Substack’s Challenge Is Our Challenge

What ‘Unicorn’ Status Means To Us

What’s ‘Unicorn’ Status?

It’s when a privately held start-up company achieves a valuation of $1 billion or more. As Accru explains, this status changes when a private company sells its shares to the public for the first time (an IPO - initial public offering) to raise equity or makes an acquisition, and is therefore no longer considered a ‘unicorn’, for example, FB/Meta, Twitter/X. On the other hand, Canva is still a unicorn, one of the current 227 active ones.

Substack reached this status when it recently raised a Series C $100 million, achieving a valuation of $1.1 billion.

So?

What Substack has created that is brilliant and unique—and key to the positive experience of me and my subscribers, is this: the ability of Substackers to engage with each other and generate comments. This level of intimacy is not available on any other platform. And it’s all the different social features on Substack—posts, notes, chats, recommendations, etc—that have enabled us to grow our following, build our communities, build trust, and monetise on our terms if we so choose.

So the Big Question is—will Substack change, now that it has to provide a ‘billion dollar exit’ to its investors who will be wanting their money back, sooner rather than later?

The answer is clearly YES.

Substack will inevitably change. It has to make a profit, which it does not do, as currently its expenses exceed its revenue.

Therefore, rather than ask “Will Substack change?” a realistic question is “How will Substack change?”

The Challenge

Peter Davis states somewhat cynically (he confesses) that when a company says that its success depends on your success, success is being defined on their terms. ‘Their definition of your success is whatever benefits them, and if it doesn’t benefit them, then you’re not really successful.’

Peter argues that since Substack takes a cut of our earnings (10%), that makes us employees.

Now here’s the rub…if all we have are FREE subscribers, then we are not good employees, because not only are we not making any money for ourselves, but neither are we making any money for Substack. We become freeloaders, actively costing the company money - Ouch!

But then again, as Peter observes, it’s Substack who is paying for the amazing email infrastructure, the cloud storage and the staffing. So, as with any other business, if we are deemed to be failing to support the company and perform well as employees, our heads may be on the chopping block!

Much has been happening behind the scenes to address this disparity, which might explain why so many have experienced a drop in subscribers since March this year. At first, it doesn’t seem to make sense. But suddenly it does, when we understand that it’s FREE subscribers that Substack wants to discourage, while encouraging us to get PAYING subscribers, so they, as well as we, are making money.

This is particularly challenging for those who just want their writing to be enough to attract paying subscribers or simply have no need to use Substack as a vehicle for monetisation, but simply want to engage and build a community.

What To Do?

First, we have to wait and see what Substack is planning to implement.

Currently, Substack is helping writers like me and my subscribers build an email list far better than any other email service provider. That is a massive plus, both for us and the platform. I failed miserably at building an email list before joining Substack, and now I’m sitting at 698 subscribers, something I never dreamed possible.

I’m seeing people who say Substack will be introducing advertising and others who say Substack will stick to its core model and will not be introducing advertising. Something that I’ve only just learned is that, currently, through newsletter sponsorship, Substack creators can sell space in their newsletters to advertisers who want to reach their newsletter audience. Who knew!

It’s a popular view that Substack will be focussing more on audio and video, adding features to make video publishing more user-friendly and attractive to writers, thereby becoming something like the next YouTube.

Substack’s Creator Studio, launched in May 2024 for TikTok creators, was a year-long initiative and the first push in this direction. There were potential concerns that this might lead to ‘TikTokification’ and indicate that Substack was moving away from long-form writing.

As we speak, Sarah Fay has uploaded her revamped Mastering Substack Video Workshop for paid subscribers to learn how video might connect us more deeply with our subscribers. And, of course, we now have Lives.

Hamish McKenzie, co-founder of Substack, is aware of the difference between monetising relationships and monetising impressions. In the Current, he is quoted as saying on the Newcomer podcast that, “When you’re trying to lead people into deeper relationships with the voices who they really trust, the behavior and the content that gets rewarded is totally different from when you have a big feed and everyone’s trying to go viral on top of each other.”

So it looks like the time is fast approaching when we have to be active in our engagement, no more lurking, and decide how we are going to monetise and get rewarded for content and behaviour that does not betray our subscribers’ trust.

We Can!

There are no statistics available, but I estimate that 85% of my 700 (Yikes…just happened while writing this post!) subscribers are aged 50 and beyond.

Furthermore, I’ll bet that 100% are lifelong learners!

Furthermore, we are far more tech-savvy than we are given credit for.

So we can do this! After all, it’s a win-win, right?

How are you going to monetise your newsletter? Or are you doing it already?

We all want to know, so please leave a comment.

I’d love to use your examples in my next post.

I haven’t monetised yet, but I’m working on it ☺️

This is an ongoing conversation!