew and then gravitated towards the product end of the world. Because for me, I realized the impact of the things that we build on people is the part of the challenge that motivates me. That's where the fascinating problems wind up being. And then being able to bridge that into the physical realities of what do we have to build? How can we make this thing real? And even at Substack, I'm the CEO this time, which is a very different story. But I built all the early code. Jay and I wrote the vast majority of the product for the first several years. When we finally relented and did that Series A, it was just the three of us working out of my apartment. And it was Jay and I that built everything. I think some people have that choice where they want to go down the super IC, really deep versus a thing where you fork and you're going more engineering manager and leader. And then, of course, a CEO. How did you know which one was right for you? And obviously, Jay is like a genius, right? And so you obviously ended up with a very strong technical co-founder that you met at Kik originally.

Chris Best: I never really even thought about it too much as like the management track versus the IC track. I think when you're a founder, you tend to really blur those things. And you wind up having to do both in order to do a good job. The way that I think about it is it's like a cliche in our industry, but it's deeply true, is you have to start with the user, start with the product, start with the thing that matters in the world and be willing to work backwards to everything else. Work backwards to what should our stack be? How should our servers be architected? And also, what should our org structure be? And how should we hire? And what should our business model be? And ultimately, when you're building a company, it is sort of a challenging, fun engineering problem if you look at it the right way. I think weirdly, maybe the founder path is a way to do both of those things in a pretty unique way.

Andrew Chen: And maybe before we transition, you can tell us about Peak Kick. What did that look like?

Chris Best: We started, we were sort of like WhatsApp before WhatsApp blew up for a minute there. We were growing very fast. They were unknown. And then BlackBerry sued us and tried to kill us and almost succeeded. And then we built it back up from nothing. And in that second phase, I think probably the most interesting part, there was at one point we were like 40% of US teenagers were using Kik. We raised money at a billion dollar valuation from Tencent. The world was our oyster, except we didn't know how to make money. Yes. And then you guys had hundreds of millions of active users. Hundreds of millions of users. All this stuff. Yes, exactly. Yeah. It was big. Really impressive. And yeah, you were in your 20s when you built it, right? This is truly like out of college. This is one of these really rare, interesting experiences.

Chris Best: Yeah, I started building it in college instead of going to class.

Andrew Chen: Okay, so after Kik, you had the messaging app wars, etc. And then eventually, you decided to move on and talk about early days of, okay, you're going to start a new company, you want to do a bunch of things differently. What were some of the lessons you took out of Kik? And how did that inform how you picked the Substack idea in the first place?

Chris Best: There's a lot of positive stuff I took from Kik. Even I think having been somewhere where we built something that had that kind of traction made me believe that it was possible and understand like what pieces have to come together for something like that to happen and understand the impact that you can have when you make one of these online systems that everybody's spending their life in. Like I gained a big respect at Kik both for human nature, like the people using your software at scale are going to do all kinds of strange things and can't change who they are too much and you shouldn't try. But nonetheless, when you're designing the systems that people are spending their lives in online, you can make a heaven or a hell out of the exact same people. And so the way you set up the rules, the way you set up the incentives, the way you set up the norms, the way the system works, I guess I became a believer in the kind of social technology that we're building at Substack at all, which I think was a big part of what probably spurred me to do it. Ultimately, We did do a bunch of things differently. We also had a business model in mind, a way to make money. This is part of why we were always saying no to the money is we had a way to make money, which was nice. It's very inconvenient for us. I recommend it. It gives you a lot of leverage whenever you need it. I don't know. We built the thing fast. Many of you guys know in HBO Silicon Valley, there's the Russ Hanneman thing about how it's so great to be the no revenue company because then if you have the no revenue company, then there's no multiples. There's nothing. It's just the dream, right? And there's sort of an advantage of that. You guys probably saw that and were like, I hope everybody believes this shit. Yeah, that's right. That's right. Well, it's funny. I mean, I was recently just making the argument that we're now in an era where you're not going to be able to build a billion active user ad supported thing. That's an idea from 15 years ago, right? And instead, because we're in a much more competitive environment, there's a lot more going on. Much easier to think about how do you build and monetize something that's very valuable that's like 100 million user environment. I often ask founders now, hey, if someone wants to spend $5,000, how do they do that in your product? Because it's almost like the deeper the monetization, the better. And I know with Substack, there are certain people that spend a lot of money. I forgot what the order of magnitude is, but a lot of money. And then tell us about day one of Substack. I think you had Bill Bishop, quite a famous writer, and he was involved quite early. I think he was like one of the seed investors and he was making good money on Substack from the early days. Help us imagine what like kind of year one was like.

