Episode of My First Million with Sam Parr and Shaan Puri.
Transcript
Note: This transcript was auto-generated from YouTube captions. It may contain errors and lacks speaker identification. A full Gemini audio transcript will replace this.
Kind: captions Language: en paid communities interest me because i came across this thing called tiger 21 and this sounds like lame that i’m bringing this up now after selling the company but i’ve been interested in this for for years um do you know what tiger 21 is i’ve heard about it what i know about it is it’s kind of like a mastermind peer group thing but it’s for a certain wealth level i don’t know if there’s a i don’t know if there’s an actual cutoff but it’s supposed to be for wealthier and i think it’s mostly older people and uh we have a couple friends who are in it so i i texted one of them today about it so i got a little bit of info but tell me what i missed what do you know about it okay so tiger21 uh google it i don’t know the url maybe. maybe just that.com um but basically it’s a peer group where you have to have at least 10 million dollars of investable assets in order to join it’s very expensive it’s 30 000 a year i wouldn’t call it a mastermind because mastermind has a certain connotation but yeah it kind of is that um i logged on to the site i i’m not a member but uh i used a friend’s login to check it out and there’s uh at least 850 members according to the what i saw and according to their site so what’s that map 24 million dollars a year in revenue um they have local chapters that meet up uh i guess now digitally and they do things like they share one another’s portfolio and you have to defend your portfolio and so it’s basically rooted in rich people talking about rich people stuff mainly being investing but i think it turns into a little bit of therapy every once in a while like a lot of groups do but what did your buddy say all right so i texted uh our mutual friend keith um and he’s he’s uh he’s a real estate guy he’s been on the pod you can go listen to keith’s episode and keith’s a good dude and he goes i go you’re in tiger21 right and he goes yes um what’s up and i basically asked him what do you think about it he’s like it’s an interesting group it’s because it’s all about investing preserving wealth uh it’s mainly for older people and um he goes the typical meeting goes four hours you do like you said a portfolio defense where you talk about what you’re holding and why and other people get interested in it and sometimes there’s speakers um sometimes it’s sometimes an external speaker sometimes it’s somebody from the group who speaks and there’s like a moderator and they also do like events because if you go to the website you can see like they hosted a tiger 21 event at magic johnson’s house and so they’re definitely trying to build this kind of like who’s who network this sort of like soho club soho house vibe uh to the whole thing and it uh yeah so they do that they also you get like deals so a friend of mine sent me a deal where they basically when you’re wealthy you get this thing called umbrella insurance which you paid two grand a year and it’s just like general insurance and it’s basically the story they tell you is like if you get in a car crash and someone googles you they’re gonna see you’re rich and they’re gonna want to see you for five million dollars and this protects against all types of stuff and so they give you a discount on umbrella insurance um and so by my calculation i actually would bet they do 30 to 40 million in revenue and they recently sold to private equity and so it’s a relatively big business and i actually read about uh read up on it and someone said like there’s 90 retention rate which is pretty amazing i’ve also been following reddit’s fat fire which is a subreddit similar to this and it’s like tripled over the last year so this space has got me incredibly interested but this is just one example of a paid community and so what i wanted to do was go through a few other paid communities that are interesting i want to explain i’m going to try to explain why i think they work and then where the opportunity is for other paid communities can i start can i start with one opportunity which is why isn’t this just a business model for our podcast like why aren’t we starting tiger 21 for people that are you know that have let’s call it a million dollars of investable assets so a million dollars of sort of like liquid net worth that you can go invest into something and uh why aren’t we starting this now this seems like the perfect thing to do for a podcast like this i think that probably there should be something like this i agree if you go to the tiger21 website um you’ll see like you know the type of models that people use on their website is like their ideal customer and it’s like 65 year old white dudes who own insurance companies that are quite wealthy but not young or not like our kind of crew um so i agree i think there’s something there okay so fair enough so let’s go into it all right so let’s talk about where should we start i’ve done a bunch of research um how about we talk about by the way sorry sorry interrupt you one more time the thing i just said by the way i think is important uh i said why isn’t that the business model for this podcast i think way too many podcasts try to just do ads and we’ve talked in the past about like super cast which lets you do like a paid a paid kind of super premium version of it for your hardcore fans who pay you nine bucks a month or five bucks a month or whatever and uh you know i started a rolling fund largely off of the audience from this thing that said hey i’ve listened to this guy a bunch i trust him he’s he has a good track record and so now that rolling fund is four million dollars a year that i get to invest into startups that’s more value than all of the ad revenue that we had before um and so i think that more people should figure out business models that are different from the content that they’re creating and so i’m surprised more podcasts don’t have different business models i agree with you but we are working we’re in one of the most lucrative niches there is i mean like if you’re a comedian if you’re um what’s that called the two women who talk about sex all the time call her daddy yes like that’s a little bit different so how do you make money off that that’s a little bit different and that’s actually what we’re going to talk about with paid communities so let’s actually talk about let’s and i’m going to bring that up so let’s talk about what makes them interesting and what makes them not interesting so to me what makes them interesting is that they can grow pretty quickly so you had a podcast um you do this four million dollar fund now building the audience takes