Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs for an audience of real entrepreneurs who are often building their businesses while listening to these interviews. A few weeks ago, I interviewed an entrepreneur who was drinking heavily, doing a lot of drugs, doing a bunch of stuff. And part of the way that he got himself back on track was he joined an organization called the YEC, Young Entrepreneur Council.
And I kind of forgot about the YEC, or maybe I just stopped paying attention to it and stop realizing that it’s been around me that when I look people up on LinkedIn, they don’t just have a list of the jobs that they had, they list that they are in YEC. And when I talked to entrepreneurs here at scotch, when I talked to them just in private, if they’re part of YEC, they talk about what they get out of it.
My favorite example is the guy who made a hoodie for me. He said, “Andrew, there’s no Mixergy hoodie. There’s no Mixergy hat. I’m just going to make it for you and send it over.” And I loved it so much. I bought one for everyone on the team. I said, “How do you get customers?” He said one of the ways that he does it is he goes into the YEC community and when he sees somebody asked a question about how do I get logo branded merchandise for my company, he jumps in and he does it in a soft way so that it doesn’t feel heavy-handed and he gets customers from within this community.
And so all that just kind of came together for me and I said, “What is it about the YEC? How did this guy, Scott Gerber, who I remember being introduced to over half a decade ago who got a lot of press, but I don’t feel built a huge company, how did he now build this huge company and then beyond YEC, this thing that is now this organization that creates communities like YEC for other companies like Forbes? It’s called The Community Company. It builds and manages top-quality professional groups in partnership with big brands.
How did Scott then go to create The Community Company which creates the Forbes Councils, which once again, I look people up on their LinkedIn profile on a regular basis in preparation for meetings, in preparation for interviewing entrepreneurs, they list that they are part of the Forbes Council on their LinkedIn pro . . . How did he do it?
I’m so glad, by the way, Scott, that I’m not the type of person who gets jealous because I would be jealous of what you’ve done. Instead, I get curious and I want to learn and I want to see what you’ve done that I can learn from and build or based on. And we’re going to find that out here. In this interview, we’re going to find out how Scott Gerber took this little community that largely was on Facebook, I think, built it up into a big community that influences a lot of entrepreneurs called YEC, and then how he went and did it for other brands through The Community Company and what we as people who want to build communities, want to build brands and people so proud of that they put it on their LinkedIn profile right along with their university and often higher up on their LinkedIn profile than universities.
How he did it, we can find it thanks to two phenomenal sponsors. The first, if you are looking to do email marketing, you’ve got to check out ActiveCampaign. And then if you’re looking to get strangers to understand what you do and close sales, you got to check out ClickFunnels. I’ll talk about those later. First, Scott, thanks for being here.
Scott: Happy, happy day to you, sir. It’s been a while since our last little sparring session.
Andrew: Yeah. It does come across as sparring sessions only because I have this like this vicious drive in a conversation and it’s thankfully not to take down the other person or else I’d be like a pain in the ass, it’s just to really understand. Let’s start with like, where you are, what we’re trying to understand that you built. How big is the revenue at this business?
Scott: It’s well over 10 million recurring revenue business. We have over 100 employees now all based throughout the United States. And just it’s really a privilege every single day to do kind of the things you were mentioning before. It’s just helping people to better facilitate connectivity with peers that actually they want to connect with, they want to build rapport with and solve challenges with and so forth. So, it’s been building on this proven model now like you said for almost a decade.
Andrew: What does somebody get in . . . I know that each community is different, but what does somebody get at YEC that’s kind of similar to Forbes, similar to Business Journals Leadership Trust, similar to the Ad Age Collective that you do? These are the different communities you run. What is similar about them all?
Scott: Sure. So, in essence, we’ve built a framework and a technology platform that sort of run our thesis of community across all the brands, but what makes them special, obviously, is the very idea of who’s in them. We’re very good at building criteria-based organizations, that way that it truly is people who are . . . that should be in [YAC 00:04:36] or in YEC, and those are not the folks that are in Forbes Councils necessarily or not necessarily Business Journals Leadership Trust. So, really good at curation of the right kinds of people very highly segmented. So, that’s . . . But the framework and the technology . . .
Andrew: That’s similar too. And by the way, Shane Mac is one of the original members of YEC. He’s been a member since day one. He goes, “Wait. They have 100 employees?” I was like that too Shane. I’ve kept in touch with him for a while and still didn’t realize it. So, what you’re saying is, number one, there’s a qualification, a set of qualifications. You can’t just say, “I want to be in Forbes. I have money. I’m going to pay.” You have to have, I think, with Forbes 1 million in revenue or 1 million in funding which you add it’s 2 million . . .
Scott: Yeah. Each . . . Right. Verticals are different throughout each of the different communities.
Andrew: Okay. So, qualification is one thing. What else did they have in common?
Scott: Number two, various different benefits that apply to sort of our three core pillars of connectivity, visibility, and growth. Basically, creating benefits that are highly targeted to these professionals that they can utilize as that specific lens they have as the curated group, but similar. So, the ability to contribute content and thought leadership on platforms like Forbes whereas in the case of Ad Age it’s on Ad Age, in the case of Business Journals Leadership Trust it’s on the Business Journals throughout the country.
Andrew: So, visibility, let’s talk about that. Every one of these groups that I saw has some component where you get to publish on their site or get to publish on other sites. And with Forbes, it was also you get to be in the Forbes directory. And immediately I’ll be honest with you my eyes rolled when I saw that, I said, “I’ll get to be on the Forbes directory. Who gives a rat . . . ”
And then I went and I interviewed . . . I went and I researched someone who I’m about to interview, Shilpi Sharma. Raised good money . . . I think it was Shilpi. As soon as I googled Shilpi, I see number three search results is the Forbes directory listing, which I have to say if you’re not in charge of like the little things that get your . . . If you don’t take charge of the first set of search results for your names, you’re a sucker. It’s too freaking easy. Someone like me who’s researching a guest gets your feedback, your research ahead of everyone else’s. It’s huge. Someone who’s about to meet you, it’s huge. So, I get that. So, every one of them has that. Ad Age, I think you get to publish on Ad Age’s website, am I right?
Scott: Correct. Yep.
