How are they selling $2 for $1? It's pretty much all employees. How many engineers do you need to support the platform? Probably not a lot. The other expense is paying upfront for content, but a few of the accounts I follow they did this for (e.g. Matthew Yglesias), they came out ahead (e.g. guarantee $250k a year while netting closer to $1 million for subscriptions) [0]. They can cut this out as well if they had to. Their platform is still strong.

They just need to scale back their hiring excesses and bullshit jobs likely created.

https://www.politico.com/news/magazine/2021/04/16/how-substa...

>How are they selling $2 for $1?

the only value of the platform is in the creators, any team of devs can clone the product in a month. You're exactly right that they need barely any employees, because the technology isn't worth anything. The site has no moat or network effects so they will effectively need to subsidize the creators forever or not charge them anything, lest they run for the next platform.

It's the same reason the ridesharing industry is a profitless money pit. Undifferentiated, easily copiable products compete each other into the ground on subsidized investor money while owning no assets of value.

The USP would be their integrity. The vast majority of cloned sites would be looking to make a quick buck and would sell out their creators in a second. If Substack can prove they understand which side their bread is buttered and show some loyalty to their creators and not get too greedy, then I feel like it could be quite sticky. Of course they are likely too deep into the VC money to pull it off, but one can always hope!

You can say the same thing for many saas companies. Anyone can clone Twitter, Facebook, Instagram, etc. But there are network effects. I like substack because they have a free tier and easy monetization. If I were to monetize I'd probably go with them due to ease of monetization, their interface, transferability, etc. The differences between fees in competitors is probably negligible.

It's differentiated to something like Medium because I know I won't get ads, pop-ups, arbitrary paywalls, cheesy SEO content, etc.

Growth is irrelevant if your gross margins are negative. But I'm 100% Substack has fantastic gross margins.

True, but the distinction is revenue-to-cost per unit of growth.