Community Business on Your Own Terms w/ Daniel Vassallo (Small Bets)

Speaker A: Hey, this is Open Threads. It's my podcast. I'm Brian Castle. Welcome to it. So today I just finished up my conversation with Daniel Vassallo. He's the founder of smallbets.com. it's a really fascinating, uh, business model, and Daniel has a fascinating story and the journey that he went on from being, uh, employed full time at Amazon out to, uh, experimenting with lots of small bets, one of them being smallbets.com and you know, as I told Daniel near the end, this was one of the most information dense episodes of Open Threads. A lot of, A lot of words per minute. I know I was listening intently and asking lots of questions. So, um, yeah, I learned a lot. And just some fascinating tidbits about how he takes the typical community business model and sort of flips it on its head and some of the learnings and iterations that he's done over the years. Really good stuff. Um, really inspiring. So here you go. Here's my conversation with Daniel Basallo. Enjoy. Daniel Basallo, great to meet you. Great to have you on the show here.

Speaker B: Hey, Blaine. Good to meet you. Thank you for having me.

Speaker A: Yeah, as I was just telling you offline, I've been, uh, kind of following your stuff, uh, off and on throughout the years. Um, very impressed with, uh, Small Bets. Um, so I think in this interview, as usual, I tend to kind of jump around. Um, but I'm interested in a few different areas. One, uh, I would like to go back and hear more of your story. I was just reading about your previous life at Amazon and then going out on your own. I would love to hear. I'm always fascinated with these major career transitions, especially for entrepreneurs. Um, so I want to hear about that. And then, uh, definitely what, what you've built with Small Bets. And I'm actually, we can talk about the concept of Small Bets and maybe indie hacking or bootstrapping or whatever you want to call it, but I'm actually more interested in your operation at Small Bets and what that business itself looks like and the workshops, the events, the recordings, and the community and all of that. Um, so, I mean, why don't we start there with like, present day, you know, tell us a little bit about small, Small Bets. And, uh, what do you spend most of your time working on these days?

Speaker B: Uh, so Small Bets today, it's in its current form, so it's changed a lot over time. So it started two years ago, like September 2021. And, uh, I can sort of describe a little bit how it started and how it evolved. But in the present form, it's a place where people interested in self employment and side projects and side hustles uh, come together to learn from each other, to generalize it. And the main product at least right now is we host these regular live zoom classes, uh hosted by people with a particular expertise on a particular topic. Say uh, Internet marketing or advertising or YouTube creation or podcasting or self publishing, books, things of those nature. There's uh, uh list of topics that we cover and members basically have an opportunity to be in the same room virtually right in a zoom room with these experts to hear them do uh, the presentation but also ask questions, mingle together and so on and so forth. Uh, we also have a group chat. We used to use Discord, uh a few months ago we moved to Campfire which is this new chat system by 37 signals which is working absolutely well. Uh it allows us to have sort of another uh place where hangouts, very casual. Right. But we uh, in the group chat we give feedback. A little bit of a support network. Um uh people share their updates as a bit of like building public but in ah a somewhat semi private mode. There isn't any of the negativity of social media or the scrutiny or any of the stuff. You know. I love social media, I love X and other things. But there can be some downsides there as well. Right. Um and it's very light hearted that we also share many other things related to business uh in, in this group chat. So it's a bit of a uh water cooler place as well.

Speaker A: So happening are they like weekly or

Speaker B: like so uh for a very very long time they used to happen roughly once a week. There was never a fixed schedule but the average has been about four to five a month. Um, uh recently. Right. In fact um, um this is something happy to dive more into as we've been sort of noticing that the attendance for these life events have been uh dropping um compared to um even earlier this year. I would say maybe from March of this year onwards we've sort of been not uh seeing the same results and the same sort of satisfaction from people attending these events. So we, I'm reconsidering. Right Sort of again like another potential uh some small pivot for small bets again. And this sort of has been I would say the main challenge with running a community. Right. Sort of. This has been a very successful business. Uh just to be transparent. Uh first year it made about $400,000 like the first 12 months in revenue about 80% profit. Second year was about 460 and this year is uh, going to be even better. That's probably approaching 600k. So um, it's been very successful at least by my expectations when I started it certainly. Um, but you know if you one might think that it has been sort of somewhat very passively I'm just hosting things but along the way I feel like my m. My job has been just to continue to adapt that with what people want with the market. Right. And uh, you know, very briefly, very briefly about the evolution of Small Bets. It started, didn't even start as a community, didn't start anything like what I just described. It actually started purely as a uh, two week cohort course that I was hosting. Right. So happy to. Later maybe we'll dive into.

Speaker A: Yeah, I mean I want to unpack all of that. There are so many different things I want to uh, kind of pull on here. Um, you know also a little bookmark uh, that we will come back to is the idea of selling a one time purchase product for lifetime access. That seems to be a theme in uh, most of your products, Small Bets, uh, which I think is very interesting. We'll get back to that. Um, uh, I also do want to hear about the evolution and the beginnings of Small Bets before we go back in the story again in like present day with the, with the workshops. I think that's also interesting that the trends that you're seeing. I assume so they also get recordings, right?

Speaker B: Um, yes.

Speaker A: One thing I noticed going through the calendar of events, correct me if I'm wrong, I'm seeing a lot of like repeat guests. Are they members of the community who are presenting to the community or how do you find people to come present?

Speaker B: From my personal network I found a lot of people from the community itself. I found many as well. From X. Um, that's probably the m. Most to sometimes introductions from people I trust. But usually I would say yeah, I discover people from the community or from social media.

Speaker A: This is actually an area I'm really getting interested. I'm trying to learn as much as I can about creating communities and memberships that don't rely completely on just myself and whatever, whatever content or things that I can create courses and, or managing a community myself. I would love to do that plus bring in guest contributors to a thing. So how do you go about attracting high. It seems you have like, you have very high quality, some pretty well known contributors coming to present workshops. Is it a, is it like uh, the opportunity to, for them to gain exposure to your membership? Is it just because it's Fun to do. Like how does that work?

Speaker B: So, uh, a couple of things. So I paid them, right? So every guest is a thousand out, a thousand dollars per session. Right. So I think it's pretty good arrangements, right? They present for 60 to 90 minutes, right. And they get a thousand dollars cash immediately. Right. So I think uh, that sweetens the deal certainly.

Speaker A: I think that also for me also like, uh, clarifies why we're seeing repeat guests. Right. Like I was seeing some, that I was like, why do these people keep coming back to present workshops?

Speaker B: My motivation for repeats is that um, you know, in the beginning I was doing repeats much more frequently, but sort of in the last couple of years I think I had said, oh, maybe the last year and a half I settled on repeating roughly about every six months. And um, you know, I was getting about 1800 new members per year. Right. So every six months there would be 6, 600, 700 new people who wouldn't have had the opportunity to uh, join these events. And we'd like to also change since there's a global community, we try to, when we do the pizza, we do them at a different time. So you know, people in different time zones have also an opportunity to uh, attend. So the reason for the pizza, for new members or members who didn't have, you know, older members who didn't have the chance to attend previously. And this is why.

Speaker A: Well of course people have different. Like, like I, I've presented for lots of communities over the years and like things that I can share change every six months.

Speaker B: Exactly. So there's, there's that as well. Right. Especially with certain topics. Like you know, we have classes on AI for example. There's a lot of change happening with every repeat. They're all almost entirely different things that are a bit more traditional, uh, you know, about writing or things like that.

Speaker A: Um, the other thing I, I'm curious about is, and again we'll go back to your story, especially your previous life coming from know full time and at Amazon and everything. What does your day to day look like these days? Uh, between managing the community and doing these events. Ah, what, what does every day look like?

