hey! This is andrew from a16z -- substack is still relatively new (~2 years) and the product is solving a real problem for writers. The numbers are already strong, but think about where it might be over the next 5-10 years. I think your calculation focuses too much on where it is now versus where it might go in the future
Profits scaling were already discussed in a comment above, ofc, this assumes linear growth where substack is charging (as it is now) only on subscription without going in for revenue from promotional activities (internal promotion of content), advertisements (external sponsors), reader/creator data (google model) or digital/print publishing (leverage of user base substack reach out) in form of a (e)book. Yes, this can make profit multiplier really big (12M/yr subscription + 50x from else)
But what about integrity of service over time then?
All of this means losing initial flavor of 'doing-things-differently', a lot of other companies can provide boilerplate '-stack' for publishing newsletter (ie, recent yc news -https://github.com/knadh/listmonk - self hosted). So, in the end, the only edge of content hosting platform is how well it delivers it's content (UX, rec systems, internal ads), the bigger substack gets, the less of an edge for its creator base it will have - same as medium.com.
I risk a statement that substack is happening only because medium.com is ending.
Yes, as an author I would be interested in hassle free publishing, but after that, i am interested only in how service is helping me grow an audience, nothing else.
I mentioned in my other comment (https://news.ycombinator.com/item?id=20453558) that I think the potential for writers here — of being a Blogger/WordPrss.com for newsletters, is the opportunity. It’s about being a platform.
Unfortunately there's some morality clauses in many investment funds that keep them from investing in something like that. Same class as porn, gambling, etc. Might be great for an individual investor though.
Yet the market for Travel is $300b (online) and the dating one is $2b (online).
How does that constitute as investors not wanting to invest into dating startups when there's 38x as many investors (by absolute numbers) as travel and yet the market is 150th the size? Seems like it's quite the opposite, no?
If anything the talking point here should be "why are so many people investing in dating apps when their returns aren't great?"
It'd be also helpful to define what you consider "mainstream" before drawing a conclusion...
You're being pedantic. I'm not saying that literally no dating products are getting funded - in fact, I'm an advisor to CoffeeMeetsBagel which is on that list. Just that there's major resistance (which that article talks about) and there isn't very much funding for the category compared to a "hot" category like SaaS/on-demand/messaging, etc. My point is that it's an uphill battle, and I gave the reasons why for investors are skeptical.
Travel is a misleading outlier as it has historically terrible margins and a large portion of the market volume is in airlines which historically generally lose money. On the other hand the market cap from online dating is pretty much entirely captured in online dating and isn't dominated by companies that own airplanes or hotels. "Revenue" that includes directly passed on fees is highly misleading as an indicator of relative market size. I'd rather own a company that made 1/4 as much than a company that passed 90% of revenue to other companies.
