Substack: Chris Best and Hamish McKenzie

Summary

How I Built This with Guy Raz: Substack – Chris Best and Hamish Mackenzie

Introduction

In this episode of How I Built This, host Guy Raz delves into the inspiring journey of Chris Best and Hamish Mackenzie, the co-founders of Substack. Substack has revolutionized the way writers connect with their audiences, enabling them to monetize their content through direct subscriptions. Chris and Hamish share their experiences, challenges, and the innovative business model that propelled Substack to become a leading platform for independent writers.

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Founders' Backgrounds

Chris Best and Hamish Mackenzie come from diverse professional backgrounds that uniquely positioned them to create Substack.

• Chris Best:

  • Grew up in the suburbs of Vancouver, Canada.
  • Earned an engineering degree from the University of Waterloo.
  • Worked as the CTO and co-founder of Kik Interactive, a popular messaging app valued at over a billion dollars at its peak.

• Hamish Mackenzie:

  • Originates from Alexandra, a small town in New Zealand.
  • Holds a master's degree in journalism.
  • Built a career as a tech and culture journalist, working in Hong Kong and the United States.
  • Authored a book on Elon Musk after working as a journalist at Tesla.

Notable Quote:

Hamish Mackenzie [07:05]: "I learned that I didn't want to work in a ball bearing factory in Stratford, Ontario."

---

Previous Ventures: Kik Interactive

Before Substack, Chris and Hamish experienced significant success with Kik Interactive, a messaging platform that rivaled giants like WhatsApp.

• Growth and Challenges:
  • Kik reached over 250 million users by 2015.
  • Faced legal challenges from BlackBerry over patent infringements, leading to a temporary decline.
  • Despite a resurgence, the founders eventually decided to part ways due to burnout and unresolved business model issues.

Notable Quote:

Hamish Mackenzie [10:15]: "We never really figured out what's the business model for this thing, what are we going to turn it into?"

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The Birth of Substack

After leaving Kik, Chris and Hamish sought to address the declining business models of traditional media. Their collaboration led to the creation of Substack in 2017.

• Inception:

  • Hamish began writing essays critiquing the media landscape.
  • Chris introduced the idea of a platform where writers could monetize directly through subscriptions.
  • Inspired by Ben Thompson's Stratachery, they envisioned a sustainable model for independent journalism.

• Launching Substack:

  • October 2017 marked Substack's official launch with Bill Bishop, a seasoned journalist, as its first subscriber.
  • They applied to Y Combinator, receiving mentorship and initial seed funding.

Notable Quote:

Hamish Mackenzie [28:19]: "People will be willing to pay for content online, they'll be willing to pay for the artist or creator who they most love or trust."

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Business Model and Growth

Substack's innovative approach centers on empowering writers to own their audience and revenue streams.

• Revenue Sharing:

  • Writers set their subscription prices, typically around $5-10 per month.
  • Substack takes a 10% cut, ensuring writers retain approximately 85-90% of their earnings after processing fees.

• Scaling Up:

  • By 2019, Substack had amassed 7,000 paid subscriptions.
  • The platform saw exponential growth during the COVID-19 pandemic, reaching over 5 million paid subscribers by 2025.

Notable Quote:

Hamish Mackenzie [52:05]: "We wanted to be in a world where we would only make money if the people actually made money."

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Navigating Challenges and Free Speech

Substack maintains a strong stance on free speech, balancing it with necessary content moderation.

• Content Policies:

  • Substack permits a wide range of content, excluding incitements to violence, pornography, and spam.
  • The platform emphasizes that subscriptions are between writers and their readers, not dictated by Substack's algorithms.

• Handling Controversies:

  • In 2023, when Elon Musk's acquisition of Twitter (now X) led to stricter content moderation, Substack positioned itself as a haven for independent voices.
  • Despite initial tensions, Substack continued to uphold its commitment to minimal content restrictions.

Notable Quote:

Hamish Mackenzie [66:42]: "Our stance on this is, look, we have a set of content policies. If something comes to our attention that is against the broadly applicable Substack rules, we're going to take action."

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Relationship with Elon Musk

Interestingly, Elon Musk's interactions with Substack highlight the platform's resilience and commitment to its vision.

• Initial Encounter:

  • Years before Substack, Hamish worked closely with Musk at Tesla but eventually left due to differing visions and challenges.

• 2023 Developments:

  • Substack's launch of "Notes" was perceived by Musk as a competitor to Twitter.
  • Musk offered to acquire Substack and appoint Chris Best as CEO, an offer Chris declined to maintain Substack's independence.
  • Subsequent attempts by Musk to suppress Substack links on X led to public disputes, but Substack's user base remained robust.

Notable Quote:

Hamish Mackenzie [70:39]: "Substack is not Twitter, but it's this subscriptions machine that helps the independent writers and creators of the world find new audiences and retain them."

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Substack's Impact

Substack has significantly influenced the media landscape by providing a sustainable platform for independent journalism.

• Success Stories:

  • Publications like The Free Press, The Dispatch, and Jennifer Rubin's The Contrarian have thrived on Substack.
  • Substack has become the preferred launchpad for journalists leaving traditional media outlets.

• Economic Model:

  • The platform demonstrated that quality content could be monetized without relying on advertising.
  • Writers have the autonomy to set their pricing and retain the majority of their earnings.

Notable Quote:

Hamish Mackenzie [82:40]: "Substack is built around you. It's built around the direct relationship. It's built around owning your audience, owning your work, having your own space on the Internet."

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Future of Substack

Looking ahead, Substack aims to evolve into a comprehensive platform for creators, integrating various media formats beyond written content.

• Expansion Plans:

  • Incorporating audio and video content to enrich the storytelling experience.
  • Enhancing tools for writers to easily produce and distribute diverse types of media.

• Sustainability and Growth:

  • Maintaining the balance between growth and sustaining the platform's core mission.
  • Continuing to uphold principles of free speech while ensuring a safe and respectful environment for all users.

Notable Quote:

Hamish Mackenzie [82:40]: "We want to bring all of that power to the people making stuff."

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Conclusion

Chris Best and Hamish Mackenzie's journey with Substack underscores the importance of innovative business models and unwavering commitment to empowering creators. By fostering direct relationships between writers and their audiences, Substack has reshaped the media landscape, offering a viable alternative to traditional advertising-dependent platforms. Their story is a testament to the impact of visionary entrepreneurship in addressing the evolving needs of the digital age.

Notable Quote:

Hamish Mackenzie [84:35]: "Most people don't do the thing. Once you decide to do it, you need to work hard. You need some luck. But most of the great things in the world that don't exist are not because of a lack of talent or because of a lack of luck, but because of a lack of people setting out to do hard things."

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Key Takeaways

1. Innovative Business Models: Substack's success is largely due to its subscription-based model, prioritizing writers' revenue over advertising.
2. Empowering Creators: By enabling writers to own their audience, Substack fosters genuine connections and sustainable income streams.
3. Resilience and Vision: Navigating challenges with a clear vision and commitment to core values has been pivotal in Substack's growth.
4. Future-Proofing: Substack's plans to integrate multiple media formats aim to keep it relevant and useful for creators in a dynamic digital landscape.

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This summary captures the essence of the podcast episode featuring Chris Best and Hamish Mackenzie, highlighting their journey, challenges, and the impact of Substack on the media industry.

Transcript

[Guy Raz]

Wondery subscribers can listen to How I Built this early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. Thank you to our sponsor, American Express. Owning a business means you get to chart your own course and create a meaningful life for you and your family. With Amex Business Platinum, you can earn 1.5 times Membership Rewards points on select business purchases, plus stay refreshed on the go with access to more than 1400 lounges globally through the American Express Global Lounge Collection, including the Centurion Lounge. That's the powerful backing of American Express. Terms Apply. Learn [e-mail] mxbusiness this episode is sponsored by Canva. If you make decks at work, you should make the switch to Canva Presentations. Canva Presentations might be the most visually impressive presentations you'll ever use. Start with a stunning template, drag and drop images, graphics, charts and data visualizations from Canva's massive media library. Add animations plus interactive polls and quizzes to really set your slides apart. Built in AI also lets you generate slides and text in seconds from a prompt, and you can share your Canva presentations with anyone and instantly collaborate in real time. Canva is used by 95% of Fortune 500 companies. Whether you work at a small or big company in a team of two or two thousand, Canva empowers workplaces everywhere to create captivating presentations, save time, and be more productive together. You'll love the presentations you can easily design with Canva. Your audience will too.

[Chris Best]

Love your work with canva [e-mail] so here's something pretty cool to think about.

[Guy Raz]

Have you ever been lying in bed at an Airbnb, maybe scrolling through your phone when you realize, wait a minute, could I do this too? I recently stayed at an Airbnb with.

[Chris Best]

A pool that overlooked an olive grove. It was incredible.

[Guy Raz]

Find out how much your place is worth at airbnb.com/host.

[Hamish Mackenzie]

It was kind of like it was a good idea for a company and a bad idea for an essay. Like, you could tell people this thing and they would give you a blank stare. I would tell people in my life, hey, we're going to make this platform that's going to. You're going to pay for writers on the Internet that you really like and they would look at me like I had horns. Or they would take pity on me. They would say like, like, oh, that's so nice. That would be so cool if that worked. But you know, and I'm sorry to be the one to have to tell you this, you idiot. But, like, nobody's ever gonna pay for something on the Internet.

