How to Make Millions, By Having Buds?
The wild world of online communities, how I monetized one, and how you can too.
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What I’m trying to say here is…
Online Communities/Masterminds ARE ON FIRE.
Might be this whole locking us in our houses for 8 months, (yes it’s been 8 months) situation.
But as I’ve said before, the “Rona,” only accelerated trends that were already happening. The online mastermind has been here and is here to stay.
What is an online mastermind/community? “A group of humans with a shared interest or purpose who use the internet and/or a group setting to communicate with each other.” These are niche or specific subject groups focused on achieving goals together and apparently… they scale.
Communities I Know First Hand Are Making MMs:
How do I know? Well I’m part of the group paying them. Full breakdown below of all the ways I apparently pay for friends. 🤷
But first, a couple of disclaimers; I know some of these founders so I’m not sharing their actual revenue (because I’m kind of trustworthy, eh?). Largely community memberships is just one stream for most, but it’s the foundation on which their flywheel is built. So essentially, I’m sharing numbers anyone could pull together AND ALL ARE TOTAL ESTIMATES. Disclaimer #2: I’m simplifying the equation as I’m sure some members are gifted or discounted and it doesn’t include churn, or profit vs rev.
That said, we’re talking MILLIONS in revenue from having buds, so you get the deal.
Who Are the Players?
Five companies making 7 to 8 figures with online communities.
Trends: Entrepreneurial Trends Membership Group
They leveraged a large email list, The Hustle, ads, then do affiliates, then naturally they started a subscription model and finally a membership group. I like watching how they stack revenue streams. Clever.
Cost is $300 a year x (8,300+ members) = $2.49M in revenue (launched in 2019)
YEC: Entrepreneurial Membership Community
Cost is $1900 a year x (680+ members) = $1.292M in revenue
This one is interesting as YEC is just ONE of a slew of membership sites they run for niche groups. So that $1M number is one example of a group focused on entrepreneurs. They have others on arts & culture, CFO’s, accountants etc. They also profit off of sponsorships, events, services provided etc. So if I had to guess, I’d take that $1M # and probably 10x it. This was the first group I joined.
Tiger 21: Community for those with wealth
Cost is $30,000 a year x (800+ members) = $24M in revenue
This one is fascinating to me. I went to their last annual meeting, had a nice chit chat with the founder of Grinder, comical. It appears to me there are more than 800 members given their event but regardless, their model is amazing. Charge $30k to members and leverage sponsorships because those members are worth a combined $80 BILLION. I’d have to assume they do at least double that revenue with sponsorships and then they also pool assets to invest. The part I love is they are very philanthropically focused. Also as a youngster in the mix there is a lot of taking under their wing happening.
YPO: Young President’s Organization
Cost is $3,525 a year x (29k+ members) = $102.2M in revenue
This organization a few of my partners in our growth equity fund at EEC are in. I think I’ll join it in the coming years (eek my success pending - no guarantees). They do these monthly breakdowns with your cohort to help you grow your business which I like. Not to mention the network is amazing.
I am not in this one and haven’t asked any of my friends if they are in it, so this is anecdotal but it’s akin to YPO/Tiger 21. On owler (site for info on companies), it says they do $200M in revenue, numbers seem to pan out.
Cost is $16,560 a year (monthly $1830) x (14k+ members) = $231.8M in revenue
Now you Might Be Thinking:
WHY PAY FOR THESE THINGS
I’m biased but, the highlight of my week is our weekly call with our mastermind (online community) at Unconventional Acquisitions. Every Monday, we talk deals, break ‘em down, everyone shares actual revenue, profits, fails, wins. It’s what I wish I had for decades of doing deals. No ego, just everyone striving for financial freedom. Join us if you’re a nerd like me: Unconventional Acquisitions.
Beyond that here’s why people strive to tribe:
I like to compare these groups to being at a continuous party you can pop in and out of, where you largely never have to engage with someone you don’t like, no feigning interest in boring small talk nonsense, a place where everyone is interesting (to you), and you get REAL value out of the interactions.
Ethan Brooks from Trends said it perfectly in regards to the power of communities for companies:
Think about the biggest sports fan you know. Has that person ever bought a different brand of dish soap because it was on sale? Probably.
Now, ask yourself this: Would they ever switch teams just because another team’s jerseys were on sale? No way.
That is the power of a strong community.
When people find an authentic community that they love, they’ll stick with it even when they have options that cost them less, pay them more, or are more prestigious.
He nailed it.
Which was why I started thinking, what do WE THE USERS GET out of online communities?
Not broad sweeping brands but highly personalized, segmented communities. And more interestingly, how can YOU create them and profit from them?
We’ll break down my online community I am building (Unconventional Acquisitions), lessons learned, how we profit from it, etc so you all can also go be buds and stack benjamins.
I did a scary thing…
I tabulated ALL the communities I pay to be a part of annually.
Don’t judge me.
Trends - ($300)
EcommerceFuel - ($1200)
YEC - Young Entrepreneurs Council - ($1900 a year)
AEI Enterprise Club - ($2000)
Tiger 21 - ($30,000) - TBF I’m waiting to engage until I can go in person again
Arcview ($3,000) - Cannabis and hemp investment group.
Summit Series - ($5,000 a year) - for one event really but didn’t go in 2020 #Rona.
Grand Total: $13,400 in 2020, or $43,400 in a normal year (that doesn’t even include all the events).
In a year where I am in-person, I’ll probably spend another $10,000 to $20,000 on events. Apparently I don’t have a shopping problem I have a self-help problem.
Think about that.
That’s potentially $50-60k in annual payouts to communities from one human. Now I may be at the high spectrum but I could list off 20 other communities that I have been a part of and my friends are, from YPO ($3,5k) to EO ($5k) to Gobundance ($5k) and beyond. The wild part is you are exponentially more likely to be in more than one. Most people I know in one group are in on average 5 other groups.
