I want to substract a letter from a circle, but when I try to do this, nothing happens.
I suspect it is because it is a text object. Is there a way to turn it into a shape so that
I can use pathfinder stuff like "substract", "trim".. etc.. with other shapes.
You may Type>Create Outlines, select oth, and use Pathfinder>Minus Front (Subtract from shape area holding Alt/Option in older versions).
Or you may keep the Live Type, select both, and Transparency>Flyout>Make Opacity Mask with Clip and Invert unticked.
The latter is reversible beyond Undos.