Publishing app Substack joins $1bn club

Hamish McKenzie, Substack’s co-founder and chief writing officer, says: “Substack’s mission has not changed. We are building a new economic engine for culture.

“We started by making it simple for writers to start paid email newsletters, but have expanded to support all media formats... Now we’ve networked the people, publications and communities together to help people find great voices and work, and to give publishers a chance to grow their reach and revenue. That has always been the plan.”

Substack still gives creators control of their email list, but now it encourages people to follow them in the app – trapping them in the Substack ecosystem and making it impossible to leave. “I actually worry about this more than the occasional dalliance with nasty right-wing politics,” the Substacker explained.

This model initially made it hard to attract investment: the company’s first attempt to raise a Series C failed. But this month, Substack raised $100m at a valuation of $1.1bn – marking its entry into the “unicorn” status of startups worth over a billion dollars.

It has drawn funding from tech investor Bond as well as Peter Chernin. Also taking part were venture capital firm Andreessen Horowitz; Rich Paul, chief executive and founder of Klutch Sports Group; and Jens Grede, a co-founder of Skims, Kim Kardashian’s apparel firm.

Part of the renewed investor appeal is the shift in marketing strategy. Substack has stopped emphasising writing and started marketing itself as an app. Three years ago, it was “a place for independent writing”. Last year, it was “the home for great writers and readers”. Today it’s “the app for independent voices”. But there are concerns Substack may lose some of its accessibility.

“The walled-garden impulse is extremely strong in tech platforms – whether it’s inherent to the model, or just what the investors expect I don’t know, but there is clearly something that pushes them there,,” said a prominent UK Substacker who asked not to be named because of their relationship with the company.

But the app can point to a big win. When US columnist Bari Weiss left the New York Times to launch The Free Press, she chose to do so on Substack. Weiss won a devoted US following for challenging what she sees as the illiberal culture of left-leaning media on issues such as diversity and inclusion, as well as Israel-Gaza.

Last week, the FT said that CBS is in talks to buy the publication for $200m. “When The Free Press started a few years ago, it was not widely assumed to be a good time to start a print-focused news and opinion publication. But in that time, it has grown rapidly on Substack and proved that there is a market for journalism. “It’s very exciting that a Substack-native publication is potentially valued at $200m,” said McKenzie.

Photograph by Shedrick Pelt for The Washington Post/Getty