[Chris Best]

Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz. And on the show today, how two partners built a getaway vehicle for journalists called Substack, a platform where writers could connect directly with their readers and write pretty much what they wanted. Back when I started out as a reporter, and this is the late 1990s, the idea that some random person with a laptop could reach more people than the New York Times or C. CNN was absurd. @ the time, most people got their information from mainstream sources and a little bit from the Internet. Now, these days, the average evening newscast on CNN gets around half a million viewers.

[Guy Raz]

Half a million people.

[Chris Best]

And yet there are 140,000 YouTubers with audiences at least as big. Once mighty newspapers, radio news, magazines, and TV broadcasts have largely lost their influence and power. And while this isn't a news story, these products have been pushed aside by podcasts, the aforementioned YouTube channels, social media feeds, twitch streams, and something that's grown a lot in recent years.

[Guy Raz]

Substack.

[Chris Best]

It was founded in 2017 by Chris Best and Hamish Mackenzie. At the time, Chris was a tech entrepreneur who had left a once promising startup that would eventually fade away. Hamish was a journalist who wrote mainly about tech and culture for different websites. They had a hunch that people would pay to read the writing of specific writers. But at the beginning, most people were skeptical, understandably because newspapers and magazines were hemorrhaging paying subscribers. What Chris and Hamish were offering was a platform that would make it easy to basically run a small publishing business. With almost no technical skills, anyone could write an article, insert photos and videos, publish it to the Internet, manage a mailing list, and accept payments all in one place. Slowly, they started to attract writers. First a few obscure ones, and eventually some pretty heavy hitters like Andrew Sullivan and Matt Taibbi. The business model is pretty straightforward. The writer can charge a monthly subscription fee, usually$5.8, and Substack takes around 10%. Now, today, it's estimated that more than 50 Substack writers earn over half a million dollars a year from paying subscribers. And recently, Substack announced that it has about 5 million total paid subscriptions. For some journalists who used to work for big publications, Substack has become a lifeline. But the company has also taken a pretty strong position on free speech. It means that with a few exceptions, like calls for violence or pornography or spam, Substack will Let you write basically whatever you want. And the founders have big ambitions for what they expect Substack to become in the future. In a few minutes, you'll hear from.

[Guy Raz]

Hamish, the other founder.

[Chris Best]

But first, to Chris Best, who grew up in the suburbs of Vancouver in the 1990s and early 2000s. Chris got his degree in engineering at the University of Waterloo in Canada.

[Hamish Mackenzie]

The most important thing about Waterloo, though, is not actually what you learn in the classes is the fact that they have this mandatory co op program. You basically go to school for four months, then go and work at a job for four months.

[Chris Best]

Oh, so what kind of jobs would you. Would you do?

[Hamish Mackenzie]

Oh, I mean, my first one, I was. I was working in a. In a bearing factory in Stratford, Ontario.

[Chris Best]

Like ball bearings.

[Hamish Mackenzie]

Ball bearings.

[Chris Best]

Oh, yeah. That's high. That's serious engineering right there.

[Hamish Mackenzie]

Yeah, I mean, I wasn't doing the serious part. I was doing the, like, little programming and honestly being pretty useless. But, I mean, I learned a lot. I learned that I didn't want to work in a ball bearing factory in Stratford, Ontario.

[Chris Best]

Fair enough. Yeah. All right, so you are doing this program, and while you're there, there's. I guess you meet this guy named Ted Livingston, who's like a roommate, or he becomes a friend, and he's somebody, I guess you start to talk with about maybe like a cool idea. Tell me, tell me about this. These conversations you guys start to have.

[Hamish Mackenzie]

Yeah, it wasn't very serious at first, at all. It started out just kind of as like a project. It was like, hey, let's. Let's build some stuff. Let's hack on some things. We were building. You know, the original thing we started working on was a music player for the BlackBerry. I don't know if you remember that.

[Chris Best]

The phones with the keyboards, Everybody remembers what blackberries were. Of course, I had one, so. And it was, of course, a Canadian company. So you guys originally had this idea to build an app for the BlackBerry that was like a music app.

[Hamish Mackenzie]

Yeah, we were building a music. We actually built a music app. We were like, hey, we'll go in and make this thing. That's way better.

[Chris Best]

Way better than what?

[Hamish Mackenzie]

The insight that we had, which sounds very stupid to say out loud now, but was novel enough at the time was, hey, this new device, the smartphone, which for a while, it was basically only, like, bankers on Wall street that had blackberries. And this was gonna, like, the smartphone was gonna take over. This is the new center of your life. And so the idea that you have your music collection on your Computer and then sync it to your phone is the dumbest thing ever. You should be able to stream any song you want at any time. So it's like way better than, like, syncing your music from the.

[Chris Best]

Oh, I see. Okay.

[Hamish Mackenzie]

Computer.

[Chris Best]

Right. And it was supposed to be a way for people to share music legally.

[Hamish Mackenzie]

It was. Yeah. It was basically Spotify. It was basically like an early version of Spotify.

[Chris Best]

Okay.

[Hamish Mackenzie]

And we got stuck in negotiations with the record labels, like Universal and stuff.

[Chris Best]

Yeah.

[Hamish Mackenzie]

And I think we were sort of just like, oh, we'll get there, we'll get there. And then while we were basically waiting for that, we ended up making a messenger on the side.

[Chris Best]

A messaging app.

[Hamish Mackenzie]

A messaging app. We're like, what else can we do? What else are these smartphones going to matter for? And, you know, BBM messenger had been a huge deal at the time. And so we built a messaging app that would pair with the music app. So we built this messaging app almost as like an accompaniment while we were sort of waiting for these record deals to come through. And that thing blew up. It hit at just the right time and went totally insane. And we went through a period of sort of surprise, crazy growth.

[Chris Best]

And just to be clear, I think it was similar. A little bit similar to WhatsApp, right?

[Hamish Mackenzie]

It was very similar to WhatsApp. We were basically WhatsApp before WhatsApp.

[Chris Best]

This is. I think this is called Kik, right? You call it.

[Guy Raz]

It's called Kik Interactive.

[Chris Best]

And the app is called the Kik messenger app.

[Hamish Mackenzie]

K I K I K. Yeah.

[Chris Best]

And so you were essentially the CTO and the co founder of this thing. And I guess Ted was also co founder or the founder too, and he kind of. And CEO and he kind of oversaw like the fundraising and that. The business side of it.

[Hamish Mackenzie]

All the fundraising, all the business side. And to be honest, it was really his vision. He sort of had a strong sense of what the product he wanted to bring into the world. And he was driving, driving a lot of it.

[Chris Best]

And so between 2010 and 2015, I mean, you guys had started. I mean, you're getting investors coming at you. This was the hottest messenger app. By 2015, it was valued at over a billion dollars.

[Guy Raz]

You know, 100 employees.

[Chris Best]

This is no joke. I think there might be people who are listening who remember Kik.

[Hamish Mackenzie]

Yeah. I mean, at one point there was, I think 40% of US teenagers were using Kik for a few years.

[Chris Best]

It's amazing. I mean, it had 90 million users by 2013. And I mean, this was bigger than the BlackBerry messenger, which had 60 million users, they would eventually sue you guys, claiming there was patent infringement on that, you know, and eventually you guys settled with them.

[Hamish Mackenzie]

That happened pretty early. So the story actually went, so this blows up. We can't believe it. I'm like, I don't appreciate at the time because I'm not sleeping because I'm trying to keep the servers up. And it's just like crazy. But then the people at BlackBerry noticed the traffic. A substantial fraction of all pushes going to BlackBerry's were just messages for our service. And at the time they felt that they had a real strategic, a defensible strategic thing in BlackBerry messenger, which is basically like their version of like the Apple Messages app. And they flipped on a dime. They went from kind of supporting us and thinking we were cute and fun to saying, no, we're gonna kill these guys. And they, they, I got a stack of papers like this alleging all kinds of insane patent infringement like on stuff that was just completely bogus. But just, you know, they just, you're couple of people in a startup and they send you this huge stack of papers. But more importantly than that, even they kicked us out of the BlackBerry app store. They said you actually can't have an app on BlackBerry anymore and we're going to turn off your push.

[Chris Best]

Wow.

[Hamish Mackenzie]

So not the people who already have the app, they're not going to get their messages on time. And if you're a messaging app and your big drive is you're half on BlackBerry and half on iPhone. If you lose half your users, you don't actually lose half your users, you lose like 95% of your users because the whole point of the thing kind of goes away. Meanwhile, there's this little other cross platform messaging app called WhatsApp that kind of like trucks along through this phase and they could go on to build like an awesome amazing thing that you know.

[Chris Best]

Sold $20 billion or something by Facebook. And by 2015, I mean actually I think you guys had like over 250 million users. I mean massive.

[Hamish Mackenzie]

So we, it went almost went up to a million users, almost back down to almost zero. But we did, we built it back up from almost nothing to get very big again.

[Chris Best]

And essentially the great good fortune was that BlackBerry is declining very rapidly and iPhones of course just, you know, made them obsolete.

[Hamish Mackenzie]

Yeah, it turned out in the long run the BlackBerry didn't actually, didn't actually matter.

[Chris Best]

And this was again a major app. It's almost impossible to believe that something with almost 300 million users doesn't exist anymore today.