Andrew: Okay. And then there’s Connectivity, which on YEC was a Facebook group.
Scott: It’s a Facebook group, but we also have our own mobile and desktop applications as well. So, private . . .
Andrew: For chat.
Scott: For chat, correct. Private forum experiences that are built into our overall ecosystem. We have our concierge team, so when you have a challenge or something specific, you can actually reach out directly to our team like say, “Hey, I’m going to be traveling to this place. Is there an entrepreneur that might be going through a similar challenge or someone around that you can introduce me to?” or, “Hey, I need an expert in this. It needs to be a private conversation. I’m not looking to widely publicize it on the forum.” And we can make some private behind the scenes introductions based on mutual agreement [inaudible 00:07:27].
Andrew: You guys have always been big on that where I could say, “I need somebody to help me with my profitability, someone who understands my business.” You’ll go privately reach out to another member and you’ll do it.
Andrew: And it was . . . Was it Ryan on your team who would just go through his own CRM and find people?
Scott: Yeah. So, we have . . . Now it’s a much different situation, but Ryan Paugh, my co-founder or business partner, he basically was like, as Mashable used to say, the godfather of online community building in his private former businesses and we’ve sort of just put that logic on steroids to really ensure that our community teams now, our customer service teams have a really deep insight into who every customer is, what their goals are, what specifically they’re looking to achieve in their business, what their business is.
Andrew: With your own CRM. So, if I tell someone on your team, “Look, what I’d really like to do next year is hire more people so I can take some time off.” I don’t want my team to know that I’m looking for time off, but I needed mentally. You’ll write that down, you won’t publicize it. But if there’s someone who’s gone through that and now is taking time off, you might make an introduction for me.
Scott: Right. We’re making very smart decisions of who the right people are to mix to maximize the value proposition of the time being spent on someone connecting and minimize all the effort it takes to do it. And so a perfect example is, I was looking at the forum right before this and one of our communities and there’s a chat going on that’s a very highly private chat, but the community managers are actually tagging the exact people that should be in that chat as well because not only do we have the ability to help you connect through email or other private means, but if we think there are some people that should be in the generalized forum as well, we’re bringing them into the conversation too.
Andrew: Okay. So, Connectivity, I always think about, “Oh, they have a Facebook group. Maybe they leveled up with new software.” No, you always think about it as more than that. How do we connect people specifically? Visibly is how do we get press? You’ve always been freaking phenomenal at that. And then growth is what?
Scott: Business coaching, ways to get group purchasing and buying on different value services. So, it’s like you sort of optimization pillar and your professional education pillar. So, things that are going to help you grow from the collective. We have podcasts with our members, we have a variety of different coaching services, we help our members grow with grow revenue as well as of course our marketplace of deals and discounts and all kinds of business providers.
Andrew: Deals and discounts meaning like . . .
Scott: I need a . . . Group purchasing rates at some of the big insurance places like I actually shouldn’t say who the names are, but various PEOs or various . . .
Andrew: Got it.
Scott: . . . different business service providers that we have exclusive rights with.
Andrew: Okay. And here is Shane’s question. Shane is saying, “You guys charge. What do you charge for this?”
Scott: So, every community is different, but it ranges anywhere from on the low side, mid-thousands to hire thousands of dollars. Communities range from, I’d say the lowest side of the column, like $1,800 a year to [substantiate 00:10:10].
Andrew: Got it. And what’s the churn?
Scott: We don’t go through our metrics and churn rate. That being said, I can tell you, I mean, look, over the time that we’ve done this, obviously, we’ve now done several interviews here and obviously, I’m not BS’ing your audience. We’ve grown substantially year over year for many years. We’ve had tens of thousands of people that have gone through our program over the last decade in all of our various verticals because, again, as I said to you, we really care about the quality of the member but we verticalize it so that we could still go for a mass population of individuals, but we highly curate the segment. So, in one community, you might have only 200, 300 people, whereas another one has 1,000 or 2,000 people, but because there are different markets, different levels, professionals and so forth, might be under one unified brand like Forbes Councils but the curation of the value of the product is what [inaudible 00:10:58].
Andrew: You know what? When I blow off community, this is why because I don’t notice all the other stuff that happens behind the scenes. Like, I see just another . . .
Scott: It’s hard work.
Andrew: It is hard work, but also all I see is another Facebook group, another chat to manage. Yes, it’s cool that Forbes has their own little chat community, but now I’ve got to manage that. What I don’t see is the behind the scenes stuff like you guys connect people to each other. There’s a place where if I’m looking for customers you can do it.
Scott: Said at different way, Andrew, I think the failure of community is making it a platform decision. Right? People think, “Oh, man, my group should be in Facebook groups,” or, “My group should be here.” That to me is . . . That’s the where, but not the how. I think a lot of people forget the how pretty often that your time and my time is incredibly valuable. In order to break into my daily routine or your daily routine I need to see such an impact in value on whatever I’m going to spend.
And so, of course, you’re always going to have your power users in every community or 20% that are going to be the ones that are every day or every week, but really, when you look at our kinds of member if you’re an executive say of $100 million company like we have in some of our groups, you might contact us four times a year in one of our various benefits. And we have to provide such an excellent level of value in each of those four engagements that it doesn’t matter it was only four times, it was the perfect four times. And that’s the difference between us and say, a general community management structure. We have to be that concierge-level experience and that’s very human-driven.
Andrew: You started out with YEC. Was the first version of YEC just a Facebook group or was it . . . No. I’m trying to remember what it was.
Scott: It was a Facebook group. We did events a little bit later on, but nothing formalized. It was more just, “Hey, let’s get together when there’s people in different cities.” Again, very happy hour focused. And then of course, we had our original inclination be called Q&A. Now it’s called Expert Panels, which was our initial foray into sort of these roundup posts that I will say many media outlets use now either ours or their own version of where, again, you’re getting basically a topic, say, “What’s the number one marketing or advertising tip you have for 2020?” We answer about 20 plus respondents that are all obviously highly curated real entrepreneurs or real business owners or executives. Roll that up to put out. Those were the original things. And then we grew it from there, basically, just listening to our members. But one thing I’ll say is . . .
Andrew: Because . . . Yeah.
