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Substack acquires team from community consulting startup People & Company
New media poster child Substack announced today that they’ve added a small community-building consultancy team to its ranks, acquiring the Brooklyn-based startup People & Company.
The small firm has been working with clients to build up their community efforts, and its team will now be tasked with building up some of the newsletter company’s upstart efforts for writers in its network.
In a blog post, Substack co-founder Hamish McKenzie said that the company had previously used the People & Co. team to consult on their fellowship and mentorship programs and that members of the team would now be working on a variety of new efforts, from scaling programs to help writers with legal support and health insurance to community-guided projects like workshops and meetups to help crowdsource insights.
“These people are the best in the world at what they do, and now they’re not only working for Substack, but they’re also working for you,” McKenzie wrote.
Beyond Substack, previous partners with People & Company include Porsche AG, Nike and Surfrider.
Substack has been blazing ahead in recent months, adding new partners and raising cash as it aims to bring on more and more subscribers to its network. The firm shared back in late March that it had raised a $65 million round at a reported valuation around $650 million, according to earlier reporting by Axios.
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Substack announces a $1M initiative to fund local journalists
While the seemingly unending debate around Substack has focused on well-known writers with a national profile, the newsletter platform just announced that it will be supporting local (presumably non-famous) journalists through a new program.
The startup described Substack Local as a $1 million initiative that will fund independent writers creating local news publications. Similar to the Substack Pro program, the company will offer cash advances of up to $100,000, as well as mentorship and “subsidized access” to health insurance and design services. In exchange, Substack will take 85% of subscription revenue for a year (its cut goes back to the standard 10% after that).
Applications are due by April 29, with participants selected by a panel of judges with their own Substack publications — Zeynep Tufekci of Insight, Anne Helen Petersen of Culture Study, Dick Tofel of Second Rough Draft and Rachel Larimore, managing editor of The Dispatch.
Substack said that through this initiative, it’s also partnering with New Zealand-based Stuff to launch two new publications covering under-served regions in the country.
A Substack skeptic might suggest that programs like this are an easy way to drum up positive publicity. (Facebook and Google have also announced programs to support local news.) In Substack’s case, this comes after the platform has been criticized for bankrolling transphobic writers with big advances — just a few days ago, the company revealed that it has recently signed lucrative contracts with transgender writers including Daniel Lavery.
Regardless of motivation, the need for more local journalism is real, with news deserts created by the shutdowns and struggles of many local newspapers. If there’s going to be any hope, it seems more likely to come from new, digitally-focused publications and independent journalists.
“This is not a grants program, nor is it inspired by philanthropic intent,” the company wrote in a blog post. “Our goal is to foster an effective business model for independent local news that provides ample room for growth.”
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Extra Crunch roundup: Tonal EC-1, Deliveroo’s rocky IPO, is Substack really worth $650M?
For this morning’s column, Alex Wilhelm looked back on the last few months, “a busy season for technology exits” that followed a hot Q4 2020.
We’re seeing signs of an IPO market that may be cooling, but even so, “there are sufficient SPACs to take the entire recent Y Combinator class public,” he notes.
Once we factor in private equity firms with pockets full of money, it’s evident that late-stage companies have three solid choices for leveling up.
Seeking more insight into these liquidity options, Alex interviewed:
- DigitalOcean CEO Yancey Spruill, whose company went public via IPO.
- Latch CFO Garth Mitchell, who discussed his startup’s merger with real estate SPAC $TSIA.
- Brian Cruver, founder and CEO of AlertMedia, which recently sold to a private equity firm.
After recapping their deals, each executive explains how their company determined which flashing red “EXIT” sign to follow. As Alex observed, “choosing which option is best from a buffet’s worth of possibilities is an interesting task.”
Thanks very much for reading Extra Crunch! Have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
The Tonal EC-1
Image Credits: Nigel Sussman
On Tuesday, we published a four-part series on Tonal, a home fitness startup that has raised $200 million since it launched in 2018. The company’s patented hardware combines digital weights, coaching and AI in a wall-mounted system that sells for $2,995.