Chris Best: Yeah, well, I'll give you the potted founding story, which was I wasn't actually planning to build a company yet. I was taking a year off. I planned to give myself basically a sabbatical. I'd been grinding pretty hard at the last startup. I wanted to live my life and pursue my hobbies. And I'd always been an avid reader. I grew up in a house full of books, and I've always thought that what you read, the media you consume, shapes how you think, shapes how you see the world, sort of shapes who you are. And so great writing and great culture is valuable. The same way that you might write a piece of software and change how a million people do their jobs, you could write a great essay and change who a million people are. And that thing is this inherently valuable, wonderful thing. And my answer to that was, I should be a writer. I should start blogging. Cool. This is going to be one of my things that I do in this sabbatical that I take. And I wrote what was going to be an essay or a blog post or a screed or something. It was like outlining my frustrations with the media economy on the internet. I was kind of like, wow, wow, the internet's killed the business model for traditional media. And maybe social media is not, you know, an unalloyed good, et cetera, et cetera. And I sent it to my friend Hamish, who's a really a writer who became my co-founder. And he let me down very gently. And Himesh, by the way, he's like a published author. He like wrote a book on Tesla. He's a journalist. Yeah, exactly. He worked at Tesla. He has worked for a lot of the top publications in the world. And he was like, dude, it's 2017. And your point here is maybe newspapers are in trouble. And maybe social media is a mixed blessing sometimes. We know this is not the brilliant new idea that you think it is. However, a more interesting version of this thing might be, so what? Let's say that all of these things you're whining about in this dumb essay you're writing are true. What would you even do differently? And we started arguing about that. And that's the thing that became the kernel of the idea for Substack. and as we talked it over we realized that it was simultaneously like a very ridiculously ambitious grandiose idea like maybe we could reinvent the business model for culture on the internet and create an entire new economy of writing and media and video and things based on the idea that people would pay for things they value that could cause all these new things to exist blah blah blah blah, blah. And also there was this very simple MVP core of it. That was like the very first instantiation of that idea that was basically paid email newsletters. And that thing was the very simplest version of this very large idea. But that thing, I was like, I bet you I could build that in the weekend. And he was like, I know this guy, Bill Bishop, I know a couple of my friends would probably use that tomorrow if only it existed. So we had this like small group of people initially for whom the simple thing that we could build was like the cure for cancer. And of course, I couldn't build on a weekend. You're always a little bit optimistic. It took me a few weeks, but we built an early version of it. We actually started out the very first act we did was publishing a manifesto. I don't recommend this, but we on this little CMS that I was hacking together, We like wrote our founding document of what we were doing and why. And I think Hamish sent that to Bill and a couple of other people. And it hooked us up with our first customer, who was someone who had been writing a email newsletter for years for a big international business and government audience and had been wanting to charge money for it, but couldn't figure. He was like the perfect early customer. And we launched with him in October 2017. And it instantly worked. He made a hundred grand his first day. And I was just sitting there being like, is this good? By the way, startups always work like this. It turns out you build something in a weekend, you make a hundred K in the first day. You know what it is though? If you ever talk about professional gamblers, every professional gambler has a story where at the start of their career, they go on this huge winning tear. And the reason this is true, obviously, is because everybody who starts their career as a professional gambler on a losing tear does not go on to become a professional gambler. And so we did this thing where we're like, I wonder if this crazy thing we're working on is going to go anywhere. And our first customer, we got super lucky in addition to being very smart and hardworking. And it really worked. And we were like, oh shit, we're doing this. And we like got into YC. And I remember very clearly in the YC interview. So first of all, when we applied, we put on the form, we have $0 in revenue. And then we interviewed four days later and they were like, it says you have $0 in revenue. And I got to say, oh, actually there's been an update in the past four days. There's been a hundred thousand dollars. And that seemed very good. And I remember the thing that they said to us, they were like, oh, this is going to be easy. If you just get four or five more customers like this, you're going to like raise your demo day money. The whole thing's going to go like you're off to the races. We're like, great. This is going to be like smooth sailing from here on out. It took us like three years before we ever got another customer that was that good. They were the best customer. They were the biggest customer and the fastest launching customer for so long. And there was such a long time where that early win overshadowed everything else we did. And we were gradually like, oh my God, did we make a terrible mistake building this thing? Is it going to work? But that initial success, I think, gave us enough energy momentum to keep going. And of course, eventually it turns out there's lots and lots of people who go on to make millions of dollars on Substack and that thing has really worked. But if we didn't both, I think, find the right hole in the universe and then get a little bit lucky, I don't know if we would have done the thing.

