Substack– A Safe Haven for Journalists with a $650M Valuation

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Good morning! It's Tuesday, July 25th - Today we’re breaking down Substack’s meteoric rise and how the platform attracted top journalistic talent from around the world!


Substack— A Safe Haven for Journalists with a $650M Valuation

The U.S. media industry took a hard hit during the pandemic and saw more than 30,000 jobs cut in 2020.

But the decline in traditional news outlets has led to a rise in a new era of media: newsletters.

Substack is the platform leading the charge into this new era with a $650M valuation– let’s figure out how they’re doing it.

What’s Substack?

Substack was launched in 2017 to allow writers to distribute and monetize their newsletters. CEO Chris Best envisioned Substack as a haven for a truly free press that liberated writers from editors, advertisers, and other constraints.

Today, Best’s vision for substack has become a reality. The platform has over 2M paid subscriptions and 17,000+ writers. Over the past six years, readers have paid Substack writers more than $300M.

Substack’s business model is quite simple. Publishing is free for creators, but a 10% cut is taken from paid subscriptions.

Substack is also venturing into exclusivity contacts, akin to what Spotify did when it acquired the Joe Rogan Experience. Daniel Lavery, who runs The Chatner, recently signed a two-year, $430,000 contract with the newsletter platform. Essentially, Substack is betting that they’ll make their money back by taking most of Lavery’s subscription income for those two years.

In 2022, Substack saw 58% year-over-year growth and generated $19M in revenue.

The Innovation

A solution to cancel culture

While celebrities and CEOs of major companies are certainly targeted by cancel culture, journalists may be impacted by it the most. The editorial staff of major news outlets like The New York Times and The Washington Post heavily revise and kill stories that don’t properly align with the accepted political narrative.

The recent tendency for news outlets to censor their writers has fueled the meteoric rise of Substack. Some of the world’s most prominent writers, such as Matt Taibi, Glenn Greenwald, and Bari Weiss, have all left their traditional media posts to become Substack writers.

Substack has profited greatly from offering a safe haven to renowned journalists that have escaped the mainstream media censorship regime. In fact, 90% of the company’s earnings come from its top 5% creators. The top ten authors on Substack, which include Taibi, Greenwald, and Weiss, make more than $20M a year.

Allowing writers to invest

In addition to providing a safe haven for writers, Substack allows its contributors to own a piece of it. Last March, Substack launched a $2M community fundraising round that quickly met its goal and was subsequently increased to $5M the following day.

The stated mission of the funding round was to create a subscription network founded on creator ownership.

Why It Matters

Substack’s success shows that no matter how established an industry is, innovators can always find a path to disrupt it and reap profits.

When historic news outlets like the New York Times and the Washington Post began censoring and cannibalizing their top journalists, Chris Best saw a golden opportunity. By allying Substack with writers disillusioned by the mainstream media, Substack now breaks the most newsworthy stories and threatens the existence of the top newspapers.


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