[Hamish Mackenzie]

Yeah.

[Chris Best]

But you're there grinding away, and by 2017, I guess you decide you're done. You're maybe burned out, and you want to. You want to go tell me what. What was going on?

[Hamish Mackenzie]

I mean, I'd been there for, I guess, eight or eight ish years. You know, after we sort of had this. This BlackBerry thing, we had this messenger that was growing, and we. But we never really figured out what's the business model for this thing, what are we going to turn it into? Like, what does this thing become? And we eventually made the decision to launch, like, an early crypto thing, a.

[Chris Best]

Cryptocurrency, in part to raise money.

[Hamish Mackenzie]

In part to raise money. And in part, kind of like as a. In answer to the question, what do you do if you have a very popular messenger that lots of people use, but you don't know how to make money from it?

[Chris Best]

Right. You weren't making money. It was a free app.

[Hamish Mackenzie]

Yeah, it was a free app.

[Chris Best]

So you're thinking, well, let's use it. Let's start a cryptocurrency, because we've got hundreds of millions of people using it, so maybe they'll buy it.

[Hamish Mackenzie]

Yeah, but I didn't. That wasn't what I wanted to work on. Yeah, it had been, you know, I'd been there for a long time, and so I left.

[Chris Best]

Were you able to personally make any money from. From the company? I mean, you had investors. Were you able to. To take some money off the table?

[Hamish Mackenzie]

I made some money, and it was enough that it changed my relationship with money, I would say, from somebody that never, you know, was always kind of like, scrabbling by to figure out how I'm gonna, like, pay rent to. Hey, I've got kind of like some room. Room to maneuver. It was definitely not, like, set for life money. And it was definitely not, I think, what some people imagine from a company of that scale.

[Chris Best]

Right, okay, so you are. Let's pause here for a moment because this is where, you know, eventually we'll circle back and with. With Hamish. Hamish, I wanna bring you in and ask you a little bit about your life before. I know you grew up in a small town in New Zealand, right?

[Unknown]

Yeah, that's right. It's called Alexandra. 5,000 people. The nearest town that anyone's ever heard of is called Queenstown, which is kind of thought of as the adventure capital of the world.

[Chris Best]

Got it. I know that eventually you went to university and you wound up getting a master's degree in journalism. And pretty soon after I think you started your career. You. You moved to Hong Kong and started working there as a writer. Tell me about how that happened. What did you do there?

[Unknown]

I did end up going to Hong Kong, and my logic was, this is 2006, and China was on the march. China was on the rise. The Beijing Games were two years away, and I thought I could go to Hong Kong, learn Chinese, and report on the rise of China as a foreign correspondent.

[Guy Raz]

Smart move.

[Chris Best]

I mean, could have been great.

[Unknown]

Yeah. It didn't really work out like that. Instead, I ended up. I just had money. I had enough money in my bank account to last a month there. But I did find a job after trying in a bunch of places, and the job was writing for this freebie entertainment magazine, sort of writing about the bar scene and writing about pop culture.

[Chris Best]

In Hong Kong and I guess. And that magazine was called Digital Media, and then. I guess.

[Unknown]

Yes, that's right.

[Chris Best]

By 2008, I think you helped to launch TimeOut's version in Hong Kong.

[Unknown]

Yeah, my friend got deeply familiar with my work, and then he got tapped to be the editor of this. Of TimeOut Hong Kong, which we were about to launch this TimeOut in London that had been around for 40 years, TimeOut New York. And so he liked my work and asked me to come in and be the music editor, basically, at the start. Later moved on to other things.

[Chris Best]

So this really is kind of like. I mean, you're still young, right? You're still in your, you know, late 20s at this point, but. But working in, like, music, entertainment. Like music and entertainment journalism. Right. Because timeout's more about culture. It's like, what's. What's on, what's going on. Nightlife, restaurants.

[Unknown]

That's right. That's right. I did get to also be the online editor in the. In the days when people thought of the web as a separate kind of entity from the magazine.

[Chris Best]

And.

[Unknown]

And I got. And then became the features editor as well. And as a features editor, I also reported. And so I got to write big sort of think, PC culture pieces. Like, what's the difference between an expat and an immigrant? That was one of my big pieces. Right. And as an online editor, I got this exposure to what it's like to build a website, especially one that is oriented around listing everything that's going on in the city, which was quickly to become obsolete as the smartphone apps took over.

[Chris Best]

All right, so you stay there for a couple years, and 2010, you leave, you move to the United States. Why? And where did you go?

[Unknown]

Leading up to the last year of my time in Hong Kong, I started a relationship with an American girl who lived in the Washington, D.C. area. And her name is Steph. She's now my wife. But Steph got into law school and was most interested in this law school at University of Maryland, which has its campus in downtown Baltimore. And so we moved there, and I just thought of it as another interesting adventure.

[Chris Best]

Around 2012, you started working for the tech blog Pando Daily. And one of the things you start to cover is Tesla and SpaceX. And I guess, like, this kind of catches the eye of an editor at Faber and Faber, and they said, hey, do you want to write a book about Elon Musk?

[Unknown]

Yeah. This is 2012, 2013, where people in Silicon Valley sort of knew about this guy Elon Musk, but he hadn't become an outside phenomenon yet. The Model S had come out and won Car of the year in 2012. And they also created this thing called the Supercharger, which would allow you to charge up your electric car for free and fast, and it could be powered by sunlight. And I was saying, why aren't more people hyped about this guy who's managed to land these rockets, or, sorry, was making these successful launches and was on the way to figuring out how to land them and had created these amazing electric cars that were winning Best Car of the Year award and could run on nothing but clean energy? And so I wrote a bit about those things. And this editor in the uk, Julian Luce is his name, he's like, do you think there's a way to do a good book about this guy, and do you think you could get him to cooperate? And I was kind of working out of my spare bedroom in boxer shorts in Baltimore, and I thought, yeah, let me see if I can do that. And so I got in touch with Elon through his mother's website. She's a nutritionist, had listed her email address there. And it led to a conversation with Elon Musk, who I actually knew already had liked one of the pieces I'd written, because his PR person had told me he liked that piece. And so I thought, maybe I have a shot of getting his attention. And he ended up on this phone call with me.

[Chris Best]

You got a call with him asking if he would cooperate for a biography?

[Unknown]

That's right. I was pitching him the idea of this book, but Elon said, I don't know about the book maybe, but would you be interested in a job at Tesla? And I thought, oh, that sounds like an insanely interesting opportunity. I could sort of go into Tesla. This was my idea at the time. I could go into Tesla and be like an in house journalist telling the story of this company that has so many fascinating aspects and so many moving pieces. And I could help the world see that electric cars might be actually a good thing for the world.

[Chris Best]

Yeah. So you accepted this job and did you move to California with your then girlfriend, now wife?

[Unknown]

Then girlfriend, now wife? Constantly amused by that description. Yes, that job required me to move to the Bay Area.

[Chris Best]

All right, so this is 2014 and this is still, I think, before the Model 3 has been released.

[Unknown]

Yeah, January 21st.

[Chris Best]

I remember I profiled Tesla maybe in 2009. Gosh, it was a long time ago. It was like when the roadster was still, you know, their car. And so it was a different company. Right. Like you probably saw Elon Musk regularly.

[Unknown]

Yeah, I saw him in the office regularly. I think there were like some thousands of people by the time I was there, so it was substantial. But I also was in meetings with Elon and I had a couple of one on ones with him. I started off when I went into that company, I started off as like teacher's pat, but like as what happens with many people sort of quickly became Persona non grata to Elon.

[Chris Best]

What happened?

[Unknown]

A bunch of things I had worked on a report about with one of the engineers about the batteries and how much cleaner they are than gasoline powered cars. And the report didn't come out the way he wanted. It wasn't written in the way he wanted to edit it in the way he wanted. I took over the social channel so Tesla and did some tweets that he didn't like. I got an angry email from him once about the state of the tweets and that sort of just contributed to a deterioration in the relationship.

[Chris Best]

But to be clear, I mean, it sounds like you were a big believer.

[Guy Raz]

In what he was trying to do.

[Chris Best]

I mean, you would eventually write the book about him. He didn't cooperate. But I mean, it was about this revolution in electric cars and I mean, it sounds like you really did believe in what he was trying to do.

[Unknown]

I'm still a believer in that. I still think that electric cars are much better option than internal combustion engine cars. And I believe that Tesla has made an amazing and important contribution to the world in accelerating that transition away from fossil fuels towards a cleaner energy economy.

[Chris Best]

I don't think that can be denied by anybody, even people who hate Elon Musk. All right, so you're there For a year, you leave, you write this book, and I guess shortly after you leave, you get some consulting work at this company called Kik Interactive. Tell me how and. Because now we're going to come together with you and Chris. How did that. How did you get work that. Were you just looking for work? Were you looking for consulting work?

[Unknown]

So what happened is, while working on the book, wanted to figure out a way to pay my bills, and I thought maybe I could work halftime at Kik, and I'd like to Kick, because I had become friends with Ted Livingston. And so I thought maybe if I can get in and work with Kik, I can be close to this guy Ted. It's a much more Canadian culture. It's totally different from Tesla, which was messy and cutthroat and had to throw everyone under the bus kind of culture. And at Kick, I became friends with Chris.

[Hamish Mackenzie]

Can I tell one story from that period?

