How To Build A $20k/month Community Business (Beginner’s Guide)

today we're talking with Greg Eisenberg CEO of late checkout a business Builder and Community expert and he's going to give us his framework for how you define and build communities we're going to break down what makes a successful Community why AI might make communities more valuable and more important than ever and if you're a Founder when and how you should think about adding communities to your business and business model that and much more all on today's show all right welcome back Greg we are going to do part two this part is all going to be around Community if you want to understand how to integrate Community into your company make Community part of the company make it part of your organic growth engine stick around we're going to ask Greg how to do that the other thing is if you want to build a community business where Community is actually the business stick around because we are going to figure out what is the business community business you should build in the future so Greg welcome back part two friend of the Pod three Tim I think he's our most visited guest I mean Greg Eisenberg it's wonderful to see you my friend good to see you part three baby and the only thing I'll add to to the agenda is why you should why you should care about Community you know and yeah I was maybe I was hoping maybe we could start there with like the definition caring part of community both like what how do you define community and like in the the ways to build a business or grow a business would you rank community and like effective strategies for doing that see the problem with when people say community-led business or communitybased product is people are just throwing the word Community like it ain't no thing like it ain't no and for some of those businesses it actually works and sometimes it's just marketing speak that I think is is really masking it so I think when Community when there's a real true Community Based product it is magical and i' i' love to Define what that is please um so maybe yeah maybe we'll start start with that so you know me I love Frameworks and I came up with a framework called the tribe framework in order to test is this a community and tribe stands for T is there togetherness R uh are there rituals uh I is there member identity B is their belonging and E is their engagement now if you don't have those things you don't have a community and you don't have a community based product the difficult thing with saying what community is is it touches so many different areas of so many different disciplines you know having member identity could mean having a brand that really just connects with people having engagement might mean you have to build some IRL experiences uh like programming or events um so and I'm happy to unpack this as M as much or as little as you want but I think the reality is a community based product is a mix of design brand uh product social in a way that makes people want to go on the rooftop and scream about your product can you give us an example of a business that people might think is a community like somebody who has a community that's actually not a community and some in a community that is a real Community by that tribe definition just so people could like tangibly understand what is and what is not a community I was talking to someone earlier today who has an Instagram account which which is basically funny memes and I don't want to give too much away because I don't want to like you know but he's got multi-million followers uh and he makes mem directed at I don't know 18 to 24 year olds now it's incredible what he's been able to create and it's incredible you know he's he has a real business like the guy is making uh about $2 and a half million dollars of profit per year on a on a on about three million followers on his Instagram account and he kept repeating the word Community yeah my community my community now when you look at the tribe framework it just doesn't fit the tribe framework it's just an audience and there is a difference between an audience and a community if this guy stops posting on Instagram his engagement will go basically to zero now if he was a real community and he was hosting a real community that wouldn't die that's an example of an audience versus a community when I think of tribe for your community I think we can get into like rituals identity and engagement but I kind of understand those ones the real hard thing is the together and belong I I want to kind of just dive into that a little bit the reason I selfishly want to dive into this cuz I want to try to bring in my I want I want to try to like use my favorite show of the time to describe what I where I'm going with this question so I'm obsessed by like squid Game Challenge I I really love the original squid game I think the challenge is like this really interesting game where you get to see like human psychology upfront and close and actually when you watch the show it's like really interesting that people who feel a sense of you see all these clicks form that people have a sense of togetherness with each other right they find some sort of commonality and you over time see this group of 400 humans start to drift into all these groups where there's commonality ac across the groups and that really when I'm thinking through your tribe it's like the togetherness and belonging right you start to see like how that plays out in in a real environment but if you're trying to start a community from scratch whether you have a product and you want to build a community around it or you just want to build build community and monetize community in some way in the business where do you even start with the togetherness and belonging like how how does that how do I as a a founder or a marketer or someone start to like think through solving that problem you need a space you know and that space could be a digital space or it could be an inperson an in-person space and I actually think that we always tend to create digital spaces because it's easy but I actually think there's a huge huge amount of alpha right now postco to create just events really to bring people together