Speaker B: It's ah, very varied I would say. And um, specific things that I think maybe the thing that takes most of my time is catching up with the group chat. Like I'm still at a stage where, you know, on the group chat we're kind of getting about 500, 600 messages a day. Uh, and uh, I feel I, you know, to use maybe a cringe phrase, I add Value when I support people, right. When I answer questions. And so I'm certainly uh, try to be as active as I can. You know, I can't help everywhere. So I feel like part of my job is to watch what's happening, help the people who I can help and so on and so forth.

Speaker A: Is it just you do you have.

Speaker B: Also I have an admin who's helping with uh, some other more you know, m. I would say easier things like you know, support and things like that. Um, you know things like I can't log in and things like that. You know I have someone to help me with. But if it's something where uh, I can help with my knowledge, right. Uh, it's uh, it's where I tend to jump in and I also do the other reason, even if I wasn't contributing, again as I mentioned before, uh, part of my job, I think to generalize that I don't. This is going to sound a bit vague is I feel I need to be observing what is happening, where are the members getting satisfaction from and where they can value from. Because I feel like I always need to be leaning towards those things. Again this is something that this type of business is teaching me is that expectations change and maybe I'm not sure if this was a, this was a bit of um, you know I started during the, you know during the peak of the pandemic period right. And sort of went to post pandemic and now maybe back to normal phase and maybe uh, sort of I experienced a bit of uh, an unusual shift in people's availability wave of like online

Speaker A: community at the right time community, people's

Speaker B: free time I think changed a lot in the last three years. Their appetite for being online. Uh, and I think this is something that you know, if you talk with other people who do courses, classes and things like that, it's sort of a very common sentiment that things have diminished from that peak. Right. So um, uh so for me I think again like it's just observing, right. And trying to understand where to adapt and on a day by day basis this doesn't result in men. Oftentimes I'm not taking any action. Right. I don't want to overreact but I'm just starting to see like you know, I look something, I look do every day I look at the engagement metrics on our group chat. I'm seeing number of messages, number of likes and number of unique users and uh, which rooms are being most active. And mostly I'm just you know, feeding in my, my Brain with data points. Right. Uh, such that, you know, when there's the need and I need to move, you know, make a course collection. Uh, hopefully I make an informed course collection.

Speaker A: Well, let's start to go back and actually talk about some of those changes. I'm especially interested in, uh, those course corrections. Right. So maybe from the very beginning, what was the uh, initial idea before Small Bets was even a thing? What was your first concept for it?

Speaker B: Um, so let me go as far back as I can. So back in 2020 I had this idea. So I had already a reasonable following on X Twitter. Back then maybe 2020 I had about 70,000 followers and already was feeling.

Speaker A: Actually, you know what, let's go back even a bit further. So uh, correct me if I'm wrong, you were full time employed at Amazon,

Speaker B: uh, until early 2019.

Speaker A: Okay. And but were you active online, like on Twitter and everything at that?

Speaker B: I wasn't. I was the typical full time employee. I actually had absolutely no experience with anything done in public. Um, so uh, yeah, we can go back there and.

Speaker A: You're an engineer.

Speaker B: Yeah, my background has been an engineer. Typical engineer career, studied computer science, worked a couple of small startups. Then 2010, uh, I joined Amazon in Dublin, Ireland. I moved to Seattle in 2012 a couple of years later. Uh, and for a long time I was just, you know, climbing the color ladder. I was a bit slapped I would say because I went in with the.

Speaker A: I was actually just reading your, uh, you have a great article that you wrote at the time, I think the week that you, that you left Amazon.

Speaker B: Yeah, exactly. Exactly. Yeah. So

Speaker A: I am sort of curious about the period between Amazon and growing a large Twitter following. Like what?

Speaker B: Yes.

Speaker A: What was happening at that point.

Speaker B: Yeah. So yeah, long story short there, you know, I realized that probably a full time employee as uh, a card, as a full time player, it wasn't the ideal thing for me. And at one point I thought, you know, this is the right time. And I jumped in. I basically I quit and I had nothing planned so I had some savings. I figured I have some time, I'm going to figure something out. And immediately I remember like the very first day, I mean, you know, my last day was on a Friday, took the weekend off on a Monday. I was sitting here, same desk, thinking, okay, what, what, what can I do? And I had a result of again I immediate, a bit of a crisis of anxiety.

Speaker A: I love this. I love. And it wasn't like you were going to go start some idea that already existed. It's like Monday morning. Now what?

Speaker B: Now, now what? Exactly. And, and the very first thing I realized was that nobody knew who I was basically. And it wasn't just some um, this wasn't just some um, vanity thing like I wanted to be famous or whatever, but I basically my reputation outside of maybe Amazon and maybe I could do a couple of places that I worked on before was non existent, right. And I felt like I'm somewhat at a disadvantage, like not having a name publicly in anything. So I wasn't even thinking in terms of building audiences or whatever back then. And uh, I thought, look, I'm going to dedicate some time just trying to help people on the Internet. I'm going to try to use some of my knowledge to try to build a name for myself. That's how I was thinking about things. And I spent a couple of months just immersing myself pretty much full time, I would say almost eight hours a day, just going to dozens of places online. So Twitter was one place, but I was going on Reddit, on StackOverflow, on Hacker News, on LinkedIn, Quora, uh, probably a few other places I forget about and refreshing the pages, these pages, looking for questions that I could answer, like people that I could help. And again, my motivation was I want people to associate me, giving valuable answers with me, with my name. And I didn't really know even what thing I would want to build my reputation on. Was it related to programming, software development? Was it maybe getting into the tech industry? I was helping people, for example with interview questions and how to get them, uh, hired and these places I was even, you know, helping. You know, I immigrated to the U.S. i had just went to the green card process and citizenship. I was trying to help people with like going to that process as well, like all over the place. Anything that I could help with, I was trying to um. And uh, long m story short, you're

Speaker A: like just going on these social networks, connecting with random people, asking questions like were you.

Speaker B: Yeah, I was think yeah, yeah, yeah.

Speaker A: Did you join any other communities? Did you attend conferences or anything like that?

Speaker B: Uh, no, not back then.

Speaker A: Uh, I, uh, of course conferences shut down in 2020.

Speaker B: Yeah, but this was, this was still early 2019. But um, uh, maybe I would have, but I felt like probably the best ROI that I had in terms of time spent, potential return was probably digital, uh, things. And um, you know, I didn't join specific communities but there were somewhat, you know, communities in all these places. When you think about the community that you think like hacker news and things like that there's like, even on Twitter,

Speaker A: X, like our circles are, everybody talks

Speaker B: about the same people, same thing. Like the building public circle, uh, that's where I was mingling with. Right. So um, long story short, you know, uh, I gravitated more and more towards Twitter for various reasons. I think it was the one that was most conducive to my goal of building a reputation. Like for example, give you a good example on Reddit I was very active for a time, but I was noticing that even though I was helping the people I was answering, it wasn't resulting in people remembering who was giving the answer. Like the platform has something, it's very anonymous. I just see your username and people see the answer and they leave. Right. And um, they don't follow you or say, oh, that Daniel guy sort of knows a lot about that thing. So Twitter turned out to be the better one for me and I gravitate more towards it. So that's how it started. And there was just basically at one point then I was doing the typical building public stuff, sharing some of the mundane things I was doing in some interesting way. You know, just opening up a business account, forming an llc. Right.

Speaker A: Or were you hacking on products of any kind?