Scott: At the beginning of YEC what most people forget is it wasn’t originally a business and that’s why it’s become so successful across all the different businesses because we started it from a place of just there wasn’t something in the market that we felt identified just us meeting a peer group, let alone something to pay for. We didn’t start charging till about a year and a half in, and that point forward, we started charging and actually building upon even more.
Andrew: I thought you weren’t charging because you said, “I need to get some really good people in the community. I’ll see if I could . . . ” No.
Scott: There was no strategy and we did . . . Ryan and I did not go into YEC saying, “Man, what a great business is going to be?” In fact, we both had different businesses at the time. It was only after seeing the value we felt we were creating and what people felt the community was like that about eight, nine months in, we started saying, “You know what? Wow. If we’re going to do this, we need to make it a real business.” And the big trick, I remember this conversation very well, Ryan and I were having a conversation, we said, “Well, the only way to do that . . . ” We didn’t want to be some sponsored-driven model or some third-party revenue that is not in your control.” We didn’t want to be going to sell other people to sell to our members. That seemed awkward. So, the only way it was membership and it had to be recurring.
And we basically said, “Look, we’re going to reach out to all the members one at a time.” At that time it was probably about 150 people. We’re not talking thousands like we have now. And I called every single one of them and I made the pitch and I said, “Let me explain what it is.” And we had at that time something like 85% of people paid up because that was the value.
Andrew: And I feel like the thing that worked was the visibility. People who were not that interested in being in another community were amazed that they could just answer a question and then it shows up on Mashable, which then gives them a link and also gives them credibility. What didn’t work on the way to that or after that? What are some of the early things that you offered members that were just a waste?
Scott: Okay. I think we can name a few. I won’t name the companies because that would be unfair because I think some great companies we worked with were great companies, but not great fits for our community. I think we try to bundle other businesses services into our business like you buy us and you also get this. It created a lot of noise, it created a lot of issues between our partners because they had different expectations of, say, yield of what partnership would value.
Andrew: Like what? The one that I admired the most was, you said, “It’s really hard for entrepreneurs to get insurance. I’m going to be the guy who brings them insurance. I’m going to get a lot of press for it. You didn’t explicitly say, but there was a heavy press component to it.
Scott: So, I was going to get to that as the second one. I would say that’s a little bit different. That one was the actual . . .
Andrew: Oh, then go back to the first one before you get to the insurance.
Scott: Yeah, yeah. The first one is, let’s say hypothetically there is a product out there that entrepreneurs use and were literally going to bundle it into us. So, when you buy us, you get both services.
Andrew: Like what?
Scott: That’s the part that I’m going to hold off.
Andrew: Give me like . . . Is it software or is it . . . ?
Scott: No, no. Like some sort of access play, let’s say, like, airport lounges or something like that.
Andrew: Got it. Got it.
Scott: And what we found was utilization was very low. Like, people would buy in for but they wouldn’t retain as a result of it for [inaudible 00:16:08].
Andrew: They wouldn’t stick around. So, even though he might say, “Hey, you know what? I get airport lounges.” Let’s just use it as a fake example. “I could totally see signing up for it. I’m also the type of person who never uses it anyway.”
Andrew: And so . . .
Scott: Right. It’s not that sticky factor. That’s a big thing in retention-based businesses. You have to have services. Everything you invest in is a cog in the wheel as much as there’s a cog on the P&L. And so not only you have to look at from an operational point of view and a P&L point of view, but you have to say, “Okay. If I’m going to spend X even if X is utterly discounted from a bulk rate, is that going to basically be a market spend that’s value ROI on the retention side of things?”
Andrew: How can you tell? How do you know why people cancel? Usually what they say . . .
Scott: Lots, lots of survey.
Andrew: How? If I ask people why they cancel, they would say, “Not enough money, not enough time.” They don’t really give it much thought beyond that.
Scott: I think this is where we have the benefit of, one, remember it’s a curated audience, so is number one. So, you are paying for a pretty high-level subscription. We have a strategy internally that we basically are building upon now to look at . . . The easiest way to look at it is like red, yellow, green throughout the year of a member, actions that we believe they should take to be happy members. And so we know based on a given point in time, you know, and we’ll know even more ongoing, like, where are they in the membership spectrum of happy to not happy?
Andrew: How can you tell?
Scott: That’s a secret sauce, but I can say at a high level, it’s a series of data points that we know to be true based on . . . Like the most simplistic one. Did they log into the platform in the last X period of time? Something that based, right?
Andrew: Got it.
Scott: So, if you look at that and extrapolate that amongst other data points, how do you hyper-target audiences within your larger community around better customer services?
Andrew: I would want to know that too. I want to know why are people signing up for my product. I used to think that it was if they were completing, then it means that they’re happy. It turns out that pushing people to complete actually gives them more stress, makes them less happy.
Andrew: Right? For you it might be logging in is actually adding more stress, but having that plaque the thing that they could keep in their office and being able to say they’re part of the Forbes Council is enough. How do you know?
Scott: But that’s the thing, right? So, you have a very probably different onboarding process than we do. Our onboarding process is not just digital education, it’s also we take phone calls from people. We’re literally speaking to every single member, and so we are actually giving them sort of an interview to know where their interests are. So, in extracting data points like we know like I’m in [inaudible 00:18:24] buckets we’re going to offer in value. And so if I know that you’re a bucket A then we’re going to gear your membership towards a bucket A path.
Andrew: Because you know when you talk to them this is what they signed up for. Do you also have any follow-up check-ins to see what are they happy about that they’re sticking around for?
Andrew: You do?
Scott: Yes. Yes.
Andrew: What is that? You know what? Let’s take a moment. We’re going to find out what that is because that is a hard thing to do. I saw Jason Fried from Basecamp say the two best times to contact people when they sign up and when they cancel. That’s when you know why they’re making these big decisions, but it’s that in-between where they’re sticking around that we also want to know. But nobody wants to check in with you and say, “Scott, here’s why I’m sticking . . . ” They may not even know.
Let’s come back to that in a moment. First thing I want to do is tell everybody about my very first sponsor. It is a company called ActiveCampaign. If you’re doing email marketing one of the beauties of ActiveCampaign . . . Shane, I see he’s listening. One of the things that Shane is looking to do with Ask is he has this place where he does interviews, he’s now hired these professional editors. Shane, what NPR show are they working on? I forget what it is. But he wants to edit and polishly produce interviews for other people.
