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Hi, I'm Jim O'Shaughnessy and welcome to Infinite Loops.
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Sometimes we get caught up in what feel like infinite loops when trying to figure things out.
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Markets go up and down, research is presented and then refuted, and we find ourselves right back where we started.
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The goal of this podcast is to learn how we can reset our thinking on issues that hopefully leaves us with a better understanding as to why we think the way we think and how we might be able to change that to avoid going in infinite loops of thought.
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We hope to offer our listeners a fresh perspective on a variety of issues and look at them through a multifaceted lens — including history, philosophy, art, science, linguistics, and yes, also through quantitative analysis.
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And through these discussions help you not only become a better investor, but also become a more nuanced thinker.
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With each episode we hope to bring you along with us as we learn together.
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Thanks for joining us, now please enjoy this episode of Infinite Loops.
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Disclaimer: Jim O'Shaughnessy is chairman and Co-Chief Investment Officer of O'Shaughnessy Asset Management, where Jamie Catherwood is an associate.
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All opinions expressed by Jim, Jamie and podcast guests are solely their own opinions and do not reflect the opinions of O'Shaughnessy Asset Management.
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This podcast is for informational purposes only, and should not be relied upon as a basis for investment decisions.
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Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.
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Jim: Well, hello everyone.
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It's Jim O'Shaughnessy with my colleague, Jamie Catherwood for another edition of Infinite Loops.
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And today I am delighted to have Linda Lebrun, the director of finance and writer recruitment.
1:48
Wow, you sound important Linda, at Substack. Welcome.
1:56
Linda: Thank you so much, Jim. Really happy to be here.
2:01
Jim: So Substack seems to be everywhere in the news and my little theory about it is, it's freaking out the old media so much and they just can't help showing their worry.
2:08
Like here's a headline from the New York Times from last week.
2:16
Why we're freaking out about Substack.
2:16
Well, at least they were honest. Right?
2:20
And I thought it was a fair article, I'm sure you read it.
2:20
And this direct to consumer bypassing the traditional middleman or gatekeeper, if you will.
2:26
Like, the New York Times or the New Yorker or the Rolling Stone, it's happening.
2:33
And so take us from where we are right now to where you see...
2:40
first off, tell us a little about what the heck is Substack for those that don't know.
2:46
Number two why is it so cool and why are people getting so worked up about it?
2:52
Because things that get major media like the New York Times writing big articles that's a big deal. So tell us about that.
2:59
And then finally, where do you see this going?
3:04
Linda: Jim, it's really incredible how Substack just in three years has, for a small company, I mean, I was the 30th employee, captured the imagination of the media of people on social media and really have people in your and my world, which is the finance and investing world.
3:22
Which I've worked in up to the point of six weeks ago, going to work for Substack.
3:26
And I think the initial idea of Substack.
3:26
So the founders Hamish, Chris and Jairaj had the idea that the media system, as a stoop was broken and that social media was broken.
3:40
And it grew out of journalists being so dislocated and precariously employed and losing their jobs.
3:50
So the initial idea was that if there could be a way for a journalist who had an existing audience, a following.
3:57
People who would want to have a direct relationship with them and pay them, not pay them by looking at an ad or getting a view but pay them money every month or every year, they could use Substack as a platform to enable and facilitate that.
4:12
And we know from tech in general, that having less friction is critical.
4:12
So that was the idea of what they built and at first they went out and talk to journalists, talk to people in the group of essayists, culture critics, reviewers, and said, Substack is a place where you and do it concurrently with what you're doing.
4:30
And it's going to have the benefit of giving you an email list that you can take with you and own for the rest of your career as an asset.
4:34
Or you could say, "I'm going to go all in, I will leave my existing mainstream media job."
4:40
And that's what some of the sort of most celebrated people who have are getting the most attention are doing, they're 100% porting their whole career over to Substack.
4:52
And for many it's working very well because if they have an audience that is willing to support them and loves what they do, the experience of getting an email it's in your inbox, it's intimate.
5:04
You feel as though the person sent it just to you.
5:10
So it's helping these writers forge the one-on-one relationships with the readers that make the reader feel like, "Yeah, I do want to pay for this every month."
5:17
So that was the problem that they initially set out to solve.
5:21
And where it's now transformed into is being opportunities for many different kinds of niches, many different kinds of people.
5:29
So you have everything from people doing some of what I worked very focused and closely on, is the finance and investing space where we have another problem.
5:40
We have another thing that's broken, which is sell side research.
5:44
So there has been a reduction in the number of seats available on the sell side and the buy side because of MiFID because of changes in the industry.
5:50
And there are people, I mean, you and I know them, who have incredible domain knowledge and subject matter expertise.
5:56
And right now the default is they have to have a seat at a large institution and go through a gatekeeper in order to be able to communicate what they do.
6:08
And then whatever they write is also still with this castle wall around it, where the retail investor can't get it.
6:17
And I know one of your favorite themes is that we're in the golden age of the retail investor.
6:22
So how, if those retail investors and professional investors are so thirsty for this useful information, what's a good way for them to get it?
6:27
So again, Substack is very applicable because what people have done before is not new to be posting and selling information on the internet.
6:36
But a lot of this good information has been trapped on blogs, where the person was posting and did not have a good, easy path to monetize it, or if they monetize it, it would maybe be with the PayPal tip jar.
6:47
Well, we don't pay for much, that's worthwhile in life with a tip jar.
6:52
It's much better to have a...