Speaker B: So uh, back then I started a software project called User Base. It still exists, userbase.com and this was I think, uh, me being naive a lot in uh, approaching business. Right. So I think my, my, my naive side was that okay, look, I know how to make software. I specialized in building databases when I was at Amazon. My best shot at making a business is to build a software business around ah, databases. And uh, uh, I thought, I wasn't so naive that I thought, you know, I just going to build it in silence and then somewhat people will come. I was doing the build a public thing and it was working in terms of getting attention of the product as I was building it. And they had like a waiting list of around 4,000 people. Quite a bit of excitement on X in terms of, you know, what I was doing. Um, but I was documenting what I was building other than documenting the performance after the fact. And sort of I got uh, an unpleasant um, uh, surprise after several months. You know, I spent about nine months hacking on this thing. Right. Again, just believing that if I persevere, if I work hard and I make a great product, eventually I will launch it and everyone will be all those people who indicated that this is something that they want, they're going to open up their wallet and give me their hard earned money and launch uh, Day was amazing as well. It was number one on hacker front page on Hacker News, number one on Product Hunt. The launch tweet got like 500,000 impressions. Got liked by Paul Graham of Y Combinator. Like lots of influential people endorsed the product. Like I remember the CEOs of Vercel and Netlify, they like quote tweeted and said like this is an excellent thing, blah, blah, blah.

Speaker A: I was actually just checking out the. It's actually a pretty cool product.

Speaker B: So it's like a good idea.

Speaker A: Yeah, you could add like a user authentication to a bait to a static HTML site with no database.

Speaker B: It was um, you know, this was before Supabase. Uh, and so that's that kind of product. Firebase was uh, from Google. It was a similar thing at the time. I was focusing a lot on end to end encryption, which I think was a feature that probably there wasn't that much demand on. But you know, again, like, I did a lot of mistakes back then, uh, some of them quite, quite embarrassingly so in terms of how much time and effort I spent. And money in fact as well. Because at one point I even hired someone, uh, to help me because I was getting impatient. To wrap it up, long story short, I launch it. Launch in terms of attention went really well. And by day two after launch I realized this is making, you know, $2,000. ARR. Right by that point, which you might think, okay, first day, not too bad. But you know, the excitement after launch quickly diminished and I started to think, okay, what's next now? I mean, am I going to do another push of six months and maybe I get another $2,000? Uh, like, do I need to wait? If I need to wait for how long? I had already, to be honest, you know, wiped out maybe a quarter of my savings or a fifth because I had spent, you know, nine months or so just living off my savings. I haven't made a single dollar yet. Which was getting quite. Already a bit, uh, stressful. I still had time, but I was imagining a potential universe where I kept persevering in this project. I would wipe out all my savings and end up with nothing. And that felt really scary, especially because I started to realize, and this, I sort of, I had a bit of an epiphany at this point. I realized, look, uh, what I care about actually isn't making this product successful. What I really want is to just to make this lifestyle that I was living. Just being independent, self employed, choosing my own, you know, choosing what to work on, choosing my own hours, not Work on anyone's terms, like, not having that taken away from me. You know what I mean? Yeah.

Speaker A: I want to pause right here on what you just said, because this is like hitting me like a ton of bricks. Like, you're, you're capturing the same mentality that I'm, that I've been in the last couple of months, the last year, and I'm someone who, who's been trying to build SaaS products for over 10 years, you know, with some success, some. Some exits. And like, the current one is like, going fine. But the. But I have come to this conclusion about the SaaS business model. As great as it is, it's a great way to grow value long term. But even when it's somewhat successful, it's such a long, slow ramp to make it a viable business. And for builders and makers and creative entrepreneurs, that is a grind to commit to. Year after year of focusing on just one SaaS product, you know?

Speaker B: Yeah. And, and sometimes, especially in the early phases, like, you don't know what's going to happen. Like, the market is much more unpredictable than many people think.

Speaker A: Right. That's the other, that's the other thing recently I've been coming around to. Unlike other business models, SaaS is unique, where you really have to win. Like every customer. Right. Because every customer who chooses your product, they're saying no to all the other products. Right. But, uh, compared to something like small bets, you know, like, I'm, I think I'm going to join small bets pretty soon, but I also join other communities and I, I'll pay for multiple things. It's not like I have to choose one email marketing tool and one accounting tool and one of this and that, you know?

Speaker B: Yeah. Look, there's pros and cons with every business model. Of course, I'm, I'm not, I'm still, I still like SaaS. Right. And I think, uh. And you know, and in fact, my realization was that probably the best thing for me would be to diversify like a little bit of. Well, I mean, you know, back then, sort of, I was saying that my epiphany was that I just need to start making money. Right. And urgently. Right. I don't care where it comes from. Right. I just need to start paying the bills because I want to make this lifestyle sustainable. Right. So, um, in my head at that point, like I said, okay, uh, how can I start making some money like now, like by the end of this month? This was, uh, I don't know, October 2019. That, uh, was the end of the year now. Um, and uh, you know, not very glamorous thing but my first self employment dollar actually I started doing some very, very part time freelancing. Some people might not even consider this uh, entrepreneurial work. But um, for me I felt like this was going to be a small income stream that gives me some capacity and some peace of mind. I didn't want something very big and in fact I was only doing about 10, 20 hours a month, not even a week. I happened to know someone who needed some programming help and I said hey, uh, do you want me to take some things off your backlog? And um, I just do a few hours a week or I wasn't, not even a week again, like just at the end of the month I was uh, spending a few days, right. And that just helped them with what they wanted to. And this was, you know, bringing me $3,000 a month or something like that. Wasn't even covering my mortgage or all my expenses by all means. But the amount of peace of mind it gave me was incredible in terms of now I felt, you know what, my Runway suddenly increased just because I'm actually making some money. So I'm not just burning only right. Um, I've offset some of the burn rate and I could do more of this. I said maybe I could find another client or I could do, get some more hours if I wanted to. Like just having something like seeing some income coming in like changed my attitude completely. And then I kept asking myself what might be some other uh, high return on investment things that I, I wasn't thinking of anything sustainable long term, whatever. In the short term of course, you know, I didn't want to do something against my principles or against my sense of ethics, whatever. Not nothing, anything uh, shady. But in terms of what are the, what are some potential small wins that I could get with what I had. And by back, back by then I realized what my assets were. You know, I had certain knowledge, right. My experience uh, with programming, working at Amazon and so on and so forth. I had my audience on X was about uh, 4,000, 5,000 followers at that point which was not crazy big, but not nothing. I was getting engagement in just a

Speaker A: few months is pretty, pretty impressive.

Speaker B: Yeah, yeah. So, so uh, I happened at the right moment, right time, stumble into Adam Wetton, the creator of Tailorman css. I don't know if you know him. Right, yeah, I know. And uh, he had started his entrepreneurial journey incidentally by self publishing a book on PHP. I don't know if you remember back in 2017, that he wrote this very short book about PHP, uh, coding patterns. Basically, his book was very simple. Here's a piece of ugly code and here's the defactored same code. That's the factored plitier. Basically simplifying his book a little bit, but that's basically how it's felt. Um, and he says published this book, basically uploaded it, loaded the book on word, saved it as a PDF, uploaded on Gummy Road, and shared this with hist. With her audience. And, uh, Adam happened to write this blog post, I think it's called, something how my $60,000 book launch allowed me to quit my job. Paraphrasing a little bit, I'm sure. Um, and that was super inspiring to me. I just saw that at the right moment I time and I. Because in the back of my mind I thought I had been thinking maybe at one day I write a book, I have. I know certain things that, that might be valuable to people. But until then, I always thought writing a book meant finding a publisher, uh, going through a googling process. All the people who I knew who those technical books took months, if not years, and they. Almost all of them regretted. I wasn't really looking forward to it. But what I saw Adam do, right, I felt like, you know, this is something I could do, like, quickly. Right.