and have people get to know one another to see them in the flesh you know we often forget we're human beings right and human beings are social creatures like we started off by gathering around thousands of years ago by gathering around you know caves and fires and then you know small towns and you know now all of a sudden we live in these like mega cities um we're connected to the you know the internet where we can are connected to billions of people we're posting on broadcast social media where you know you can I can tweet and hundreds of thousands of people are going to see my tweet and that's more artificial than it is natural and I think that my prediction is that the brands that are going to actually get people to not just create customers but create raving fans are the ones that are going to master this tribe framework and you're seeing it all the time I'll give you an example I saw an article that went viral this weekend in I think it was the daily mail that said that sooh house is cutting off their membership yeah I was about I was about to bring the same thing up it's it's New York Miami and La they're accepting no more members in their which are he I went to se house the other day in Miami I had to wait in a line to get to a line to get to a line into so house and not included in that is like the the invisible line which is you need to be a member yeah so what can we learn from sooh house which is a community- based business what can we learn there's a huge pent up demand for these type of exclusive experiences that are community experiences you know when people join so house they're joining because it's aspirational and they want to meet interesting people period the problem that soos have which is a champagne problem but it is a real problem is they want to charge members $5,000 a year and they've got a lot of demand and they're letting everyone in but it's making the experience worse it is making the experience worse and That's a classic example sometimes it happens with Community Based products which is it's not an exponential the more people doesn't make it better yes there's a negative Network effect at at a point right at a at a point and then you have to figure out once you get there you have to figure out how can I maintain if not you know I want to keep this magic but I also want to grow my business and there's ways to do that one thing I on the together and belonging like I feel like that's a space But the thing that I think is really hard is like what's the thing right like what's the commonality to bring people together to feel a sense of belonging because creating a community is like how do I find something that is deeply like a magnet to these people but is still differentiated enough that it doesn't look like every other single community and that's what I find most people struggle with is like oh I'm creating another Community for Founders I'm creating another Community for marketers I'm Crea another Community for people who want to pick stocks right like I wonder how you actually in today like does to together and belong in like the thing that you bring people together for does that matter as much as the experience or do you try to differentiate on the experience which is like maybe why Soo house works so well let's get tactical so if I was starting a community based business today I wouldn't start with I'm building something for XYZ group I'm I'm building something for Founders I would start with a milestone for a particular group I building something for Founders who have gotten through YC to help them raise series a and series B and series C we are the community for those types of people and there is an outcome it can't just be for these people has to be for these people and an outcome that is a very very small it sounds like a small distinction but it is so big because human beings are selfish and and we want to get something out of the products that we buy I think one of the examples I love one of my favorite community- based examples is a is a business called Rafa it's basically like a a high-end cycling apparel company and they have this sort of yearly membership that you can join in cities like London and New York and you show up and these it basically matches you with other cyclists in your area so if you're going to show up to a Rafa meeting in London in shortage let's let's just say obviously you're going to be wearing Rafa gear you're not wearing Nike to a Rafa meet up or else people you're not a part of the club so the Milestone here is I want to get better at cycling I'm going to join the Rafa membership and the product is the gear that you buy and the more deep you get into uh cycling the more product you're going to buy and that becomes beautiful so you're getting recurring Revenue subscription based revenue from uh the membership love it and you're getting this onetime buying that makes you deeper deeper I think David Spinx calls the community commitment curve you are becoming more and more committed to the community as you're buying more and more product and that's just a beautiful flywheel yeah you're aligning your community participation to the monetization of the brand exctly and the best part about that is not only do you make money as people engage more in community you're also building your brand during that whole thing because you're building this Army of people who is wearing your brand around talking about your brand riding around London with your brand on their back and that that's a really powerful thing and Rafa is doing something that I think is very hard which is monetizing a community directly and monetizing that Community separately through this the sale of goods and gear and everything else which is pretty incredible and it should be noted that the cost of not wearing Rafa is massive right I think that's a very smart point so how do you position your product to be that that the cost of your product is almost like the entrance to the club you need to wear that or else you're going to be looked at kind of funny I always say one of my favorite you know Community quotes of all time is the Andy Warhol quote which says Studio 54 is a dictatorship at at the door but a democracy