[Guy Raz]

Yes.

[Hamish Mackenzie]

So Hamish did a bunch of stuff, and probably in the natural course of things, we would not have interacted that much because Ted was really the face of the company. But he had a weird, I don't know, quirk of his personality or preference or something where he really didn't want to go on tv. Like, he didn't like being on video.

[Chris Best]

Right.

[Hamish Mackenzie]

So he's like, chris, you gotta go do the. Like, be the representative of the company in video appearances.

[Chris Best]

Right.

[Hamish Mackenzie]

And I was like, you know, the cto, like, technical co founder that was used to just hiding in a back room. And Hamish was kind of assigned to shepherd me through this process. One time, I remember in particular, do you remember the time I had to go on Squawk Box?

[Unknown]

Yes, Squawk. It was for the cnbc wanted to have one of the founders of Kick. Chris got assigned to do it, and I got assigned to be his handler for it. And Chris is a little bit nervous about it, feeling a little bit uptight, I could see. And so it was 8 o' clock in the morning, and I thought, well, I think Chris should have a beer before he goes on. That might just help him loosen them up. And so he had an 8am Corona, and I joined him as an act of solidarity. And then he went on the interview and crushed it, and from that moment on, became a media hero for Kik.

[Chris Best]

Wow. So you guys, you're the editorial kind of editorial advisor at Kick, Hamish, and you get to know Chris because you're helping him prepare for interviews and you just become friends, basically.

[Unknown]

Exactly.

[Chris Best]

Meantime, and this is. I guess you're there over two Year, period. Chris, you are starting to kind of think about transitioning out, and you leave in early 2017, and just to kind of take some time off. And what did you want to do during that year off?

[Hamish Mackenzie]

Mostly I just wanted to give myself some space. Like I had, you know, I'd done this crazy thing. I should take some time, live my life, you know, do some of the things that I would have done if I'd had spare time over the past eight years. Anyway, one of the things that was on this sort of bucket list was, you know, maybe I should write. And I had enough of sort of, like, the programmer's hubris, where I was like, I know how to read. I know how to type. Like, I should write. Surely I would be good at that. And I started writing sort of an essay or a blog post or a screed outlining my frustrations with the media economy on the Internet. It was very pretentious. It was very. There was a lot of, like, Facebook is driving us crazy. Twitter is dividing us. Like, wah, wah, wah, wah, wah. And I sent this essay to Hamish because I'm like, here's my friend who's actually a writer. And he let me down very gently. We joke about this. He was like, okay, it's 2017. You're writing this essay. The thesis of which is, like, maybe the Internet is bad for newspapers. Like, we know this is not new information, but if you wanted to make this good, the more interesting question you should be asking in it is, so what? Like, let's assume that all of these things you're whining about are correct. How could it be different? I should mention, by the way, that Hamish disputes my interpretation of that essay.

[Unknown]

Yeah, it was not a piece of shit. It was a very good essay, and it was very well argued. And I gave him a series of bullet points of feedback, mostly praising it. And in one of the bullet points, it was like, can we push this further? People who work in the media know that these are the problems, but no one has a good idea what the solution is.

[Chris Best]

What's the solution? Yeah, yeah.

[Unknown]

And so that's what led to. To Chris. We had this conversation about. Chris is the systems thinker and the genius who is mostly responsible for the substack model. And the core insight he had was that you should make readers the customers instead of advertisers the customers. And if you change that core dynamic, especially if you monetize the relationship over time in a subscription, then different things are possible.

[Chris Best]

Right?

[Unknown]

But despite the world knowing that there are These grand problems with the business model that supports media. Even some of the smartest, most well funded minds and organizations weren't quite figuring it out. And it was starting to feel like maybe this thing is all just going to crumble and we're all going to live in the Facebook world now. But there was one bright spark, and it was a really small bright spark. And it was a guy named Ben Thompson who writes a publication called Stratachery, which is the worst name in media history.

[Chris Best]

Yeah. And he's had this blog for a long time.

[Unknown]

He had had it for a couple of years even by the time we came around in 2017 and were paid subscribers.

[Chris Best]

Taiwan. Right.

[Unknown]

Writing this thing out of this bare bedroom in Taipei. And he's just writing about the business models of technology companies. And his model is really simple. He would publish a blog post each week that was his most polished and best work, and that would be free. And then if you wanted more Ben Thompson, if you wanted his view of the world on more things, you could pay 100 bucks a year and you'd get three more posts by him over email. And it was a really lucrative business for him. We figured out through napkin math and guessing basically that he was already making more than a million dollars a year from that. And Ben Thompson was telling anyone who would listen, I don't know why more journalists don't try this model because it works really well for me.

[Hamish Mackenzie]

We even called him up at one point.

[Unknown]

Yeah, we talked to him about all.

[Chris Best]

This stuff and yeah, he's like, I.

[Hamish Mackenzie]

Don'T know why more people don't do it. I was like, so what did you have to do? He's like, well, I, you know, I invented the business model from scratch. I did it for a year with no money. I made my own tech stack and my own cobbled together product and editorial. Like, he sort of like described all of the things that went into him doing it. And he had to be this like triple unicorn of a great analyst and a great writer and a great entrepreneur and a great editor and a great technology wrangler. And we were just like, oh, that's why nobody does this. That's way too hard.

[Unknown]

He listed on one of his webpages all the tools he uses just to run this thing. And There are like 19 different tech tools that he paid for. Most writers are not technologically savvy and they don't want to waste their time wrangling those different tools.

[Hamish Mackenzie]

Yeah, you're a writer. You know how to write something great. That is rare and hard enough. And to expect you to also be this tech genius and this entrepreneur, it's crazy. You should be able to come and type into this box and if the things you type are great, you're going to get rich and famous.

[Chris Best]

When we come back in just a moment, How Chris learns to push back when people tell him how bad his idea is. Stay with us. I'm Guy Raz and you're listening to.

[Guy Raz]

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[Chris Best]

And thought to yourself, this actually seems pretty doable.

[Guy Raz]

Maybe my place could be an Airbnb while you're away. Your home could be an Airbnb like the place I just stayed at in Palm Springs with an incredible kidney shaped pool and palm trees.

[Chris Best]

It was just perfect.

[Guy Raz]

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[Chris Best]

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[Guy Raz]

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[Chris Best]

How I Built this. I'm Guy raz. So it's 2017, and Chris and Heimish have an idea for a new digital platform for writers. And even as they're talking about partnering on the idea, Hamish the journalist is wary about becoming a founder.

[Unknown]

I knew that that was a stressful life where you could never really switch off and there would be many dramas, and you're responsible not just for your own job and income, but for whoever ended up working for you and then all your customers and all that kind of stuff. So it was, like, excited to go back to journalism at that time and be plotting my next book and returning to freelancing. That's what I was really amped up for. But Chris, annoyingly, was coming down to San Francisco every so often in one of these trips. He stayed with me and my wife. I think she was by that point. And once he was excited about that idea, after I had prompted him to, like, just invent the new model that was going to savor everyone because complaining in an essay isn't enough, he started to go to work on me to convince me that I had to do this with him, I had to build this company with him. And I was like, no, no, no, no, no. That sounds like a horrible life. And I'll just be a consultant or an advisor, and I'll help you along the way and point you in the right direction. And he didn't accept that answer. And he kept working away at me and trying to persuade me that I had to do this, and this is going to be fun. And then my wife, Steph, kind of teamed up with him and agreed that I sort of have to do this because it's too much of a convergence of my interests and experience and the things that I like to do.

[Chris Best]

Chris, why did you think you needed Hamish so badly? I mean, good question. You were a tech guy, and obviously Hamish is a talented journalist and writer, but why were you so convinced that you needed him to start this thing?

[Hamish Mackenzie]

I mean, I knew nothing about this world. I didn't know the people. I didn't know how they thought. I wouldn't have even known where to start. I can think about things from first principles and having Both halves of the brain having the first principles, understanding, but kind of pairing it with being of that world and knowing the language and knowing the people was actually like, the magic that made it work.

[Chris Best]

So, Hamish, you were. So. You basically were like, okay, I'll try this. I mean, you did not want that life. You knew what it was going to entail. The, like, long days, the travel, the sleepless nights, worrying about other people's incomes. And you agreed to sign up for this?

[Unknown]

I did. And, you know, I think it's important to mention that I thought that this model that we devised was kind of stupid enough to work. It was so simple that it had some obvious flaw that we just had missed for some reason, or it was so simple that it was actually going to work. And if it could work for more than a few people, then I think it could work for many, many people. And in that world, the difference it could make would be profound.

[Hamish Mackenzie]

Can I make one point here that I think is really interesting?

[Chris Best]

Yeah, please.

