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Hey Friends: I did a bit with strikethrough text in this piece that appears not to be formatting correctly in the App version. Just a heads up that you may have a better reading experience on the web or via email.

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"55% email open rate"

"consult a Magic 8 Ball."

🤣🤣🤣🤣🤣

Thanks for this post, Amran. Really enjoyed this, and you've finally convinced me that you know what you're talking about. Therefore, from here on out I'll be leaving all my future life decisions to you. So check your spam folder/hit the unblock button. 🥩 🥩 🥩

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It's taken this long?! Well, better late than never I guess. :-)

Glad you enjoyed it and I sincerely hope you and others find it informative. I revile shadiness and obfuscation and have no time for it.

My daughter told me she loved her mom more than me the other day. That I can respect.

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That's the thing about sons vs. daughters...

My house is destroyed, but my heart is in tact.

If I were religious, I would pray for you. Hang in there, my friend!

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It's true, my son really does love me. But I like that my daughter's an emotional terrorist: she makes me stronger. And I know she'll absolutely wreck shit as an adult.

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Yes she will.

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Straight fire emojis.

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Thank you, Meg! Glad you dug this one.

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⭐️⭐️⭐️⭐️⭐️

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I've been waiting my whole life for one of these!

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🤣 You've earned that review, Amran!

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I decided yesterday that I don’t know enough about investing to invest (which has been my lifelong investment strategy). Now, thanks to you, Amran, I don’t know what to think. But I’m still not investing.

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author

Sorry to muddy the waters even more, C.L. Obviously a topic like investing is quite complicated and multi-faceted, and a piece like this can only touch on so many points. I tried to highlight the biggest, most salient issues here, which is that Substack management conveniently forgot to show any numbers, and the valuation they're selling at is no longer relevant in the current market conditions.

For example, what if Substack only has $10 million dollars, and burns $2 million dollars per month? That means they're bankrupt in five months. That's something I'd sure like to know before I gave a company my money. Note: those are made up numbers for illustrative effect.

Secondly, in 2021 interest rates were still low/zero, the pandemic was waning, WWIII hadn't started yet, and we weren't about to enter a new financial crisis. The psychological conditions for investing then were much "frothier," people were much looser with their money, and Substack got valued at $585 million.

Now, everyone is scared, and there's zero chance Substack could fetch a $585 million valuation from its VC investors. Instead, what they're telling us is: "Well, writers are dumb, so they won't understand, so let's fleece them for some money!"

I'm a hater and a skeptic and a cynic but I ain't wrong.

All that said, here's one piece of investing advice you can ALWAYS rely on: Never give anyone money before you can see the financial statements and future projections. Ever.

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What I appreciated in the 'Own a piece of Substack' post was this part:

"So, should you invest in Substack? Remember, you shouldn’t just because you can. If you don’t have money to spare or you’re uncomfortable with risk, don’t spend your money on this."

They don't get your five stars, but I was pleased that they'd said this.

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I'm such a hater I found that part even more cynical!!! It's good they put it in there, but to me it read like they were trying to show balance and create trust while clearly hoping to rip us off. Did I mention I have issues?

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And there I was thinking they'd ticked the 'social responsibility' box! 🤣

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I felt the teensiest bit patronized by the "So, should you..." line.

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Great minds, Bev.

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Yeah, that bit just further triggered my own Spidey sense. Don’t apologize at the start of your speech. Don’t make excuses before you begin. If you’re going to sell, just sell

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I didn’t find this controversial. It’s good satire. I get your point of view. You’re probably mostly if not entirely right. Your skepticism and sarcasm are fun and remind me of myself. Good material my friend.

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Thank you, Michael!

With any good piece of satire the key is to keep an open mind. I'm not saying I have all the answers, but I'm definitely asking the right questions!

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Oh boy, irony IS such a complicated idea! I’ve been through a number of the skeptical takes on Substack’s announcement and, truly, I like yours the best, especially the more straight-up analysis after the fold.

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Thanks, Tom! The minute I saw their post my Spidey-sense went off. The more I thought about it the angrier I became, and the more compelled I felt to write something. I credit my wife and some finance-oriented friends for encouraging me to take the plunge.

Also, feel free to link to other good takes you've read. I'm sure many readers/writers are trying to figure this out.

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Mar 31, 2023·edited Mar 31, 2023Liked by Amran Gowani

This was great. I know absolutely nothing about investing and thought maybe this was the time to invest. So they got me on that one. But I didn't. Yet. But I still might. Maybe because I believe, somehow, despite any visibility on how exactly an ROI would play out, that because I FEEL good about Substack, my FEELINGS can be turned into less money in my bank account for the promise of MORE money in my bank account, somehow. And that's science.

PS but for real, given your financial knowledge, what's the hypothetical way my $100 could become $200? IPO? And then wouldn't Substack just go the way of every other small-time art-centric platform that sold out for cold hard ca$$ (see: Bandcamp)?

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author

Thank you, Samuél!

Investing is emotional. That's why we have bubbles and irrational exuberance and financial crises. I want Substack to succeed too! I think they've created a great product.

But a great product doesn't make a great company. And a great company doesn't make a great investment. If it did, Wall Street scammers would have a much harder time ripping people off.