on the dance floor it's my favorite quote the reason why I like it so much is it makes it makes sense right like the like if you going back to the soos example if if it wasn't a dictatorship at the door and anyone could join then it becomes a lot less interesting for people to join well yeah so like building on that like I was talking to somebody a friend uh last week who who who has a house in Malibu and the so House of Malibu yeah only exists if you are a home homeowner in Malibu so it's like the best version of this business model where you have to be a homeowner so it's a very small select group it's the ultimate dictatorship you have to belong to this and you have to own land in this little tiny super expensive place before you could ever even like walk through the door in that but the experience is 10 times better there than like the SE House of Miami where Greg was you know in three different lines to get in during art bosle and it being like a crazy crazy week yeah and I think you know the power of community is probably so big that there are people in the world who are actually looking at buying a $5 million property in Malibu a $10 million property easily yes a $20 million property because they want access to that Soo house 100% And I think you're kind of here making an argument that Community Equity is if not as important maybe more important than brand Equity because of the togetherness right I think Kieran you did the right call out here because you're like look a lot of different businesses have aspects of that tribe framework the biggest disconnect is the togetherness because a lot of those things Greg's pointed it's an audience I'm talking directly to you about this thing that people are not talking to each other and once you have people talking to each other about your brand about the problem you're solving like it goes back to like a daresa quote which is like you your success is directly uh dependent on how many people want you to be successful right the more people who love your brand the more successful your Brand's going to be and I think that is like the ultimate Community flywheel once it gets going I also I'll I'll say a hot take because I know or spicy T I know you know you guys are the type of people that would appreciate this but I think that AI is going to ex is basically going to kill so many different brands and it's going to level up so many different Community Based Brands and I'll unpack that a little it in a world where you have all these incredible tools powerful tools companies like you know open AI spend billions of dollars in creating software that anyone can create content you're going to see a flood an absolute flood of content for Brands all over and what's going to happen is a a lot of these brands are all going to look and feel the same it's going to feel like you're walking into a McDonald's and the ones that are going toand a hamburger every brand every brand and it's because a lot of Cosmos are saying hey you need to be on chat GPT you need to be using Runway ml you need to be using all these tools blazed that a for copy Jasper all these different you know tools and it's all going to start to look the same but it's the ones that the ones that are going to stand out are going to be the ones that are going to master my prediction is going to be the ones that are going to master this tribe framework understand I need to BU build something different and as Seth Goden says like purple cow right like I think that we're entering this age where this like Community age where the brands that are going to stick out are going to be like you you might look weird wearing Rafa out there but to someone else who is into Rafa you're like you're cool so I think Kip and I agree that all brands start to look the same I still think that even in your tribe framework one of the things that still is key and still key to building Brands is storytelling so anyone who can tell somewhat of a differentiated story is going to have some semblance of a tribe right that's like standing act you're going to have people if you can be like much more polarizing I guess you don't have to be more polarizing but you have to be much more differentiated so you have people who can see themselves in you right and and maybe that's a large number of people or a small number of people but doesn't it don't if you follow through that narrative and like all brands start to see the same and we start to see diminishing returns on these channels and everyone light bulb goes off and wow like the thing we really need to do is invest in the community aspect of our business then you just get many more companies vying for the same attention that's kind of what I was trying to get at is like let's say I really like what you said Greg which is it's not just like the person it's a person plus outcome but what happens like what really does differentiate one Community from another if everyone is going after the founder who's qualified from a from YC and you're trying to get them to raise their next Grant and there's like there used to be five communities vying for that business and now because of AI and everything is getting saturated people realize the value of community now there's a thousand right like the same the same thing that happened on search s to community if everyone realizes like that's the place I should invest and I'm wondering like what does differentiate a great Community versus an okay Community if they're vying for the same attention I completely disagree with this take Karen what what yeah what part go go like because communities are not commoditized right no they're not commoditized yet my point I would argue they're not commoditize oh that's okay you make your argument and then I will argue back because I I think that's completely false well no because let's let's take our running example of communities for somebody a Founder who's graduated YC right it's very commoditized to start an online community for Founders who who graduated YC it's very hard to commoditize a true Community where hey you know what we have we have physical spaces in Boston New York San Francisco for these YC Founders we have VCS who go through the this