And, I’m not mad about it. I’ve brought in more investors, more deals, learned more, experienced more and achieved more through these humans than any four year degree where they charge you $60k a year—by far. I started UA because of one, most of my friends are now from them, I’ve hired from almost all of them, I’ve raised millions from them and while I try to add value, I’ve gotten 100x in return. This has little to do with my competence and much to do with what happens in “tribes.”
In fact my brother is quite successful in finance in LatAm, and he asked me, “How do I meet other like minded go getters, I’m too slammed with work and I don’t have the time?” I replied, “Join some masterminds.” No faster way to get in the right crowd.
If you are the average of the 5 people you surround yourself with, paying to increase the sophistication of your network, and learn from their mistakes, is priceless.
But let’s put a pin in me hyping you on masterminds for a minute. Beyond the fact that I obviously think you’re crazy for not joining mine (duh), there’s something else at play. Creating your own community, may help you offset those 4-5 figure costs. I’ll break down quickly the top lessons I’ve learned from talking to the founders of the groups above and creating our own. If you want more, lmk in comments (not email plz I can’t respond to all those le sigh).
Early Lessons Learned from Creating A Community
First of all we are still small. I have no idea if this will be a multi-million dollar community. Our goal is to make 100,000 business owners. We’ve helped create 10 thus far. THAT FING LIGHTS MY FIRE! I love helping people make money and change their lives, it’s so selfishly rewarding.
Upfront: We do no advertising and we are experimenting on purpose. I’ll update you all as we add fuel to the fire but figured it’s more useful to show the progress than the end state.
Cost is $1997 a year x (56 members) = $112k in revenue (launched in August 2020)
Now as mentioned there are discounts, there are some freebies and we only started this bad boy in August so it’s been 3 months. BUT the cool part is the trend line, we growing baby.
Lesson #1: Price it Higher than You Think
Don’t do an online community unless you think it’s worth at least $5-10k IMHO. Then you can have a high customer acquisition cost with no problem, and you add a barrier that keeps those who decide to buy super engaged. They have skin in the game. It also keeps chargebacks down. We haven’t had any chargebacks yet BUT everyone tells me you will as you scale so I like to remember this:
Sell your product at $10, some will say too high.
Sell your product at $100, some will say too high.
Sell your product for $10,000 --> less complaints, less returns.
Most bizarre yet true phenomenon to remember..
Lesson #2: Don’t Do A Separate Platform, Use Facebook/Slack/Existing Channel
I talked to YEC, Gobundance, Mike Dillard’s team, and slew of others who all said they tried a new platform, it was $5-10k to build out and then… crickets. All of them moved back. People are already on Facebook so when you start do it on FB. Only one I’m a part of that has separate platform is Ecommerce-fuel, and it’s because it’s custom coded with massive value add. That’s not needed to start.
Lesson #3: Don’t Advertise to Start
Be organic. Start with your own network. Try to get on as many podcasts and webinars as possible to speak. Free work turns quickly into paid. For a bigger ticket item ($1k+) you need about an hour of people’s time for them to feel comfortable making the purchase in my experience. There’s a whole universe of how-to’s on that out there so I’ll leave the how-to to google.
Lesson #4: Build An Email Funnel
It takes humans quite a while to decide to buy into something that requires their time not just their money. You need 7-10 touch points with them. We use long form (90% value, 10% sales) newsletter style emails on our blog to convert. Forget about giving too much away, give lots of free value away so they can trust you. This is… the way.
Lesson #5: Affiliates Suck 90% of the Time & 10% of the Time Are AWESOME
I suppose it’s just the 80/20 rule but if you are going to do an affiliate program (which I recommend), make sure it’s somehow automated (we use Thinkific paired with Paypal payouts). And spend as little time as possible with people who don’t usually do affiliates and lots with those who do. Those who know how to affiliate will crush it for you, newbies will waste your time.
Lesson #6: What will they get from this explicitly?
The advice I received is you need to have your members take one action quarterly in order for them to feel they have been given enough value to continue engaging. So ask yourself how can you build in items for them to get quarterly value?
Lesson #7: You Have to Be Involved
In the beginning, there is you. A friend said it best, “You can’t pay someone to be the entrepreneur for you.” When you first start these you need to be the community manager, you need to be active, you need to be connecting people, you need to be hyper involved. As you grow you help people self-provision but it’s not a get rich quick with no work scheme. It’s a lovingly nurture a group of humans you get to hand pick. I chuckle calling it my online cult. Oops, probably not PC. You create a world, make people better for being in it, they pay for your world creation and you get to live there too.
Pretty damn beautiful.
*Now I don’t profess to have this all figured out, we haven’t even hit 7 figures yet. But we are having fun and if we can scale one to six digits why can’t you?
Questions everything (and stack revenue streams),
PS I’m HIRING for Contrarian Thinking.
So any of you sadists who want to come work for a full blown crazy person who runs a million miles a minute (and yet still only runs about a 10min mile - embarrassing), hit me up.
Oh, for what you ask? GROWTH HACKER - Well I’m looking for someone (remote is cool) to come onboard in a growth hacker role. Job description: Codie comes up with crazy ideas to hack growth in email lists, social media, or investing and you get to be the guinea pig that tries it. EVEN BETTER you come up with ideas and we try them. I mean who doesn’t want this lab rat of a gig? Reply to this email. I dares ya.
This article is presented for informational purposes only, is an opinion, and is not intended to recommend any investment, and is not an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Entourage Effect Capital, LLC, Codie Ventures, LLC or its affiliates. Any such solicitation of an offer to purchase an interest will be made by a definitive private placement memorandum or other offering document.