Now, Shane, you’re going to have some Radiolab. Yeah, it was a Radiolab producers. Sometimes Shane’s going to have two different groups of people, some group who just want to listen and some group who just want to publish. He can have a forum on his site and say, “Enter your email address and tell me what you want to know more about,” but that’s kind of a pain in the butt to do. It would be so much more interesting if he said, “If you want to know how to publish, enter your contact information and we’ll send you the “How to Publish Information Right Here.” And if on his website he also said . . . What am I trying to say here? Actually, I’m getting a little bit lost. If on his website he also had a way for people who were interested in listening, he could have people fill in their information and say, “I’m looking to listen.”
The problem is people start to shift, Shane. You start to see that some people who are listening start to say, “You know what? What would it be like if I could publish?” And they’re not ready to fill in a form and say, “I want to publish an interview. They’re just filling it out.” And the way that they’re expressing that is by going to pages on your site, Shane, where they could see how to publish, going to videos on your site where you’re explaining, “Here’s what our professional editors do to make each one of our podcast episodes look really polished.” They’re looking at all of those.
Now imagine if your email software didn’t ask people constantly, “Are you ready to switch from being someone who’s a listener to someone who’s producing?” but instead, tag them when they started watching a video about how to produce an interview, tag them when they read a blog post about what it goes into doing an interview. All those little tags allow you to know your subscriber better so that you can change the email that you send out based on what they’ve done. That’s the beauty of it.
So, if you’re out there listening to me and you want email marketing that will do all that based on what people do on your site, not what they tell you, but what they actually are action in, taking a part of, you got to go to activecampaign.com/mixergy. Number one, they will let you try it for free. Number two, if you sign up, they’ll give you a second month for free, then they will even give you two free consultations to make sure you use their email marketing automation software right and get all the value you want out of it. And if you signed up for one of those sucker email providers that just stink, you can switch over by going to them and they will migrate you for free if you go to activecampaign.com/mixergy.
All right. Scott, what then do you do in the middle to know that people are happy enough to stick?
Scott: Well, I think you sort of hit it on the head before when you said, “Oh my God, if I tried to survey someone, they never want to answer.” Right? So, the worst time, in my opinion, to try to get the survey, in the end, is, why do they churn? You try to get as many as you can, but the reality is you’ve lost the value because you’ve not apparently somehow given them value of some reason. So, why should they make it as a homework assignment?
But again, with our service being that it’s human first where we are reaching out to members to see where we can contribute value to their professional lives where we’re doing quarterly check-ins, we’re asking them very specific questions like things like, “What are you working on this quarter? Is there something specific that is challenging in your business right now?” So, using these kinds of questions, we’re then able to get on more detailed phone calls or email threads with them to also asked them questions while we’re in communication with them to improve upon their service.
So, the reality is, is because we are constantly trying to be proactive with our members and deliver value at these various stages, it also gives us a moment to learn and to see where we can improve. Take a member . . . And I’ll give, like, one example. Our head of retention, Miranda, who your team has been working with, you know, she basically is at any given point trying to figure out how do you turn a member around who maybe hasn’t seen the value, right? And this is not unfortunately or fortunately something you may be able to scale massively, but you know what, over time, the riches in retention-based membership businesses are in the niches. It is ensuring that you have, you know, the 10 pocket people that are going to talk to another 10 people that are happy and turned around the right way at the right time in their membership to tell others that they’re going to do right by you [than us 00:23:11] when things are going wrong.
Andrew: So, Miranda or you will talk to people or someone on your team will talk to people in between the membership cycles?
Scott: Yes. Multiple times.
Andrew: Call them up.
Andrew: What’s going on in your business?
Scott: Phone calls, emails, fake messages, in-app discussions, like, all the kinds of things that are going to help us to get that member in their time and space to give us information that will, one, help us to further fuel our utility as a membership benefit that we are there as an extension of their team, but also to ensure that they realize like more times than not, Andrew, you’d be blown away, that most people churn at least in our business because they didn’t realize a benefit that was available to them. No matter how much onboarding education, newsletters, people are busy. And so reinforcing that [inaudible 00:23:56].
Andrew: I think we just lost a little bit of his time, but it looks like Miranda is in the audience. There we go. We lost you there for a second. You’re saying reinforcing it is a key part of it.
Andrew: So, you were starting to see that people were not using the . . . We’ll use airport lounges as an example. They weren’t using it and also it wasn’t something that was going to help them grow their business or with the issue that they came to you with, and you realized that’s not a good fit. Let’s talk about another thing that wasn’t a good fit or . . .
Scott: Yep, biggest failure, for sure. And I’ll own this one because I was the CEO, was, and this is what you were referring to before, startup insurance, which if there was a dartboard in my office, so to speak, that would be what people would be throwing stuff at. We went way off model. I believed at the time that services were going to be a big boon for our brand. It’s the same sort of thing like Apple right now is thinking, right? They own the platform. How do they now diversify the revenue streams through ongoing recurring revenue ancillary?
And we were too young. It was too expensive. It took too much time, the opportunity cost was high and the utilization was near non-existent. Adding to the fact that it was a regulatory nightmare because of all things we decided to go into was insurance, which certainly has problems by, you know, everything from zip code to type of care. So, I think the moral of the story there was to stay in your lane, know your lane and double-down, triple-down, quadruple-down on your lane. Don’t go to create a second lane so fast.
Andrew: So, I would have thought that that made sense that connectivity, visibility, and growth, all those are really important. Why not have in addition to it, or maybe it’s part of growth, all these extra benefits that people need anyway?
Scott: Yep. So, we do it but we do in a very different way, right? We partnered with best of breed services, but don’t own those services. We don’t own the cost.
Andrew: Oh, you were starting to own it. You were starting to manage the insurance.
Scott: We weren’t owning the . . .
Andrew: Oh, right.
Scott: Just for clarity. We weren’t owning, say, the actual like underwriting or anything like that, but we were owning the process of getting members directly into the hands of the healthcare provider and that was just a very off-model business for us.
Andrew: Got it.
