Lenny Rachitsky writes Lenny’s Newsletter: a weekly newsletter about “product, driving growth, and working with humans.”

He has over 200,000 subscribers, including over a thousand paying subscribes.

Lenny publishes on Substack. He recently tweeted how Substack is now driving 10% of his paid subscriber growth — and 72% of his free subscriber growth.

He ends the tweet off with “Network effects in action”.

And understandably so, given how his growth on the platform is creating the flywheel, network effect of growing his newsletter.

His growth is propelling more growth.

So what does this mean for the 99.9% of newsletter publishers who do not have lists this big? Should you switch to Substack to take advantage of their “network effects”? Or if you haven’t launched yet, should you start on Substack?

It seems to be tempting some people:

It comes down to this question: are the network effects on Substack worth the tradeoffs of the platform’s limitations?

Let’s dig in with 4 things you should consider before switching to Substack.

#1 - Substack doesn’t offer automation or sequences

Okay… this isn’t *entirely* true.

Substack provides you with an automated and customizable Welcome Email to your new subscribers. But that’s where the automation ends.

You can’t build email sequences (think launch sequences, email courses, etc). You can’t automate anything.

And that’s because Substack isn’t an email marketing platform. It’s a newsletter media platform.

So if automations or automated email sequences are a part of your newsletter strategy or experience, look elsewhere.

#2 - Substack doesn’t have an open API

Alright, so no automated sequences or any other email marketing automations.

No biggie, I’ll just use Zapier to automate things.

Nope, sorry. No can do.

Substack doesn’t have an open API. Which makes it impossible for tools like Zapier or Make to automate processes & functions — like you can do with other email marketing platforms like ConvertKit or Mailchimp.

So if running these triggers and automations is part of your newsletter strategy, it’s a no for Substack.

#3 - Substack doesn’t offer segmentation

You *probably* wouldn’t be considering Substack for an eCommerce brand newsletter, or any company that’s selling DTC products.

But just in case — consider the importance of segmenting your customers based on where they are in your marketing funnel, their psychographics & demographics, their purchase history and behavior, etc.

Now consider that you can’t do any of that with Substack.

Enough said?

#4 - Substack takes 10% of your subscription revenue

Here’s where the math could get interesting—IF your newsletter model still works despite the previous 3 knocks against Substack.

If you can forgo most of your promotional/marketing/advertising costs by leveraging Substack’s “network effects”, giving them a 10% cut can make a lot of sense.

Like Lenny has done.

Lenny’s paid newsletter as an example:

Lenny charges $15/mo for his newsletter (or $150/year). So $1.50/mo or $15/year goes to Substack and he gets the rest.

He has “thousands of paid subscribers”. Let’s speculate he gets 50 new paying subscribers per month. Five of those would be just via Substack’s discovery & recommendations (ie. network effects).

That’s $75/mo (or $750 per year) he earns (gross revenue) just by being on Substack.

Not too shabby.

All it’s costing him is Substack’s 10% cut of $7.50/mo (or $75/year) to acquire those 50 new monthly subscribers.

What should YOU do?

This works great for Lenny. But he’s in the 0.1% percentile of newsletters in terms of earnings & size.

What should you do?

Depends on your newsletter’s needs, right?

Do you need automation? Segmentation? Email sequences? HTML customization?

Then Substack’s network effects are not likely worth the tradeoff of losing those key features.

But not all newsletters need to leverage email marketing functionality. And in that case. Some of us are just publishing a good ol’ fashioned email newsletter.

Like Lenny.

Ending with something noteworthy…

As I was climbing the mountains of Whistler BC last week, thinking about the implications of newsletter network effects, Nathan Barry (CEO of ConvertKit) responded to the tweet above with something worth noting.

When asked if ConvertKit had any plans are for “network effects” features, he replied:

And then co-founder of SparkLoop Louis Nicholls chimed in:

👀👀

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