Andrew Chen: One thing that was so fascinating in the early days was your choice of technology platform, because this was way after the mobile first thing. And I remember when we first had it, I was like, okay, it's a website and email list. And you didn't do mobile. And then by the way, this guy was so against all the algorithmic anything. This is almost like a Luddite startup. You know what's a sexy technology to work on? Email. Yes, exactly. Exactly. And so maybe two things on this. Why pick from a tech standpoint, something that was where you started as one? And then in the early days, as you're hiring and building out your engineering team, how do you get people excited about the mission and everything when maybe folks come in and they're like, okay, well, what's the technology problem in this? And tell us maybe how the engineering vision has evolved over time as well.

Chris Best: Technology is a means to an end. And the thing that was so cool about email to us was, this is one of the last places on the internet, especially on your phone, where you can have a direct connection with your audience without having to install an app. And it not mediated by one of the big social algorithms Yes there like a Gmail priority inbox algorithm but email was sort of like this really fun hack where early on you could be a writer and have a direct connection with your audience in a way that did actually work on the phone. And it didn't require that you install a new app because in the early days of Substack, nobody was ever going to install an app. But if you have one newsletter you're subscribing to and it's get this app to get it, that's never going to work. So we knew that we needed, especially early on, to have a growth loop that didn't require putting an app in that thing. We wanted to be just as easy as possible. We wanted to be like, hey, you want this thing? What's your email? Cool. Do you want to pay for it? Give some money. Great. You're done. So we built that. And this is like working backwards from the customer. We're like, what's the thing that's going to be great? What do we need to build to make that happen? And what's a great fun engineering challenge is scaling a service that has lots of users because you made something good. That's a better challenge than figuring out some really cool, deep technological problem and then realizing that you didn't make something that anybody cares about. And the tech problems are going to come with scale. And now we get to do all that stuff. Yeah, we're building like crazy machine learning stuff for our recommendation engine. And we're doing AI video editing for our video platform. And we've got an app and it's wonderful. And we get to do all that stuff. But we get there by not focusing on what's a sexy technology, you focus on what's a sexy product to build. And then how are we going to let ourselves move very fast to do that?

Andrew Chen: I wanted to build on one point that you mentioned about the open internet. Because I think a very interesting argument that we're so used to the internet being this place where you can publish anything and anything can happen. I think you could make the argument that actually it's a fluke. Because prior to the internet, the primary platform was Microsoft Windows and a little bit Macintosh and Amiga and like all these other things. But Microsoft was a closed system. And Microsoft did a lot of things with their power that caused them eventually to be sued by the DOJ and they became a convicted monopolist on all those things. And then the internet was open. And then mobile is really a duopoly of two companies. And then this new thing that we're creating right now on top of it, which is all the AI things, you're like, well, is this going to be a couple really wealthy companies? Or is this going to be something that can be open again?