[Hamish Mackenzie]

You mentioned that thing. It's so stupid. Either we're stupid or it's going to work. I definitely remember that. The way I would have described it at the time was we couldn't talk ourselves out of this idea, but it was kind of like it was a good idea for a company and a bad idea for an essay, which is how it started. You could tell people this thing, and they would give you a blank stare. I would tell people in my life, hey, we're going to make this platform. You're going to pay for writers on the Internet that you really like. And they would, like, look at me like I had horns. Or they would. They would take pity on me. They would say, like, oh, that's. That's so nice. That would be so cool if that worked. But, you know, and I'm sorry to be the one to have to tell you this, you idiot, but, like, nobody's ever gonna pay for something on the Internet, right? And people would tell me. People would be like, that sounds great, but I would never pay for something like that. And I devised this, like, parlor trick where when somebody told me they would never pay for someone on the Internet, I would say, well, who's your favorite writer? And they'd say, oh, you know, Guy Raz or whoever. And then I would say, would you pay five bucks a month for that person? And they would say, well, yeah, but that's different. Like, that's a special. That's a special case. Like, that's. Yeah, it's so and so. Like, they're really good. And so I think the. In retrospect, I think we were onto something that, like, was a good idea but sounded bad or, like, didn't. It was not yet in the realm of a thing that people would believe, but it was a realm of thing that people would do.

[Unknown]

Right.

[Chris Best]

So this was. I mean, so basically you're looking at this and saying, well, if you're creating content and you're bringing people to the platform, they should be. The people doing this should have a guaranteed way of reaching those people.

[Hamish Mackenzie]

They should own the connection. It should be their relationship. When you subscribe on Substack, you don't subscribe to Substack. You subscribe to Guy or whoever.

[Chris Best]

Yeah, it's an important point because this is 2017 when you're having the conversation. And it's even more of an acute issue now, which is that you might have a million subscribers on YouTube, but if YouTube changes the algorithm and stops delivering your videos to people automatically, it might be really hard to make a.

[Guy Raz]

Living off of that.

[Chris Best]

But YouTube still benefits every time you post, or Facebook benefits every time you post. Instagram and TikTok, they benefit because there.

[Guy Raz]

Are more eyeballs and there are more advertisers.

[Hamish Mackenzie]

And this had happened with Facebook pages at this point. They created a thing where people spent all this money getting people to like their Facebook page on the assumption that that meant they'd built up an audience. And then they said, oh, just kidding. Actually, when you want to reach those people, you have to pay again.

[Chris Best]

Yes.

[Hamish Mackenzie]

And that had worked for Facebook very well.

[Chris Best]

And by the way, I mean, there were other models. Patreon. Right. For musicians and artists and filmmakers, like, that existed. People were being supported for their work through Patreon.

[Unknown]

Yeah. Patreon, I think, is a hugely important company because it changed the culture. It showed not only that people will be willing to pay for content online, they'll be willing to pay for the artist or creator who they most love or trust. And we looked at Medium and learned a lot from Medium and took lessons from both of them where they had struggled or what could have been better and got to benefit from standing on their shoulders to design something like the Substack system.

[Chris Best]

Yeah.

[Hamish Mackenzie]

I mean, this was one of the things that kind of went into my calculations here. I was like, what if we made something that had a business model from the start? And we knew it was. And that's actually important because the thing that we were onto at this point, as it was turning from, like an essay into a company that we needed to start was the big idea of, what if you completely change the economics of how these platforms worked? The problem with Facebook is not that it doesn't work right. The problem with Facebook is that it works too well and doesn't serve the people who use it. Yes, it kills all the newspapers, but it's a massively successful business that takes advantage of the scale of the Internet, yada, yada, yada. So what if you could design a new economic engine, a new incentive structure that could harness the scale and network effects of the Internet, but then actually paid money to the people who were making the culture? And at the same time, we had this thing that we could hold in our hand that was like, what if we just made it a hundred times easier for the next Ben Thompson to do a paid email newsletter?

[Chris Best]

Yeah. So Chris, you're in Kitchener in Canada, and Hamish, you are in San Francisco, and you, obviously you're communicating every day, but Chris, you are on your own starting to build the platform. You're just working on trying to create this thing that would become substack.

[Hamish Mackenzie]

Yeah, I mean, it was pretty simple to start. It was just a website that could host some content and. But I mean, the thing. None of it was rocket. Like, none of it was technically rocket science. It wasn't like we were building some software that only we could have built, but it was just like the. Putting it together and having it actually work the right way was the new thing. And it, I mean, by the way, it turned out to be pretty hard. Like, it was, it was. I think we were right about some of the core insights. We got some early breaks that really helped, but it was. It took a. There was a whole series of things that we had to kind of like believe and act on for long periods of time. That is. It's hard to do.

[Unknown]

Yeah. And like, 2017 writers were not the sexiest customer base in the world. No one thought they were going to build a billion dollar tech company by serving writers. In fact, people were forsaking writers, forsaking the media, turning their back on that. They'd given up on that.

[Chris Best]

So, all right, so you are building this. Chris and Hamish, you are kind of trying to drum up potential people to join this platform and it officially launches in 2017. Before we get to that, up until that point. Right. Because I think you guys really kind of decide, let's do this in July. So that summer of 2017, you guys are really working on. On building this thing because you're going.

[Guy Raz]

To launch it in October.

[Chris Best]

You probably didn't need A whole lot of money at this point. Right. I mean, you had a little bit of money from. From your time at Kik Chris. So were you able to use some of that money to just finance what needed to be financed?

[Hamish Mackenzie]

Initially, Yeah, I put in a little bit of money to basically, like, pay the hosting bills. And, you know, we bought a domain and there was. But it was sort of like, minimal at that point.

[Chris Best]

And given. And we've had this conversation with co founders many times, given that, you know, you're initially kind of this idea that you have in your head, Hamish helps you to kind of refine it. How did you know you had some money to put in? And Hamish probably didn't have a whole lot of cash to put in because you're a working journalist. How did you guys have that delicate conversation about, okay, here's how we're going to, you know, split the company.

[Hamish Mackenzie]

How did we have it?

[Unknown]

You insisted on splitting that evenly based on past lessons and ideals you'd developed for yourself since.

[Chris Best]

So that was it. We're just going to split it.

[Unknown]

Yeah, that's right. What happened is that my grandmother had recently died and passed down some money. I was. I had no money. I had paid a check to paycheck with my wife in 2017. Yeah.

[Chris Best]

Probably putting in $10,000 at that point for you would have been just like.

[Unknown]

We couldn't do that. We couldn't do that. And this is why Steph's support was so important. She was okay with the risk. And luckily, I had this inheritance money from my grandmother that I spent all on. I spent all of it to just cover my salary for a few months before we raised a proper round of money from, like, more friends and family that could help us start to pay ourselves a little bit of a salary.

[Chris Best]

So. All right, so that summer, you're working on it, and By October of 2017, you're ready to officially launch, and you've got this guy, Bill Bishop, who you knew. You knew him from your time in Asia. Hamish. He had been writing about China, and he agreed to. Because I guess this was a free blog that he was writing, and he agreed to join Substack and start charging.

[Unknown]

Yeah. He accidentally had a really successful free newsletter. He'd been running it for five years. He'd never really made money off it set for doing a couple of donation drives.

[Hamish Mackenzie]

He was paying a bunch of money to send the emails.

[Unknown]

Yeah. And so Bill had been talking in his newsletter that I was a reader of, he had been talking about how he's going to introduce a paywall soon. He's going to introduce a paywall soon. He'd been talking about that before we started Substack, and I'd been noticing that he kept talking about it but never getting around to it. And so halfway through his process there, I jumped into his inbox and said, my friend and I are starting this thing, which is kind of like, we'll take care of everything for you. This thing that you're describing that you want to do. So you can just worry about the writing. Would you be interested in being a guinea pig for this? And he luckily said yes. And so we got to launch with kind of the ideal first customer, the perfect first publisher. That happened in October 2017.

[Chris Best]

And did you at that point Chris moved to California or were you still in Canada?

[Hamish Mackenzie]

I was still in Canada. We launched Bill, and we'd also applied to yc.

[Chris Best]

So Y Combinator.

[Unknown]

You should talk about how you're a Paul Graham fan and that was part of your inspiration for writing these essays.

[Hamish Mackenzie]

I'd been a Paul Graham fan.

[Chris Best]

I'd been the founder of Y Combinator, obviously. Yep.

[Hamish Mackenzie]

Yeah. And so we applied to YC with Substack. And I remember the timing because on the application to yc, it said, how much money are you making? And we said, $0. And then between the application and when we came in for the interview, Bill's launch happened. And we had no. I had no idea what to expect, but he made like six figures his first day through this, like, duct taped, like, stripe setup that I had built in the preceding weeks. But we just woke up and we were like, huh? Like, I think this is. This seems good. Is this good? This seems really good.

[Chris Best]

All of a sudden, more than $100,000 of revenue, annual revenue based on his.

[Hamish Mackenzie]

Oh, his single in like a day. It was just like that. It just, like, you watch, it's like, boom. And so we went a few, like, you know, a few days after applying, we flew down and went to the YC interview. And they were like, you know, it says here you're making $0. And we got to say, oh, actually. And I think it contributed to a sense of real momentum. And it was. It was sort of funny because our advisor Jared looked at that and he's like, oh, this is gonna be easy for you guys. Like, you just. You have one customer that did this. You just need like four or five more of these, and you're gonna be like, sailing off to the races and raising money. It's gonna be so easy. Meanwhile, it took us Years to have that kind of success again. It was very like we just had that perfect, you know, not quite years.

[Unknown]

Not quite years.

[Hamish Mackenzie]

It was not quite.

[Unknown]

But it was much harder than we thought.

[Hamish Mackenzie]

It was kind of much harder. It was. It wasn't as simple as get the next four Bill Bishops. There weren't the next four bill Bishops, but it gave us such a burst of confidence that we were onto something, that it sort of helped sustain us, I think, through the next. The next phase.