By any measure, it is poised for success — sales increased 800% between December 2019 and 2020, and by the end of this year, the company will have 60 retail locations. On Wednesday, Tonal reported a $250 million Series E that valued the company at $1.6 billion.
Our deep dive examines Tonal’s origins, product development timeline, its go-to-market strategy and other aspects that combined to spark investor interest and customer delight.
We call this format the “EC-1,” since these stories are as comprehensive and illuminating as the S-1 forms startups must file with the SEC before going public.
Here’s how the Tonal EC-1 breaks down:
- Part 1: How a homegrown experiment became one of the fastest-growing companies in fitness tech
- Part 2: Millions of dollars and 3.5 years, and it all came down to this
- Part 3: Building online communities for fun, profit and product
- Part 4: Can Tonal become the luxury fitness market champion?
We have more EC-1s in the works about other late-stage startups that are doing big things well and making news in the process.
What to make of Deliveroo’s rough IPO debut
Image Credits: Nigel Sussman (opens in a new window)
Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors?
Let’s peek at the numbers and find out.
Kaltura puts debut on hold. Is the tech IPO window closing?
Image Credits: Nigel Sussman (opens in a new window)
The Exchange doubts many folks expected the IPO climate to get so chilly without warning. But we could be in for a Q2 pause in the formerly scorching climate for tech debuts.
Is Substack really worth $650M?
Image Credits: Nigel Sussman (opens in a new window)
A $65 million Series B is remarkable, even by 2021 standards. But the fact that a16z is pouring more capital into the alt-media space is not a surprise.
Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media. Let’s take a look at Substack’s historical growth.
RPA market surges as investors, vendors capitalize on pandemic-driven tech shift
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Robotic process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.
RPA has enabled executives to provide a level of automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.
E-commerce roll-ups are the next wave of disruption in consumer packaged goods
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This year is all about the roll-ups, the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value. The interest in creating value through e-commerce brands is particularly striking.
Just a year ago, digitally native brands had fallen out of favor with venture capitalists after so many failed to create venture-scale returns. So what’s the roll-up hype about?
Hack takes: A CISO and a hacker detail how they’d respond to the Exchange breach
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The cyber world has entered a new era in which attacks are becoming more frequent and happening on a larger scale than ever before. Massive hacks affecting thousands of high-level American companies and agencies have dominated the news recently. Chief among these are the December SolarWinds/FireEye breach and the more recent Microsoft Exchange server breach.
Everyone wants to know: If you’ve been hit with the Exchange breach, what should you do?
5 machine learning essentials nontechnical leaders need to understand
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Machine learning has become the foundation of business and growth acceleration because of the incredible pace of change and development in this space.
But for engineering and team leaders without an ML background, this can also feel overwhelming and intimidating.
Here are best practices and must-know components broken down into five practical and easily applicable lessons.
Embedded procurement will make every company its own marketplace
Image Credits: Busakorn Pongparnit / Getty Images
Embedded procurement is the natural evolution of embedded fintech.
In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.
Knowing when your startup should go all-in on business development
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There’s a persistent fallacy swirling around that any startup growing pain or scaling problem can be solved with business development.
That’s frankly not true.
Dear Sophie: What should I know about prenups and getting a green card through marriage?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
I’m a founder of a startup on an E-2 investor visa and just got engaged! My soon-to-be spouse will sponsor me for a green card.
Are there any minimum salary requirements for her to sponsor me? Is there anything I should keep in mind before starting the green card process?
— Betrothed in Belmont
Startups must curb bureaucracy to ensure agile data governance
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Many organizations perceive data management as being akin to data governance, where responsibilities are centered around establishing controls and audit procedures, and things are viewed from a defensive lens.
That defensiveness is admittedly justified, particularly given the potential financial and reputational damages caused by data mismanagement and leakage.