Chris Best: I'm a big AI bull in general. Like I think we are in the early phases of the most important technological revolution of my lifetime. I think there's going to be, as with any new technology, there's like a hype cycle and a reality cycle. And those two things don't always match up and they don't always have a predictable pattern. That's all true, but I've seen enough. This thing is going to change everything. And the way that we think about it, I said it before a little bit is like creative leverage. I think what's going to happen is that the cost of creating content of where things are fussy, when I need to produce things, when I need to like do work, I used to have a big team that had to realize this creative vision. The cost of doing that thing is going to plummet to zero. And you're going to have like a massive supply of content of every kind that you could ever want. By the way, that's not a new trend. That's just a continuation of a trend that we've already been in. Even before AI, we had more content than we could ever want in the whole universe. And the reason that people subscribe to a Substack is not, oh, gee, I don't have enough emails to read and I wish I could pay money to get some more. The problem you have in a world of abundant content is like, how do I allocate my scarce attention? Right? You know what AI has not given us yet is more seconds to be alive. And so how am I going to spend my time and my life? What kinds of things do I want to put in my mind? If what I read is what I become, who do I trust for that? What is the point of this culture that I'm consuming? That stuff, it gets to like really interesting philosophical territory. But my answer to all this is you're still going to care what other people think. You're still going to want to have a connection to the human culture and human society that you're a part of. You're going to want to not just consume that, but you're going to want to act back upon it. But then all of the tools that make that stuff are going to get so much better. You're going to be able to have two people write and make a feature film by themselves that's better than anything that could have existed before or whatever the new format that replaces the feature film will be. You're going to have people that can sit there on their phone and just talk to each other and have it turn into the best TV show or the best series of clips or the best essay if you wanted to. You're going to have weird things where you write a science paper and it turns into a podcast. Like, I don't think we can predict exactly how it's all going to bounce, but the like cost of creating really high production values, slick, well done, whatever you want from it, content is going to drop. Actually, that's not only not going to lessen, it's going to increase the value of your trust and relationships, the things that you really care about. People always talk about like, how is AI going to impact Substack, the product, and what are we building? There's a bunch of interesting stuff there. we've talked about, it's all creative tools. It's all that stuff. The thing that I think is maybe less thought about, but just as important to us is how is AI changing, like making a company? Because my view on this is, I think there's going to be like a great extinction event where there's sort of like a pre AI world and a post AI world and companies that are getting started now are going to be native adopters of all of the things that change as that happens And that happens pretty quickly And companies that came before by default are going to die I think because by force of habit you keep doing the old thing And unless you're willing to like remake yourself pretty substantially, you're going to get lapped by new entrants that are using these tools natively. And so we're pretty obsessed at Substack of avoiding that fate by being constant early testers, early adopters. I think of it as like testing the fences. Because at any given moment, there's like hype about 20 different things in AI that's, oh, everyone's going to be doing this now. And like 19 times out of 20, it's not there yet. It's bullshit. People are getting hyped about something. You can do a cool demo, but it's not real. But then one in 20 times, it's fucking real. And we cannot afford to miss the one in 20 times. We got to be like, we have a Slack channel called Model Behavior where we're just constantly talking about, is this possible now? Does this work now? Can it write tests for us? Can it do this? Can it handle our customer support? Turns out, yes, it can. And I think that's true in our careers too. I think this is true if you're like a more senior engineer. It's very tempting to feel like, oh yeah, I played around with Copilot. It's not that good. Whatever, I'm not even faster with it. This is all fake. It's not going to be fake. You got to test the fences. And just to add to your point about companies, I think it's absolutely true that we can now really conceive of using LLMs to write essays and ultimately books. I think that's like a linear extrapolation on what's going to happen. And we often talk about the two people that get together, they make a Marvel movie. Today would cost hundreds of millions of dollars. Tomorrow, it's something that you can do on the laptop. And same with video games and so on. But I very much agree that companies themselves are almost like a format. How do you run something that feels like a thousand person enterprise, but by yourself? That's a very interesting vision in this. And it's absolutely true that we don't know how companies are going to be organized. And in fact, if you go back to pre-industrial revolution, I mean, every business was basically a family business. You have the blacksmith and you teach that to your kids. And it was all based on like the labor of your family. Then factories were very different. And then even the concept of a limited liability corporation had to be invented and so on and so forth. And so, yeah, one of the things we have to talk about is in the future, do we even know what the job titles are going to be? Do we even know what? You know, I think it's very hard to extrapolate. So it's cool that you're leaning into all of this. And I go back to the thing I said before. If the thing you're doing is starting with the value in the world that you're making and working backwards, so how do we do that thing? And you're good at that and you're focusing on that and you're willing to like shift up how you do that as you learn new things. I think this whole thing is going to be a huge win for you. It's only going to make the people doing that more powerful, more effective. We're going to have such wealth and abundance that gets created. and you just have to be willing to use whatever tool becomes available to make great things.