[Chris Best]

All right, so you get into Y Combinator, obviously, big deal, because now you've got, you know, you're going to get exposure to big time investors and you're going to get mentorship. And I'm assuming that's when you move to. To California. Chris?

[Hamish Mackenzie]

Yeah, I came down for YC. We did the thing.

[Chris Best]

Okay, you're now together in 2018. You did raise some seed money and you got some interesting investors who I guess were interested in this. And I imagine Y Combinator. Being part of Y Combinator was certainly helpful.

[Hamish Mackenzie]

Yeah, we did the YC demo day thing, and I think I would characterize us as being kind of like, we were not one of the, obviously the hot companies that everybody's clamoring for, but we were also, we raised around. We were not one of the struggling ones. We were kind of just like middle of the pack.

[Unknown]

Yeah, I remember on the first demo day we did, which is the one that's for YC alumni, Emmett Shear came.

[Chris Best]

Up to me and he said, Emmett Shear, founder. Co founder of Twitch, who was on the show a couple years ago. Yep.

[Unknown]

Yeah. He said, I look at you guys, I'm really excited about this idea. I think you guys are like Twitch, but for journalists. And I want to invest. And so we got him as an early investor. And then there's a bun of people who sort of saw the same thing around that time. And so by the time we finished YC at the end of March, we had 7,000 paid subscriptions across the network that we could point to and say, look, this thing is working. This thing is going somewhere, at least somewhere relatively interesting.

[Chris Best]

Well, let me ask you about the business model and the math. Right? So the model, if I understand it correctly, from the beginning and even till now, was the writer gets, basically you guys get a 10% commission or whatever, plus there's going to be the payment processing fees, which is another 2% or something. And so effectively the writer is getting about, let's say, 85 to 87% of the total revenue.

[Guy Raz]

How did you work?

[Chris Best]

I mean, that math is, like, by any account, very beneficial to the writer. Right. They're getting. They're getting a good deal here. Like, if you compare that to any other platform. Right. The writer is doing really well, but it means that your margins are really thin. Like, how did you come up with that math instead of, let's say, 20% or 25%?

[Hamish Mackenzie]

Well, it's interesting. You know, it starts out as a really great deal, and coupled with that, by the way, everything else is free, so we're not charging you SaaS fees to host a website, to send email to any size. Like, everything else costs nothing. We wanted to be in a world where we would only make money if the people actually made money. I didn't want to be in the business of, like, selling people a dream of doing this thing, and they would pay us, but then they wouldn't make money. And, well, tough for them. And then it's a great deal at the start. And then you start to get. You know, by the time you're making millions of dollars a year, that 10% starts to look substantial. You start to think, wow, that's. Aha. I see. I'm sorry. Right.

[Chris Best]

But that was gonna take. That was gonna take a while. And I think even now it's a very small number of people are making over a million. A small. You know, not as small as you.

[Hamish Mackenzie]

Might think anymore, but it's. It's. It.

[Guy Raz]

Right.

[Hamish Mackenzie]

It scales. Right. Like, we. We really want you to succeed.

[Chris Best]

Yeah.

[Hamish Mackenzie]

At the very start, we. We only handled only paid newsletters. Only. Only paid subscriptions. And then we very quickly figured out we had to have. If you're gonna have a paid newsletter, you need free subscriptions as well, and we have to handle those. And then we very quickly figured out, if you're gonna become a paid newsletter, you're gonna start as a free one, so we should make it so that anybody can use it for free. And that became, like, a big piece of how the top of Funnel kind of worked for us.

[Chris Best]

All right, so here's my question initially. Right now, this is the. You know, you're. You're getting some momentum, right? You Y Combinator, obviously, there's. People are starting to believe in you, but I just want to be clear about something to people listening, which is Y Combinator, we know about the Coinbases, we know about the Airbnbs, we know about the Instacart, but most of the companies that come out of Y Combinator don't end up making it. I mean, the founders might go on and do something else. So just being in Y Combinator isn't a guarantee that it's going to work. And so we see these headlines every day. So, and so company was your own company.

[Guy Raz]

Kik was valued at a billion dollars at one point.

[Chris Best]

Knowing now you are the CEO of this company, you've learned a lot of lessons because you were the CTO of that business. What was the sort of the primary kind of lesson that you took from that experience? That you were like, we're not going to do that here, because I saw what happened and, you know, it ended up going south.

[Hamish Mackenzie]

I think there's probably two things that I think about a lot. One was just have a business model. And that's.

[Chris Best]

It seems fairly straightforward.

[Hamish Mackenzie]

It seems unkind in retrospect to say, oh, we just had this theory of like, we'll get a bunch of users and then we'll figure out the business model. But you have to remember that worked for some of the biggest companies in the world. That worked for WhatsApp, who sold for $22 billion. So I don't think it's like, I don't say that as a criticism to say we were stupid for thinking if we got a whole ton of users, we would be able to turn it into something that was not a ridiculous way to operate. But it did leave me determined to operate in a different way this time and to have an idea from the get go of what is this business? And then the other one that I think about a lot is there's this saying in Silicon Valley that is keep the main thing the main thing. And we, we went through this at Kick, where I think even after, like, I think we were always kind of unmoored. We were always thinking about, like. And because we didn't have a biz model, we're like, what are we going to turn this into? But there was a lot of kind of like trying to figure out the next thing instead of making the main thing actually work. And I think with Substack, we're trying to do the opposite of that. We're trying to have. There's like a core of what Substack is. And, like, that's the thing.

[Chris Best]

When we come back in just a moment, Elon Musk comes back into the story, this time to make Chris an offer that he can and does refuse. Stay with us. I'm Guy Raz, and you're listening to How I Built this.

[Guy Raz]

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[Chris Best]

Believe in, like online music and videos.

[Guy Raz]

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[Chris Best]

Hey, welcome back to How I Built this. I'M Guy Raz. So it's around 2019, and Chris and Hamish have built a solid scaffolding for substack. Writers offer their content for free or for money. And substack, it's a cut of the subscriptions. But now the question is, how do they get more writers?

[Unknown]

We looked for people that we thought weren't being well served by the dominant media structure, but actually had interesting things to say and had a devoted audience. And so it wasn't necessarily the people with the largest audiences. Maybe they'd have a smaller following on Twitter. Twitter was a common hunting ground in those days, but the people who were following them were really paying attention to what they had to say. And we developed this tool that allowed us to put, like, fire emojis beside the names of the ones who had these really devoted audiences. And so if you had.

[Hamish Mackenzie]

It was like a Richter scale. Three fire emoji was 10 times as good as two fire emoji.

[Unknown]

Yeah. So if you had one fire emoji, you're like, your audience didn't really care that much about what you were saying. If you had three fire emoji. Okay. Like, we're pretty sure you're gonna work on Substack. If you had four fire emoji, we knew you had the kind of audience that would really respond well to you going independent and would have this direction relationship with you and could help make you get rich with this model, basically.

[Chris Best]

And let's say a prominent writer has a million subscribers. They really just need a fraction of those people to pay them a monthly fee to make significant money. Right. I mean, the math is clear.

[Hamish Mackenzie]

Totally.

[Unknown]

It's surprising how much we had to make that obvious to writers. Actually, over the course of the years, it was. They're used to dealing with huge numbers in terms of audiences, but getting paid pennies as a result, whether by an employer or through the revenue share agreements of those other platforms. And we would have to say to them, look, if you get a thousand paid subscribers and they're paying you 50 bucks a year, do you know how much money that is? And they're like, look, that's enough to live on. And it wasn't always obvious to people. People didn't take that step. And then we're like, if you get 10,000 paying subscribers paying 50 bucks a year, that's enough to actually, like, really make serious money and change your life.

[Chris Best]

Half a million dollars. Yeah. That's no joke.

[Hamish Mackenzie]

It's surprising how much you have to do that multiplication for people. Like, it's not that they can't do it themselves, it's that they won't do it. And the number of times I've had a conversation that's like, you know, so and so has 10,000 subscribers paying, uh huh. They're charging $100 a year. Uh huh. So they're making a million dollars a year. What? And it's sort of like, you know, you could have got there yourself, but you sort of have to like point out what's happening.

[Chris Best]

Very fortuitously you had raised money in the summer of 2019, which would come into great use, I'm sure by Covid you raised $15 million. It was led by Andreessen Horowitz. But you've got the pandemic and this really is a turning point year for you. I mean, in many ways I think you would both agree because of circumstances beyond your control.

[Guy Raz]

On the one hand, you've got the pandemic.

[Chris Best]

A lot of the social media companies were, as many of them have admitted, cooperating with the government to deplatform specific people who were talking about who were opposing Covid vaccines, for example, or people who were writing about what was perceived to be misinformation.

[Guy Raz]

Right.

[Chris Best]

And so there's this kind of all these things happening in the background. On the one hand, the social media companies are deplatforming and banning people. On the other hand, prominent journalists are losing their jobs or are feeling under pressure. And so you start to get people coming to your platform. Matt Taibbi, Andrew Sullivan, Bari Weiss Lisa, New York Times starts a sub stack.