Nonetheless, there’s an element of myopia here, and being excessively cautious can prevent organizations from realizing the benefits of data-driven collaboration, particularly when it comes to software and product development.
Bring CISOs into the C-suite to bake cybersecurity into company culture
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Cyber strategy and company strategy are inextricably linked. Consequently, chief information security officers in the C-suite will be just as common and influential as CFOs in maximizing shareholder value.
How is edtech spending its extra capital?
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Edtech unicorns have boatloads of cash to spend following the capital boost to the sector in 2020. As a result, edtech M&A activity has continued to swell.
The idea of a well-capitalized startup buying competitors to complement its core business is nothing new, but exits in this sector are notable because the money used to buy startups can be seen as an effect of the pandemic’s impact on remote education.
But in the past week, the consolidation environment made a clear statement: Pandemic-proven startups are scooping up talent — and fast.
Tech in Mexico: A confluence of Latin America, the US and Asia
Image Credits: Orbon Alija (opens in a new window)/ Getty Images
Knowledge transfer is not the only trend flowing in the U.S.-Asia-LatAm nexus. Competition is afoot as well.
Because of similar market conditions, Asian tech giants are directly expanding into Mexico and other LatAm countries.
How we improved net retention by 30+ points in 2 quarters
Image Credits: Steven Puetzer (opens in a new window) / Getty Images
There’s certainly no shortage of SaaS performance metrics leaders focus on, but NRR (net revenue retention) is without question the most underrated metric out there.
NRR is simply total revenue minus any revenue churn plus any revenue expansion from upgrades, cross-sells or upsells. The greater the NRR, the quicker companies can scale.
5 mistakes creators make building new games on Roblox
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Even the most experienced and talented game designers from the mobile F2P business usually fail to understand what features matter to Robloxians.
For those just starting their journey in Roblox game development, these are the most common mistakes gaming professionals make on Roblox.
CEO Manish Chandra, investor Navin Chaddha explain why Poshmark’s Series A deck sings
Image Credits: Poshmark
“Lead with love, and the money comes.” It’s one of the cornerstone values at Poshmark. On the latest episode of Extra Crunch Live, Chandra and Chaddha sat down with us and walked us through their original Series A pitch deck.
Will the pandemic spur a smart rebirth for cities?
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Cities are bustling hubs where people live, work and play. When the pandemic hit, some people fled major metropolitan markets for smaller towns — raising questions about the future validity of cities.
But those who predicted that COVID-19 would destroy major urban communities might want to stop shorting the resilience of these municipalities and start going long on what the post-pandemic future looks like.
The NFT craze will be a boon for lawyers
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There’s plenty of uncertainty surrounding copyright issues, fraud and adult content, and legal implications are the crux of the NFT trend.
Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors. All of these concerns mean artists may need to lawyer up.
Viewing Cazoo’s proposed SPAC debut through Carvana’s windshield
Image Credits: Nigel Sussman (opens in a new window)
It’s a reasonable question: Why would anyone pay that much for Cazoo today if Carvana is more profitable and whatnot? Well, growth. That’s the argument anyway.
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Clubhouse will create billions in value and capture none of it
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. It was a busy week on the IPO front, Danny was buried in getting the Tonal EC-1 out, and Natasha took some time off. But the host trio managed to prep and record a show that was honestly a kick to record, and we think, a pleasure to listen to!
So, for your morning walk, here’s what we have for you:
- The Substack conversation: Does the new $65 million check make sense? What is Substack? Does it have a moat? Why is Natasha’s URL so much better than Alex’s?
- Cameo raised $100 million and none of us really have a bone to pick with that. Danny actually argues in favor of it.
- The Clubhouse conversation: Does every single product need to feature live audio? The answer appears to be yes, oddly enough. Discord comes up along with Spotify, as does LinkedIn. And somehow, Microsoft Excel and Miami?
- TechCrunch scooped that Pipe is raising more money at a huge new valuation, and we argue about what a derivative really is.
- Harlem Capital raises $134 million for its new fund.
- MaC VC raises $103 million for its new fund.
