I had written this as a reply to a comment on my Substack thread written today. Turning it into a blogpost (with some edits)


Disclaimer: These are my initial thoughts on this topic. So might seem a little incoherent. I think writing as I am thinking.

Medium got popular because of the ease of discovery of content on its platform.

Most people who signed up did so to consume content.

Very few actually wrote a post initially.

In terms of creation / consumption ratio: fb(pure social media) > twitter (microblog medium) > quora (you already know what to answer) > medium > wordPress > substack.

Ratio of people who have signed up / people who have read something on that platform would be similar.

So very few people will jump on to Substack just because some thought leaders/early adopters are writing there.

People will consume newsletters sent through Substack and will form a 1-1 relationship with the sender and not Substrack.

At least until discovery of content on the platform itself becomes huge and people start coming to substack homepage to read (like medium) instead of going to the specific author’s page after getting a newsletter from her.

This is part of a larger thesis I am thinking/writing on how platforms are taking 2 different approaches to connect demand with supply.

User looking for a plumber comes to Urbanclap and orders a plumber.

Relationship is between user and Urbanclap & plumber and Urbanclap.

This is the same model most e-commerce follows (when supply is not differentiated).

1-1 mapping between demand and platform & supply and platform.

Compare this with Substack and something like Meesho.

Here users form relationship with the author who is writing and sending newsletters from substack and not the platform itself.

Same with Meesho where resellers sell on whatsapp groups and end buyers don’t even know Meesho is in the picture.

Resellers brought their existing relationships/clients on Meesho and help them supercharge their growth.

Not sure what is Meesho’s CAC but I am sure it is less than other ecommerce giants acquiring new users on Google/FB or display ads.

The only issue is Meesho not being able to form a direct relationship with their end users and giving enough power to their resellers who can potentially bypass them and move out from their platform once they get big and can source items directly from China.

So in case of Meesho the relationships are:

Meesho <-> Reseller Reseller <-> End buyer

Same with Substack

Substrack <-> Author Author <-> Reader

Both of them have different biz models but it is interesting how:

  1. in both supply gets the demand for the platform and help it grow
  2. the platform does not form a tight relationship with the end user
  3. once supply gets powerful they can churn and take users with them

I will write a longer post on explaining both models in terms of acquisition strategies, CAC, relationships with various stakeholders and how these new platforms relying on supply growing demand and help prevent churn.

One important difference between Substack vs Traditional newsletters: Subscription process for a new newsletter is a single step instead of 2 (traditional enter email and then verify) if you are already logged in to substack as a reader.

I am assuming this has led to dramatic improvement in conversion of the subscription funnel.


P.S Someone rightly pointed that Amazon vs Shopify is a much better comparison. It is true. I completely missed it.