Hamish McKenzie on Musk, money in media and the one writer from history he wishes was on Substack

With 35 million active subscriptions, some of the world’s best writers on the platform and a goal of creating a ‘new engine for culture’, Substack isn’t short on ambition. 

 However, co-founder and ex-pat Kiwi Hamish McKenzie says the business was also founded to solve a more mundane problem.  

“The thing I was trying to figure out was how to make a living as an author and a freelancer,” he told Caffeine.

“Could I get enough money to support doing the work I felt was important? Not because I wanted to get rich. No journalist ever hopes to get rich.“

Many journalists today count themselves lucky to be employed, let alone rich. The number working in New Zealand is less than half what it was in 2006. Over 200 lost their jobs in 2024 alone, following Newshub’s closure and cuts at TVNZ. 

Substack was founded in 2017, as the media faced increasing scrutiny and constricting cash flow following Trump’s election. 

McKenzie says it stood out from other Silicon Valley startups because its pitch for fixing the media’s woes wasn’t built around a flashy new piece of tech. 

“The problem isn’t that people don’t have enough places to read journalism or can’t get videos easily, or the CMS isn’t beautiful enough, or it’s not instantly easy to create a transcript. The core thing is the business model is broken, which is unglamorous but fundamental.”

Unglamourous yet fundamental is a good summary of Substack’s approach, which looks to the past to secure the future; reviving a time where paying for journalism was an expectation rather than an exception. 

“That dynamic in a subscription where the relationship over time is monetised rather than a piece of viral content or how much time someone spends in a feed - that dynamic could change things for the better.” 

McKenzie says Substack’s actual product is its business model, where writers publish what they want, and the platform takes 10% of paid subscriptions. When neither the publisher nor its readers are products to sell to advertisers, ‘winning’ at Substack becomes about consistently building trust over time instead of chasing clicks. 

He argues that business incentives the media follows have a profound effect on society.  

“The way to win at Twitter or X is to be a titan of the idiot circus. It’s better if you’re shouting or creating drama with your ideological opponent. Just shouting at them in front of your tribe, saying, ‘Look at this idiot!’ 

“US culture and politics at the moment is a pretty neat reflection of the Thunderdome mania and state of discourse on X.”

 Anyone who has spent time on social media for the past decade could be forgiven for thinking that once you give billions of people microphones and a shared online stage, toxicity always dominates. McKenzie disagrees. 

"I don’t think scale is the problem,” he said. 

“I think the thing that actually changed is that they all introduced advertising, and the genius engineers and data people of Silicon Valley who built these products made a perfect machine for optimising the capture of attention and the servicing of advertisers.”

Tristan Harris, founder of the Centre of Humane Technology and fellow sceptic of the attention economy, calls this dynamic ‘a race to the bottom of the brain stem.’  

The argument goes that when human attention becomes a resource to be extracted and sold to advertisers, companies race to find increasingly intrusive and damaging ways of harvesting that attention. 

In the same way our environment has been polluted by fossil fuel companies looking to extract oil however they can; tech titans pollute our information ecosystem by aggressively harvesting attention.

And when your business model depends on keeping people on a platform as long as possible to serve ads, it often means amplifying content which enrages us. 

Studies show that for every word of moral outrage added to a tweet, e.g., “despicable, outrageous,” reach increases by almost 20 percent. 

When I commented that advertising-based models sound like they’re the root cause of the media’s woes, McKenzie was quick to say it’s ‘too glib’ to just blame advertisers but the business model around them is clearly damaging.  

“When you have this unique combination of a giant aggregator deciding how attention and dollars are distributed, funded through advertising, you need to create a machine to monopolise attention as much as possible by keeping people addicted to these feeds. That cocktail is really potent, and I think we’re clearly seeing bad outcomes,” he said. 

“We need a different set of incentives and preferably a less centralised system not based on just aggregation and control with a king like Elon Musk or Mark Zuckerberg or the Chinese Communist Party at the top of the totem pole.” 

Regardless of how toxic the platform is or isn’t, X still provides an essential service which hasn’t been replicated at scale.  

It’s where Biden announced he was dropping out of the race, Kamala Harris announced her pick for vice president, and hard news breaks first. 

McKenzie admits Substack isn’t the first place you’d go to discover what’s happening worldwide at any moment but says that could change.

He points to Notes, Substack’s discovery feature, as a potential path to a healthier version of X’s ‘Global Town Square’. 

“I don’t think there’s anything in Substack’s dynamics or the system design that would prevent that from being true one day. 

“A Substack version would inherently be a bit more siloed than Twitter, which is just an all-in brawl. Substack has communities that gather around publications, and then there are nodes away from them and relationships with other publications in their own universe, and this bubbles out with some overlap.”

Of course, in addition to ‘creating a new engine for culture,’ Substack still deals with the same everyday stresses as every other startup. 

When I asked about his biggest challenge as a founder, he reflected on responding to the 

global economic downturn after a period of ‘aggressively but not irresponsibly’ spending money.  

“Interest rates were at zero. Money was cheap, and funding was being sprayed everywhere. We’re in this hot time, and we went out and raised a huge Series B in 2021 of $65 million. 

The challenge was to get as many people onto this platform as possible.” 

When the economy turned and interest rates spiked it forced harsh realities on the company. 

“It became really difficult, almost impossible, for companies at our stage to go raise money. Suddenly, we had to teach ourselves how to be an entirely different kind of company, which meant doing a small layoff. That sucked. We had 95 people and had to lay off 12,” McKenzie said. 

Speedbumps aside, Substack doesn’t seem to be slowing down anytime soon. 

Former MSNBC Host Mehdi Hasan’s Substack-based news venture just announced 31,000 paid subscribers and $3 million in annual revenue over just four months.

As for which writer from history he wishes was on his platform, McKenzie answered instantly. 

“Oscar Wilde.”

The writer once quipped: “The difference between literature and journalism is that journalism is unreadable, and literature is not read.”

I’d subscribe.