It was a mix of laughs, ‘aha’ moments and honest conversations about how complex ambition in startups should be. One listener the other day mentioned to us that the pandemic made it harder to carve out time for podcasts, since listening was often reserved for commutes. We get it, and in true scrappy fashion, we’re curious how you’ve adapted to remote work and podcasts. Let us know how you tune into Equity via Twitter and remember that we’re thankful for your ears!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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Is Substack really worth $650M?
Substack didn’t invent the paid newsletter, but the startup’s early success with the model is enticing previous backers to more than double down on the media startup.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Last evening, Axios reported that Substack is “raising $65 million in new venture capital” at a valuation of “around $650 million.” As you’ve already guessed, Axios goes on to report that Andreessen Horowitz (a16z) will likely lead the investment.
That we’re seeing a16z pour more capital into what we could call the alt-media space is not a surprise. The investing group is ladling even more cash into its in-house media efforts and has put a small archipelago of capital into audio-based social media app Clubhouse. Its internal publishing schedule is in part an attempt to get around traditional media; the Clubhouse universe is an inverted one in which tech investors are celebrities, producers and gatekeepers. And Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media.
You can detect the theme.
Regardless, Substack’s new valuation and investment are eye-catching. This morning, I want to collect all that we can regarding Substack’s historical growth so that we can chew on its new valuation from the best vantage point. Let’s go!
$650 million?
A little history to kick us off. Crunchbase counts Substack’s total funding to date at $17.4 million. PitchBook puts the number at $21.21 million, inclusive of debt. Both sources agree that the company’s most recent round came in July 2019. PitchBook pegs the company’s valuation at $48.65 million at that date.
Raising $17 million in cash around 20 months ago, regardless of debt, is an amount of capital that the company could easily have burned through by now. Raising more funds is therefore not a surprise.
But the size of the new round is notable, as is its constituent valuation. Series A and B rounds have been growing in size in recent years. But a $65 million Series B would stand out, even by 2021 standards. Not shockingly so, but enough that any company raising that sum at its implied level of maturity would demand our attention. That we’re all familiar with Substack only makes the sum more curious.
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Substack faces backlash over the writers it supports with big advances
Substack has attracted a number of high-profile writers to its newsletter platform — and it’s not a secret that the venture-backed startup has lured some of them with sizable payments.
For example, a New Yorker article late last year identified several writers (Anne Helen Petersen, Matthew Yglesias) who’d accepted “substantial” advances, and others (Robert Christgau, Alison Roman) who’d started Substack newsletters without striking deals with the company.
However, a number of writers publishing via Substack have begun arguing that this strategy makes the company seem less like a technology platform and more like a media company (a familiar debate around Facebook and other online giants) — or at the very least, like a technology platform that also makes editorial decisions subject to scrutiny and criticism.
Last week, the writer Jude Ellison Sady Doyle pointed to writers like Yglesias, Glenn Greenwald and Freddie deBoer (several of whom departed larger publications, supposedly turning to Substack for greater editorial independence) and suggested that the platform has become “famous for giving massive advances [ … ] to people who actively hate trans people and women, argue ceaselessly against our civil rights, and in many cases, have a public history of directly, viciously abusing trans people and/or cis women in their industry.”
Doyle initially said that they would continue publishing via Substack but would not charge a subscription fee to any readers who (like Doyle) identify as trans. Later, they added an update saying they’d be moving to a different platform called Ghost.
Science journalist and science fiction writer Annalee Newitz wrote yesterday that they would be leaving the platform as well. As part of their farewell, they described Substack as a “scam”: “For all we know, every single one of Substack’s top newsletters is supported by money from Substack. Until Substack reveals who exactly is on its payroll, its promises that anyone can make money on a newsletter are tainted.”
Substack has responded with two posts of its own. In the first, published last week, co-founder Hamish McKenzie outlined the details of what the company calls its Substack Pro program — it offers select writers an advance payment for their first year on the platform, then keeps 85% of the writers’ subscription revenue. After that year, there’s no guaranteed payment, but writers get to keep 90% of their revenue. (The company also offers legal support and healthcare stipends.)