To your last question: typically private companies create "liquidity" -- meaning, how you can actually sell your shares one day -- via a sale to a larger buyer or an IPO. Depending on market conditions and long-term potential, one choice may be preferred, and that varies.

A "no doubt this is the next big thing" company usually prefers an IPO, where its stock can run wild in the open market. Think Apple or Amazon: nobody could've ever paid $2T in a private sale, but those companies reached a $2T valuation in the public market.

Since Substack is begging us for money I doubt an IPO's on the table. Who's the last VC you met who happily "diluted" their stake by letting plebes also buy shares?

Nonetheless, let's say Substack is just struggling now and one day in the future goes public. If you buy $100 -- at the $585 million valuation -- and the company goes public at $1,170 million, your shares will be worth $200 total. Note: this is oversimplified because there's "recapitalizations" and additional funding rounds and fees and subordination and etc. etc. etc.

More simply, if Musk or the NYT or TikTok buys Substack for $1,170 million, your shares go from $100 to $200.

The absolute biggest risk to what Substack's pitching is much less exciting: you buy $100 at the $585 million valuation and Substack has to raise more money (to avoid bankruptcy) but they do it at a $292.5 million valuation. Now your $100 is worth $50, and you still have no way to cash out. Note: this is also somewhat oversimplified because there's a difference between "pre-money" and "post-money" valuation.

All this is to say: if you want to donate money to Substack to support them, go for it! But don't let them fool you into thinking this is a solid "investment" opportunity.

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Oh, and will Substack sell out to corporate greed? Yes.

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But rainbows, Amran. Rainbows are pretty and they come after the rain and everyone is happy and kind and smiling faces and warm words make me feel fuzzy and oh shit my bad I'm actually just on acid.

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I’d call it lighting money on fire, but that’s a simple, straightforward, and transparent process.

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And what fun would that be? Spending money is easy -- I've read Expensive Evil.

But dumping your money into a cultish black box, while feverishly convincing yourself you're saving the culture? That's art.

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(extremely difficult to find footnotes of an extremely difficult to locate SEC filing, a la Hitchhiker's Guide to the Galaxy)

"It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard.'”

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Brilliant!

You know, HGttG is my Predator. Never read it. Don't shame me! I'll add it to my list.

Also, thanks for the cross-post! Just need someone to send it to Chris, Hamish, and Jairaj now.

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I'm going to parade you through the town square with a scarlet letter HGttG on your chest.

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It's well deserved. One of my best friends told me to read it over twenty years ago. Do you think it'd make for a good audio book? Maybe I could dig into sooner in that format.

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Yes. Also there’s the original BBC series which is very retro but has a narrator that’s very true to the book. I’m rewatching it for like the fifth time.

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Oh, and I'm sure Hamish is all over it. Who are you kidding.

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author

My sincere hope is they read this. In a better version of the world they'd show this piece to everyone and say, "You know, this guy's an asshole, but he brought up some solid points, so here's the information we withheld."

In a hilarious version of the world, they'd try to reprimand and discredit me. Try being the operative word. They wouldn't like me when I'm angry.

In the world we've got they won't acknowledge my existence, which is the smart move.

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Now I'm singing the theme to the Incredible Hulk. Thanks.

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Now I'm going to YouTube to remind myself how it goes. Thanks.

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This is a quality use of our time, let me tell you. I can play it on the piano too.

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Apr 1, 2023Liked by Amran Gowani

I have the anthology in hard cover. I can lend it to you. It explains so much about my adult psyche that I read it as an impressionable high school kid.

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Mark it down, Dude. I think most people with good sense did the same.

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Mar 31, 2023·edited Mar 31, 2023Liked by Amran Gowani

This may be your most cutting, invective, and HILARIOUS piece yet, Amran.

I love your particular brand of heresy (or sanity, in this case!)

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Thank you, Larry! I'm gonna start branding myself as a sane heretic! You can keep the copyright though.

It's funny, because sometimes I get nervous that perhaps I'm being too inflammatory, and when I do those almost always end up being the best-received pieces. But -- everything in moderation...

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Apr 1, 2023Liked by Amran Gowani

...including moderation!

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Thanks for this Amran! The pitch felt weird, now I know why!

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Thanks, Wil!

Had to put that MBA I don't use to work somehow. I'm thinking maybe the first Field Guide should cover valuing stocks. There's hundreds of books and papers on the topic, but they don't deliver with my sense of élan.

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Apr 3, 2023Liked by Amran Gowani

To test your theory, I put some cash tonight in my salad spinner and didn’t get rich. What gives?

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Seriously! It's like capitalism doesn't work anymore.

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Late to the party, great read! 👏You had me at 55% email open rate. Now off to find out what this seedier side of Substack is all about...

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Thanks, Russell! Glad you enjoyed it. If you uncover anything interesting shoot me an email at agowani@gmail.com. This is a story I'm very curious to follow.

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I'm even later than you. Now the party can really start!

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Welcome to the show!

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Where have I been all these years

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I take offense at the donkeys comment. I know one personally who really knows his hay. I mean dough. I mean...

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My apologies! Lots to pun-tificate going forward.

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I sure as hell hope so. The regular channels bore me backwards and inside out.

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