What is Substack?

This week we’re breaking down Substack’s business model.

Substack is a platform for independent writers to distribute subscription newsletters. The company makes this easy, even I figured it out.

The 1,000 True Fans Business Model

Business models can be like Rorschach tests. When I look at Substack, I see author Kevin Kelly’s 1,000 True Fans. The core of Kelly’s argument in this essay is that:

To be a successful creator you don’t need millions…To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.

The definition of a true fan here is anyone who buys everything that you produce. Underlying his argument are two criteria and some basic algebra:

First, you have to create enough each year that you can earn, on average, $100 profit from each true fan…Second, you must have a direct relationship with your fans. That is, they must pay you directly.

The algebra is that earning $100 from 1,000 fans equates to $100,000 a year, which is a decent living. Where this idea starts to get interesting is when you combine it with internet assumptions.

The internet reshapes business rules, requiring an entirely new playbook. As tech analyst Ben Thompson notes, while the physical world is dictated by scarcity the digital world is one of abundance. For example, compare your local drug store to…