MFM #160
The guys breakdown paid communities
Why paid communities are good businesses:
You can make them kinda fast (much faster if you have an audience)
Fun to run if you like the interest
Don’t need a lot of start-up capital and can have a lean team
Quite profitable
Cons:
Churn can be high
Likely can’t scale to me huge
Won’t get better with size necessarily (if user content-driven, deal-driven, or otherwise, more can be better. If connection related, less is better)
Seem challenging to sell if there’s a leader
To make a successful community:
The amount of money you’ll make is directly proportional to the amount of revenue the members will make being connected to each other multiplied by the amount of people who’d sign up.
Enthusiasts of RC cars? Likely don’t make much value from it, so you can’t charge a lot. But if it’s huge (and get better with size) then can work
Underdog, us vs them, united interests, info that wants to be private, highly disjointed online,
Communities the guys like:
Tiger21: A peer group for people above with a net worth of at least $10m.
Numbers: It boasts ~850 members. They generate revenue through a $30,000 membership fee and also run ads to its members. Do an estimated $24m at least in sales
Sold to private equity recently
Why join?: Learn and make connections.
Evanta
Was known as CXO Acquisition Co. and Sports Leadership Acquisition Co...so maybe started in sports?
Evanta derives most of its revenue from event sponsorship. Event sponsors pay a fee to advertise at each event with pricing dependent upon the quality and level of executive attendance.
121 Unique communities worldwide 6,500 Participating organizations 253 C-level programs across 10 countries 83% of Fortune 100 represented 18,000 Participating C-level executives 87% companies with revenue of $1B+
Sold for $275m in 2016 to CEB and then Gartner
Had $17m in cash when bought
12x income...so made $23m in profit!
SoleSavvy
A SoleSavy membership provides you the tools and resources you need to successfully purchase the products you want for retail (starting with sneakers)
Raised $2m
Started as a Slack group (the waitlist for the group grows by 400 people per day)
5,000 members. They charge $33 a month so $160k MRR
Cook groups. AK Chef is a big one. 2000 ish members at $50.
NurseLifeRN
Instagram meme page with 1.2m followers
BALA (a shoe for nurses company) uses this as the main advertising channel.
Shaan predicts these niche communities can launch brands and hold equity in companies who need their captive audience to grow.
Inertia
Shaan explains inertia:
Are you doing what you are doing just because or does it make you happy and are you chasing what you actually want
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Editing thanks to Jonathan Gallegos (@jjonthan)