these spaces five days a week we have special Partnerships with ramp and brex and all these people who then give you special pre preference and terms for your technology all of those things that is not commoditized yeah but you've just you've just literally made my point for me because the thing I the thing I was asking is if x number of communities now go after the same business how do you differentiate you just actually given an example of how you would differentiate there is not an infinite supply of Founders who qualify from YC and are looking to raise their next seed that is somewhat capped and so if you have 10 companies that are trying to V for that attention versus in a post AI World a thousand like any other channel where we have tried to Garner attention it becomes much more competitive and you have to do much better to get that attraction let's get great chime in before I like before we go back and forth forever here so I mean so what are we saying here we're saying that in a world where it's so easy to create a community in a world where it's so easy to create software right like I saw a video the other day of someone literally drawing on a piece of paper what the interface of Twitter is and using AI to build Twitter literally so if you can build a $4 billion company in 4 minutes in terms of building the software uh there needs to be a mo right there's going to be way more competition for everyone who cares about standing out in the new economy sounds like you need to get your community and marketing skills pretty high and you need to be able to be the person that's being copied not the person copying other people because I think what is that Greg what what what is the I could tell you in paid search content I can tell you what is the thing that would differentiate a great strategy versus a mediocre strategy so if someone's copying that great person what is that great person doing well using the so house example like if so house starts by having a ritual where at 3:00 there's a tea service where they match you up with other people in the room and it becomes really popular and it's a big reason why people sign up to soah house then I'm sure other organizations are going to copy it so I think you know what what you have to be if you want to build a community- based product that's going to be the one that's copied then you need to be constantly throwing out really crazy ideas that you think will resonate with your audience and build a culture of experimentation so that you're constantly building new ideas faster than other people uh I think it's it that's what you have to do or else you know what's the alternative the alternative is you're playing a Commodities game and you're you're just trying to breathe and keep your head above water and that's no way to a build a business and as a Founder like that's a really tough place to be it sounds like what Greg said like trying to find find a ritual that really resonates and gets a ton of traction like or an experience like a a unique or differentiate experience is one of them I was like curious about if I'm there hey I'm going to have like 500 more competitors how can I make sure that I am at the you know bleed an edge of the things that I can do I think I think it's rituals I think it's spaces I think it's also like both the members and the leaders right like if if somebody started a marketing community and you and I were a part of it would have a lot more credibility than if like five Junior marketers two years at of school were were were in that right like that's just I think those are the ways you differentiate and the challenge with any of those is like how do you get the business model to work and I think that's why a lot of people have challenged with Community businesses is because I think the B there's no like one perfect business model right like there's a lot of different business models that could be successful depending on how you need to invest in those things yeah I also think to that point I think in 2024 we're going to see a lot more paid membership for sure communities you're you're already starting to see it it's sass like Revenue without building any sass so if you want to create a a paid membership you basically need to come up with who am I building this for what is the Milestone and then how do I bring those people in here to get them from point A to point B so for example like I did this just for fun just to like you know to prove to to that this could happen you know I I recently launched paid Community for people who want to build community based products it's like super a meta a meta topic I love it and it's like a private community and and it comes with like a free school membership which is so basically the cost of it is $99 a month the school school if you want to build your own is $99 a month so it's like literally free if you think about it and I started to think about what are some uh what are some like crazy rituals that we can start offering people and like one of them is like what I call like a punch you in the face meeting which is basically tell tell us more about these punch getting punched in the face GRE this is my favorite well I don't know okay I'll get into it it originated basically many years ago I you know one of my close friends Julian Smith he's a New York Times bestselling author we lived in Montreal Canada and we set up a meeting at 700 a.m. every single Monday where he would ask me did you complete what you know did you complete what you did last week and he would hold me accountable and I would do the same for him and we called it the punch you in the face meeting because Montreal gets like more snow than I think any major Metropolis City it's wild it's not fun to get up you know at 6:00 in the morning and walk through two feet of snow to get to this coffee shop but we did it to for that accountability and I think one of the reasons why a lot of Founders fail is just accountability so like our paid membership there's no other punch you in the face meetings and other you know like these are the ideas that not only create a moat but also create a culture and people get very connected to these meetings so going back to like why