6:52
I don't have to tell anybody of your audience that a recurring revenue model is better.
6:55
So what we're starting to say... Jim: Really? Really?
7:00
[crosstalk] wrong all along.
7:00
Linda: If I actually have the information and insights that I provide as a service, then that's going to be better than a one-time sale. So what's been the...
7:09
my own project at Substack has been to start to get rolling, where figuring out who are the people within the investment and finance and economics and crypto sphere of writing online were Substack could be something useful and applicable for them.
7:27
And then there were many models, but one thing that the Substack founders did was to set up a signup flow that was very effortless and easy.
7:32
And the other thing that matters, matters a lot to writers matters a lot to publishers, is you are not locked in when you set up a Substack and sign up, your email list and your content and your payment relationships are all very portable.
7:52
So if somebody comes up with something new in three years, and you say, "I want move from Substack to that."
7:55
You are in no way married to Substack, it wouldn't be a good option for people unless it had that probability.
8:01
Jim: So, let's pull on that thread for a minute because I think that's kind of a killer feature, but it might be a deadly feature for Substack, in that there's another thing called Ghost $9 a month.
8:14
And I can only assume watching this, the world is moving from the physical world to the digital world and the digital world inherently has a lot more leverage to it.
8:28
And people are figuring this out and recreating themselves and whatnot, by the way, I agree with you totally about the sell side research, some of the best research that...
8:34
We were quants, so we rated only out of interest but our first OSAM research partner, Jesse Livermore is pseudonym anonymous. I hate that.
8:43
But he is one of the brightest minds- Linda: Yeah, phenomenal. Jim: ...
8:51
looking at wall street right now.
8:51
So a couple of questions, I think the feature's great that you have that they can leave, but doesn't that worry you a little bit, or do you just think that Substack is going to continue to invent additional features that keeps them in their seats, right? That would be my guess.
9:07
Linda: Mm-hmm (affirmative).
9:09
Jim: And also there seems to be a little controversy about, so I've written four books and the book I've made the most money on was all in an advance.
9:17
And it was the only mass market book I wrote called How To Retire Rich, and it was in the late 90s and you're probably too young, but late 90s, it was crazy.
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I mean, literally if you were in Alabama in a McDonald's, they had CNBC on, back when things like that mattered, it was like, sell everything.
9:35
But so personal finance was huge, got this huge advance for that book, never saw another dollar.
9:41
And I know that you have a model that you are giving advances, and there seems to be some controversy about, well, gosh, if you're Mr or miss important X, Y, Z, you shouldn't take the advance.
9:58
But first, let's start with telling me why you're not worried about that ability for your clients or your writers to just leave.
10:02
Linda: Honestly, Jim, it's a necessity to have the door be open, otherwise nobody will partner with you in the first place.
10:11
It's life under competitive capitalism right now because the writer and the creator are ascendant and have power and are the center of everything that consumer tech companies are trying to do.
10:22
And you see it, like if I'm speaking to somebody who is, you gave the example of a Jesse Livermore, who is able to produce something that is compelling and original and unique, and you can make money off of it.
10:33
That person has the power, this is I think, going to be a theme of the 2020s and we at Substack or whoever else would like to address.
10:45
And whether it's a writer or we're talking about Patrion, and it's somebody doing videos, or we're talking about TikTok and someone doing short form content, it's all very much at the piece where you have to build something where they feel like they are the center and they come first.
11:00
And I think that that could be, we'll see, could be a sustainable competitive advantage of Substack and some newsletter based systems, versus the giant incumbent social media platforms.
11:07
We know that if I go on Facebook and I'm a business, people may follow me.
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The people who follow me, aren't going to necessarily see each and every thing it drives people crazy.
11:19
They're not necessarily going to see everything that I post.
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It's the same thing on Twitter, certain things get surfaced by the algo, certain things don't, and whose interest is that based on?
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Advertisers, it's no secret.
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So what Substack says is from the founding of the company, how can we serve that writer so that they are the center and they have the direct relationship?
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There's never going to be an algo that keeps your email out of your paying subscribers inbox.
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And the CEO of Substack Chris Best says, "Somebody may hate to follow you on Twitter, but they're not going to hate to pay for you on Substack."
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So it's a nicer experience for the writer.
12:02
So going back to your question about competition, there will be a ton of competition, there's no doubt about it.
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People will be familiar with Twitter has acquired review, people will be familiar with Ghosts, there is somebody working on something that we don't even know the name of right now that that could be a serious competitive threat, right? So this is life.
12:19
And our answer as Substack is to always have the governing principle of putting the writer first and we have to run fast to be earning the fee.
12:26
And I can really tell you one thing that's impressed me since working at Substack is, when you have...
12:32
you're operating under limited engineering resources, so how do you prioritize?
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There's an endless list of what users, the writers or readers would like to see as features?
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So things are very much prioritized by what people are asking for.
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Someone's in there like me, and says, "I think we should have feature X, Y, Z."
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That's not going to be the right direction, the right thing to do, and this is an old saw of the best consumer tech companies as well, is to listen to the people who are actually using it and what they are requesting over and over is going to be what direction roadmap.
13:06
And that's how we keep improving to keep earning the trust and the respect and the validation of people who use it.
13:18
I mean, you probably mentioned that the New York Times article and in that some of the people who use Substack and have a good big audiences for their publications, made comments about they really like the fact that they don't have to worry about and think about dealing with credit cards, dealing with, when does my subscription renew, technical type questions, none of that.