“We see these deals as business decisions, not editorial ones,” McKenzie wrote. “We don’t commission or edit stories. We don’t hire writers, or manage them. The writers, not Substack, are the owners. No one writes for Substack — they write for their own publications.”
The second post (bylined by McKenzie and his co-founders Chris Best and Jairaj Sethi) provides additional details about who’s in the program — more than half women, more than one-third people of color, diverse viewpoints but “none that can be reasonably construed as anti-trans” — without actually naming names.
“So far, the small number of writers who have chosen to share their deals — coupled with some wrong assumptions about who might be part of the program — has created a distorted perception of the overall makeup of the group, leading to incorrect inferences about Substack’s business strategy,” the Substack founders wrote.
As for whether those writers are being held to any standards, the founders said, “We will continue to require all writers to abide by Substack’s content guidelines, which guard against harassment and threats. But we will also stick to a hands-off approach to censorship, as laid out in our statement about our content moderation philosophy.”
Greenwald, for his part, dismissed the criticism as “petty Substack censors” whose position boils down to, “because you refuse to remove from your platform the writers I hate who have built a very large readership of their own, I’m taking myself and my couple of dozen readers elsewhere in protest.”
But when I reached out to Newitz (a friend of mine) via email, they told me that the key issue is transparency.
“If Substack won’t tell us who they are paying, we can’t figure out who on the site has grown their audience organically, and who is getting juiced,” Newitz said. “It’s blatantly misleading for people who are trying to figure out whether they can make money on the platform. Plus, keeping their Pro list secret means we can’t verify Substack’s claims about how its staff writers are on ‘all sides’ of the political spectrum.”
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Can data fix healthcare?
Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.
Ready? Let’s talk money, startups and spicy IPO rumors.
Can data fix healthcare?
Not alone, but you might be able to make a lot of progress with the right data in the right hands. And that’s precisely what the startup we’re talking about today is up to.
The Exchange caught up with Terry Myerson and Lisa Gurry this week, the CEO and CMO of Truveta, a young company that wants to collect oodles of data from healthcare providers, anonymize it, aggregate it and make it available to third parties for research.
It’s a big task, but the team behind Truveta has experience with big projects. Myerson is best known for his time one-rung below the top of the Microsoft org chart, where he ran things you might have heard of, like Windows. Gurry was a leader inside that org, most recently working on strategy for the Microsoft Store product.
But now they are at a healthtech data company. How did that come to be? After Myerson left Microsoft he worked with Madrona, the Seattle-area venture capital firm, and the Carlyle Group, a huge investing group with a taste for private equity. A few years later, several former Microsoft co-workers of Myerson had wound up at Providence, a healthcare giant. They reached out to Myerson around when COVID-19 was first locking down the United States. The former Microsoft exec agreed to take part in a few calls, but didn’t formally join them as he was stuck at home.
During that time he learned that Providence had put together a white paper concerning the idea that Truveta would become, that by collecting data from healthcare providers a dataset of sufficient size and diversity could be compiled to allow research of all sorts to leverage it. Myerson got stuck on the concept, later founding the company. Then he called up some former colleagues, including Gurry, to help him build it.
Truveta has around 50 people today and will scale to around 100 this year, Myerson said.
Questions abound in your head, I’m sure. Things are still early at Truveta, but the company announced last week that it has signed up 14 healthcare providers to help with its data goals. Those firms are also investors in the company (Myerson put in capital in as well).
I was curious about the company’s business plan. Per Myerson, Truveta will charge different rates depending on who wants to access its data. As you can imagine, commercial entities will pay a different price than an independent researcher.
Next for Truveta is getting more data, locking down its internal data schema, collecting feedback from researchers and, later, approaching commercial access.
Healthcare in America is inequitable — something that the pair of Truveta executives stressed during our call — thus giving the company a huge market to improve and make less racist and sexist.