Andrew Chen: Do you think people want to subscribe to and follow fully AI content creators? Or do you think that it matters that there's always a human in the loop for that authenticity aspect of it?

Chris Best: I'm not going to say anything's not going to happen. I have enough epistemic humility and I've been surprised enough times by things that have happened that I'm not going to say this is not going to happen or that's not going to happen. When I tried to think about this kind of from first principles, the thing I come back to is like, what is the point of culture? What are we doing here? What do I want from Substack? What do I want from whatever thing I'm using to experience the internet and put media? What's the point of media? Like, why do I consume media? And I do think one answer is basically solely for its effect on me, right? Like I use media like a rug. It's like, I watch this thing and I feel good. And that's what I get from it. And I think AI is going to be able to do that really, really well. I think it's going to be like science fiction wireheading. Like we already have things that are like this. There's already people that treat TikTok this way, where you just switch your brain off or reality TV or any kind of thing, giving me a feeling, making me forget the world. That will happen. There'll be big businesses built on that. That's one of the real motivation, giving me what I want. But the other point of media to me is learning what I should want. It's being part of a wider society of trying to figure out who I want to become. Am I like becoming more like the person that I think I should be? Am I understanding the purpose of my life? Am I getting to contribute back positively? Am I connecting with other people who I can like live in society with? I basically think both of these things are going to be enormous businesses. And we're building the second one.

Andrew Chen: Tell us about the next chapter of Substack. What are you the most excited about now that you have scale? Now that you have that momentum going, what is the next chapter? What are you the most excited about?

Chris Best: I think there's probably three related things that we're working on right now that I think are going to change what's possible. The first is the Substack app and destination. You sort of asked, why did we never build an app? It's like, well, we couldn't at the start. It turns out we can now. And there is a place, you know, we want to be like the first class place on the internet where you can go and have a real direct relationship with the people that are making the things you deeply value. And then that enables some other things, right? It enables the multimedia stuff. We're pretty deep into podcasting now. Video is starting to really take off. The fact that this model doesn't only work for writers, but it also works for all kinds of creators who are starting to have the same kind of complaints. A lot of people feel about Instagram today like writers felt about the New York Times in 2019. I don't have enough control over this thing. I'm not getting to make the thing that I actually want. I'm not making as much money as I wish I could from this. there's a whole sort of like class of creative people beyond exclusively writers who are starting to discover Substack in weird and wonderful ways that I never would have predicted there's a thriving like fashion scene on Substack which could not have been further from Hamish and my original network that we were making and then related to those two things the last thing is just like making it radically easier for the next generation of creators and within the last month we've made it possible where you can just pull out the app and publish something. And we've already had people who like pull out the app and publish something. And then three weeks later, they're making like 50K and they're like, Ooh, this is very interesting. And I think you tie that into the video stuff. You tie that into all this AI stuff. I think we're going to live in a world where like, I can talk to my phone. And if the things I say are important enough, smart enough, good enough, I can get famous. I can make a million dollars. Every other thing that I would have had to worry about besides making something great. I don't have to worry about it anymore. And that's going to dramatically increase the amount of great culture we have.

Andrew Chen: Last question for you, Chris. One of my favorite things about Substack when I talk to people about it is Substack is one of those products where people will literally come up and tell me, this has changed my life, especially for creators, right? And so I'd love to maybe close on maybe an anecdote or something, a very interesting creator's experience. I know you have a lot of creators. Well, there's one person in particular that kind of jumps to mind. I won't say who it is, but there's this early period where like a butterfly could have flapped its wings and they wouldn't have started a sub stack, right? It's like at the very beginning, I'm not even a writer. I don't know if I want to do this. I don't know if I have anything worthwhile to do