Scott: Versus having a series of benefits that they can tap into. But Andrew, this will be the third thing that I think I would add. And this is where I think that, you know, the chambers of commerce and other, like, old school professional organizations get it very wrong. We go to the basic fundamentals of time. When people ask, “Who’s your biggest competitor?” they’ll say things like, “Oh, EO or Vistage or YPO.” And the answer is none of those. It’s bandwidth. I deal with executives that already do not have time, therefore, I have to find a way to beat utility in an already bandwidthless individual.
And so the more you throw at them, the more you try to market at them, the more you try to show off as a benefit, the worse it is. And so we try to make our buckets as clean and simple as possible and now we remove much faster. We don’t roll out new benefits all the time. We improve upon what we have. We build upon the foundational elements because the more crap we throw at them, the less likely they are to use the core which hurts the entire strategy.
Andrew: What’s an extra thing that you threw at them that actually makes sense but was a distraction?
Scott: So, again, I go back to like the insurance product. We do do a lot of business right now with PEOs, but we remove the entire process simply to say, “Okay. Here’s the three PEOs we think that are excellent PEOs. If you want them, go get them.” We’ve created a deal that is unbeatable in the public markets, but we handle none of it. We don’t . . . We’ll hand you off to them if you ask us, “What do you think about insurance?” but that’s the extent of it. We didn’t build systems around it. We didn’t go and invest and try to market externally for it, but it’s finding those moments.
A better example, right? You started the conversation earlier with our Facebook group when we started way back in the day with YEC. To this day, our Facebook group in YEC is still incredibly active. We also have invested in our own proprietary forum technology but overtime is built around our specific use cases of creating individual connectivity based on a number of factors. But at the end of the day, like, our goal is to own an experience because we don’t want 50 bells and whistles sort of to be at the behest of other business models. We want to just keep honing in on the small things, not necessarily say a Like button or the bells and whistles and frills that way, but something that is going to at some point say tell you the kinds of people you should connect with within the group you’re in that makes sense for your specific business needs. A Facebook as a mass-market product would not do that. So, those are the kinds of things that we double down on and of course would that matter to us.
Andrew: What about this? So, I noticed that the Forbes Council has concierge services, but YEC doesn’t. You could easily . . .
Scott: It does.
Andrew: It does?
Andrew: Oh, it does.
Andrew: And that’s part of what? Growth?
Scott: It would be part of, excuse me, the connections. Connections to us is how we facilitate connectivity through either human interaction or through forum interaction.
Andrew: No. I meant doesn’t Forbes also like . . . Wouldn’t Forbes Council allow me to find a ticket to a show or restaurant if I needed it?
Scott: No, no. So, in fact, there’s another . . .
Andrew: Oh, got it.
Scott: There’s another example, Andrew. So, we went into that business two years ago. We tried to do like the American Express black card experience.
Andrew: Yeah, because they’re companies you can partner up with and now you get to say in addition to all this, we will also get to the restaurant you want and it’s a nice benefit, but . . .
Scott: But the utilization rates are so low and the marketing and visibility inside selling it to the community are so high, plus, again, our constituency is already at a certain level that they probably have a provider already that it’s just another thing. And so I think that’s . . .
Andrew: Got it.
Scott: That’s my biggest lesson to all community managers out there. And I’m the worst offender because I always want to be doing new, cool, fun, interesting and exciting, but the reality is, is that focus and simplicity on what you know and what you’re known for are where your investments in the community should go, not always necessarily something brand new, net new, another freaking thing on the checklist because it’s just another thing you have to get penetration on. And if you’re diverting 3% audience into a new utility benefit but you’re marketing 100% and you’re taking away from another core that was originally getting you 15, 20% utilization, now you’re basically just removing the visibility of the thing that’s been driving in order to push the thing that’s not getting any value.
Andrew: Let me tell the people who are listening the way that I think about questions. Both people listening live and also I know the majority are going to be listening to the recorded podcast. My goal is to understand how entrepreneurs make the decisions that get them where they are. And so to me, this is especially interesting which is why I’m diving in on it because it’s so counterintuitive.
I would think if there is a monthly membership, adding more features will mean more people stick around even if they don’t use it. More people stick around because you give them more stuff, more reasons to stick around even if they don’t use it because it’s always like a just in case I ever need it, I can have it. What you’re showing me is, no, every time you add another feature, you distract from the real features that keep people around. And people don’t make the decision of, “Do I keep my annual membership, my monthly membership based on how much more do I have?” but, “Do I have the one key thing or the few key things that I need?”
And so that is absolutely counterintuitive and it’s actually reassuring because it is a little bit crazy-making to say, “I’ve got Mixergy Premium membership. What else can I throw at it? Well, there’s this group over here that’s offering to do software bundle. Great. Let’s do software bundle too. And there’s another group over there that will give you discount on Staples orders. Yeah, nobody uses Staples, but what if they did? Now they’re going to want to stay signed up because maybe one time they’ll need it.” Got it. And you’re showing me all that is different. So, you started to . . .
Scott: But that would also be . . . Just so I’m not make a blanket statement, that would also be specific to our business because we’re a much higher premium price point. But when you look at things like AARP or discount cards or things like that, the more benefit strategy for the perceived value bundle does make a lot of sense. But again, when your audience is highly curated, not mass market, and when you’re going after a certain kind of person to get into a very difficult schedule already, you know, the more that you just do it through legacy consistency for us has been much more effective.
Andrew: I wish I could get Shane on here. He’s like really revved up on this. He says, “I ignored it because I kept doing more so I didn’t know what it did for me.” Got it. Shane is saying he ignored being in YEC because it just kept doing more and then he didn’t know what it would do for him.
Scott: And he’s absolutely right.
Andrew: Like, “Why should I even do it?”
Scott: And he’s absolutely right. And that was a major learning of the early years because, again, our thinking was like what you just said, Andrew, let’s just add more value, more value, more value, and then you lose your thesis, you lose your core and nobody knows what you’re known for. Now you’ve gone from this hyper-focus group of young entrepreneurs connecting to, “Oh wait, but they also do airport lounges. Oh, wait, but they have a startup insurance program.”