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Email deliverability all of the customer service and support piece.
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And knowing that you have this team of just crackerjack engineers that are improving it all the time.
13:47
So it's a question of, are people willing to pay and be able to focus 100% on their writing and not...
13:54
I mean, we've had writers say that before they can get Substack, that all of that that's not writing took a third of their time.
13:58
So they're very pleased to download it.
13:58
So I think that really the answer on the competitive side is we just have to stay very acute and if we...
14:08
we believe that if we are able to keep the considerations of writers and readers as our touchstone, then that will put us in a good place versus the social media sites.
14:20
Which is certain we love Twitter, it has its own merits, it's no dis on Twitter, but for this specific thing of providing the ability to writers to connect with readers, and then monetize off that, that will be how we retain people, not by some artificial walk-in.
14:35
Jim: So yeah, obviously our experience at OSAM, parallels what you've just said.
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So we have this platform called canvas and we intentionally kept the original group of partners who are RIAs, registered advisors to a small group. Linda: Yeah.
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Jim: And this was on some really good advice that Patrick and my son got from a very big BC who said, "listen, limit the number of people, but don't take new clients until everything they want is on platform."
15:03
And, we learned, for example, I would have put tax optimization pretty low on the list, turns out it's number one on the list. Linda: Interesting.
15:16
Jim: And it was a Bear, it's not a trivial software to be able to do continual tax harvesting.
15:19
But I love that idea that you're putting the writer at the center and just saying, what do you want?
15:26
And then going with that.
15:26
That's how you continually improve.
15:30
Obviously our mantra at OSAM is learned, build, share, repeat, and just keep doing it.
15:30
And do it in the open too, as opposed to trying to be mysterious.
15:37
So it seems to me also that one of the things that is happening and I kind of call this period that we're in, the great reshuffling.
15:46
The old days where you needed the [inaudible] of like a shiny bank, a shiny big bank or a shiny broker, et cetera.
16:00
With these people, this man, and this woman, they're the best we've vetted them.
16:00
That seems to be disappearing and it's really kind of proof of work, right?
16:06
Back to Jesse Livermore, Jesse Livermore is who he is because of the work that he did and put out there and people are like, this is amazing.
16:19
This could be a PhD thesis.
16:19
So do you think though...
16:19
the question that I have is, in this age of the move towards the sovereign individual, where the leverage inherent in the digital world is being picked up by individuals.
16:34
Do you think that there are...
16:34
So for every real deal, maybe there's nine not real deals, but they're very good at hacking human operating system.
16:45
They're very, very good at persuasion, et cetera and it's like the Gresham's law, right?
16:52
You're familiar with that? Linda: Yeah.
16:52
[crosstalk] money drives out.
16:57
Jim: Drives out good money. Linda: Did I get it?
16:59
Jim: Yeah, you did very good. I'm impressed. I'm impressed. But do you...
17:01
is there a control for that within your system or no?
17:07
Linda: We have a mentality of having a hands-off moderation policy and believe that, if somebody is a bad actor and they want to spam, obviously that's going to be caught by our system and that's going to be disposed of and not allowed to continue on it.
17:22
I would say that I've heard sometimes the criticism of, "Okay, Substack, people hear the name, people read about the writers who are doing super six-figure annual recurring revenue.
17:31
And this is a false promise that everybody can do well."
17:36
In human life, everything takes on a Pareto distribution, the question is sort of how pronounced that is going to be.
17:45
If you look at any platform, there are going to be big winners, and there's going to be a long tail that may linger and obscurity on YouTube, for example But what we'd like to do is to give a...
17:58
Substack, we often repeat, we are not a publisher, we are a technology platform.
18:04
And if the better the platform is, and I mentioned friction before, the less friction that it has, it gives people the ability to build what they want to build.
18:16
And then the next question is, how will they find you, how will they discover you?
18:16
And a really great person to look at on this theme is there is a publisher on Substack called Petition.
18:21
Many of your listeners will know this publication talks about distressed bankruptcy.
18:28
And Petition wrote an article that is on library. substack.
18:36
com, talking about how to succeed without an existing social media following.
18:40
So there is a perception that maybe you have to be [inaudible] and have this famous brand name before you could come onto Substack and be successful.
18:52
Certainly that helps, it always helps in life to have this...
18:52
to have been hacking away for a long time and consistently applying yourself, and if you've done that for years, it's going to be much easier for you day one.
19:02
But I think the Petition and numerous others provide an example of how you don't necessarily, I mean, Petition writes anonymously.
19:08
So you don't necessarily have to have that large preexisting audience, you can build something.
19:18
And I can assure everybody that Substack is very concerned with providing better and more ways for the people who would enjoy reading your work to find you.
19:24
So when we look at the distribution of success in any...
19:31
it almost seems to be naturally emergent, the 80/20 law and the 20% will get as much attention as all the other 80% combined.
19:37
And then iteratively there'll be some tiny proportion that gets a massive...
19:42
it goes in every industry.
19:42
But we really would like to serve that middle group of what you could call smaller medium sized Substack publishers and writers, because they're the potential very successful ones of tomorrow.
19:55
And again, I would just emphasize it's such a young project that I think that there is so much time and space for new names to come out and new people to be successful.
20:07
There's all of these merit to getting onto a platform early.
20:13
We know that there were people who were among the first users of Twitter, and now they have sort of 300,000 followers and nobody can really figure out why.