I like paid membership is like built it didn't do much marking for it you know I think it brings in like $20,000 a month of of Revenue it's like quarter of a million dollars right if you think about that if you valuate value that as a SAS company at like eight times all basically out of thin air created seven figures of Enterprise Value from a from a paid membership I think you're going to see a lot of people do this yeah there was one Christmas season or one holiday season where there was a game and you could load a foam on a wh or shaving cream pie right and you can like play roulette or something and someone got the Pie Face the the story of that business is pretty fascinating someone set that up and like earned millions of dollars instead of punching the face you could have like remote control Pie Face Pie Face you know Pie Face each other there's um three things just to reiterate for our listeners three things that are like I really resonate with me in this talk so far which is number one I really like the kind of pairing the Persona with the outcome or just like the category people with the outcome the ritual seems to matter like that's the thing I was really trying to get at right it's like I'm trying to like figure out what truly matters and it sounds like these rituals truly truly matter and then the other thing I'm thinking through as we're talking it feels like the more friction you can and maybe this isn't for all communities but like a lot of successful communities the more friction you can have in the application process the better like one of the things that web 3 companies were truly really great at was Community Building because it's actually how they built a lot of their businesses as communities running tokens and I joined a couple of communities and boy they had so much friction in actually getting into the community that when I got the notification they say I they've accepted my money like literally paying for this stuff to pay to be in this community um and now I've actually managed to join I was like a static I was like wow I'm in here like I was texting like other crew who all love crypto and um I'm curious about that how you think like in certain friction in the application process or who can join what role that has Greg do you think in making these successful communities if you want someone to want something tell them they can't have it right scarcity the two there's two plays in marketing make it free or make it scarce right and free communities aren't interesting scarce are is what I think Greg you're saying that's how I summarize it I think scarcity is a hell of a drug man it is I think it's one of the world's great drugs yeah yeah and I think with these community- based businesses playing with that lever is a huge huge lever that is at your advantage you have to be a great salesperson because you have to somewhat know what makes that person truly tick like to have to have that amount of friction and have them want to go through that like for a software product like it's because you you're a lot of B2B companies your job is telling you to like pick a piece of software so you have to sometimes overcome that friction but for community business there's I think easier to like fall out of that funnel so you have to have like real ability to sell that person on on that value like why your community is valuable enough for them to kind of jump through all those Hoops I think the other thing that really good communities that I've seen or been a part of done is that they recruit the right seed membership yes right where it's not like oh hey I'm just me and I'm going to start this community and you're all going to go through this High friction process it's like no I've went out and I've gotten 50 amazing people and if just the 51 of us just hung out we would have the best most valuable time and because of that because of there's this you know center of gravity here you're going to want to be a part of it it's not it's it's a very scarce thing to get to be able to spend time with everybody and I think that is what really makes it go I don't know Greg like do you see the best Community start that way too where it's kind of like seated with a membership yeah you know at the end of the day a community based product is culture you know like there's a culture that's created so going back to the Rafa example if I showed up to that London Meetup and the people were mean to me and you know weren't that interesting or they were experts and I'm a beginner like there's all you know there's a million reasons why I would leave that experience and be like that wasn't for me and what you're trying to do if you're building a community based product is you're actually trying to do the opposite the outcome you want is for me to go to that experience and be like that was for me and if you could do that you've succeeded and the way to do that is by seeding properly in the beginning but also to maintain and grow your community thoughtfully and that's why a lot of venture-backed Community Based products fall to this trap of yes it's they want to grow at all costs and I don't blame them I've been there you know I've I've raised millions of dollars I was a part of the wew work story we raised billions of dollars uh so I know I know that pressure very well and intimately and the you can't do that to a community based business it just you can't be throwing G gasoline on a community based business without you know you have you should be sprinkling gasoline not throwing it yeah I feel like we need the right metaphor there where it's like you need a different type of accelerate in a community based business right yeah like it's it's not a it's not a you know the analogy that people use for Venture back startups is a fire literally right and putting gasoline on a fire but a community based business isn't a fire it's a plant that you water daily and you love your plant and you you smell your plant and you look at your plant and you look at the ground of it and you put fertilizer in it and you name it something and you tell your friends about it it's a plant Kips always telling me about his plant get get really tiresome the the the the thing the