Scott: And we had to do a major rethink and that was a major undertaking because now all of a sudden your emails don’t look like spam anymore. It doesn’t look like you’re trying to get another thing in someone’s hands or that you frankly, and I’ll say it, because I’m the CEO, I own the successes and the failures, that you look like you’re a poor leader that’s just trying to figure it out. And so now I see Shane’s thing coming up now. So, what it now is, is really those three benefits and those are our three cores. It’s getting you visibility, it’s helping you directly connect in the moment that you need it, and it’s helping you to get the help you need when you need it. Those are the three cores of those three pillars and all the other noise is gone. And we do it much more tactically and much more cleanly with a much more dedicated staffing effort behind each of those pillars.
Andrew: Okay. And visibility is . . . Yeah, he’s giving thumbs up. Visibility is the one that I see a lot of people brag about without, like, saying how they got it. It’s I am in all these different media.
Andrew: Got it. Let’s come back in a moment and then talk about how you then went from there to creating the first community for a brand, how you even get paid for those, what you did that was different for them from what you did for yourself because now many people, Scott, would’ve said, “I got this community. It’s great. I’m the YEC person. I’m just going to keep on growing.” What was smart about you was you said, “You know what? Forbes could use one of these things. Ad Age, all these other businesses could use one of these things. I think I could go and do it there and give them everything that we’ve learned here.”
All right. First, let’s talk about my second sponsor, it’s a company called ClickFunnels. ClickFunnels I feel, Scott, in here in San Francisco in Silicon Valley people do not respect, do not take seriously and it is a mistake because they grew in this community of direct online marketers, people who are online educator.
The thing that we have to understand here in San Francisco we outside of the direct marketing space need to understand is these guys at ClickFunnels really homed in on what it takes to get a stranger to fill in a form and give you some contact information and then what it takes to get them to buy.
And the thing that I talked about the most is something that happened to me by accident. I was offering, as I traveled the world, I said, “Look, I want people to stay in touch with me with my goals. Enter your email address and you’ll get on a monthly call with me and we’ll help each other out.” And that did help me. The only reason I got to Antarctica was somebody said, “Hey, Andrew, I’m going to help you with your goal.” Anyway.
Someone on the team, Rebecca said, “Andrew, as long as we’re getting people to fill out these forms, why don’t we also just sell them these beads? These beads are what you use to stay focused. Just sell it to them.” I go, “Okay. How do we do that? I don’t want to do it.” She says, “Look, just zap it over. We’ll take the payment using Stripe. Zap over the order to . . . ” Who do we use? ShipBob. “Zap it over and we’ll send it out.” I go, “All right. Do whatever you want.” She did it. The orders started coming in for people buying these freaking beads, which is great. And all she had to do was add another like press a button on ClickFunnels to add another page.
Then she goes, “Andrew . . . ” because she gets carried away with this stuff, all of a sudden, Rebecca does and she’s not a marketer, but she gets carried away. She goes, “Andrew. You know what we could do is with one click we can add, buy this . . . You’ve taught this. How do you use this to stay focus? After somebody enters their credit card there’s something called an order bump on ClickFunnels. Can I just drag this box over?” I go, “Stop it. We don’t need to . . . ” “If I drag this box over underneath the credit card when people enter their credit card, they’ll be a little checkbox that if they check it for a few bucks more they can also sign up for this program and get that.” I go, “I don’t know. Do whatever.”
I forgot about it. I started going through my books and I started seeing, “What’s this extra revenue source? What is this?” I thought the bookkeeper made a mistake. I then realized, no, the bookkeeper they got it right. She just dragged . . . Anyway, this thing is built for sales, built for collecting email addresses. I have tons of other software that I can use to do that and ClickFunnels is absolutely the best.
If you go to clickfunnels.com/mixergy you can try it out for yourself. I used to brag in these ads about how I am in the Two Comma Club, I’ve earned over $1 million with just one of these freaking funnels. And then I went to a conference just last weekend and I kept over-hearing other people talk about how they’re in the Two Comma Club, one funnel over 1 million . . . I go, “It’s not special for me,” but it’s great for them as a software company that there’s so many people now who are using ClickFunnels and with one of these little flows, you just drag and drop. Anyone even not a marketer like Rebecca can do it. You end up closing sales and growing your list. Go to clickfunnels.com/mixergy. Really, I freaking love them and I know you will, too.
So, then, let’s move on Scott. How did you . . . I like that you’re smiling as I do the ads. The ads used to suck here. I used to suck at the ads, but I said I’m going to suck in public and I’m going to get better and better at them. Okay. Let’s talk about then, how did you know and how did you make the decision to go beyond your current audience?
Scott: It’s interesting. You have these . . . Well, let me start with what we learned with YEC. We learned that we could easily . . . No. Let me restate that. We learned in very in a very difficult way that building a brand is incredibly hard. Building that aura, that thesis, that thing that people want to drive and attract, that is upwards slog, rolling a snowball up a hill type thing. And we realized, though, what we did know very well was we had the engine and the understanding and the core game plan to do this for another community.
Ryan and I were not interested in your consulting. We were interested in a lifestyle type business. We really wanted to go and make this a scalable, verticalize business. And so we said, “Okay. What’s the logical brand that we could take this,” not poach the core at that time which was YEC, “and move this into a new program?” And Forbes were a group of amazing executives that we had worked with for a number of years with YEC instantly got it.
Andrew: Doing what? What did you do with them in YEC?
Scott: We were creating content with them. We were doing panel discussions with them, like, for their audiences and so forth, like, bringing entrepreneurs together. So, they were very forward-thinking early on. They obviously had a contributor model that was a quarter of their business at that time.
Andrew: Wait. They were taking people to . . . Allowing entrepreneurs to write on their blog.
Andrew: But it was a business model? They were charging somehow from it?
Scott: No, they weren’t.
Andrew: It was an SEO play. It was just you create a bunch of content on our site . . .
Scott: Correct. Page views and advertising. But the reality was they were open to the idea of, “Well, what if you could take this benefit style model, this community-style model of bringing Forbes brand, but instead of entrepreneurs you’re making executives?” And so that’s what we started doing. We started verticalizing executive tiers and different categories, like Forbes Tech Council was CTO, CIO, and now it’s the CEOs of technology companies.
Andrew: So, they asked you to do this.
