Insights from today’s 4-min read:

• 🏆 The Growth Playbook Substack Stole from TikTok 

• 🔍 Inside Substack's "Recommendations" That Generates 70% of Subscriber Growth

• 💡 Why Twitter, Uber and Others are Now Rushing to Copy the Strategy 

👋 Henry here, welcome to B2B Growth Insights, where I take my learnings from being at Pricepoint Partners to showcase how the best B2B SaaS companies do pricing, growth, and retention.

The TikTok Growth Playbook: How Substack Solved Their Marketplace Dilemma

For B2B SaaS companies, retention is everything. But what happens when your own business model inadvertently encourages your most valuable customers to leave? This is precisely the challenge that threatened Substack's existence—and the innovative solution they found by borrowing from an unlikely source offers valuable lessons for any subscription business.

The Problem Facing Every Marketplace

Substack launched with a compelling value prop that quickly made them a pandemic-era rocketship: a beautiful newsletter CMS that was completely free for unlimited free subscribers. This freemium approach was deliberately designed to counter-position against incumbents like ConvertKit, which imposed strict limits on free subscriber counts.

Their monetization strategy was simple: take a 10% commission on any paid subscriptions. This model was irresistible to amateur writers just getting started—they wouldn't pay a cent until they were actually making money.

But herein lay the critical flaw: As soon as writers achieved meaningful success and revenue, that 10% commission became a significant expense compared to platforms charging flat fees (typically around $99/month). The very moment writers became profitable for Substack was precisely when they had the strongest incentive to leave the platform.

This paradox isn't unique to Substack. Marketplace businesses from Fiverr to Upwork to Dribbble all struggle with a similar challenge: how do you prevent payments from happening off-platform once you've facilitated the initial connection?

The Initial Solution: Substack Recommendations

Substack's first attempt to address this retention challenge came in the form of "Recommendations." The feature was simple but effective: after a reader subscribed to a newsletter, they would receive suggestions for other related publications they could subscribe to with a single click.

This solved part of the discovery problem and provided writers with a modest boost in subscribers. But for most creators, this incremental growth wasn't enough to justify the 10% commission when they reached significant scale. Substack needed something more powerful.

The Breakthrough Insight: TikTok's Wealth Concentration Strategy

Their next insight came from studying TikTok's growth playbook. Alex Zhu, founder of Musical.ly and later an executive at TikTok, explains the strategy in an amazing 2016 talk:

"Building a community from scratch (on an app) is like you just discovered a new land. You give it a name, America, you want to build a population and you want people from Europe to migrate. In Europe, the economy is already very developed—and in your country there is no population... and no economy, how can you attract those people?"

Zhu continued with the critical insight: "The problem with Europe is the social class is already stabilized. For the average citizen they have almost zero opportunity to move up in social class. In the beginning you have to... make sure the majority of wealth is distributed to a small percent of people—to make sure these people get rich. These people become role models for other people living in Europe. This person is just a normal guy who went to America and he became super rich. I can do the same!"

Creating Substack Celebrities

TikTok executed this strategy with creators like Charli D'Amelio. By artificially boosting select creators' content, they helped a small group amass massive follower bases and build substantial wealth. These success stories enticed countless creators from Instagram and Snapchat to migrate to TikTok, believing they could achieve similar results.

Substack adapted this playbook to solve their retention problem. They identified writers like Lenny Rachitsky and strategically boosted his visibility through their recommendation engine. The results were staggering—Lenny recently reached 1 million subscribers and has publicly credited Substack Recommendations with 70% of his growth.

You can even see the inflection point where Substack launched Recommendations and his growth went nuclear. 

Other Successful Examples

This approach of engineering visible success stories is now being adopted across the marketplace economy:

• Twitter has boosted creator payments to incentivize more people to subscribe to Premium ($50/month) to become eligible for these payouts.

• Uber has showcased how people have made $90,000 in under six months through referral rewards.

Actionable Takeaways for B2B SaaS Leaders

If you're running a B2B SaaS platform, there are several ways to apply this "engineered success" strategy:

1. Identify Your Potential Celebrities: Look for users who are already showing above-average engagement and results with your product. These are your candidates for amplification.

2. Create Visible Success Metrics: Ensure there are public ways for users to showcase their success on your platform.

3. Amplify Strategically: Don't try to boost everyone equally. Concentrate your amplification efforts on a small group of users who can become aspirational examples for others.

4. Document and Share Success Stories: Create detailed case studies of your "platform celebrities" that highlight not just their results, but the specific features and strategies they used to achieve them.