A Conversation with Substack Co-Founder, Hamish McKenzie.

A Conversation with Substack Co-Founder, Hamish McKenzie.

Hamish McKenzie is co-founder of subscription publishing start-up Substack and author of Insane Mode: How Elon Musk’s Tesla Sparked an Electric Revolution to End the Age of Oil (November 2018). In recent years, he has been the lead writer for Tesla, an advisor to Kik, a tech reporter, and a freelance journalist covering everything from the World Beard and Moustache Championships to the world’s most comprehensive face transplant.

Substack was founded in 2017, and has grown to become one of the world’s fastest-growing publishing platforms. In a statement, the founders note that “We started Substack because we believe that what you read matters and that good writing is valuable. We believe that writers, bloggers, thinkers, and creatives of every background should be able to pursue their curiosity, generating income directly from their own audiences and on their own terms. When readers pay writers directly, writers can focus on doing the work they care about most. A few hundred paid subscribers can support a livelihood. A few thousand makes it lucrative. Readers win, too. By opting into direct relationships with writers, we can be more selective with how we consume information, homing in on the ideas, people, and places we find most meaningful.

In this interview, I speak to Substack Co-Founder, Hamish McKenzie. We discuss the failures in traditional media, the genesis of Substack, and how it’s grown to become one of the world’s fastest-growing media platforms.

Q:  What was the failure in the journalism model that led to the inception of Substack?

[Hamish McKenzie]: A lot of the credit should go to Chris Best who is the CEO of Substack and my co-founder. It was the two of us who started the company – but he’s the smart guy who thought about incentive systems, and who was really dismayed by the state of the media economy and how much the attention economy was driving things, and frankly, damaging us. Twitter, Facebook and Instagram were play attention games – they reward creators with ‘status points,’ likes, retweets and quote tweets for example. Those rewards come to those who are best at monopolising attention… that’s not the same thing as telling the truth or acting in good faith. The things that get rewarded in those systems are things that provoke, divide and drive outrage – so we end up with a broken media economy that drives us all crazy and doesn’t represent the best version of ourselves – that doesn’t help us come to a common understanding of truth. We felt that a better system was needed – we needed to shift the media economy off a dependence on online advertising, and we needed to change who the customer is. Both things are possible with paid subscriptions because it’s trust rather than content that gets monetised. Readers can become customers and pay writers they trust directly.

I was a journalist and made a living- it was always a struggle and I was looking forward to my future options. I’d left Tesla, written a book, and was wondering what to do next. Many of my peers were experiencing the same as they’d lost their jobs, gone into communications or taken some other route in life. What was broken in journalism was not a lack of demand for good stories nor a lack of journalists or the format of stories and distribution – the thing that was broken was the business model. Newspapers made less sense economically and financially and news websites simply hadn’t found the golden ticket, with advertising frankly not serving business well. I was really keen to help fix the business model of journalism – even if only for selfish reasons to help writers like me get hope for the future.

Q: How did you ‘cross the chasm’ of getting people to pay for a ‘product’ which historically had been free, or very low cost?

[Hamish McKenzie]: Ultimately, I think we were fortunate with timing – when we launched it was the right moment for Substack. Patreon had come along and proved people were willing to pay for creatives they valued, and people were losing trust in social media and looking for a better experience. We are beneficiaries of timing and cultural change, more so than technological change. Substack is pretty simple – it’s based on blogs, email and fairly established ‘ways’ of communicating. When we launched, we needed one perfect publisher, and our first customer was Bill Bishop. He’d been writing a newsletter about China for 5 years (for free) – and was intending to go ‘paid’ at the encouragement of his friend Ben Thompson who ran a successful pre-Substack called Stratechery. Bill was the ideal demonstrator of this model and platform- he’d built up a following, and when he went on Substack, he immediately got six-figures of revenue on day one. His readership comprised academics, policymakers, journalists and business executives. He was a person we could point to in the early days to demonstrate how powerful this platform was. We then got a few other writers of similar influence in different fields. Daniel Lavery was another successful humour and culture commentator who came to Substack early. Daniel’s success was totally different to Bill’s. Bill’s subscribers were businesspeople, and his publication had a high price-point with people mainly paying on company credit cards. Danny on the other hand charged $5 a month – his writing wasn’t necessary for your job, but it brought value to your life in other ways. Those early success stories gave us the grist to go to other writers and say look, this model can work for you too!

Q: How do you ensure publishers get a fair chance to succeed on the platform?