a while but you turned your fun on and you it was four million dollars in a matter of months very quickly so they seem relatively fast to grow they’re really fast if you have an audience but compared to like a software company which would take 10 years i think we definitely could build it in a matter of two or three years second they seem pretty fun to run if the interest of your community is the same interest that you have if you if you if they don’t then it’s definitely not as fun but it’s kind of interesting if you are very interesting about what you care third you don’t really need a lot of money to start one you kind of actually need no money you really could just start with a paid facebook group um and you could have a really lean team to do it and finally they definitely seem pretty profitable because you can have a lean team but let’s talk about the cons one and this is what i’ve learned with our paid stuff and from friends i think churn could be pretty high did you notice that churn was high in any paid communities you’ve been part of honestly the churn was not high in the paid community that i ran um i don’t measure the year yeah yeah for sure but i was it was a monthly it was a monthly fee so you could churn out monthly right for trends i think you charge annually so you don’t know your churn until you know sort of later unless somebody actively cancels so it’s not like uh like enterprise software return where it’s like a net like a 100 negative yeah so that that i don’t think that exists in most communities by the way my my paid community just for real numbers mine was seven percent a month was churning which is like if you just if you’re not adding any new members you know that doesn’t take long for it to go to zero but i think seven percent is one year no i’m talking about monthly i was monthly i was churning seven percent and so uh so oh you’re saying one year for it to go to zero yes i think if you have a i think if you have a four percent churn that’s 18 months and and so when with including my growth i think my net churn was like one percent so i think i was adding six percent and i was losing seven percent basically every month and um can you share anything about trends what was the retention like yeah um so we had some payment issues when we first launched so basically we had some issues um where if someone signs up on day one and on day 366 they get a renewal um the credit card statements a lot of the banks will be like whoa whoa whoa what’s this that’s fraud so we actually had a big fraud a problem with banks blocking it but 80 of people uh were opted in to uh renew in the year one or in renew in year two in our first cohort yeah um ballpark ballpark about 80 which is pretty good but not but like it’s hard to get new customers on a consistent basis yep um okay so uh the second thing is a lot of times they don’t scale that well and the reason they don’t scale that well is if your community is kind of like trends where you value close-knit connections or tiger 21 more people makes it actually worse um now if your community is content based which we’re going to talk about in a second it can actually make it way better but a lot of communities like a ypo like or um like if there’s 150 people at your meeting versus five people at your meeting one is worse than the other the scale gets worse for two reasons one is exclusivity so if the reason to be in this group was that it’s exclusive the more people in the less exclusive it is or the if the value is that oh i really like this conversation this conversation was really really nice but now you get a noisy room of a thousand people well now it’s just too noisy i can’t keep up with this i don’t know who these people are some of these people are saying stupid things i’m out of here right so that’s the two reasons that the scale scalability hurts yes and it can work though because if you’re a reddit which is a community not a paid community but it’s a good community um you want more you need more you need way way more people if you are um quora you need way more people if you’re some of the other examples that you need you need way more more people is good and that’s great um but it’s not always good to add more people so what i want to talk about is a few communities that i found that i think are interesting and then i want to talk opportunities in the space and then finally we can talk about what i think you need to build a successful community um so the first one that i discovered and i’ve actually brought up here a ton it’s called aventa have you seen aventa no okay so eventa i know the first example is gonna it’s like doesn’t even entirely apply because i think aventa is actually a free community but you need to apply and eat or get invited so it’s somewhat similar but eventa is a community is a professional group um i believe it has uh 18 000 participating members and it’s for executives particularly uh are you on the website right now no i’m on our our notes okay uh basically it’s for fortune 500 or fortune 100 people um it’s people like the i don’t even like because i’ve never worked at a company i don’t even understand all these roles but like a cio was that a chief information officer so uh i said c s o i’m looking at their website um c-i-s-o i don’t even i don’t know what c-i-s-o means it was that chief information security officer yeah cso yeah so these are like things that i don’t even know i guess they have cfo i know that is chief financial officer so it’s basically executive he’s just turned into a glossary section him to figure out well you know what that really hro is yeah that’s basically your hr chief hr officer basically okay i guess that one was easy a cdo i don’t know that one chief data management officer because come on a lot of people aren’t going to know what this stuff is but it’s a big thing they have 18 000 members and check this out they sold in 2016 for close to 300 million dollars it was 375 million dollars they sold for and it was for 12 times profit which means their profit was 23 million dollars a year and almost all of that profit came from sponsorships and so the way it works is is that uh they would get groups of 10 or 20 people they would host a talk uh like i think it was mostly an online talk that says like how walmart is going to handle how walmart is going to promote work remote work and 10 people like i’m just going to guess what’s a fortune 500 so like the cmo of northern i’m looking at now the chief information officer of northern trust i don’t know what that is but it sounds like a huge company uh the cio of um delta of chevron of nestle is going to go which is like it’s only 10 people at that talk but it’s 10 people who each control 20 000 people and sponsors will pay stupid amounts of money hundreds