20:18
Well it's because they've sort of path dependent, compounding effects that kick in and can be very fruitful in sort of an accidental way.
20:30
So yeah, it's a meandering answer, but I would really say that we're concerned with the success of everybody on the platform.
20:33
There are going to be some natural tendencies that some people, they bring an audience and it's going to work better for them right off the bat, but the whole point is to facilitate people to build something.
20:43
Jim: So, this is a good segue, I think.
20:46
So my colleague, Jamie Catherwood, my young squire here, has done very well with his site called Investor Amnesia which is financial history.
20:51
Pitch Jamie on Investor Amnesia over to Substack.
20:58
Jamie: So I think Substack is great, but the one question that I...
21:02
and maybe there's a great answer and I just haven't looked it up in awhile.
21:08
But inertia, I guess, dilemma for me is I built this whole site and it's a whole website with different things than just a newsletter.
21:15
And so my understanding is that with Substack, I wouldn't...
21:20
with Mailchimp, I can link the two and I can basically do Mailchimp through my site, but you don't see any individual MailChimp stuff at all just is on investoramesia. com.
21:29
But for Substack, that would be like a separate entity, correct?
21:29
I would basically have to not post stuff on my site and just start posting everything on Substack.
21:41
Linda: Well, I would say you could set it up, whatever way made the most sense and had the most logic to you.
21:44
I would say that people have found that they've been more successful when they port everything over to Substack and it becomes the main home for their work.
21:55
Let me ask you, I mean, I'd be a terrible evangelist for Substack if I just launched into a pitch before asking any questions.
21:59
Let me ask you, Jamie, do you have any monetization on the site right now?
22:03
I know that you have a course, but is that separate?
22:08
Jamie: The course is separate, I'm actually this weekend working to get that embedded into my sight out with the guy I do my site with, but I don't do monetization in terms of subscription.
22:16
I have done monetization in the past through partnerships with other companies and get paid that way, but not in terms of a monthly subscription. Linda: Okay. So...
22:26
Jamie: Sounds nice though.
22:29
Linda: Yeah, it does, right?
22:29
It's a nice word, monetization some people don't like it.
22:32
I think that when you have been working as hard as you clearly have, and when you have a product that people find value in a lot of the writers that I talked to who write on a blog or may do something that is not monetized, they have readers saying things like, to them sending the messages, how can I support you?
22:49
Or I feel like I should be paying for this, it's so good.
22:54
I mean, that kind of feedback is such a signal that you need to do something.
22:59
And what's good with Substack, so to address your question about, okay, would I have to give up my blog?
23:03
There are many people who concurrently run a site of their own and then use Substack as the home for their writing.
23:08
The great thing with Substack that is tough to do on MailChimp is my understanding, is to concurrently run a free and a paid version of what you're sending out and throw all the history of direct email marketing.
23:27
The best way to get people down a funnel is to have them sign up for free.
23:27
And then when they see what you were doing, they like it, and they feel an affinity to it and then they will come over and go to your paid list.
23:36
So what people really like and what allows them to start in paid and to grow and paid is that they can send out...
23:44
let's say you could send one free email per week and one paid one.
23:50
And the free one, you have so many options, it could just be a summary of what your paid is going to be and then your paid could be in depth, or it could be something of its own indifferent.
24:00
And it gives you an opportunity to say to people, "By the way, I am coming out with something on Friday that's going to be an in-depth discussion of this.
24:08
You should subscribe and check it out."
24:08
So it very elegantly gives you a way to direct people to really join you in fully being able to read everything that you do if they like what you do.
24:21
Your posts that you send out through Substack then do live on a Substack publication page that most people listening are probably familiar with what that looks like, it's just laid out vertically.
24:30
And so it definitely is a discussion piece with some people where they say, "Well, I have this whole history of posts on my blog. What about that?"
24:35
It is possible to bring in, fairly simply it's self-service posts from another blog that you have into Substack, and you could redirect your URL so that it goes to your Substack page.
24:48
Now, again, everybody's probably listening, thinking, "Okay, should we drink the Kool-Aid, just thinks you should obliterate everything and just use Substack."
24:55
We all know that having a single clear call to action is going to get a better response than if you sort of make two or three or four different calls to action to people.
25:07
So having one location for all your work has tended to work well.
25:13
So that would really be...
25:13
something to think about is if you want to have a crystal clear way of letting people know you're going to get the emails of my posts, but if you want to see everything that Jamie does, you will need to join and have this regular subscription price.
25:25
And pricing has also its own question and discipline that people wrestle with, that would be really the rationale.
25:36
And just to sort of close the loop on the thought, people often when they'd have projects like investor amnesia or something like a blog they update regularly, they end up spending a ton of time.
25:47
They enjoy it, but they're spending so much time that they come to a point where they say, "Unless I can make this pay, it's going to be difficult for me to justify it.
25:57
I have other calls on my time.
25:57
I may have a full-time job, I have a family time, friend time.
26:01
So monetizing, it actually makes it sustainable because you have a rationale for continuing to spend all those hours working on it.
26:07
So you and I can talk about this more offline, Jamie, for sure.
26:12
But those are the things for people listening who have a blog, those are the things I'd invite them to think about with the center of it being the ability for people to satisfy the part of your readership, who feels that they would like to support you.
26:26
Jim: I love Linda, the fact that you are nefariously trying to get Jamie to do that right in front of the guy who employs Jamie. Kudos. I like that. I like that a lot. Linda: It's very bold.