Scott: No, no.
Andrew: You suggested to them.
Scott: I suggested it to them and we both came to an understanding of what the best way to move forward of it was. And we built an entire business together. And it’s a joint venture partnership. That’s the highest I can go into the details of it, but we co-own the entity in essence in terms of what we can and can’t do with it, the verticals that we create, the recurring revenue model that comes from it, the . . . Our team is the team behind everything that manages and creates all the member experiences. And, obviously, we’ve taken that and since launch with Ad Age and since launch with Business Journals, but each one has a different flavor, right?
Again, like I said it was figure out the brand first, what kind of community can be put together under that brand? Who resonates with that brand? What’s the opportunity market sizing, and so forth? Who’s their audience that they’ve never monetized similarly through a professional organization style membership program more than say like an advertising relationship or something else? Then begin to figure out where your fences go.
And I think, you know, if you take our newest program with American City Business Journals, here’s an incredible company. They’re a company that has 40 different business journals throughout the country, 43 and they are the it factor in every single one of their markets, right? If you are in the Austin Business Journal, if you’re in the Atlanta Business Chronicle in Georgia, these are the business publications of record, but they never had at that time a really formalized membership program to support that. They had many recurring revenue subscriptions in the traditional media parlance, but they didn’t have anything that was more than just an event or an honoring ceremony or a native content package.
And so when you look at all those factors, you realize that if these brands can basically own their community beyond just the eyeball thesis of paying advertisers for the eyeballs because at some point, that ceiling is too high, then our model makes a lot of sense. So, that’s how we built our brand.
Andrew: So how do you know what goes into it? You talked about where the fences go. How did you figure out what is it that each communities’ people are willing to pay for?
Scott: Yeah. I think that what we have found is it’s not a matter of, “Is our price point different? Is our benefits package different?” We have found that we serve a very specific customer, that customer is a business owner or executive who has a substantial amount of responsibility and not a lot of time. And then it’s just a question of what brand do they resonate most with and who ultimately do they need to connect with to further their own journey?
And when you look at that across the media landscape of who owns what markets, you know, it’s very difficult initially to figure out which brands you want to partner with because you have to be very careful that we don’t partner with the wrong brand by accidents because then there’s a lot of problems and so forth there. But if you pick the right brand and the right audience, then it’s really about just bringing that audience together under our current benefits and technology program because it’s not the benefits that make the membership special, it’s the community that makes it special that utilize the benefits in different ways. That’s really the key.
So, an owner in say, St. Louis, is going to see a lot of value in being a thought leader in the St. Louis mainstream business community by being a thought leader in the St. Louis Business Journal, right? No different than a tech executive from the enterprise who wants to talk about technology in Forbes. The question is how do you ensure that your audiences are correct against the media properties and then deliver best of breed service?
Andrew: So, then how . . . Wait. So, what you were looking for is audiences that are the same and then what brands are they going for right now and then partner up with the brands. But you don’t do any research to see, “Well, it turns out that Forbes people really admire the Forbes brand and they really would like to have something on their desk, and so we’re going to make this thing that looks like a trophy or looks like . . . ”
Andrew: What is it called? The tombstone. You don’t do that type of thing.
Andrew: That comes from the brand.
Andrew: And you just tell them all . . .
Scott: We basically . . . The brands give us a lot of . . . We work very, very closely with our brands to be able to create a mutually controlled, mutually agreeable experience that’s great for our customers. And they all have little differences in terms of the service delivered. As an example, a forum that’s in YEC, a forum that’s in Forbes and a forum that’s in Ad Age or a forum . . . I’m sorry. A forum that’s in the Business Journals Leadership Trust, they’re all going to be different conversations.
But at the end of the day, it’s the people who are connecting that make the community valuable because the St. Louis people might not see the value of say being in Forbes because they’re local business owners. To them, there’s not as much value. They want to be cemented into the St. Louis business community be connected to people on the ground in a smarter way and also be connected to other local business owners around the country that have similar values as them, whereas an executive at the highest level vary different in terms of how they’re going to use our benefits, but at the same time, the delivery of those benefits is similar.
Andrew: Got it. So, we have a set of tools, we’re only going to be doing these three things, connectivity, growth, and . . . What was the third one?
Andrew: And visibility. We’re only going to do those things. Who else could use it? Who has a brand and a certain group of people that can benefit from it? Got it. And usually, by the way, what I do is I go to Ahrefs to see where people are getting their traffic, how are they actually, like . . . how they’re growing their business. It’s been consistent for you at least on Ahrefs for at least five years that I’ve seen right here. It’s articles like this one on technoweb.io “11 Ways Novices Can Start the Process of Learning AI Programming.” And it’s answers from your community members like Rahul from ResumeSeed, Susan from Cyleron, and so on. Each one of them just answers with one paragraph and you publish it there. You get them traffic and you also get visibility for yourself. That’s the model for how you get attention.
Scott: Yep. It’s organic and it’s straight forward. I mean, we do a lot of outbound direct marketing and other things for people that we think are interesting. We’re not mass marketers, right? We hand-select every single person for every community that we want to talk to, which is important too. We’re not like some of the others that will just blast a billion people a year, doesn’t matter who they are or what. And then we’re going to put them through an application process. So, it’s really about any marketing we do to get people that we think are interesting to tell us more about themselves and determine if they’re a fit or not.
Andrew: And it’s for all the brands it’s how do we get content written by the members on the brand site and also on sites that are related?
Andrew: That’s the model?
Scott: That’s for our visibility pillar, yes.
Andrew: For the visibility. And do buy ads also to bring in more growth to get more people to YEC and the other brands?
Scott: Again, any advertising or what I would say non-personalized outreach that we do is about people learning more about us to see if they’re a fit, but ultimately, we don’t sell based on those ads. It’s more of a visibility play because they have to go through the application process.
Andrew: All right. How about something that failed or challenge that happened as you were working with a new brand?
Scott: Oh, yeah. I mean, I’ll give you a perfect one. I mean, several years ago we had a community with Men’s Health. And the challenge of sometimes working with the media world is that it’s imploding around us in some ways and their business models are having problems. And so men’s health was part of Rodale, Rodale was bought by Hearst. And so the entire business changed over a period of months because of changes that were not on our side of the equation. There was a lot of turnover, Rodale a lot of things that were happening, and that negatively affected our member experience because the partner simply put was going through a lot of changes, we were going through a lot of changes with them, and at the end of the day we parted ways because of it.