of thousands of dollars to reach these people enough that it makes 25 million dollars a year in profit uh very interesting an interesting community again like tiger 21 if you go to the website it just kind of looks like pretty old school mostly older white people so who knows if it’s if it’s hip or or at least like in the know of everything the second one that i want to bring up and i got hold of their deck uh a year ago and i could have invested into it and i skipped it i passed and i think that might have been a mistake but it’s called soul savvy have you heard of soul savvy it’s like a shoe thing yeah it’s pretty interesting a sneaker head lover community something like that yeah so it costs 33 a month and you basically when when i was got their deck it was basically just a slack group that’s all it was and i don’t know if that’s what it is anymore but there’s a lot of kids probably grown people as well who are uh want to get insider tips on when a certain drop of a shoe is and they somehow game the system like it’s it’s called cook groups so there’s these like groups where they team up and somehow i i don’t know anything about the space but they somehow get insider information on when a drop is gonna happen and they and they collaborate and scheme together on how they can get access to these certain shoes now what soul savvy’s doing is they started with shoes it was just a slack group which i think is stupid by the way i think if you’re building one of these on slack group that’s not the right move but they get they get because they have a group of i think they have 5 000 members now so it’s 160 000 mrr um because they have this contingency of 5 000 like really big shoe fanatics they can probably give them special access to x y and z they can do interviews with special people it’s kind of interesting they raised two million dollars uh recently they say that they’re adding 400 people to what to their waitlist a day i don’t know if that’s true but yeah it’s an interesting it’s an interesting space nonetheless what do you think of that uh i think you did good by passing on it i think it’s a cool business for the person who owns it it’s definitely not a as constructor right now that i don’t see how that becomes a super large business worth investing in worth why they need two million dollars and how they’re going to turn that into you know a 200 million plus company i don’t really see that because like we said communities themselves this you know these chat groups don’t scale and um you know you’re looking for diehards who are going to pay if you’re paying 33 a month right like you know that’s more than it’s like you’re providing more value than amazon prime you know what i mean like that’s double that’s triple the price of amazon prime and so you know you really have your yeah the hardcores are going to go for it but also the more people you let in the more people who all have access to the same information the same tips the same drops that they’re trying to go buy the harder it gets for you to actually go buy anything that’s valuable so i don’t really see how this becomes a big big venture scale business but i think it’s a great idea for somebody who’s a big shoe fanatic to create a community like this i think that’s an awesome lifestyle business to to own and uh like if that’s your thing that’s great i love it i agree with you um so let’s talk about three i can can i give you can i give you two characteristics i think make it work one is high passion um and then the second one is the ability to make money on the other side so this happens a lot with stock trading groups so um there are a bunch of stock tip groups out there where people are looking for additional information and they want to be in a group where the crowd is moving a certain direction you have this for sneaker heads you have this for nfts right now collectibles so so the key characteristic is it’s not i’m a big fan of the you know the golden state warriors so i’m going to join this paid community for them typically that doesn’t work as well as if i join this group i’m going to get tools that are going to help me make more money so it’s a very simple money and money out calculation for people and i think that’s why it works for sneakerheads and it works for trading cards and it works for crypto but it doesn’t work as well for like you know people who just love gossip girl yes so there’s a few ways i think if you’re going to build this uh you’ve got to think about the first is the amount of money that your company is going to make is exactly what you said which is it’s directly in proportion to the amount of revenue that the uh attendees member can make that so for example if you are enthusiasts of rc cars um well the equation here is how much revenue the attendee or member is going to make times how many there are so members of people who like rc cars i have no idea i just made that up but there’s probably not that many of them and because it’s like a hobby that you don’t really make any money from you probably cannot charge a lot for it so that like probably won’t be massive that’s not i mean maybe you should do it but that doesn’t mean it’s going to be actually that big so that’s the math that you have to do which is how much revenue is the member going to make and how many of those potential members are there right or or the one like you said with tiger 21 so tiger21 is actually like that right when you when you go and you hear somebody’s portfolio you’re going to get investment ideas and even a single investment idea a single like improvement to your portfolio if you have over 10 million dollars in investable assets one good idea is gonna more than pay for the 30 000 of your membership excluding the friends you’ll make and the deals you’ll do together and that real estate thing you’ll buy together and all that good stuff so excluding all that now on the other hand if you’re looking at something like um the aventa or whatever where it’s what is the cmo of nestle gonna do when she meets the cmo of delta like they’re not gonna directly get revenue out of it i don’t think that’s why i think it’s like how hard were how hard is it to accumulate this group of people in a room so if it’s really hard to reach these people these are all high value people then it’s the membership is worth the value of the people in the group so if it’s just a bunch of sneaker head buyers each individual member is bringing zero like clout to the table but if it’s cmos of different companies and it’s about how much clout do they each bring to the table that’s the value not so much how much revenue they’re gonna make i feel like i can rule the world i know i could be what i want to i put my law in it like no days off on a road let’s travel never looking back [Music] uh