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Transcript
- Lucas: So Heather Cox Richardson started a Substack in 2019. She was a history professor at Boston College writing about American politics. Two years later, she was pulling in over a million dollars a year from subscribers. Luna: A million dollars. Off email. No Instagram, no TikTok. Just words in an inbox. Lucas: Exactly. And she's not an outlier. Lenny Rachitsky, who used to run product at Airbnb, built his Substack about tech and product management to over 650,000 subscribers. He charges $200 a year for the paid tier. Judd Legum's Popular Information newsletter is another one—he broke stories that got picked up by the major networks. Luna: So what's the common thread? Because a lot of people start a newsletter and get maybe 200 subscribers, then they burn out. Lucas: It comes down to three specific tactics that I want to walk through. First is the referral engine. Substack has a built-in share link that looks like this: you're reading an email, you see 'Share this newsletter with a friend'—you click, you send a link, and if that friend subscribes, you get credit. But the top creators didn't just slap that generic link at the bottom. They wrote a two-sentence personal note above it. Luna: Something like 'Hey, I think you'd find this useful' kind of thing? Luna: Okay, that's smart. But you need something worth giving away. Lucas: And he had it. He'd already done hundreds of interviews. The ebook was essentially a curated best-of. Cost him nothing to put together but had high perceived value. The second tactic is the issue template. Most newsletters fail because readers open them once, see a wall of text, and never open again. The top creators use a consistent format. Luna: So they're building a reading habit, not just a one-off read. Lucas: Exactly. Heather Cox Richardson's format is almost identical every day: a short personal anecdote in the first paragraph, then a deep historical analysis that ties to today's news, then a one-paragraph call to action. No images, no ads. Just structure. Lenny's format is even more formulaic: a table of contents at the top with three sections, then each section is exactly three bullet points. He tested it and found that the table of contents boosted open rates by 35 percent over the first six months. Luna: Thirty-five percent. Just from telling people what to expect. Lucas: It reduces cognitive load. Your brain sees a clear path and says 'I know what I'm getting into.' The third tactic is the pricing strategy. Substack lets you set a monthly or annual price. The common mistake is to start too high. Judd Legum started at $5 a month. Lenny started at $10. Heather Cox Richardson started at $5. But here's what's interesting—they all raised prices after the first year. Luna: Leaving money on the table initially to build trust. Lucas: Right. You're not just selling content. You're selling a relationship. If you ask for $200 right away, nobody converts. But if you prove value over six months, then raise to $15 a month, the churn rate stays low because the audience has already decided you're worth it. Lenny eventually went to $200 a year. His churn is under 5 percent annually. Luna: That's incredibly low for any subscription business. Lucas: It is. And it's because the content is genuinely high-signal. He only publishes once a week, and every issue delivers actionable takeaways. The other thing these creators do well is cross-pollinate. They don't rely on Substack's discovery features—which are basically nonexistent. They go where their audience already hangs out. Heather Cox Richardson is a regular guest on podcasts. Lenny posts on LinkedIn. Luna: LinkedIn? That's interesting. Not Twitter. Lucas: He found that LinkedIn drove the highest conversion to paid subscribers. Because the audience there is already in a professional mindset—they're looking for career tools. A tweet gets lost in the firehose. A LinkedIn post about product management stays visible for days. He'd share a detailed post, then at the end say 'If you want more, subscribe to my newsletter.' Simple. Luna: So the lesson is: instead of trying to game the algorithm on every platform, pick one platform where your target audience is already in the right headspace. Lucas: Exactly. And then bring them back to your email list, which you own. Because the algorithm can change tomorrow. Your email list is yours. Luna: I want to talk about the economics for a second. If Heather Cox Richardson has 100,000 free subscribers and 20,000 paid at $5 a month, that's $1.2 million a year. But what about the platform fee? Lucas: Substack takes 10 percent. So she keeps about $1.08 million. Stripe processing takes another 2.9 percent. So call it a million net. For a single person writing from home. No ad sales, no sponsorship team. Luna: That's a better margin than most SaaS companies. Lucas: It really is. And it's because the cost structure is just time. No inventory, no servers, no customer support team beyond what you choose to do yourself. Now, not everyone is going to hit a million dollars. But the median paid Substack creator who makes over $1,000 a month—there are thousands of them—they're earning between $50,000 and $100,000 a year on the side. Luna: Which is a solid side hustle, or even a full-time income if you replace your salary. Lucas: Right. And the barrier to entry is basically zero. You just need a Substack account and a willingness to write consistently. The hardest part is the first hundred subscribers. Those are usually friends, family, and people you email personally. One tactic I've seen work: send a personal email to everyone you know saying 'I'm starting a newsletter about X. Would you read it? If yes, click here.' That gets you a baseline. Luna: And then you use the referral system to grow from there. Lucas: Exactly. And here's a number that stuck with me from Substack's internal data: paid subscribers convert at a rate of about 5 to 10 percent of free subscribers for most successful newsletters. So if you have 10,000 free subscribers, you can expect 500 to 1,000 paid. At $5 a month, that's $2,500 to $5,000 per month. Luna: So you don't need a huge audience to make real money. Lucas: Not at all. And the revenue compounds. Because every time you publish something great, people share it, new subscribers come in, and some of them convert. Over two years, even modest growth can get you to a comfortable income. The key is consistency. The creators who succeed publish on a predictable schedule, week after week. Luna: What about the ones who quit? What's the typical failure mode? Lucas: Two things. First, they try to be too broad. They write about 'business and technology and culture and sports' and nobody knows what they're signing up for. The successful ones have a very narrow niche. Lenny is product management. Heather is American political history. Judd is investigative reporting on politics and media. Second, they burn out because they publish too often. Luna: So weekly is the sweet spot? Lucas: Weekly or even bi-weekly. The frequency doesn't matter as much as the perceived value. One amazing issue per week beats five mediocre ones. Lenny publishes once a week. Heather publishes daily, but she's a historian who writes for a living. She's the exception, not the rule. Luna: So if someone is listening and wants to start a Substack tomorrow, what's the first step? Lucas: Define your niche in one sentence. Then write your first three issues before you publish anything. That way you have a buffer, and you can schedule them out. Then send that personal email to the first fifty people. And then—this is the hardest part—just keep going for six months. Most people quit in month two. Luna: I've seen that data too. The drop-off after issue number ten is huge. Lucas: It's massive. But if you can get to issue twenty, you've built a habit, and your audience starts to expect it. That's when the magic happens. Because suddenly people start emailing you back, sharing your work, and the growth becomes organic. Luna: And you never have to worry about an algorithm change. Lucas: Exactly. So I'll leave you with this: the next time you see a creator making money on Substack, know that they didn't get lucky. They followed a playbook. Pick a niche, build a referral engine, use a consistent format, and price to build trust first. It's not magic. It's marketing.