thing with communities actually the interesting about communities is like in a software product you want hockey sck growth hockey sck growth will likely kill a community because you grow so fast the quality of the community diminish like there's probably a pretty interesting chart you can draw out that you have to get the perfect balance between growth and quality of the community and those two things can sometimes be an opposite you know forces against each other and so you have to have this like it's more like growing a marketplace right if you actually have to grow like an Airbnb or something there's like this perfect balance between the hosts and the hostes to get the quality bar at the right you know it's like a seesaw right like if you go one up to the end the quality bar is continually changing to good to bad and so it feels like the community is like some you have to grow it in a different way you have to grow it in a more kind of organic have I got the right balance between the quality and the amount of new members join in yeah and it's tough as a Founder because as Founders we have a bias for action and we want to see numbers go up so but the best community based founders understand that it's okay to grow linearly for a while and in fact you maybe you should grow linearly for a while and I don't want people to listen to this and be like Oh I'm not going to start a community based business because you know it's not it's not a big opportunity I can't create a lot of value and no that's not the case at all there's plenty of examples of including ones that we've mentioned today that are billion dollar businesses of community core um but you have to the reality is is you have to grow linearly for a while well what's what's interesting about it is that your tribe framework is not just a framework for defining Community you would also just say that same framework is you want a health metric for each of the aspects of that tribe framework and you can actually grow as fast as you can as long as the metrics around togetherness rituals belonging are okay it's when they start to get out of whack that you need to slow down to make sure you you don't lose the core tribe of the community right that that's what what I'm hearing there might be times where you have hockey stick growth but you might have to then slow down to rebalance like the core foundational elements of the community that's right and you can also have hockey stick growth in other products that are adjacent so you could if you're a Rafa I don't care if you spend you you know million on a Super Bowl ad and go and try to sell $150 million of cycling gear over the next 12 months that's okay if it doesn't hurt the core cycling experience right so it's just it's a different the membership experience I was I was talking about before so I think it's okay to have some products that you create that you know might not dilute the brand you could spend money on ads you can spend money on SEO no worries but there are portions of your business that for example like the pying group or the so house tea time that needs to see linear growth not hockey stick growth I love that all right we we we are out of time Kieran did you have anything you wanted to cover before we closed out today I can I can I we'll wrap on one question because I know we will get dinged if we don't ask this Greg so you're all those AI companies all those companies that are disrupted by AI in B2B in particular if you're a founder one of the most common questions I get asked is like when when if at all should I add a community to my business and not not a customer support like Community right what what do you tell Founders who come to you in the B2B space in terms of like when is a good time to create that Community for your business we are entering an era where if you're a B2B business and you don't and you're not thinking about like things like the tribe framework that it's going to be way more difficult for you to find new customers maintain your current customers and have your customers talk about you to other customers so I think it's really important that if you're a CMO of a business or you're a founder of a business that's selling to other businesses that you're thinking to yourself how can I apply this framework to what I'm doing how can can I stand out how can I create an identity around what I'm doing how can I create a roadmap uh for becoming one of these businesses uh because there's a lot of upside in doing it and the downside of not doing it is pretty high so to and to go like specifically like when to build the community like the space well that could be on your road map you don't need to do it tomorrow but it's certainly should be something that you're planning ASAP yeah yeah I agree I think um we are entering the new era of marketing when AI really becomes more more ubiquitous we start to lose a bunch of our search traffic I think most brands need to be customer Centric really care about the together and belonging and fure had to like treat their customers in in that way so that to me is like a good way to to end the show cool I love it awesome as always Greg thanks for being on the show I'm sure we'll be have you on again very soon thanks for breaking down all things community and we'll see everybody next time on Market Against the Grain this data is wrong every freaking time have you heard of HubSpot HubSpot is a CRM platform where everything is fully integrated wo I can see the client's whole history calls support tickets emails and here's a task from 3 days ago I totally missed hpot grow better

Channel: Marketing Against the Grain

Views: 11,527

Keywords: marketing against the grain, matg podcast, kipp and kieran, hubspot, hubspot podcast, How To Build A $20k/month Community Business, community business, Greg Isenberg, greg isenberg, greg isenberg youtube, greg isenberg community, late checkout, business advice, business ideas, business podcast, the power of community, community building, how to build an online community, online community, build a community, growing a community on social media, how to make a community

Id: 7ItYHzXNZSc

Length: 39min 54sec (2394 seconds)

Published: Tue Jan 02 2024