It was a bit odd to talk to Myerson and Gurry about their startup. In the past I’d chatted with them about some of Microsoft’s largest platforms. Let’s see how fast they can transform Truveta from an idea I can’t help but dig, to a company that is a viable commercial concern. And then how big they can grow it.
Market Notes
A lot has happened in the past few days that we couldn’t get to. Adyen’s earnings, for example. The European payments platform reported H2 revenues of €379.4 million, up 28% compared to the year ago half-year. And from that it reported EBITDA of €236.8 million. Who said fintech can’t be profitable? (Note: Adyen’s results are required reading if you care about Stripe’s valuation and future public offering.)
And there were some rounds that also fell through our fingers. Investments like CloudTalk’s recent $7.3 million Series A. The Slovakia-based startup previously raised a $1.6 million seed round in 2019. The startup, as its name suggests, offers cloud telephony services to call centers.
We suspected that CloudTalk probably had a pretty good year in 2020 thanks to global growth in remote work. It did. In an email, CloudTalk said that it has not seen “Zoom-like [growth] figures” but that in 2020 demand for its services “exceeded [its] expectations.” That helps explain its latest round.
The Exchange was also curious if the company had a perspective on subscription pricing versus consumption pricing, a rising topic amongst software dorks such as myself (more to come on this next week with notes from Appian, Fastly and others). Per the company, CloudTalk charges “for both seats and for usage,” making it a hybrid company from a pricing perspective. CloudTalk called its pricing setup “a good balance for both parties because customers like to know what they are going to be paying ahead of time.”
It’s a startup to keep in mind. As is Zolve, a globally themed neobank with a focus on helping expats have a working financial world. I couldn’t get to it, but TechCrunch wrote it up. More here.
And in case you didn’t have time to watch television during work the last few days let’s talk about Robinhood. Which enjoyed a Congressional hearing this week that was mostly dull apart from some notes on the fintech giant’s business model.
Finally, it was a busy week for crowded startup niches. There was more money for OKR startups, leading to our question about VCs putting capital into related companies in the future. Public also raised several hundred million dollars. Because why not. And low-code player OutSystems raised $150 million to round out the group. It was one hell of a week.
Various and Sundry
I will leave you with a few data points. First, that Clubhouse’s metrics are finally starting to match the hype around the product. People are showing up in droves, pushing its total download figures over the 10 million mark.
And in news that I missed, Substack crossed the 500,000 subscriber mark. That’s impressive!
And to close, a Chicago-based, home-focused insurtech startup called Kin crossed the $10 billion “total insured property value” mark this week. The Exchange reached out, asking the company about its economics. After all it’s not hard to run up premium volume if you are selling dollars for 50-cent pieces.
Ruth Awad from the company responded that her company’s “ loss rate is 53% and our gross margins are 32%.” Not bad at all. Given how quickly insurtech has gone from experiment to public-success, Kin is a company to keep tabs on.
Wrapping, please make sure to support your local heavy metal band this weekend,
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Stripe Climate is a new tool to let Stripe customers make carbon removal purchases
Last year, payments giant Stripe announced that it would donate $1 million of its own funds annually into companies that are building technology to remove carbon from our environment, with the recipients of that investment announced in May of this year. Now, it’s expanding that commitment with a new product aimed at getting its customers to invest, too.
Today, the company is launching Stripe Climate, a new tool that companies using Stripe can integrate to set up automatic contributions that are made as a percentage of each transaction — the company can set the percentage itself — with the proceeds feeding into an add-on pot on top of Stripe’s own investments in carbon reduction companies.
Currently there are four companies on that investment list: CarbonCure (which collects carbon dioxide and recycles it for other purposes, among other things); Climeworks, which is building carbon removal plants; Project Vesta, which has worked on projects like “green sand” to remove carbon on beaches; and Charm Industrial (converting waste biomass to bio-oil). These are “earthshots,” as it were — not completely proven tech that might be too costly to run if it does work — but as with moonshots, there will be a lot of capital needed even to see how and if they can get off the ground.
