Nathan Baschez is both an analyst of disruption theory and a disruptor himself. After years playing at the intersection of media and technology, he created Substack's first newsletter bundle, Everything—a never-before-seen publication of business analysis by practioners, for practitioners. Read on for more from our town hall with Nathan, including his thoughts on career choice, disruption in the passion economy (Clubhouse vs. podcasts), and innovation in online media.

I: Nathan's career arc

The common thread in Nathan's early career was an interest in business strategy and the intersection of media and technology. "I've loved writing and business-oriented non-fiction since college," Nathan told us. "I'd wander into the business section of Barnes & Noble and find something that looked interesting [like Getting Real, The Lean Startup, or Paul Graham's essays]."

He worked at Olark and General Assembly before founding Hardbound, an interactive storytelling platform. After Hardbound wound down, he joined the product team at Gimlet and then became the first employee at Substack.

Nathan knew Substack was an incredible product. "I thought, [Substack] is going to work—I just see it," he said. At the same time, he was self-aware enough to realize that it wasn't a great fit for his skills. Though his title was VP of Product, "what the company really needed was someone who could write code really well," he shared. "Being the first product hire at a startup where one of the founders is running product is different than if you're used to being CEO or PM of a company."

So Nathan struck his own path again to come full circle as a business strategy writer and organizer of Everything, Substack's first newsletter bundle. "I always wanted to be the person who reads Clay Christiansen or Hamilton Helmer for fun, but to have the time to really go deep on the research is an unimaginable luxury."

II: Disruption theory: a modern take

What is disruption theory, again?

Disruption theory attempts to explain the relationship between a startup and an incumbent in a given market. Big companies don't want to be driven out of business; small startups want to succeed. So when an incumbent loses ground to a startup, what is going on?

"Before Clay Christensen, most people just assumed [incumbents] just screwed up," Nathan said. "[Company leaders] were hailed as geniuses on their rise, and when they were at the top, all of the sudden, it was like their IQ dropped 50 points." As Christensen's disruption theory postulates, though, reality is more complex.

Here's the gist: imagine a company that enters a market with a product and finds customers by solving a particular problem. As it grows, it improves its product—but eventually, it improves beyond what its customers need. (Gillette razor with seven blades, anyone?)

The company, which is now an incumbent, keeps incrementally improving its product to serve its best customers, who willing to pay the highest prices. It ignores customers with at the lower end of the market, who would prefer a simpler, cheaper, or more convenient product.

New startups have the opportunity to serve those lower-end customers, and incumbents often choose not to launch a competitive response. "Incumbents are susceptible to a degree of cognitive bias, assuming that anyone serious will graduate to their products," Nathan said. The trouble comes when the startups follow the same improvement trajectory of the incumbent—ending up with sufficient quality for high-end customers while being cheaper and more convenient. Take a modern smartphone as an example. "I can write emails on it, I can read on it, I can view maps on it. Originally, cell phones couldn't do any of these things. Cell phones disrupted paper maps in this classic sense: they were worse at first, but then became better to the point where paper maps were obsolete."

Where disruption theory fails:

Tesla, Uber, and the iPhone don't fit disruption theory well because they started at the high-end of their respective markets, yet still managed to beat their incumbent rivals. Uber, e.g., was a more upmarket experience than the taxi: it had precise arrival times, a consistent car experience, and seamless payment. Why didn't incumbent taxi companies build something like Uber?

"That's where reality gets more complex than the model," Nathan said, emphasizing the importance of the DNA, motivation, and information world of an incumbent company. Initially, taxi companies lacked the DNA to create an app like Uber. Once Uber started to gain traction, venture funding gave it the scaling power that allowed it to escape incumbent competition.

The passion economy: can Clubhouse disrupt podcasts?

Clubhouse and podcasts have the same "job to be done": when I can't use my eyes, give me something entertaining to do. To disrupt podcasts, then, Clubhouse needs to become as entertaining as podcasts.

"Sometimes it is now, but a lot of times it is not," Nathan said. "You hop in, the conversation's kind of meandering, you're not sure what's going on—it's like, hey, maybe I'll switch back to The Daily, I know exactly what I'm gonna get." This is partly a scale problem: "Clubhouse originally started as a very tight group of people, and it was an incredible  experience. Now it's a little bit looser, and the product mechanisms haven't caught up now that there are couple thousand people rather than a couple hundred people. The answer could be more scheduled shows, better audience Q&A, or helping people orient into rooms in progress better."

The orthogonal benefit of Clubhouse over podcasts, of course, is the ability for people to build their own reputations and meet others, including celebrities as well as regular audio content creators without podcasts. Clubhouse lowers the barrier to entry for creating compelling content, like TikTok did to YouTube for video content.

Even though YouTube could build a TikTok clone, the underlying technology of Apple and the existing podcast ecosystem limits its ability to respond to Clubhouse. "Spotify is in a better position to respond because they have a relationship with both podcasters and listeners directly," Nathan said. "If I were an executive at Spotify, I would DM Paul [Davison] on Twitter and offer him $300 million, easily. That's a trivial amount of money for Spotify to waste if it Clubhouse doesn't succeed. The lesson from Instagram is not to ignore new networks coming out; the cost of a false positive is low relative to a false negative."

Can brands be disruptive?

Can a brand be disruptive without a differentiated product (e.g., Hims and Hers)?

"Christensen or Helmer might argue that there is no such thing as a disruptive brand, because disruption is about the functional attributes of a product," Nathan said. Without a disruptive value proposition or business model, a brand itself isn't disruptive.