Speaker A: So I think it's so interesting in our, in our circles, in our industries, like, there are a few people who have some big win and create something great. I mean, Adam went on to Tailwind and everything, which is incredible. But yeah, I remember that first book and before him, for me, I had a very similar experience, just like so many others following Nathan Barry in the early. In his early years when he was doing the books and everything. And yeah, it's interesting to see those.

Speaker B: Yeah, that's sort of. Yeah, absolutely, absolutely. And Nathan as well, I saw was doing lots of other things as well, which I think is very interesting. I had dozens of different things, different projects, which, uh, I'll get to in a minute. Like, it's a bit like what I evolved to do as well. So, yeah, like, that was a bit of a light bulb moment for me. And I said, you know what? I'm going to dedicate a month trying to write, uh, a book about aws. And I happen to also have a bit of a vital tweet back then. At the same time, again, sometimes the stars align a little bit, uh, where, uh, my vital tweet was a little bit like, forget all the things that Edwards is selling you just forget the hype. These are the good parts that you need to, you know, consider. Like it was a bit of a, um, provocative tweet to um, make people, you know, realize, uh, that they don't need to use all the 200 services like AWS is trying to push on them. And um, basically my book became that, right? The good parts of AWS, like just the 12 important, uh, you know, things, right. That are very valuable and doesn't mean that everything else is useless. Right. But this is sort of the, uh, you know, the biggest value you can get if you wanted to jump into AWS and. Yeah, same thing. Like Adam wrote it myself. Well, uh, actually I did it with a co author. In fact, that's with a friend of mine. So to hedge the risk as well, because this was still something new. But I was thinking like, if this thing makes $5,000 or something like that, it would have been worth it. And I was doing quick back of the mat, um, calculations. You know, I had 4,000, 5,000 followers like that viral tweets resulted into, I don't know, some 200 comments, lots of questions. And I felt like if those 200 people who were asking me questions on that tweet were to buy the book, right? Sell the book for 20 bucks or 25 bucks. There you go, like 5K. And I. That's how I was approaching things that I'm very much months to month. Like I launched that book and to my surprise, that book ended up making over $100,000, which amazing. I think again, I was super lucky again. I think if I were to go back in time and do everything the same, the outcome might have been different. I got some pretty good endorsements completely out of the blue. I got a couple of high profile retweets on launch day again, which sort of boost. These things snowball, right? When you got some endorsement or something, sort of then sort of success brings with it more success.

Speaker A: I'd uh, have to think that AWS is the topic for that. I'm guessing the book has done fairly well ongoing beyond the initial launch, right?

Speaker B: Yeah, no, so it, you know, like many digital products, sort of, it's uh, like now it's doing maybe $600 a month or so, which, which I think is still good. Very passive like this. I don't promote it at all.

Speaker A: Yes, I mean, totally passive. But AWS is one of those topics that, I mean, literally just this morning I was fighting with AWS because it's so complicated, right? Like there's, you know, it's one of those things that, like, everyone knows it's just this beast of complexity. And here's this book that simplifies it, you know.

Speaker B: Yeah. But you know, uh, this is a business. Right. So you have to put effort into promoting it as well to make it work. Right. And of course I had that spike of intense promotion on launch day and you get all these endorsements and whatever and sort of that, uh, to be honest with you, I'm, you know, I still get to say a couple of sales a day or whatever. I, uh, always think, like, where are these people coming from right now? Because, you know, I haven't been. It's been like at least three years that I have.

Speaker A: I do want to ask you about, like, I do. I want to get into how Small Bets started. But as we get into that in the, in the next, you know, couple of minutes here, like, where do new people discover you? And Small Bets. But before we get into that funnel question, like, take us to the beginning of Small Bets and where the initial concept was and then some of the iterations.

Speaker B: Yeah. So, you know, to sort of compress a little bit. Like what I was doing, I was doing a lot more of these kinds of things, these kinds of small projects. Like, I abandoned the idea that this idealistic idea that, uh, I'm going to build some long term sustainable business. I'm just going to do a bunch of small projects, which is again, like you mentioned, nature, really.

Speaker A: Lifestyle is what it's all about. It's why we're doing this. We have families, we have freedom. Um, financially, of course, there's always the option of an exit in the future, life changing. And that's a very real reality for most people who are building businesses. It's probably the most likely outcome someday, but we're also in it for today. Like, we want the freedom and lifestyle today also.

Speaker B: Yeah, yeah, yeah. Like the future is just a bonus. Like whatever happens there. It's. Yeah, it's the, uh, like to me, I realized I needed to tame some of the uncertainty that I was facing. Right. And these sort of small projects were conducive, uh, to that, that I was chasing small wins. I like to call them, like small payoffs. Sometimes they surprise me. Um, like to give you another example, you might call like Small bets. Yeah, exactly. And that's sort of how the term started again. Like very much on that, with a tweet, like I call them. You know, I feel like I'm doing these Small bets. Right. And sort of the name, uh, picked up um, but to give you another example, I saw there's a few more information products like that, like Data, awesome book. And another one that was a big hit, which again, blew my mind. Like, this was peak pandemic, April 2020, that I made, uh, a Twitter course. Basically. Uh, as I was sharing the performance of the book, many people were curious about how, uh, I built the audience to promote the book and so on and so forth. And it was answering questions and I recorded. So this wasn't a book, it was a very scrappy video course. I pretty much shared my desktop, recorded myself explaining, you know, just for about an hour or so, explaining how I go about writing my tweets, what I, how I set up my profile and things like that. And this product sold over $300,000 in sales, right? Which, uh, was incredibly, again, it's an understatement to say how surprised I was. And I think, again, it was a good, uh, timing, you know, that it was just the start of the pandemic. Lots of people had nothing better to do than being online. They were curious. I didn't at all engineer the timing. I didn't even think about it back then. It just felt like, I have some knowledge. Let me package this as a product and give it a go. Um, and I did this product, like in 16 hours. I almost challenged myself to, uh, make it as quickly as possible. Um, I didn't focus anything on production quality. Like, again, like, nothing crazy with lighting, whatever. I just wanted to present something useful. I charged 25 bucks for it at reasonable price. And I'm just giving you a brain dump of some things that I learned in the previous life. And so this model of creating these educational products was becoming very interesting to me. Um, and again, I kept sharing with other people what I was doing, and I saw other people getting interested and so on and so forth. So, uh, I keep doing it for another couple of years. Few other things along the way related to this. Uh, and, um, at one point, late 2021, I decided I want to do a live course. I had never done this before where I would meet with a cohort of people to talk about basically a little bit like what we're describing right now. So the idea of building a portfolio of small projects rather than, uh, trying to choose some long, sustainable businesses and persevering at all costs. So this third way of doing business.

Speaker A: So this. So this concept, like your initial concept for small bets, was a, Like a cohort course?

Speaker B: Yes.

Speaker A: Live thing, like, so X number of students. Let's all Meet together for a number of weeks and we'll go through some material together.

Speaker B: It was a cohort of 25 people. We meet for two weeks, three sessions a week, Monday, Wednesday, Friday. And there was no, I wasn't thinking about community or group chat or live classes or whatever. It was just me. And again, I felt like, um, uh, I have some knowledge in me. People on X were interested because I was noticing the I did response when I shared these ideas and I said, I, I, I, there's more to, you know, I, I can dive deeper into this topic and I probably what made

Speaker A: you decide to like, like you had some wins with, with books and courses, like one off, you know, like self serve type stuff. And then what was the idea behind doing a live cohort? Yeah, you know, program type thing. Was it something that you expected? Like if this works, I'll repeat it? Um, or is it like I only want to do this for three weeks and then be done? Like what was your idea there?