It’s also likely there will be more efforts added to the list — and maybe some subtracted — over time.
For now, companies using Stripe Climate don’t get a chance to choose how their contributions get invested: they basically mirror and follow the path of those being made by Stripe itself.
Stripe Climate is free to use, and Stripe said that the 25 companies testing the service in a closed beta — the list includes Flexport, Substack, Flipcause and OpenSnow — have already contributed hundreds of thousands of dollars to the effort.
“We built Substack because, while it’s easy to be depressed about the current state of the media business, we think there’s tremendous opportunity for those daring enough to be optimistic. We feel the same way about climate change,” said Chris Best, co-founder and CEO of Substack, in a statement. “We’re done with defaulting to depression. We want to help show the way to a better future—and better yet, we want to give all Substack writers the opportunity to join us. Stripe’s climate initiative is a gift because it removes all barriers to positive action. This program makes it easy, and valuable, to do the right thing. We’re proud to be part of it.”
Stripe Climate is playing on some important themes at the company.
Stripe — now valued at $36 billion — has made a name for itself primarily through a simple payments service that site and app developers can integrate by way of APIs, using a few lines of code. That has helped the company grow fast and pick up a huge number of users, from sole-trader outfits to much bigger businesses.
The company is using the same low-friction principle here with Stripe Climate: the idea is that while companies and individuals might in theory be committed to making investments in environmental causes, many don’t know where to begin, or how to do it in an efficient way. This gives them that way, having it integrated as part of its existing payments flow.
“A lot of the social issues right now are collective action problems,” said Nan Ransohoff, Stripe’s head of climate, in an interview. “Climate change is a collective action problem. Coordinating can be complicated and expensive. So can we make it easy to bring Stripe businesses together to make the whole bigger than the sum of its parts? If we can do it even a little bit we as a planet we will be in a better place.”
The second theme of this is how it fits into what Stripe is building on a more strategic level. Basic payments may be the company’s bread and butter, but on top of that it’s been adding a host of other services for businesses, from tools to help them incorporate their operations in the U.S., through to fraud prevention and analytics, and money advances and credit based on their existing activity on the platform. And the other week it also made its largest ever acquisition, buying a startup called Paystack in Nigeria, to enter more comprehensively into new geographies like Africa.
The idea is not just to make more money from their customers through value-added services, but to increase stickiness with customers, who might be less reluctant to switch out a simple API if that data is also integrated into a number of other parts of their business and how they operate.
Stripe Climate isn’t going to make Stripe or its customers any money — in fact, it’s a way for its customers to give money away — but it’s a very strong goodwill gesture that could go some way to building more loyalty and regard with its customers.
Ransohoff said that the plan will also be to expand Stripe Climate into a tool that these companies can also in turn offer to their own customers at checkout — not unlike the many offers you might already see these days to contribute money toward good causes when you are hitting “buy now” on any number of sites.
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Substack builds multi-author support into its hybrid publishing, newsletter service
Substack announced today that it has built support for multiple authors into its service. The company provides a publishing tool that blends blogs and email newsletters into a single entity, with a focus on subscription monetization.
The day’s updates also include a number of publisher-friendly tools, like shared access and homepage features closer to those of traditional websites than the linear timeline style that Substack has focused on so far.
The additions, which also include nice-to-haves like author pages for multi-person publications, mark a new level of maturity for Substack, a service that quickly attracted both authors and an audience after it launched. That early traction helped the company land an outsized — when compared to the size of its team — Series A that put $15.6 million into the business.
For users of the service, news of the funding was welcome. As was Substack’s disclosure at the time that the publications on its platform had attracted 50,000 paying subscribers. That figure was exciting, indicating that the company’s product might help writers of all sorts build a monetized audience, a holy grail for written creatives.