26:34
It's very nefarious and shameless.
26:40
Jamie, do not quit your job.
26:40
Jim: Yeah I was going to say with Jamie, after this is done he's going to try to text me something, and he's going to notice that his phone has been wiped.
26:49
Linda: Very unfortunate happenings here on the podcast.
26:55
Jim: So, but that's [crosstalk] Jamie: It's a good pitch.
27:00
Not the quitting part, but [crosstalk].
27:00
Linda: Not the phone being disabled part. Jamie: Yeah.
27:04
Jim: That actually brings us to another thing that I think is really important and one of the reasons why you have this advantage that I think you have for right now.
27:16
And that is that, with all of the controversy over what is acceptable within the Overton window to discuss, and what's not.
27:22
And with the desire of many to control the narrative, so to speak, a lot of people are like, "You know what, fuck you, I'm not going to sing from one hymnal in one row in church.
27:35
I'm not a unidimensional human being."
27:43
And so I personally think that one of the reasons why you're seeing the New York Times, here's another headline from the New Yorker, is Substack the media future we want? Linda: Question mark.
27:54
Jim: And of course they're going to tell us why it's not and why they are.
27:56
So they're nervous, which is good.
28:02
I mean, if I was Substack, I would be like, "I want them saying horrible things about me, because it means that they really are worried about what I'm doing."
28:07
And one of the things that I thought about as I was reading the New York Times article was that the big media cancellations, right?
28:19
Like Barry Weiss at the New York Times and others, the article says are often an on-ramp to the bigger income.
28:25
And I'm sure that you've seen the movie, The Producers where they... Linda: Yes. Jim: Yeah.
28:31
And there's another great Peter Sellers movie called The Mouse That Roared in which this little tiny country decides that the only way that they can make anything work is to make the United States their enemy, let the United States conquer them, and then get rich on all the aid that the US is going to give them.
28:47
So what do you think, I mean, do you think there are people out there who are consciously getting canceled just to stir up some kind of controversy and interest and then Substack comes calling or no?
28:58
Linda: I think that there's a class of, you could call them influencer, who wants to create a frenzy of excitement around themselves.
29:08
I more associate this with YouTubers who will do a one to pranks, and, Oh gosh, this guy is so awful, and they will then get all of this mainstream media coverage, because everybody's always looking for content that is going to attract people to look at it.
29:26
And it's kind of like the meme industrial complex of perennially trying to get people to look and be excited and trend on Twitter and everything else.
29:32
The idea of Substack is it's a much less viral place like for you to receive somebody's newsletter you must have intentionally subscribed to them and ask them to present it to you.
29:45
So it's much less like a social media site where we all go on Facebook and then our second cousin posts some incredibly offensive, sexist thing.
29:52
And then there's a big underneath all of these comments were people are going, "Andrew take this down."
30:05
So it's like the newsletter spaces [crosstalk] Jim: Wait a second, Linda.
30:05
Does your cousin, Andrew listened to Infinite Loops. I hope not.
30:11
Linda: Andrew reply to my Facebook direct messages and take it down. Jim: I love it.
30:23
Linda: Take down the minion meme.
30:23
Jim: So, in seriousness so, I mean, I think that this is...
30:27
it's like for a Dallas, right? What does a Dallas do?
30:34
They go with the flow, and the angry, "I'm not going to do that.
30:34
I'm going to make it work.
30:39
I'm going to swim against the stream." Okay.
30:39
It might work for salmon, but it doesn't work for humans.
30:44
And so there is an under...
30:44
there is a flow here that is, in my opinion, unstoppable.
30:44
And it is destructive in many ways, depending on what your viewpoint is.
30:53
It's very destructive to people who think that they should have the right to tell you Linda, or me, Jim, or you Jamie, what you are supposed to think.
31:06
And that's like inherently anti-authoritarian, which news alert, I'm pretty much Switzerland on a lot of my political ideas.
31:13
But the one that dominates is I'm fiercely anti-authoritarian of either the right or the left.
31:18
I don't think I have a right to tell anyone what to do, but we're going to ask you a question before we end, that you get a chance to do that. Linda: Oh, no.
31:28
Jim: But so one of your founders, Hamish, I believe McKenzie, what a great name.
31:29
I'm 20% Scott so I immediately took to it.
31:34
He said, and it's real simple, platforms own people now, people are going to own platforms.
31:41
And we've had a guess on who we're having on again, Brian Romanelli, who really believes this.
31:45
He believes that social media is exactly backward and that people should have the right to monetize themselves, so to speak.
31:53
So that they could sell all of their likes, dislikes, et cetera, and make a lot of money off that.
32:00
Or if they don't want to do that, they can opt out of that.
32:06
One of the things that I do find interesting about Substack is the idea that it is a one-to-one relationship, right?
32:11
So if I subscribed to your, let's say you have a newsletter Linda that talks about Canadian mining companies.
32:18
And I subscribed to that, I'm just getting an email from you, right?
32:24
It's not like I'm trying to dig through- Linda: Exactly. Jim: ... a bunch of other things.
32:29
Are there problems with that that you see or no?
32:33
Linda: So I mean to go back to what you said about people will own platforms, that really resonates with me.
32:34
And I think when it comes to the fact that the existing platforms have not facilitated people being able to get any financial benefit off what they are doing, that boils down to what we all know is true, which is show me the incentive, and I will show you the outcome.
32:52
They are there to serve the advertiser.
