How are they on the right track? They've taken over $17 million in funding from VCs, meaning they need a ~$170 million exit in the next 7 years, meaning they need to monetize like crazy.
Everyone loved Medium, too, in their Year 3 when they were just burning VC cash and nobody there cared about being a profitable, sustainable business.
Substack is different in that they are a kind of Patreon meets Medium (with the newsletter angle, but I think on a long enough timeline that's a gimmick). With regards to what sets them apart from Medium -- in short, they actually have a revenue story: a cut of subscriptions. Even this is phrasing is wrong though because IMO a lot of "subscriptions" in this space could effectively be categorized as "recurring donations" since they are more about supporting individuals or small collectives and less about pay-for-product.
I'm a little skeptical about the overall size of their market or their ability to create sustainable revenue opportunities for individual creators in the long term, but they certainly have more obvious a pathway to revenue than Medium.
They ought to be investing in low friction, easy to use customer acquisition tooling for creators btw. Something that doesn't feel like marketing but is, effectively, marketing. That's where they can apply those millions in technology and differentiate between Medium. For these "substacks" (btw this phrase is actively being xeroxed and they should invest in ensuring this is the case) where people are trying to quit their jobs to become full-time creators, they need to come with a story and tooling that eases these creators into the idea that part of their new lifestyle is keeping certain KPIs up and to the right (without drenching these concepts in growth jargon).
By doing this they can effectively outsource their growth to their customers: they take the vig from creators and at the same time utilize the creators to grow their platform. It's a smart idea.
Patreon is a great comparison and, I think, supports my position. Only $35 million in annual revenue after 6 years.
Not a bad business but they've taken $160 million in finding to get there.
Actually, my bigger point was just that the tech industry is full of businesses that were hot & sexy in their early years and then people got disappointed when they tried to start being a real business in year 7 or 8 or 9.
Instead of jumping from the Medium hype train to the Substack hype train....it is probably safer just to get off all the hype trains and assume any given startup will eventually try to become profitable and screw over old time customers in the process. You're going to be about 90% right with that as your default assumption.
Everyone loved Medium, too, in their Year 3 when they were just burning VC cash and nobody there cared about being a profitable, sustainable business.