Speaker B: No, it was, to be honest, I felt it was going to be easier. So something I learned with these types of products is like, you know, writing a book. Again, I managed to write a short book in a month. But you know, it takes time, effort, you know, you need to organize your thoughts and words. There's a flow, there's glamour and whatever. Uh, so. And you know, putting everything in writing would have taken me, you know, quite a long time, especially on this topic that I had lots to say doing something recorded. I also felt, um, was going to be, you know, it was going to take me time. Believe it or not, this sounds almost irrational because you might think, hey, you're doing it live, might as well record it. But when you're recording something, at least for me, right. It's just you need to activate another part of your brain. You need to rehearse things better. Right. And uh, you also don't get the feedback from people live. Like if something is not clear, someone raises their hand, you can elaborate and so on and so forth. You need to be even more careful. And I was already feeling back then, right, that people's appetite for long courses wasn't there. Right. I mean people, this is something I learned. People don't pay you just with their money, right. If, if you're offering them a video course of 10 hours. Not a lot of people have the desire to spend 10 hours watching you talk about something. Right. So I felt the easiest way for me to do this, that probably I thought and I think I'm still convinced, maybe even from A business perspective was to try to do it live. There's something intangible when you do something live that I don't know what to do, how to describe it. So that makes people want to be there more than, uh, a quarter course. And actually I think the inspiration came from me joining another course. So I joined a course about complexity science, just as, you know, random topic that I happen to have some interest in. And initially I was skeptical. Right. Again, like, I actually joined because I really like the creator. I want to support them. And I thought, you know, maybe I'll learn something. But I said to the guys, you know, this person was learning this course, um, you know, twice a week, Tuesdays and Thursdays. And I was looking forward. I got into this routine. I take my kids to school, come

Speaker A: home, there's like some anticipation.

Speaker B: Yeah, some anticipation. At 10:00am I'm going to, uh, be there with sort of this group of people. And then after the fact, we were sort of discussing things and this was fun, actually, which again, it was surprising to me.

Speaker A: I guess it's sort of like it really is. Even though it's a course, it sort of is a community.

Speaker B: You're, you're meeting people. I didn't recognize it immediately that and sort of again, this is sometimes, sometimes how luck and randomness play as all here because. So I create the outline for this course, I announce it, and I fill up the first 25 seats immediately and I also open another three cohorts, like back to back. So I was doing these every two weeks at one point, like, so, um, I finished a cohort the first two weeks and I opened another one two weeks later. And I was pretty much doing it after, uh, the edges. So in the first 24 hours, I fill up, uh, four cohorts, 100 students basically have 25 seats each. And I was super excited, you know, made like $40,000 in a day. I was charging $375 per seat back then. Not super high for cohort courses. There are many that, like the complexity science course, I paid $2,500. That was more in line with, uh, the going rate. So, um, but I wanted to try going low ticket. It has always been a bit my strategy to do more volume rather than. I think there's a benefit there. Happy to dive more into it.

Speaker A: Yeah, it's interesting to hear you talk about that pricing because, like, your pricing today is even lower for life.

Speaker B: Yes.

Speaker A: You know.

Speaker B: Yeah. So, uh, yeah, like, I believe, you know, that I'd rather have a thousand customers paying, uh, $100 than have 10 customers paying a thousand dollars, even though it's the same revenue usually because the hundred customers generate more word of mouth, more testimonials, more reviews, more energy and so on and so forth. And I really think it's an underrated way of, you know, generating more activity later. Right. So it was, that is my motivation.

Speaker A: That is a really fascinating insight I think, because, you know, especially in SaaS circles and like services and things like everyone's all about, like, just charge more, it's easier to get fewer customers paying more, which, you know, makes sense, uh, from a certain perspective. But I think that you're totally right. Especially in these types of businesses, these community, uh, learning connection businesses where volume really matters from like a marketing and spreading standpoint. And like, for someone like you who's a leader of this community, you know, now you have Runway forever and audience forever for not saying like anything you launch is going to be successful. But like you have this launching pad and that's where volume really, really helps, you know.

Speaker B: I think so, yeah. Again, it's very hard to measure. Like it would be nice to a B test different things in life, but it's hard to go back and do things differently. Um, but, but that was the motivation. So I do this course and it's going well. There was no community. So my expectation was I'm going to two week cohort. 25 people come, we do the six sessions, they leave and maybe we keep in touch on X or whatever. But at one point, actually in the first cohort, somebody asked me, hey, why don't we set up a Discord so that we can share the notes and um, ah, or maybe we share the links that we're discussing in this course and so on and so forth. And basically I did that. I thought it was going to be a good communication method. Instead of me sending emails with the recordings of the classes and the material and so on and so forth, I just post on Discord. And um, to my surprise, what happens that after the first cohort finished, the first 25 people, some of them kept coming back to the Discord server with things like, hey, I'm doing this project. Does anyone have any feedback? I got my first customer today, just celebrating. Or I saw this thing on Twitter. What do you guys think? And again, I neglected this. I wasn't even logging in. But I open it one day and I see all this activity happening. Not only that, but then I bring in cohorts too. And I, on the first session I tell them, hey, I Also have a discord where I'm going to be sharing the links and the resource and the materials. Please join so that you get everything from there.

Speaker A: They were all in the same discord.

Speaker B: They're all on the same discord. Yeah. So these people already find some activity happening there. And then, uh, you know, a couple of weeks later, I've been Cohort 3 and Cohort 4 and so on, so forth. And I run this course 12 times, right. So for about six months, uh, I do it back to back, like almost twice a month. And I'm still not promoting a community. My landing page was still this. This. It was called a portfolio of small bets, A cohort course. The structure, you know, three sessions a week for two weeks, hosted by me, centered around me, right? And people were telling me, hey, I'm joining this course. But this discord thing you have there, this is where the value is. This is, uh, I joined for the course, but I'm staying for the community, and so on and so forth. Like I had. I needed people to tell me that there was a community that took a life on its own. I was barely recognizing it. And for a long time, this discord was just. Just one channel that wasn't organized, just, you know, very random, um, and so on and so forth. And I started to take notice of that, that there was value in it. Some people were telling me some, you know, very cool outcomes. You know, they found business partners from the discord, they started a podcast together. They, uh, some feedback, they sort of changed the direction of their business. And, um, ah, so on and so forth. And so it seems like there was something there. So then, um, I decided. So in the meantime, I was also noticing that it was becoming increasingly harder to fill my cohorts. Right. So as I said in the beginning, I sold four cohorts, and 24 hours, six months later, I was realizing, no, it's taking me about a month to fill up those seats. So I would announce that, say, you know, in November, I'm going to have a new cohort, and it will take me almost until the start of the cohort to actually fill up that seat. I was noticing that I was, you know, saturating my pipeline that I already had, uh, for selling.

Speaker A: Like, I know that you. You've had a growing audience throughout this period. So.

Speaker B: Yeah.

Speaker A: Uh, is that primarily where the. So it's like people who've been following you and.

Speaker B: Yeah, so this, this is just typical funnel dynamics, right? So maybe back then I had 70, 000 followers on X that resulted into, I don't know, 700 people taking the course by then. And I felt like to find another 700 people, probably I needed another 70,000 followers. Maybe not exactly so, but I was realizing that my audience growth wasn't growing as fast enough just to keep this type of business. I was enjoying this, that I would have continued to repeat this indefinitely if it was working. But I was noticing some pressure, some resistance, right? So I felt like, okay, either I need to reduce the frequency, maybe I do this once a month or once every other month or whatever. But of course, that was going to reduce my revenue again, revenue wise. Here this was. I was doing about $36,000 a month, uh, because actually I increased the cohort size to 35 people a bit later, and I was doing two cohorts a month. And it was, you know, pretty good.