32:57
How can they also serve another master of the person making the content?
32:57
And this is also the orthopedic thing they say, which is that if you are not paying, you are the product.
33:02
Even if you think you are the customer, you are the product if you are producing all of this great content for free, and then at some point people sit back and they say, "Oh, Jack Dorsey should be paying me for all these great tweets."
33:15
It's not going to happen.
33:15
That's not what the incentive is.
33:18
[crosstalk] should I should check myself.
33:18
Jim: Jack pays me a ton for my tweets.
33:23
Linda: The checks are not [crosstalk] maybe he doesn't have my right address.
33:25
So even as I say that, I would say that Twitter is realizing that the bounce of power perhaps has shifted, sounds highfalutin, but maybe the idea that the people having more control over the platform is going to force the existing structures to realize this.
33:48
When it comes to the fact that there are some voices pushing back on something like Substack or the other ways for people to get paid for their content independently without the gatekeeper going in between.
33:58
I mean, the point of creating Substack was never to say, to heck with the New York Times we don't like them.
34:06
It was that journalists were in crisis.
34:06
The number of people who want to work as journalists are trained to work as journalists, the number of jobs is just contracting and there need to be new opportunities. People's desire to read.
34:17
I mean, rarely in history has there been so much good long form writing.
34:22
We all know we have a stack of things that we...
34:27
it's like love to read and writers that we love to follow, but it's the business model that is tearing apart. So as an outsider of...
34:32
I've never been a journalist, I worked in the investment business all my career, but as somebody who likes to read that kind of stuff and feels that there should be ways for people to be able to communicate with the reader.
34:47
I think that it's great if many different models proliferate and the ones that are economically sustainable are going to win out.
34:53
If you're trying to do something and it's not profitable and not sustainable over a long period of time, that's not going to serve anybody.
35:02
It's going to end in tears.
35:02
So I really think it's going to be...
35:02
and you mentioned about how to only have one authoritarian view of what you're allowed to express, what you're allowed to say.
35:13
I see things going back to more how we can remember how they were on the internet a decade ago or 15 years ago, when you would go and have a bunch of blogs that you liked.
35:18
And you would scroll through, see what people's thoughts were on the blogs then you would have discovery because they would all have a blog or what their favorite blogs.
35:27
And you would click through.
35:27
You might have some that you liked them enough that you'd read them very regularly.
35:31
And that, to an extent, to a large extent, I think got washed away when we all made the social media sites our home, and now we're sort of in this routine of, I'm going to go on Twitter and see the best TikToks, and then I'm going to go on Facebook and see re-posts of the best Instagram posts.
35:50
And it's kind of a more bounded world.
35:50
Well, maybe with a lot of these, and I'm not just talking about Substack, there are ways where we can get back to just a more proliferating diversity, including long-form having a whole more places.
36:01
Jim: Yeah, I think it's pretty amazing.
36:04
One of the things we do at OSAM, particularly Patrick and me, is we try to say, "Okay, so what's the end state here?" Right?
36:10
So one of the reasons why we got so excited about Canvas was we thought the end state of brokerage was it was going to be free.
36:15
And if that happens, suddenly things like canvas become doable.
36:22
So what do you think the end state is here? what is publishing? What is interacting?
36:27
What is content that people enjoy look like five to 10 years from now?
36:35
Is the New York Times gone?
36:35
Linda: It's totally beyond my pay grade to guess what is going to happen with conventional media.
36:38
Many of these titles have proven far more resilient than any of us would have guessed years ago when the decline began.
36:49
Things can have a very long half-life.
36:49
The decline can take a long time and brands that are trusted brands are very powerful.
36:55
What I do think will happen is that there will be an unlocking where people who were unable to make a living from producing their own content because they, for whatever reason, could not get a seat in those traditional institutions, could not have somebody pick them as, "All right.
37:16
I'm very happy for you to have my brand on top of you."
37:16
They will be able to go direct much more.
37:22
This has always been the promise and the ability of the internet.
37:26
It's just you need a bit of technological enablement to smooth the road for you, and then you can go out and build something for yourself.
37:32
And the Kevin Kelly's idea of needing 1,000 true fans, and each of them pay $100 a year then you have a living, you kind of have a lifestyle business out of that.
37:43
And then if you can double and triple that it's all the more, that will be accessible.
37:46
And that that's not a new idea, but it will be accessible to many more people.
37:50
So what I would see coming in five years in 10 years, it's so funny because in the investment business our whole life is doing these discounted cashflow models and arrogantly asserting what we think the world is going to look like in five or 10 years.
38:05
But if we have a sense of humbleness about it, we say, "Well, I'm envisioning a scenario that I think, I can put some error bars around it."
38:12
It's more likely than not, and it's going to be a tool to help me say, "What do I see that's different from what others see?"
38:21
So if there's something that Substack sees that's different from what others see, is that we think this trend will be stronger and more enabling and more exciting and draw in more people faster than maybe is sort of assumed as the general media and assumption right now.
38:39
Jim: So let's talk specifically about your niche because obviously most of the people who listen to this, although we actually have a pretty broad diversity in our audience, but a lot of them obviously are finance people interested in that.
38:51
So what is your process for going out and trying to find this talent and then trying to convince them they really ought to be doing things on Substack?
39:04
Linda: Well, early in the conversation you asked about advances and I definitely do want to touch on that.
39:10
That's some people may have read about the Substack program.
39:10
So maybe I'll start with the opportunity that's available for everybody, for every single person listening to this right now.