So, I think that it’s picking your partners is crucial in this industry because the media industry is going through such a consolidation period right now that you really want to make sure that the brands are going to be long-lasting, have very specific leadership, a very specific care over their partners. I have nothing but respect to the Hearst team and others that we tried to work together on but it just simply didn’t make sense moving forward. But the thing that I’ve . . . lesson there was, really do your homework on the partners. Don’t just get sold by the brand because the brand just like Men’s Health today is still a very powerful brand, but the obvious team behind it was going through a lot of flux.
Andrew: So, what are you looking for then in a partner?
Scott: Well, the beautiful part now is we have . . . Most of the media companies come to us now and we’re just very slow on picking new partners for all the reasons I’ve stated. We’re not in the business of growing 100 media brands, right? We’re in the business of growing very big, very wide networks of communities, again, case in point with American City Business Journals right now. We’re in the process of building 40 individual CEO groups in every one of their markets.
So, we’re not interested in say, “Hey, we’re going to go work with XYZ company that might have one group in them.” That’s not valuable to us. We need something that’s expansive and also feels small and intimate. And those are rare and in between. So, we’re talking to a number of brands at any given time. We have several in our pipeline now. But at the end of the day, we’re very slow to move on those because we can build a very authoritative, very meaningful business without just keep adding new stuff.
Andrew: What is businesscollective.com? I looked you up on SimilarWeb. They’re sending you a bunch of traffic.
Scott: That was one of our old YEC blogs. We used to have. We’ve since integrated directly into the YEC.
Andrew: Oh, got it. Okay. Yeah, let’s see what the . . . I can’t see where the latest article was published. I’d have to go into this source code on it. Why didn’t that work out as a standalone blog?
Scott: It was house cleaning. We wanted to just move all the traffic and everything over directly to YEC. It started originally as part of a sponsored property by city years ago, and it just made sense to move it directly into the content engine of our normal day-to-day operations.
Andrew: Okay. So, here’s what I’m taking away from this. Anyone who wants to build a community, a lot of it is more hands-on than I’ve created a Slack group, go and talk because you’re all the same. Right? It’s more like what are you trying to get out of this? A lot of it will be public, but you know what? Maybe the most valuable stuff will be private. And if you’re trying to make connections, we will do a lot of the concierge services for you. Right?
And then the other thing is, if you’re building community, look for those key things that keep people sticking around and get rid of everything else instead of expecting that every little benefit doesn’t really take away from people who aren’t using it. Let’s pile on the benefits. It’s more like every other benefit that we add is a distraction from the ones that people care about and you’re risking creating a lot of Shane Macs, people who joined from the beginning, but don’t get involved because they get too confused by what’s there instead of seeing, “This is the three things I can get, pick off that menu, and move on.” Right?
Andrew: And talk to members in between sessions, in between like re-up sessions and see if they’re getting what they want out of it. And what else? What else am I missing here?
Scott: Just like you said laser focus I think is absolutely the key. Make sure you have a revenue model that supports because this is not vaporware software kind of play, right? It’s people-heavy. And if I had to say one other thing, I think it’s the team you have. You have to have a very empathetic and emotionally intelligent team because you can have the best tools in the world and enterprise software to help you do it, scale it, but if someone doesn’t understand what it’s like to be in the shoes of an executive with no time, that is looking for a solution, not trying to throw them 100 ideas, but really deliver very targeted opportunities to them that are going to be valuable directly to them, you’re missing the mark.
Andrew: Is Ryan still with you guys?
Scott: Oh, yeah. He’s the CEO of the company.
Andrew: Okay. Good.
Scott: He runs the whole operation day to day.
Andrew: I thought for a moment that you were talking in the past tense. I heard Ryan has that, that he embodies that empathy with the person and he’s got the patience to sit down and go through email back and forth with people. I don’t check email more than once, maybe twice a week. He’s going back and forth. I totally get that.
The other thing that I take away from you is this connection to brands. I think it’s very easy to say, “I built this thing up it works. How do I buy more ads to get more people in it?” There are handful of people who are teaching me. Like the founder of Tweaky, this company that does WordPress tweaks and then I forget who he sold it to. He and I were going through this email exchange, he says, “Well, most people don’t realize about my company is. We were really good about partnering up with people like . . . ” And then he gave me a list of people I think maybe Automattic or WP Engine. I forget who it was.
He’s like, “We are doing the tweaks on behalf of theirs. Most people think I’ve got my brand, I’m going to go buy ads or do some content marketing. They don’t think these bigger people have your audience, how can you partner up with them?” And you’re really good at doing that at saying, “These are the brands that have my audience. These are the brands that add prestige. I belong in their office. We need to work together.”
Scott: Yeah. Business development is a blessing and a curse for me because I’m the guy who would do 1,000 deals if I had the chance to, but I’ve seen the negative effects of that. And to Shane’s point earlier when he was tweeting there, if you lose your focus, it’s the same thing if you have a ton of bad partnerships that sound great on paper but execute poorly or don’t resonate. And so, better to have the lessons more thesis on anything community and you’re probably contributing.
Andrew: You have a minute for me to close this out and then bring Shane on. I want to see what he . . . He’s back from . . . Where is he? He’s on vacation somewhere and he still wants to jump on a call with you here. Do you want to do it?
Scott: Sure. No problem.
Andrew: Okay. I’ll close it out for the recorded audience and then for people who are listening live we’ll see if we can get Shane on. I like when people have that kind of fiery sense of conversation in our chat. I want to close it out by saying if you’re interested in YEC, it is Young Entrepreneur Council, yec.co. If you want to check out my two sponsors, go to . . . Really, for email marketing you cannot beat right now ActiveCampaign. Check them out at activecampaign.com/mixergy. And if you need to convert strangers into customers, you’re going to turn this down for a long time and then you’re going to kick yourself for not signing up sooner. That’s what I did. Go check out clickfunnels.com/mixergy. Thanks all for listening. And now we’re going to go just to the live audience.