Speaker A: I mean, the other question. Yeah, the other question I have about that period, but also present day with your live events and also showing up daily into the. Into the chat, I think about your commitment and your, like, obligation to show up live, right? And I think. And I even used to do, back in the day, a couple of years ago, I sold a course on productized services, and then I experimented with a live cohort version of that. I did it once, and I made pretty good money with it. And. But it burned me out. I was like, I don't want to have to show up every Tuesday for this thing that I committed to. How do you think about that?

Speaker B: Uh, so for me, running the cohort, because, for example, became almost like it was taking me almost no energy. So of course it was taking me some time, but it wasn't a crazy amount of time. This was about, um, you know, an hour and a half, uh, three times a week, right? So, uh, you know, four and a half hours or whatever, right? Um, uh, it's, you know, four and a half hours per week. Not, not too bad. And I decided what times and which dates I run it, right? So I can work it around my lifestyle and my life and so on and so forth. But, uh, the fact that I was repeating it and there's a topic that I enjoy talking about, it was almost on autopilot, right? I come in, I share my presentation. I become super fluent in it. I didn't even need to rehearse anything, and very casual as well. So I sort of am taking questions live from people, and we jump on tangents and show examples and so on and so forth. So I wasn't feeling anything that I would consider burnout or displeasure. Again, like, I felt like when I was doing that. Again, this is different than running the community and the chat and whatever. I'll talk more about that in a second. Um, uh, but again, I have to be honest. The reason I stopped doing the cohorts that way was purely a marketing challenge that I was running out of customers. The demand is changing, otherwise I would have probably been doing it. So this prompted me to reconsider. I need to tweak something. This is one of my first course collections. And what, um, I realized was that maybe I will have a better success if instead of me selling the course, I mean, as a positioning, what if I start to sell this as a community? Hey, guys, instead of, you know, you, Brian, you join cohort number 12. Uh, that's going to run from September 24th to whenever. What if you just joined the Small Best community and you get immediate access to the Discord server? And then I keep running the courses maybe once a month. Uh, and anyone who's a member in the community can just join without you having to book your seat, deserve your spot, and so on, so forth. And I thought it was a bit risky again, because I was wondering whether it is going to bring, you know, a lot of people to the Zoom again. Up till now, it was always like small groups, right? And I wasn't sure what this was going to result with, if anyone could just come and join these Zoom sessions and so on. But I decided to give it a shot. And I promise didn't change anything about the product. It was still me running the course instead of doing it twice a month. I was deciding to do it once a month now. And the main difference was that people are going to be paying the same $375 and they get immediate access to the Discord server. And then once they're in the Discord, they can come say hi, introduce themselves, and they can join the next cohort, even multiple times if they wanted to. And from a business perspective, this was incredibly successful. Like there was in my revenue charts, there's a clear inflection point where I made this change. I felt like, was it like a new launch?

Speaker A: Like, yeah, basically.

Speaker B: I went on Twitter and I sent an email to everyone who had bought something from me in the past and said, hey, because previously you didn't get immediate access that you like. If you paid now and you joined the November cohort, you had to wait until November to get access. So my announcement was, from now on, you can get immediate access to the Small Best community. That's how I positioned it. And I think this created a bit of fomo. Like oh, I want to check what this thing is. One time payment. Again like nothing the carrying. Right. And um, um. And people were curious and uh, it was again like spectacular launch day. But the success sort of was sustained. It felt way easier to sell this as a community than as a cohort course. Even though I was doing almost the same thing. Like nothing changed. But there was another problem that I was feeling now. I uh, suddenly that whereas previously I felt like I was somewhat over delivering that you know, people were joining for the course, they were paying this one time fee. They get the course as it's a bonus. They were discovering this community. No, I was feeling that I was almost overhyping the value of our Discord server. Like the Discord server was cool. But I was noticing you know, uh, there were days where I would get like you know, 20 people joining and I hear nothing from them. And I was starting to picture myself in their shoes. Like these people are paying money, they're probably logging into the Discord. They're scrolling around a little bit and I never see them ever again. They weren't leaving bad reviews or saying or asking for a refund or anything. But I was noticing um, again I felt like previously I had almost 100% satisfaction rate from all the people who are joining the cohort. Now it felt like some people are not really getting much and that's sort of. I felt like the Discord server was probably still too um, cluttered and I was imagining myself joining, seeing a lot of activity in the Discord now what do I do with it? And I was hearing feedback as well from people who told me, yeah, I joined your community a couple of months ago but to be honest, I don't even know where do I even need to go?

Speaker A: What do I do?

Speaker B: What do I do? Do I need to disco install the disco thing? Yeah.

Speaker A: The other thing about the. This comes back to pricing and how you are doing it. Uh, non recurring, you know, one time fees. And the other thing is that's interesting. I do want to ask you again about like you were at 375, now it's down.

Speaker B: Yeah. Still at 75. Yeah. The pricing changes again. It's reacting to the market.

Speaker A: But I guess the thing that you're noticing there is interesting. It's a great observation because normally with community and memberships it usually is recurring and these businesses are known for high churn.

Speaker B: Yeah, absolutely.

Speaker A: Um, but you wouldn't see that with non recurring. But you can see it in like engagement metrics, right?

Speaker B: Yeah, you see it with Engagement Index. And I needed to rely on word of mouth. Like, that was the thing that I knew was important. And, um, a member that pays 200 to 5 but is not satisfied, I mean, or they didn't, they're not participating, is not going to go on Twitter or talk to their friends and say, hey, you should be joining small bets. So I thought I needed to fix that. And I felt it was important to do something about it. And sort of after just only about two or three months, I figured, like what you said before, I needed to make this not about me anymore. Until then, it was my course, my community. There was my name, my face, everything centered around me. And this was where I had the idea of inviting other people. So again, this almost happened a bit by accident. Uh, I had, I had given an honorary membership to some of the people who I liked. And I went out and say, hey, you know, uh, Brian, you know, I really like what you, what you talk about on X. If you want to join my community, you can join for free, right? And then I would come on the Discord and say, you know, we have a new honorary member. And, you know, Brian is going to be here. He knows a lot about this topic. This topic. And, uh, you know, with some people, this really worked, right? Some of the people I invited as only members kept coming to Discord and answering people's questions. Again, I wasn't paying anything back then. It was just out of the goodness of their heart. They just wanted to be helpful. Uh, with some, they didn't. Again, some people are busy and so on and so forth. But I was noticing there was something interesting there. And this is where I got the idea of trying to invite some guest speakers, right? So I thought, what if, uh, I can't, I can't teach people about everything. I don't have experience in anything. What if I start to invite other people who have expertise and things that I know very little about? And, um, I tried this model and this was free to all members. So this was, again, the motivation here was that I'm going to be investing some money in this. Again, as I mentioned, for a long time I was doing about four or five a month. Basically, I was paying to, guess $1,000 each. So I was budgeting about 4,000 or $5,000 a month. This business was, at this point was still making 40k a month in revenue. So it was still, um, uh, you know, acceptable. But this was my first time investing anything until Then it was almost all profits. Like my fees were just payment processing fees and other miscellaneous things. Um, I was still a bit scared in terms of again, am I setting some expectations now? Do I need to continue to pay this indefinitely? But I decided to give it a shot. Right. And I thought wasn't really maybe a one way door. And the motivation again was that I really wanted to improve that customer satisfaction. It was a detention play. I wanted people to, I wanted to email people and say hey, thank you for being a member. We're going to be having a uh, live event and you can join for free. Right. And uh, I wanted to be sending, wanting to continue to send these uh, frequently that, to continue to enhance the value that people already paid for. Right. And they just keep getting more. Never charging them anything more. They just keep getting. And I want, because I wanted them to go on X and say I just attended this amazing class by Brian at Small Bets and I learned so much to start, uh, you know, making the word of mouth.