39:21
So anyone can go on substack.
39:21
com and you can set up an account and you can be sending out your first email to your list of subscribers, which could be just yourself and your two friends within 20 minutes.
39:33
I think it is unparalleled for ease of use.
39:33
So there's nothing to prevent you from going and setting something up and trying it.
39:39
What Substack, I'll give some tips now in case there are people listening to this who would like to go ahead and do that, what Substack and my colleagues who work with writers and have some extensive experience working with writers recommend is to just keep what you do free for the first while.
39:52
Until you establish a critical mass, maybe you do it for some period of months or even years, you are building up a group of people who like to listen to what you have to say, and only when you...
40:06
and nobody can tell you what the exact number is.
40:09
But when you get to some sort of critical mass, could be a couple of thousand, then that's the time to think about turning on paid if you feel that you have good open rates.
40:20
There might be a rationale for people to want to pay to hear and read and see all of what you have to say.
40:25
And you might put some things behind the paywall.
40:25
Like I explained early in the conversation, you would not want to paywall everything, generally speaking, you'd still want to have somethings going out for free becomes your funnel, but then you have your paid that now we really have some worthwhile monetization going on.
40:39
So anyone and everyone can do that.
40:39
The Substack pro program is a program where if somebody really...
40:45
this is intended for someone who may have an existing audience of people who follow them, read what they have to say, and they may be within one of the large conventional organizations we've been talking about and an employee.
40:56
And they may have a profound interest in going independent, but they have to consider the necessities of life.
41:12
And just for them to start from zero on day one is a tough call.
41:12
So the idea as Hamish McKenzie, you can go and Google why we pay writers, and he's written an informative essay about what this really all is.
41:25
The pro program is a way to, we estimate what the person will be doing within the first year, and then just like a book advance, provide them some advance on that money so that it will manage risk for them and smooth it out.
41:38
So it's not in any way, shape or form a, here's some free money to come work for Substack, but it is a risk mitigation for that person.
41:50
And there could be people listening to this right now from the finance and investing community who, if you recognize yourself in what I've just said, if that idea appeals to you, contact me, I'm very available.
41:59
You can look on Twitter.
41:59
My name on Twitter is SubstackLinda, or you can send me an email linda@subsectinc. com and we can...
42:05
Jim is laughing right now. Jim: No, I admire it.
42:11
I love watching somebody work.
42:11
It's like you've seen Glengarry Glen Ross a lot I bet.
42:16
Linda: Jim, have you ever heard of something called Amway?
42:19
I think it can work for you. Jim: You lost me. I'm just...
42:25
Linda: I want to be very...
42:28
at this point in talking about Substack, I want to be very open and very transparent and very easy to reach because I don't know where the next person writing on Substack will come from.
42:34
And the whole idea of pro it's a tiny...
42:41
it's a couple of dozen people out of many thousands who are on Substack.
42:46
The vast, vast majority of people who are on the Substack, they just went, took 20 minutes, set up a Substack in the normal way and then off they went.
42:50
And the last thing I should say, I will get in trouble at work if I don't say this is, for many writers with an audience, it is better for them to not take an advance because the way that the advances are set up.
43:00
And Hamish explains this in his post and people go look at it, it changes the deal in terms of the percentage that you get from Substack while you're in the deal so that because you're were getting a some type advance.
43:15
So for people who are going to grow a lot in many cases, it could be better for them to just start with the deal that's available to everybody.
43:20
So, yeah, hopefully I haven't caused more confusion than clarity, but the important thing to know is if somebody is leaving the conventional writing world and they need an advance in order for it to be risk managed for them, that really is the purpose and intention of pro. And it's just been...
43:40
I guess like I said, a couple of dozen people who have participated in that this far.
43:45
Very new, young, recent program too.
43:49
Jim: Yeah, well, listen, I find it very fascinating.
43:51
I think you are in the fast lane of what's going to happen in publishing and monetizing content.
43:58
And it seems that with this new ability for people of talent to have a platform immediately, it's a brave new world though, because the old world you strove for different things, right?
44:12
You wanted that [inaudible] of a fancy university, you wanted the fancy big bank in our world.
44:17
And that is moving so rapidly and changing so rapidly that I do think that people kind of get confused and get like, "Oh my God, what am I going to do here?"
44:30
So you've explained this very simply and I think it's a really interesting idea.
44:30
So we'll see where you are in three to five years. Linda: Yes.
44:38
Jim: Now, we always ask people at the end of the podcast, we're going to make you, Linda, the Empress of the world for one day.
44:48
You can't kill anyone, we often get that question, no killing, no killing allowed nor can you put anyone in a reeducation camp.
44:55
But what you can do, you've seen the movie Inception, right?
45:01
Linda: Mm-hmm (affirmative).
45:01
Jim: You can incept two ideas in the population of the world.
45:02
Like, I'm not going to give an example because I don't want to point you on what you...
45:09
bias you on what you're going to do, but they're going to wake up the next day, then the Empress of the world for a year.
45:18
Very nice benefits, by the way, you get a great palace, but only for that one day, so eat well and enjoy it.
45:22
But they wake up the next day with these two suggestions that you have incepted in them. What do you got for me? Linda: Yeah.
45:31
I have gotten a lot of pushback on the fact that I'm a big promoter of cold email and reach out on the internet to whoever it is that you want to talk to and communicate with.
45:43
And when I say pushback I mean, people from my own mid-career age group who are like, "Cold email doesn't work.