[Hamish Mackenzie]

It was a big pull forward for us. I mean we grew something like 6x in that first year of the pandemic. I had this speech that I would give to people at the time. I was like, think of substack as your getaway vehicle. You don't have to get in it right now, but like fuel it up, have the engine idling, like create your account, like claim your handle, have this thing ready just in case something unexpected happens. And if you're in the media in 2020, that wasn't like that didn't sound crazy to you. And then sure enough, you know, over the. We had that conversation with Andrew, expected it to be months. You know, he calls us after a weekend, basically says, you'll never guess what happened. And we were like, you know what? We actually might be able to guess what happened. And you know, he was out, he'd been fired.

[Unknown]

Well, he resigned under duress.

[Hamish Mackenzie]

He was, yeah, sorry, I shouldn't say fired.

[Chris Best]

This is in 2020, this is in 2020.

[Hamish Mackenzie]

And there was a moment where a lot of those kinds of people you're talking about, the people who are, you know, the recalcitrant voices that don't like being told what to say and were kind of like not going with the program, were both the people who are selectively the most interesting to read, the people you actually would care about and want to fire. Or so I want to. You'd want to subscribe to them if you're a reader. But there was a moment where a lot of them got either fired or pushed out or had some kind of moment where they were suddenly unwelcome in the institutions they'd made a home in and invested in. And so we had done a bunch of things like having a stance on freedom of the press and on how it was the right way to approach content moderation that were very non obvious and non consensus at the time that we took a lot of heat for that we would not have been willing to take a lot of heat for. Did we not have a theory about what was happening and what mattered and why that set us up to be the platform that those people could trust when that moment hit. I mean, a big part of it is the business model, right? Like the fact that we was paying subscribers. We didn't have advertisers who were getting spooked and boycotting us, bringing us under pressure. I think we were not yet at the size where we were getting the government attention that the X's and metas were of the world.

[Chris Best]

And let's be honest, I think objectively voices that all of us here could agree were objectionable, like people who are racist or spewing conspiracy theories that we may find objectionable. There was a lot of pressure to deplatform people who I'm sure even both of you personally thought, ugh, I'm uncomfortable with this person. So how did you, how did you do the gymnastics in your brain at the time when the culture was somewhat different to say, nope, we're still going.

[Unknown]

To let that happen with conversations at the time? Because we were confronted with this kind of thing in small ways and then bigger ways and then more public ways that led to us reaffirming our belief and our position on it and caused us to do things like write down and publish our view of this, like why we have a hands off stance on content moderation, which doesn't mean no science at all. We still protect the platform of the extremes in line with the First Amendment, no incitements to violence. No spam, no doxxing, et cetera.

[Chris Best]

You say et cetera. So just to be clear, no incitements to violence, no spamming people, and no doxxing. So you can't expose where people live or personal information about them. If you don't like them.

[Guy Raz]

Those are red lines.

[Chris Best]

If you do any of those things, you're off.

[Unknown]

Right. And so our view of the world is not that the way to address these problems was to devise more sophisticated content moderation. We'd seen the attempts of the other social media companies to do that. They've invested billions of dollars on this. They come up with these policy documents that are hundreds of pages long. And it doesn't appear to us like it has actually helped misinformation problems, or it's helped reduce the level of harassment, or it's helped increase trust in the media ecosystem writ large. Our view of things was the way to solve these kinds of problems, address them or mitigate them, is through changing the business model, changing the kinds of behaviors and content that can succeed on the platform.

[Chris Best]

And so the theory is, like, if people are writing a lot of nonsense, they're just not going to succeed on Substack because it's not an outrage machine like social media. It just doesn't work. Work in the same way where that actually is successful.

[Hamish Mackenzie]

To me, like, that's probably too rosy. Like, I think there's, you know, I sometimes think of Substack as an index fund of culture. There's like, whatever people are willing to pay for, whatever people are interested in, there's going to be that. That thing. I don't think our role as a platform on the Internet should be to tell you what's right and what's wrong or who to trust and who not to trust. And it's a seductive idea that it should be that role. And a lot of platforms took that stance and it just didn't work.

[Chris Best]

But you guys have responded at times. Like, there was an article that, you know about. It was written in the Atlantic in November of 2023. It was called Substack Has a Nazi Problem. And this writer identified, I don't know, 15 or 20 newsletters that use Nazi symbols. Swastika goes. You guys did ban some of these newsletters. So what was the reason behind that?

[Hamish Mackenzie]

So, I mean, our stance on this is, look, we have a set of content policies. If something comes to our attention that is against the broadly applicable Substack rules, we're going to take action, but we're not changing what we what we enforce based on pressure.

[Chris Best]

Because I, as you know, I read a lot of substackers and, and I really. And I pay for a bunch of them. And based on, on what I see, I still feel like the best or most prominent writers tend to be iconoclasts. Now obviously there are some who are.

[Guy Raz]

On the left, but I find that the, the ones that I seem.

[Chris Best]

Seem to feel like are more successful are like maybe on the sort of the libertarian center right.

[Guy Raz]

Is that fair?

[Chris Best]

Would you say that's fair?

[Unknown]

You should look at the leaderboards of Substack, which is ranked by revenue. And in the politics in the US Politics category, for example, you'll see a diversity of perspectives represented and there's like, some of the top ones are like very hard on the left, Some of them are very hard on the right or libertarian. I think there's a true mix, but I actually don't know that one dominates the other.

[Chris Best]

Okay, let's go back to our old friend Elon Musk, who Hamish, you first encountered back in 2014, I think when you started to profile him and then would eventually work for him. He comes back into your world less than 10 years later. He buys, of course, Twitter, which becomes X Now, I think fair to say.

[Guy Raz]

One of the, if not the most.

[Chris Best]

Influential sort of social media platform in terms of, of shaping policy, because it's clearly read in the White House. He buys it. And one of the things that happens in 2023 is you guys launch Notes, which is sort of a short feature where you can do short form content to your followers on Substack. He basically says, look, this is a Twitter clone. And he kind of completely flips his shit. Well, is he fire a shot across the ballot? He basically says, anyone tweeting out a Substack link, we're just going to block those.

[Hamish Mackenzie]

Even mentioning the word substack was briefly banned. If you search for substack, it wouldn't work.

[Chris Best]

Yeah. To clarify, there are plenty of people who link their substacks on Twitter or X now. It's very common. And so that's obviously no longer the case. But. But let's just talk about.

[Guy Raz]

And Hamish, I'd love to hear your.

[Chris Best]

Take on this because he's somebody you really did admire for the work he did around electric cars. And I think that you felt this way, but all of a sudden you're on his radar as an enemy and that's no joke.

[Unknown]

Yeah, it's an unusual and uncomfortable experience. I continue to believe that about SpaceX and Tesla and some of the other things he's been involved in, he was instrumental in starting to OpenAI as well. These are major contributions to the world. But that doesn't mean that he doesn't have some personal shortcomings and social shortcomings that show up in other ways. So it sort of sucked at the time. I think he misunderstood and misinterpreted the thing we're doing by launching this Notes feed, which is only similar to Twitter in the way that an electric car is similar to a gasoline car. The steering wheel looks the same and the wheels look the same and there's a windshield, etc. But the thing that powers it is ultimately creating a totally different product that is better for the end consumers and better for the world. And the Substack feed is not Twitter, but it's this subscriptions machine, basically, that helps the independent writers and creators of the world find new audiences and retain them.

[Chris Best]

And just to slightly back up for a second, I mean, I should mention that right around this time, Elon Musk actually made an offer to buy you guys out. I think the way this started is that right before you released Notes, you called him and you guys, or let.

[Guy Raz]

Him know that you were going to.

[Chris Best]

Do it as a courtesy, I guess. And you had a call with him.

[Guy Raz]

And told him that.

[Unknown]

Yeah, we gave him a heads up as a courtesy that we're launching Notes the next day and that, you know, some people are going to perceive this as a Twitter competitor, but we don't see it that way.

[Chris Best]

I see.

[Unknown]

And he responded by getting Chris on a call and saying to him, well, how about Twitter acquire Substack? And I'm looking for a CEO to run the company.

[Chris Best]

This is before Linda.

[Unknown]

Before Linda Yaccarino, like within weeks, actually. And I'm looking for a CEO to run the company. I don't want to be the CEO. So how about you come and do that and I'll be the chairman and how about you think about that? And so we went on an accelerated process of thinking about that.

[Chris Best]

That seems like an interesting, I mean, an interesting offer, right? He's saying, hey, we'll buy you. And at this point, you know, you raised some money and you know you're doing well, and he's probably going to offer you premium and you could be the head of the whole operation. What did you think, Chris?

[Hamish Mackenzie]

I guess I tried to imagine that playing out, and I didn't think it would be what I think of as like a CEO role. Like, he runs that place now. He makes all the decisions he's you know, to my mind, done a lot of things that make sense from his perspective, but would not be what I would see as supporting the cause of free speech or as a, you know, a neutral, independent platform. I gotta. I mean, it's, it's. It was interesting, right? It would have been like one of the most interesting crazy things to, to, like, contemplate doing. But for me, ultimately, I didn't think it would let us make the thing we set out to make.

[Unknown]

This is on the eve of launching Notes. And here you'd say, well, do you want to come in and do this and be part of Twitter? And we're like, hang on, we're not going to talk about that right now. We need to focus on Notes. And the next day we launched the Notes. There's this huge reaction on Twitter about Substack being the Twitter killer.

[Hamish Mackenzie]

Now, I think he took that launch as a no, which is fair enough.