Editorial brands, however, might be a different story. "I think there you can actually have a disruptive brand that does similar work to an incumbent but positioned at an underserved audience," Nathan said. "The incumbent brand can't change because it would cannibalize its existing business. Viagra can't copy Hims; it's got too much brand equity with the people it's targeting. What could it even do—change their font and tone? It wouldn't work."

Balancing brand heritage with innovation is also a delicate balance. Many brands—particulary luxury brands—experience generational churn. ("In seventy years, will Soho house feel like the Elks Lodge?") The ones that escape gravity may do so by sacrificing their older audience to avoid fading into irrelevance.

III: The future of media

What exit opportunities exist for for mid-sized newsletters?

"I don't know anyone currently who's acquiring [$100k/yr newsletters] but we'd love to chat," Nathan said, laughing. "Your exit option is likely to get a job somewhere you'll get a better salary and signing bonus and working conditions with more creative control. If you are an indie designer and you make a cool app, you can probably get a pretty good job at a tech company somewhere, having proven your taste and ability." Those who stay in media might follow a path like Ezra Klein's: his blog led him to the Washington Post, which led him to Vox.

"[Everything] or other media companies might get more acquisitive, but the problem is that you can't pay a very high multiple," Nathan said—at least without a very strict golden handcuff system. "You run the risk that if the writer leaves, you've lost a ton of money."

The creator<>platform relationship

Will creators eventually unbundle from their platforms for economic gain (e.g., Substackers moving  to their own newsletter distribution)?

"There will be many cases where that happens, but the extent to which it happens depends on platform dynamics," Nathan said. If YouTube, for example, had built something like Patreon natively or had a more generous ad revenue split, today's Patreon may never have formed.

"Competitive arbitrage means that platforms will come into existence that offer a better deal," he added. Think about energy around Substack getting siphoned off to Medium: "as platforms like Medium let creators take their email list with them, there will be less unbundling from platforms than platforms competing with each other to offer creators better monetization."

IV: The Everything bundle

Everything focuses on a new kind of writing: business analysis written for practitioners, by practitioners. "There's a lot of writing like this in other realms. If you want general cultural commentary you can go the New Yorker or n+1. But within [our niche], there's not nearly as much, because there isn't a great supply of practitioners who are great writers." Nathan's bundle attempts to create that supply and build a company around it.

The ideal bundle experience would balance consistency and novelty, where readers could a trusted relationship with writers they love, but also explore novel areas. "The real magic is having something worth paying for, without knowing, any given month or week, what exactly you're going to need," Nathan said. "It's like the feeling when you first sign up for Spotify—I'd never buy an opera CD at Best Buy, but [my subscription] gives me the chance to listen to Pavarotti."

Recruiting talented writers

Successful newsletter bundles can and plug early talent into their audience and monetization mechanisms, like what Everything has done with Adam Keesling. "He had written some really great posts and Twitter threads, but he wasn't writing full-time, so we asked him if he wanted to work together. Now he's a core member of our team," Nathan said.

"We want to help enable stuff that wouldn't otherwise exist. It's hard to do your own paid subscription business: there's a lot of commitment that goes into that and there's a lot of ways to mess it up. It's much easier if you can plug into a machine that's already humming. We can take a lot of the risk out of it [operationally and financially]."

Newsletter bundle creators may eventually do what Y Combinator does for startups, i.e. let people experiment cheaply, providing platform, community, and audience.

Using non-traditional modes of storytelling

"I would love to be able to use the platform of Everything to ship more [non-traditional storytelling formats] if we have the distribution channel and the monetization to justify it," Nathan said. The investment will come once demand is proven: "the bigger we get, the more we'll be able to justify the upfront investment into cooler interactive projects. It's better to go audience first and start with a simple format before moving to stuff that's more sophisticated."

Imagining the future of Everything

What does this look like in ten years? "The real galaxy brain take on it is that people in the best position to solve problems are those who deeply understand an audience and can write something that's rewarded with attention and dollars. Writing and analysis is really important, but we could also build software," Nathan said. "Maybe this becomes some sort of crazy Amazon Prime for business."

"First, however, we're trying to write really good stuff that people love to read. We do have some software that we've built, particularly for [productivity-focused] Superorganizers, but our main focus is to ensure that subscribers feel like they're getting a lot of value out of the writing, that every week there are multiple articles that were important to them and created a lot of joy."

"The other thing we're doing that feels different to me from most business writing is that we'd like to reach for beauty. Ideally, we can write stuff that might matter for years."

V: Advice for founders/creators

On content creation:

"One of the biggest mistakes that content creators make is they get really cute with naming things and try intentionally to coin terms. That's putting the cart before the horse; you should try to have original insight and express it clearly—don't try to make fetch happen."

Additionally, "one thing that people do too often is wait too long to get feedback from anyone," Nathan said. "It's really useful to get a first beta with like a dozen friends and then like a dozen random people, and then another beta where you send it out to 50 people and you go for the polish."

On bootstrapping vs. getting VC funding:

"The vast majority of people have too much of the grand vision and not enough of the mentality of 'let's just start something that works and see what happens'...The grand vision only matters if it affects something you're doing soon; otherwise it's just talk," Nathan said.

"I think it's generally better to not need venture capital and to just get started. If you can finance it yourself, and [get] cash flow positive immediately, that's great. There are a lot of businesses that would be successful but just don't seem like an obvious bet for a venture success. I'm usually on the side of going with what you think will work and run some experiments on the side."

VI: A question for us:

Nathan asked, what is most confusing to you about strategy? "I always love to know what people are pondering, because maybe they can outsource some of it to me." Answer in our Twitter thread!

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