45:48
If somebody can't get a resume in my hand, I don't want to talk to them."
45:52
But the vast majority of people cold...
45:52
I'd like to incept in them the idea, especially if there are people listening to this podcast who are on the younger side, earlier in their career, don't be so afraid that the worst thing that will happen to you is someone ignoring you.
46:08
I got the job that I have right now through a cold email, didn't know me from Adam, I just sent them some ideas and that led to conversations.
46:13
And what the internet facilitates for you that wasn't there 20 years ago is, that variability to probably reach out and you'd be surprised how accessible by email and how much they read their own email, some of the powerful people that you admire are.
46:31
So I find that there is...
46:31
And to just to give one more piece of advice, don't email people and just say, "I want to have a networking call with you or pick your brain," have some specific questions, believe that you, despite being young and not that experience, do have something to offer.
46:42
So I'd like to just encourage people, hopefully by [inaudible] example that, try talking to people who you admire and who you'd like to speak with.
46:51
And those could lead to potentially long relationships and don't hesitate maybe as much as you do because, to be ignored is not in any way even a minor disaster.
47:03
And then maybe the other one is a little bit political, but I would say I'd like to just incept in the, and everybody, the idea that your sex being male or female has nothing to do with your personality, your interests, your tastes, and what you can choose to do in life.
47:23
And anybody who's in North America and hears that is probably like, "Well, you just said something patently obvious it's 2021."
47:29
But to be able to, you said the whole world, right?
47:34
Jim: Mm-hmm (affirmative).
47:35
Linda: So there are still a lot of places in the world where somebody who looks like me would not have been able to walk the path that I enjoyed to go to university to get great opportunities from male and female mentors.
47:50
To be able to be considered just as equally for promotion as somebody else.
47:57
To be available to reach out with a cold email and to be hired.
47:57
So I would like a world where every woman has that opportunity, and indeed, every man can be whatever he wishes without the constraints of assumptions around what a man should or shouldn't be.
48:06
So that will be my very political or philosophical one that I wish I could incept in everybody to make better world.
48:18
Jim: Bravo, Linda I love it.
48:18
Both of them are [crosstalk].
48:21
Jamie: I'm skeptical about cold outreach. Linda: You are? Don't worry. Jamie: I'm kidding.
48:27
Linda: Don't worry Jamie. Jamie: No no no.
48:27
Linda: Well, how did you get your... Is that a joke? [crosstalk]. Jim: That's a joke. Linda: That's great. [crosstalk].
48:31
Jim: So we'll tell this story real quick.
48:34
So, Jamie sends out an email to Patrick saying, "Hey, I'd like to take you to lunch."
48:40
So, Patrick reads email assumes that Jamie is in Connecticut and says, "Yeah, okay. I'll..."
48:47
Was it breakfast or lunch, Jamie? Jamie: It was lunch. Jim: Okay.
48:50
So, Patrick sends him an email back and says, "Yeah, sure.
48:50
I'll have lunch with you tomorrow."
48:54
Jamie was in Washington, DC when he sent that email to Patrick.
49:00
So he got up at the crack of Dawn, drove up to Stanford, Connecticut, where our office is, had lunch with Patrick and then pestered me forever on Twitter and wonder of wonders, got a job.
49:12
So he's a master at cold outreach.
49:12
Linda: That is a phenomenal story. Jamie finesse. Jamie: Thanks.
49:19
Linda: That's a great, great [crosstalk].
49:23
Jamie: I always try and tell people that at cold outreaches, as long as they're not doing the, just generic, can I pick your brain. Jim: Right. Linda: Yeah.
49:30
And that's key and, we could talk for another hour about how do you position your cold outreach because we all, and I'm sure Jim gets three a day, have gotten emails that are just they do not inspire you to reply because there is nothing particular.
49:39
There's no why me in it, so that's key.
49:46
Jim: But just before we close, I mean, yes.
49:47
So young people don't send calendar invites that puts your self on somebody's calendar. Linda: Oh my gosh.
49:57
Jim: Because I have said to my assistant, anyone who does that, they are banished, we are not going to do business with them.
50:01
If we are doing business with them, we're going to stop because that is just downright ridiculously stupidly aggressive.
50:13
Linda: Yeah, that's strange. Jim: Don't do that. Don't do that.
50:14
The second thing is don't send emails to people like me, that go not to me, but to an info at OSAM thing.
50:21
And then pester me on the open timeline on Twitter saying, I have sent you three emails and you haven't replied.
50:30
It's like, Oh, I just want to take that person aside and say, you're doing it all wrong.
50:37
You're insuring that you're going to have a negative compounding event here. Linda: Yeah.
50:47
Jamie: Someone Dmed me saying, invest in my startup. That was it. No introduction.
50:48
And I just responded just nah. Linda: No. [crosstalk]. Jamie: How about no. Linda: So painful. Jim: Yeah.
50:59
The only difference there would have been Jamie is I would have sent him the bugs bunny cartoon upset him Bug saying, no. Linda: No.
51:08
Jim: So Linda this has been great, this has been a lot of fun, we wish you the greatest success. Linda: Thank you.
51:13
Jim: You're going to be able to see in the show notes all the ways you can contact Linda and follow her on Twitter. This has been great.
51:19
Thanks a lot, Linda and- Linda: Thank you so much, Jim. Jim: ... best of luck. Cheers. Linda: Thanks. Thanks guys. I appreciate it.