[Unknown]

Yeah. And then that's when the bad things happened.

[Chris Best]

And the bad things were him sort.

[Unknown]

Of him nuking substack. Yeah. Suppressing Substack links, making accusations about how we're using the API.

[Chris Best]

Yeah.

[Hamish Mackenzie]

We had been using for. Since the start of Substack, we'd been using the Twitter API so you could link. You could sign in with Twitter, you could link your Twitter. And he got really mad that we'd been using this API and sent me a bunch of threatening stuff saying, why are you using this stuff to blah, blah, blah, and got quite angry at me.

[Chris Best]

And I guess at the time, I mean, just to put it in context, he was. Because of the changes he had made at X and sort of the media narrative. And look, I think some legitimate, certainly legitimate blowback and criticism. They were struggling. There were no advertisers. They were losing advertisers. They were hemorrhaging cash. A lot of people were like, what did he do? Why would he buy this for $44 billion? Why would he buy. Now, of course, everyone's saying the reverse. They're like, look, he's got 200 million followers and he's the most powerful, probably world list. Right. In one of the most powerful voices in the world. So it was a bargain. But at that time, in mid 2023, that was the narrative. So I guess from his perspective, he was probably feeling threatened. Right. And were you guys worried that he. That those decisions could have a negative impact on your business?

[Hamish Mackenzie]

I think he overestimated how negative that impact would be. Like, he thought he could kill Substack. And he said, as much to me.

[Chris Best]

He said to you, we can bury you.

[Hamish Mackenzie]

Yeah, there was. There would have been a time in Substack's history when that was true. Like, if this had happened in. In 2019 or 2020, like, yeah, I think that really would have, like, set Substack back a lot. But by the time it went down, the share of substack traffic that was coming from Twitter had been on a steady decline for years. And I think he thought that it would be like he sort of had the ability to crush us.

[Chris Best]

Basically. Sounds like the only course of action was to just let it pass. There was going to be. It was going to be painful on a certain number of levels, but you just eventually would just pass.

[Hamish Mackenzie]

Yeah, I think once we did that launch, we were sort of. We were committed.

[Chris Best]

So, interesting. Interestingly, now, 2025, when Twitter's fortunes have turned and Substack obviously has also grown and is successful, he actually, I've seen him tweet links to Substack pieces, so clearly not an issue anymore. As of the end of 2024, you had. It was reported that there were about 35 million active readers, and about 4 million of those people were paying subscribers. Probably a little bit more now by the time we're talking, I think we.

[Hamish Mackenzie]

Can say there's over 5 million now.

[Chris Best]

All right, 5 million paid subscribers, paid.

[Unknown]

Subscriptions, to be totally accurate, as distinct from subscribers.

[Chris Best]

And that's bigger than, I mean, the Washington Post, the Atlantic, the New Yorker. There's a narrative that you often hear, and I'm sure you've heard from people who really are skeptical of mainstream media organizations. And the narrative is, look, they lied about the Hunter Biden laptop. They lied about COVID restrictions. They told us that there was no lab leak. Do you guys think that as we see the influence of big media organizations, the CNNs, the New York Times, the Washington Post's decline, do you think that they're partly responsible for that, or do you think that it's just that the business model doesn't work anymore, or maybe a combination of those things?

[Unknown]

I would say it is a symptom of the model, a symptom of the structure rather than ideological preferences of these publications and the people who run them. And so while I think social media has created opportunity for this skepticism to arrive, is that created a market for kind of conspiracy theory against the dominant media? I think it's actually more of a symptom of the structure of that economy and that in this dismantling of that structure that social media has wrought, there is a whole lot of reorganization and confusion and volatility that is waiting for order to be imposed upon it again in a new way. But that's not going to look like the old system. It's not going to look like a few central pillars who get to be the ultimate sources of truth. Growth is going to look a lot more distributed.

[Chris Best]

Substack is not yet profitable, which is not unusual. Right. It's going to take some time. Based on your experience at Kik, Chris, you know, right. Things can always go south, and obviously you don't anticipate it, but it can always happen.

[Guy Raz]

How do you protect the future?

[Chris Best]

How do you build, let's say, the proverbial moat around substack? There are competitors. You may not consider all the. The companies like Patreon or Ghost or Medium or Beehive or, you know, some of these other. Even.

[Guy Raz]

Even HubSpot.

[Chris Best]

You may not consider those as necessarily as competitors. But how do you make sure that, you know, the momentum continues and what happened to Kik doesn't happen to you guys?

[Unknown]

You just worry about it very hard.

[Hamish Mackenzie]

Well, there's two things I would pitch. One is, you know, the advantage of having a business model is you can be in control of your financial destiny. And so we're not running the company to, like, turn a profit. But the thing that is true, and we've kept true pretty much the whole time, is we don't need to raise money again. We're not on this clock. We have, like, we are in control of our financial destiny.

[Chris Best]

You have how many employees now, by the way?

[Hamish Mackenzie]

About 100.

[Chris Best]

Okay, so you're small. I mean, it's small and. But efficient. Right, because in terms of the. What's generated, it just takes 100 people to do that.

[Hamish Mackenzie]

Yeah, but this is part of it, right? It's like you want to be in. You want to be in control of your. Of your future. You don't want to be. You know, the best time to raise money is when you don't need it. And so you want to make sure that you're always in that position where you have a path to accomplishing your goals that is not like, you know, if it's possible to build a business this way, which for us, it is, it's better to build it where fundraising is an accelerant, but not a necessity.

[Chris Best]

So my industry, right, podcasting, have changed so much since it began, you know, back in the day where you had to plug an ipod into your computer and download some weird, wonky thing. There are people like Marc Maron and Joe Rogan in the early days, Adam Carolla. Now, it's a massive business. So it's changing, and this is natural and normal. How do you see the substack model changing? I mean, right now, most people, they might subscribe, they might pay for it, or they might not, but they're getting anything to their inbox, a letter. There are some people who are also doing audio, some people who are making these videos. So what does it look like? What is a successful substacker going to look like in five years from now?

[Hamish Mackenzie]

There's a lot of other platforms and networks that are built around a format, right? Facebook does text and Instagram does pictures, and Snapchat does disappearing pictures. And podcasts are for audio, and medium is. There's all of these formats. Other things are built around formats. Substack is built around you. It's built around the direct relationship. It's built around owning your audience, owning your work, having your own space on the Internet. And so we already live in a world where you can write, you can make a podcast, you can make a video. Things that you used to need a studio and special equipment and a team to do are going to become able to be done automatically. You're going to be able to make a very high quality audio video thing from the palm of your hand. And the thing that we want to do in subsec is just bring all of that power to the people making stuff.

[Guy Raz]

All right?

[Chris Best]

When you guys think about your whole journey, right? And I mean, even the fact that you met, you ended up working for, doing some consulting work for Kik Hamish, and you were on your way out, Chris. And then you started this thing, which.

[Guy Raz]

Really was kind of weird.

[Chris Best]

And I don't know if I think a lot of people were skeptical. They were, as we know, as we heard. But now that where you've landed 20, 25, you're eight years into this thing.

[Guy Raz]

How much of where you are now.

[Chris Best]

Do you attribute to the grind and the work you put in? And how much do you think the success of it so far has had to do with just luck and circumstance?

[Unknown]

Feels like a yin and a yang thing to me. Totally inseparable. That the luck has to go with the talent and talent has to go with the luck. And the greatest successes come when those two elements perfectly in a mutual dance with each other.

[Chris Best]

Yeah.

[Unknown]

When we're starting the company, it was the two of us, and we got the opportunity to build this thing and it started to show some early signs of success. I said to Chris, like, how can we get to do this? How come, like, not everyone else is trying to build this kind of company or takes advantage of this very obvious thing and these like dynamics? And his answer was actually similar to what you said in your question was like, not many people have the ability to do this thing. Not everyone happens to be in the right position to do it.

[Hamish Mackenzie]

Chris, is it luck or is it hard work? I think it's mostly a third thing which is just doing it. Most people don't do the thing. Once you decide to do it, you need to work hard. You need some luck. But most of the great things in the world that don't exist are not because of a lack of talent or because of a lack of luck, but because of a lack of people setting out to do hard things.

[Chris Best]

That's Chris Best and Hamish Mackenzie, co founders of Substack. By the way, Substack has become the go to launchpad for a new generation of media brands, including some big ones like the Free Press and the Dispatch. Both sites, not surprisingly, were founded by veteran journalists who left big companies to move to Substack. The latest former Washington Post columnist Jennifer Rubin's publication called the Contrarian, founded just days after she quit. Hey, thanks so much for listening to the show this week. Please make sure to click the Follow button on your podcast app so you never miss a new episode of the show.

[Guy Raz]

And also please sign up for my.

[Chris Best]

[e-mail] or you can find it on Substack. This episode was produced by JC Howard with music composed by Ramtin Irabloui. It was edited by Neva Grant with research help from Iman Maani. Our engineers were Patrick Murray and Jimmy Keeley. Our production staff also includes Kathryn Cipher, Casey Herman, Alex Chung, Sam Paulson, Chris.

[Guy Raz]

Masini, Kerry Thompson, John Isabella, and Andalane Coats.

[Chris Best]

I'm Guy Raz and you've been listening.

[Guy Raz]

To How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery. Com. Survey.