In light of today’s updates, TechCrunch asked Substack about the progress of its monetization, specifically curious about how many paid subscribers Substack publications had accreted. The company declined to share new numbers, with its co-founder and COO Hamish McKenzie instead saying that his team is “very happy with the growth [it has] seen over the past few months.”
In a company blog post accompanying today’s news, the firm noted “tens of thousands of paying subscribers,” implying that Substack has not yet doubled its former 50,000 person subscriber base. (Doing so would give Substack six-figures worth of subscribers. However, as it reached the 50,000 paid subscriber mark less than a year ago, it might be aggressive to expect such a rapid doubling.)
Newsletter, blog, website
Part of Substack’s initial success came from its intelligent blending of blogs and newsletters. Anyone who wanted to build one or the other got both, in a format that worked for each; bloggers could send email, and the email-focused also got a home on the internet. That the product came stapled to monetization tools made it all the more attractive.
Today’s updates help add a new form to the Substack mix: Websites. Here’s what a new Substack website can look like:
The ability to pin posts to the top of publications, the addition of photo bylines, and other tools mean that users can now do much more with the Substack publications. The company will now have to tread the line between the power of simplicity, and simply empowering its power users.
The company’s model appears to be working. Traffic to the larger Substack service has risen in recent months, according to analytics service Alexa. Substack was ranked among the 13,000th most visited global site in October of last year, according to the platform. It’s now in the 11,000s. With media companies like The Dispatch hatching on Substack, and with today’s updates, expect that number to continue to fall.
Substack is a bet that readers will pay for the written work that they care about. It’s a good wager. And better tools will tilt the odds more in its favor.
Now we can simply count down until Substack announces 100,000 paid subscribers.
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Newsletter platform Substack raises $15.3M round led by a16z
Andreessen Horowitz is betting that there’s still a big opportunity in newsletters — the venture capital firm is leading a $15.3 million Series A in Substack.
To be clear, although Substack started two years ago as a way turn newsletters into a paid subscription business, it’s since added support for podcasts and discussion threads. As CEO Chris Best put it, the goal is to allow writers and creators to run their own “personal media empire.”
Writers using Substack include Nicole Cliffe, Daniel Ortberg, Judd Legum, Heather Havrilesky and Matt Taibbi. The startup says that newsletters on the platform have now amassed a total of 50,000 paying subscribers (up from 25,000 in October), and that the most popular Substack authors are already making hundreds of thousands of dollars a year.
Also, a16z’s Andrew Chen — a blogger and newsletter writer himself — is joining the Substack board of directors. In Chen’s view, the startup represents the combination of the old and the new, allowing writers to reach longstanding “passionate online communities” while also pursuing “a new way of doing micro-entrepreneurship,” where they make money directly from their audience.
“When you combine the two — wow, this is something special,” Chen said.
Y Combinator, where Substack was incubated, is also participating in the funding.
Best told me the team consists entirely of the three co-founders — CTO Jairaj Sethi, COO Hamish McKenzie and Best himself — “working out of my living room.” (The three of them are pictured above.) Even with the new funding, Best and McKenzie said they want to grow cautiously.
“We’re conscious of the writers depending on a reliable and stable Substack for their income,” McKenzie said. “We don’t want to go out there and do a bunch of crazy startup stuff.”
Still, they will be moving out of that living room and hiring a bigger team. Best also said they have plans to build more “writer success” tools that help creators get the most out of the platform, and to expand into other formats, like video.
Even as Substack grows, McKenzie said it will maintain a focus on subscription products for “people who are attracted to the idea of owning their relationship with their audience.” Best argued that this approach avoids the incentives that have pushed online news in the direction of “cheap outrage, attention and addiction.”
He added, “It’s just a better model for creating culture.”
As for whether the newsletter boom might eventually reach a saturation point, making it harder for new titles to find an audience, Best acknowledged that there’s probably “some finite limit” to the number of newsletters that most readers will subscribe to, but he said, “Even if that’s the case, it can still be a very successful model. The magical thing about paid subscriptions is that you don’t need to have millions of people in your audience.”
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