[Hamish McKenzie]: The barrier to entry on Substack is close to zero. There are no gatekeepers stopping you from setting-up. It’s a really honest and transparent system because you go to your readers and encourage them to follow, subscribe and pay for your content. You are in total control – and people can sign-up and unsubscribe really easily (the same goes for publishers!). Our publishers have their own content, mailing lists, relationships with readers and payment providers. Every publisher has a different definition of success – I might be publishing a newsletter on Substack for free because I enjoy the feedback from my community… or I might encourage people to pay for subscriptions and use this as side-hustle income… or I might make it my full time living, even a source of wealth. The more people pour into the platform- the more time, energy and focus they provide- the more subscribers express trust with their dollar and so the cycle continues. Now, we’re even seeing people hiring reporters, admin people and more to help them with their Substacks!

Q: Do platforms like Substack encourage a purer form of journalism?

[Hamish McKenzie]: Journalism has broad definitions, but it’s definitely a force for people who are independent. We characterise our ideal ‘Substacker’ in affectionate terms – we call them outsider nerds – they’re outsiders insofar as they don’t fit comfortably in the dominant media structure for whatever reason – perhaps they feel they can do better work outside of it They’re nerds insofar as they’re especially knowledgeable or passionate about a particular subject area. There are no pre-set rules when you’re your own publisher. There’s nobody telling you what to do, what not to do, what to say, what not to say. Of course you could still work with editors to improve your work and make your writing as good as it could be – but having that direct relationship with your reader does give you pressure to do the job well, and to give people a viable alternative to scrolling mindlessly on social media!

Q: Did your experience as a business journalist inform your entrepreneurship journey? 

[Hamish McKenzie]: I worked at Tesla, and wrote my book, but my unusual career did make me realise the start-up environment was unusual and challenging. I saw that coming up with a business model and product which would get customers was one part, but you also had to focus on building a company as a precious machine that needs to be run right with aims, objectives…. Our aims are cultural – we want to have a better future for writing – a better media economy.

Q: What are some of your key learnings about running a scale-up?

[Hamish McKenzie]:  You can have your best day and your worst day on the same day. There’s so much happening at once, and everything happens so fast… the emotional highs and lows are tense. I’d interviewed lots of founders about the trauma and stress of their roles, and with a company like Substack, you also have the lens of public scrutiny in a way that only industries like the media can attract. Carrying those emotions isn’t necessary difficult, but you have to deal with them for you, and for everyone who works in the company and for whom you are responsible. All those employees chose to put their lives, souls and energy into working on Substack – we were lucky enough to get it off the ground- and we did it together.

[Vikas: How do you cope with stress as a founder?]

[Hamish McKenzie]: I’m really lucky because I work with Chris and Jairaj. The three of us as founders. Chris is CEO, Jairaj is CTO and I’m Chief Writing Officer. We’re supported by a team of brilliant, amazing people and it’s a privilege to work with them every day. When it comes to pressure – having those two as wingmen to carry the load makes it all doable. Chris and Jairaj aren’t like chest-thumping Silicon Valley types, nor are they painfully introverted engineer-scientists who can’t communicate. They are balanced, level-headed and extraordinarily talented. We’ve been tested so often in this journey, and have come out the other side stronger.

Q: Do you feel successful?

[Hamish McKenzie]: We’re still just at the start of the Substack journey – we still have so much to do. If it stopped now? I’d be sad… sad because Substack can make the world quite a bit better I think, at least the media economy. The media economy is important to helping society – I do feel successful, and before I came to Substack, I had the opportunity to do so many amazing things, work with amazing people and live a good life. If you’re not grateful for those things, you set yourself up for misery. If you’re not content in life, when will you ever have enough? Seeing people succeed on Substack makes me happy, and makes me feel successful too – we’re able to change people’s lives, and in turn enable them to touch lots of minds and lives. There are thousands of stories of success on Substack and that really amplifies my feeling of success- but there’s so much more to do.

Q: What do you hope your legacy will be?

[Hamish McKenzie]: I don’t care about legacy – not because I’m not thinking of legacy, but because I’m thinking about how to make the greatest positive difference in the current moment I’m living in, and not obsessing about how I’ll be looked back on. Even if I think of the most amazing expression of success and legacy, in 20 years it will be a distant memory, and in a 100 years a whole new population will exists, and all of us will be dead, right? You’re setting yourself up for misery if you focus too much on legacy honestly, but if you try and make a positive difference in the current moment of your life, you’re doing the right thing, and that might end-up becoming what people think of as legacy.

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.