Speaker A: Wait, so you were doing some of these workshops were like totally free to, for anyone to join.

Speaker B: Two members. Only. Two members. Yes. Yeah. So members. But basically members. They had no expectation that this was happening. Right. So that this is going to happen. So for them it was pure bonus. Again some of them paid just for the course, you know, a, uh, year before.

Speaker A: Yeah. Or just access like community.

Speaker B: Or community. Right. And out of the blue there was this thing, uh, I'm not upselling anything, I'm not asking anything for it from them. They can just show up. Right. So um, and I started to feel that this was working. Right. And I was noticing that ah, before every class there was some buzz. After the class people go on their social media, they talk with their friends. And for a long time I would say this became my major marketing arm. Um, not to mention that the hosts themselves, some of them are people like Justin Welsh for example that uh, has a huge audience and I say that he's coming to host a class about LinkedIn, he retweets it and that access of the endorsement. Right. And it's sort of, I was sometimes, you know, I would be making you know, $5,000 in sales, extra sales before the class even happens. Right. Um, that pays, you know, just for the speaker. Right. So, and that's just the immediate results, not to mention so the long tail effect of having these things over there. Um, so, um, I kept tweaking this format. So for example for a long time the recordings weren't available, uh, to people who joined new and Then later started to make recordings available like so if you join today, you can basically see the recordings of everything we've hosted in the past. And that became another part of the value proposition. Again like I was improving the onboarding experience because back then the onboarding was still a bit underwhelming that you join, you pay, you get into this discord that for many people was too, you know, too much going on. And then there was these classes in the future, right? So for many people they pay but there's still not something can do today, right? Uh, okay, I joined this class that's going to happen next month.

Speaker A: So now they can immediately go into the archives and see, now they go

Speaker B: into the archive and they can start watching and start getting some things right. So that, that also helped me make another marketing push because all of a sudden I was selling this catalog, right? And this was actually very effective. I was screenshotting the list of things literally right. And saying if you pay once to get access to all this stuff that we've done and all the future events and um, you know with these things you almost need, you know I feel almost bad saying this but it's the two. So you almost need to create a bit of FOMO for selling these kinds of products that, and not in that bad way but in terms of, but

Speaker A: you do have to sell the value of it.

Speaker B: You know, you have to sell the value like, like I'm missing out by not having access to all these resources. And I know we're going out of

Speaker A: this group, I know we're going a bit long here, but so I am kind of curious about um, who are the types of people who you tend to attract. I know that there are so many of these communities and circles and sub circles, uh, and they each have sort of like a different flavor with small bets. And I think again I think that the price point probably plays into this but also like the vibe and the subject matter of the workshops and everything. What does your tribe sort of look like?

Speaker B: It's aspiring uh, entrepreneurs and uh, side hustlers I would say. I think the typical Persona is someone who still probably has a full time job but they want to have side projects, maybe jump into self employment at some point. But they're daunted by the uncertainty of how to deal with uh, marketing and promoting their things and with their work, life balance and so on and so forth. So that's the typical uh, person we attacked like uh, the beginner, uh, in, in this journey. So yeah, there's many other communities that cater to successful, uh, people, uh, entrepreneurs with, you know, shooting for their IPO or whatever. We're not there and again like very much bootstrapped kind of businesses. Right. So we don't have the typical VC bagged. Uh, um, no, actually we have a few, but it's not there. The type of person we tend to attract is it mostly people who are,

Speaker A: who are interested in doing software products or courses or books or freelancing.

Speaker B: With a bit of mix, I would say about 70% is people with attack backgrounds. So it's certainly that inclination. And I think, uh, I've partly, I think with you know, I've made an effort to promote the idea of educational content and for products and so on and so forth. So I think the interest in people has been built up by me showing them that this is a way to do things. But actually there's quite some diverse backgrounds as well. Incidentally we, you know, we attacked a lot of people sort of in the uh, you know, in the sciences space and even in like uh, medicine and have quite a few dentists for example, which is interesting. It's, it's a very overrepresented profession in our community. A couple of doctors, ah, quite a few people with like artistic backgrounds and arts, music, things like that. Um, and uh, because I didn't believe like these ideas are conducive, maybe even more so, uh, to uh, non tech stuff.

Speaker A: Um, how do you approach like um, self promotion or. I guess to a certain extent there's got to be benefit of like members connecting with other members.

Speaker B: Yeah, yeah, I encourage it. Yeah. It's not like Reddit, so you know, of course, you know, spam. Uh, this is a bit like, you know, the dose makes the poison. You don't want to be annoying. So basically the only rule in the community is like, you know, don't be annoying. Right. I mean share your projects. You're encouraged to uh, ask for feedback. You have a lot of excuses to mention your products. Share updates, sellability or wins. Um, uh, you know, ask for feedback. Um, and all of that is highly encouraged. And it's useful because it's an inspiration. It's not. It's useful to other people as well because it's an inspiration generator I call it. You see other people do their thing. It's like the building public movement. Right. So there's the value add. Um, oh, what's what I, and this is very, very rarely happens. Maybe I only had to intervene three or four times. It's like when people are like spamming Multiple channels or spam DMing hey, uh, you know, check out my product or upvote me here or whatever. Like um, we just don't want people to be annoying. Yeah, but yeah, yeah, use common sense again. Like this is um.

Speaker A: Ah. Have you like uh, experimented at all with uh, with going to a recurring model or like you're really like all in on the. Yeah. So lifetime.

Speaker B: So last year during the Black Friday period I tried to introduce a one year plan. It was still a bit of a twist. It wasn't as a killing one year plan. It was still pay once but you only have access for one year and I'm not going to charge you again that. My idea was that um, at the end of the year I will try to make them an offer they can't refuse to upgrade to a lifetime. Right. Um, and um, you know I discontinued it after six months because I felt like, I mean it was, I made, I forgot like I had about 200 members who joined from that plan. Um, but it wasn't clear to me that again from a business perspective it was adding revenue. There was certainly some cannibalization. So basically at the time the pricing was um, uh 185 for the lifetime membership and 95 for the one year plan. So it was roughly half. Right. Ah and I was getting about 25% of the new members joining the one year plan. Um but uh, I was hoping that eventually they will upgrade and their lifetime value would be close to the full. You know the people who, who upgraded to a lifetime. But uh, I, I didn't get that much conversion and maybe I didn't do it well but sort of I went back basically I feel like simplifying to just single lifetime plan was probably better. Um, and I experimented with lots of things. For example uh, uh, for a long time I had purchased parity pricing discounts like for people from. Based on your country you have an automatic discount. And I did that for a few months. I discontinued it but I brought it back recently as well. Um, and very recently I dropped the pricing now to 129. Right. And this was the lowest it has ever been. And this was a little bit again a reaction to June of this year. Like so about three months ago I started to see sort of an even more bigger effect of resistance to wanting to join this value proposition that I was putting uh, out there like these live classes. And um, I tried to bring the price down a little bit from 185 to 129 and I also added PPP back and again, I could make quite a big difference. Again. I'm always surprised how spice sensitivity plays a role, especially now that I'm accepting my customer base. My new customers are people mostly on the fence from colder leads. In the beginning it was people who knew me, they came from my own audience. People who might have already talked with in the past. Now lots of people join. They don't even follow me on X. They join from word of mouth.

Speaker A: They say, hey, I must say I was telling you, I think before we started recording, like the, the name Small Bets is just something that I've literally heard like multiple people I know just mention to ah. Like it truly is a word of mouth. I think that's one of the most fascinating things about what you're doing aside from the pricing model. It, it really actually is built on word of mouth. I don't, I don't see any other like, you know, I'm not, I'm not seeing, obviously you have the Twitter following and everything, but I'm not seeing like a lot of like public facing content other than that. Right.

