Substack

beehiiv turned Substack's percentage fee into its main wedge. beehiiv charges flat SaaS fees of $49, $79 or $159 a month by size, with a 0% take rate. Tyler Denk calls Substack's take rate predatory and says users complain of paying $10,000 to $15,000 a year in fees as they grow.

Denk found the top complaint about the leader on X and built the pricing around it. One in seven new beehiiv writers now come from Substack, including Time and Newsweek. His view: "I don't think by simply building the infrastructure to pass money through the pipes of Stripe that is the value that we should be extracting at that layer."

Lenny's Podcast▶ 11:33

A percentage take rate makes Substack's biggest publishers the ones most likely to leave. A cut of revenue looks harmless at small scale but becomes meaningful as a publisher grows, so the largest ones switch. Time and Newsweek moved to beehiiv for more features at about 40% of the cost.

Denk says ESPs charge from $100,000 a year for capabilities beehiiv offers at $79 a month. He sees the platforms diverging: Substack is building a simple social platform, while beehiiv brings enterprise-level software to prosumers. He also doubts Substack's free model is a forever strategy given its burn.

Lenny's Podcast▶ 13:32

Lenny published weekly for nine months on Substack before adding a paywall. After moving to Substack, he wrote every week for nine months, then reasoned he could do it for nine more. Only then did he add the paywall, and he made meaningful money about a month after launching it.

He used the Lindy effect: how long something has lasted predicts how long it will keep lasting. The track record shows you have the ideas and the consistency to sell a subscription. As he put it: "I've been doing this every week for 9 months, which means I could probably do this for nine more months."

Subversive▶ 20:40

Lenny's overly generous Product Pass launch drew fraud rings that Substack and Stripe helped stop. The pass launched with a free year of Cursor, Lovable, Bolt, Replit and v0. Fraud rings, mostly in China, found exploits in the API and spread the offer through student networks.

He worked with Stripe and Substack to shut the attack down, and his engineer barely slept for a week patching holes. He calls it the most stressful business moment he has had and feared it could undermine trust in the whole subscription. His verdict: "that was way too good an offer. People came for it, bad people."

Subversive▶ 34:10