Substack worth $1 billion? Likely not

According to Tech Crunch, Substack is worth at least $650 million and possibly as much as $1 billion.

Substack, the five-year-old newsletter platform that has aggressively positioned itself as a disruptive force in media, has abandoned efforts to raise a Series C round, The New York Times is reporting today. According to its sources, Substack held discussions with potential investors in recent months about raising $75 million to $100 million at a valuation of between $750 million and $1 billion.

Substack, based in San Francisco, was most recently valued at $650 million after closing a $65 million Series B round in March of last year led by earlier investor Andreessen Horowitz (a16z). It had earlier raised a $15.3 million Series A round led by a16z in 2019.

Substack valued at $650 million defies any reason or logic. As mentioned above, there is the problem of burnout. Despite what Seth Godin may say, writer’s block is real. After the initial creative momentum slows, coming up with new content becomes harder and output slows. I have observed that the output for several high-profile writers has slowed, such as Zeynep Tufekci. Coming up with post ideas is much more difficult than uploading pictures or videos to Instagram or tweeting. How many times can you write about Biden doing a bad job, the left being ‘too extreme’, or how the media is dishonest, and other common topics. The second and much bigger problem is that Substack does not scale. The market/audience for long-form political opinions is just not that big, nor is there much room for growth. Compared to video or social networking, the potential audience is tiny even if Substack seems quite popular. Third, related to scaling, it becomes very expensive from a consumer standpoint. Subscribing to just 4 blogs (assuming the minimum $5/month subscription) is the same as a Netflix premium plan.

Perhaps I can see it justifying such a high valuation if it pivots to a services business in which anyone can embed a Substack-enabled paywall widget or email subscriber widget on their website, but without having to set up an Substack newsletter on So I would be able to embed paywall widgets on individual posts on my blog, but while keeping everything else the same. It would still look the same (and not like a Substack blog), but the paywall would be powered by Substack. This would either be a widget or script which I upload to my server. And then also the ability to create a squeeze/lead page, similar to MailChimp, which was recently sold for $11 billion. So after someone submits their email address, the content would unlock.

Like, Substack is not going away and fills a similar niche catering to creators and consumers of long-form content, but is this enough to justify a nearly $1 billion valuation? Likely not.

1 comment

  1. Substack ought to organize a cruise with writers-as-celebrity speakers grouped by subscriber interest. Sure, some writers would hate to speak but they might like the lionizing.

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