Speaker B: Like, so I do it. I uh, just to be clear, I do it but I try to not do it in a very salesy way. Like so every time we run a class I tend to, you know, I like to say I try to find excuses to mention small bets. Right. So, um, um, um, and I mentioned it in passing. Uh, and um, sometimes I mention something from our group chat and I refer to it. So.

Speaker A: Sure.

Speaker B: Uh, and I, I think it's important. Right. So I certainly feel like that if I take time off from not doing this, you know, I, I see it in my revenue. Right. So it's not like, you know, I post a tweet and I see a spike in sales, but there's like, you know, some background because, because I think what really happens is a little bit like what you're saying. Like um, you know, this, this is the kind of thing, you know, this is the kind of vitamin, not painkiller products. Right. It's not like nobody needs Small Bets just to fix some, um, playing for product. This is the, you want, you, you may want it just because, you know, you're curious or want to learn more and whatever. So I think um, uh, life circumstances for people matter a lot. Like if someone is for example, uh, thinking they're going to get laid off or they're really annoyed at their job and they wanted to leave, this is what motivates them to join something like this. So what tends to happen.

Speaker A: Communities are very um, Almost like seasonal but sometimes like seasons can last years. So like I, Yeah like I've been, I've been going in and out of communities sometimes for like two or three years at a time. You know, like I might get like some m. Sometimes it's a learning based thing. If I'm learning like Ruby on Rails, like I'm in heavy learning mode for a year and then I sort of. All right, I, I've learned everything I need to learn for now and, and I don't really need this connection anymore. Yeah, same um, thing with other communities and I think that's where you see a lot of like the natural churn in these businesses. It's like, yeah, it just runs its

Speaker B: course after a while and, and I think this is where the one time pricing really matters because um, I like to joke, but it's not really a joke like that. You know, uh, nobody can leave small bets once you join. You know, you can check out but you can never leave hotel California style. Right? I mean, and people check out like, I mean uh, there's there I, many, many people who were active like three years ago when I started and I haven't heard from them um, for a very long time. And I think again, like this is like what you're saying. People, life gets in the way. They get busy, they find a new job, they have a baby, they're not thinking about their projects, whatever, they forget about us. But there's also a lot of people who actually return after they go to some period and actually this happens also a lot where somebody has disappeared for two years and they come back because now they are in a place again when they uh, want to mingle with the community and learn some things and so on and so forth. And I think that all these people would have almost certainly churned if this was a yearly or a monthly plan. But now the fact that they can still come back, they're still working for me in quotes. When someone is engaged, they go and talk to their friends, they go and mention it on X. They go and um, let word of mouth spread. But if they churn, you lost them. They're not in my email list anymore. They're not talking about it. They're out of my radar. Um, uh, I think one of the underrated ways where one time payments for this kind of business at least uh, really help. I have 6,000 something members. I can email them all today, right, and tell them something about small bets. Whereas if they, you know, if 70% of them had churned, I would have A much smaller audience there. Right. In terms of who I reach out to, um, that's amazing. And uh, and again like it's. I sometimes I wonder like, I mean, what if I charge the early.

Speaker A: You know, that's a model as I'm thinking about building. Probably a different looking business than what you've built, but the same sort of space. The model that I keep coming back to in my head is an annual fee, right? Like you pay for a year because I think monthly is just way too short for a membership and that's when you see the high churn. Um, but at least paying for like a year to say like I definitely want to participate in this, at least for a year. And then maybe after the year, maybe it doesn't even automatically renew, but um, there should be some incentive for continuing like because the community is just worth it, like that it becomes that important to people.

Speaker B: I think, um, uh, personally again, I'm doing this obviously for a reason that I think

Speaker A: you make a really strong case for. The like the volume aspect but also like the um, like the loyalty. I don't know if that's the right word, but the, the word of mouth, it doesn't just come out of like, it's just, it's not just a pricing thing. It's like they actually have an affinity for you and for the community and they want other people to join. You know, like there's an actual benefit to doing that. You know, I think when you're, when you're asking people to share your thing, whatever your thing might be, it's a high bar that you have to reach to get someone to trust it that much to be like, I'm going to put this on my own Twitter feed. Oh yeah, that's a big thing.

Speaker B: And I think what's helping me is that to many people this feels like the gifts that keeps on giving. Again, just because I have people who joined in October 2021, that's three years ago, they joined my cohort course number one or number two. M my ask then was, you know, it's going to be a six ah, session class. And since then they received you know, hundred plus access to classes, access to all these recordings, access to group chat, lots of interactions with me and other people. Right. And uh, you know, it's easier to clear that bar. That's when you're just over delivering. Now you could argue I'm leaving money on the table by not upselling or charging them recurrently and so on and so forth, but I really feel again that, yeah, but you're also running so

Speaker A: lean too that it's like.

Speaker B: Yeah, I mean at the end of the day, if you set a target, like if I set the target of I want this to make $500,000 in revenue a year. And this is how I start to play the math in my head. Like how many new members do I need to get to get that revenue? And if I were to charge the currently, how many active members do I need to have not churn. Right. And I wasn't convinced when I did the math. I wasn't convinced that I would be able to retain and sufficient number of members at a reasonable price to make the same amount of revenue. I felt it was easier like just to get an extra, I um, don't know, 1800 members a year. That's almost what I was doing. Because I think, you know, the one time fee, it's a marketing play as well. Like I emphasize it a lot in my landing page. Like pay once, access forever. Like this makes the impulse buy aspect even stronger. Like I heard, uh, you know, uh, we talked about Adam Wetton in the beginning. I had once mentioned on his own podcast. Maybe I'm paraphrasing it like nobody impulse buys a subscription, right? When you're opting into to a subscription, you always pausing and say do I want this thing? Do I really want it? Do I, is it, will it be easier to cancel if I uh, what will it involve? And so and so forth like people. So true.

Speaker A: It's, it's like the phenomenon that I keep learning over and over again throughout my career. Like I, I've, I've sold tens of thousands of dollars of services with one time fee which seems so much easier to sell than a $49 a month SaaS.

Speaker B: You know, there you go. It's human psychology. And sometimes this might not even seem rational. But if you observe people and even if I observe my own behavior right. Again, like uh, even $5 a month if I'm going to, it's never an impulse buy. Whereas a one time fee, people just see $129 one time. I can afford that and going to assess, have access to this indefinitely, it's so much easier to make the sale there. So again, like I wish I can do a scientific experiment where I can a B test this like at the same time and whatever, I don't have that data and I'm not again against. And again I'm honest. Sometimes I am tempted to uh, and occasionally I do pause and consider, should I maybe try annual or something along those lines. But I've never been convinced enough that it's the best thing, uh, to do again, because I think from the sales part, and I think even from the expectations part, I think it was also put pressure on me that I need to continuously be proving value on a recurring basis, which I, I still do because I need to attract new members. But it's a different mode.

Speaker A: I'm sure even you go through seasons with it, right?

Speaker B: Absolutely. Like, you know, summer, for example. I, you know, I took some time off, went on vacation. Uh, it was very, I was very, I was still keeping up with things again, like. But, um, very, uh, uh, offhands. And uh, I think if I had people getting charged there, like every time you're charging someone recurrently, you almost need to be convincing them every time that this is worth keeping.

Speaker A: Daniel. I mean, what you've built is incredible. Um, it seems like a ton of value and, uh, it's also just a really fascinating story. I think for this episode of Open Threads might be one of the most, like, information dense, uh, episodes that we've had. This has been awesome. Um, yeah, I'm going to continue to follow along. You might see me pop into the small bets community at some point soon. And uh. Yeah, this is great. Thanks for doing it.

Speaker B: No, great chat, Brian. Thanks for having me.

Speaker A: Sam.