MFM #160: How to Build a Paid Community Making $20M a Year

David Selinger

"Hey, I've got a white male, 6 foot 3. He's got a crowbar, and he's trying to break into this building. Here's the address." I've just given them: - A description of the suspect - A description of the crime - The existence of weapons Every single police department in the nation, that's what their dispatch is designed to do. And he just described it, sir.

Shaan Puri

at his own house

David Selinger

practicing crowbar combat as a person

Sam Parr

your thing looks pretty good I think it

Shaan Puri

looks no I think it looks

Sam Parr

great I look

Shaan Puri

I look fucking fantastic. You look fantastic. This is the best... this is the best I've ever looked. If I look in a mirror, I've never seen this coming back. So whatever this camera is doing for me, this is just... know if you're watching this, I'm uglier than this looks right now.

Sam Parr

so what do you think

Shaan Puri

I'm uglier than this looks

Sam Parr

I think you kind of look celebrity-ish. Like, you've got cool hair, right? You've got a cool beard. I think you look cooler than you've ever looked.

Shaan Puri

Thank you! That's how I feel. I feel cooler, and I think I need a tattoo or something. I'm just like, now I'm trying to triple down on the celebrity status that I see.

Sam Parr

No, I think you look wonderful. Two things: 1. Today I want to talk about paid communities a lot. 2. Before we get into that, I want to tell you something. Last night, my wife Sarah goes, "Good night, Sean." Because everyone's been saying that, dude. They say it in such a mean way!

Shaan Puri

was he trolling or was it an accident

Sam Parr

He's trolling because someone tweeted, "Well, we think that you are Sean and Sean's you because Indian guys typically have high-pitched nerdy voices and white guys like you have low-pitched alpha voices." It turns out Sean's the one with the alpha voice and I'm...

David Selinger

like fuck

Sam Parr

so she called me sean thanks

Shaan Puri

oh that's amazing I hope you guys were doing some great things while she called you sean that was awesome

Sam Parr

Yeah, well, she burned me good. But let's get right in. Do you want to talk about paid communities? I did a lot of research because this interests me right now.

Shaan Puri

okay let's do it

Sam Parr

Okay, so paid communities interest me because I came across this thing called Tiger 21. This sounds lame that I'm bringing this up now after selling my company, but I've been interested in this for years. Do you know what Tiger 21 is?

Shaan Puri

I've heard about it. What I know about it is it's kind of like a mastermind peer group thing, but it's for a certain wealth level. I don't know if there's an actual cutoff, but it's supposed to be for wealthier and, I think, mostly older people. We have a couple of friends who are in it, so I texted one of them today about it. I got a little bit of info, but tell me what I missed. What do you know about it?

Sam Parr

Okay, so Tiger 21... Google it. I don't know the URL, maybe just tiger21.com. But basically, it's a peer group where you have to have at least **$10,000,000** of investable assets in order to join. It's very expensive; it's **$30,000** a year. I wouldn't call it a mastermind because "mastermind" has a certain connotation, but yeah, it kind of is that. I logged on to the site. I'm not a member, but I used a friend's login to check it out, and there are at least **850** members, according to what I saw on their site. So what's that math? **$24,000,000** a year in revenue. They have local chapters that meet up, I guess now digitally, and they do things like share one another's portfolios. You have to defend your portfolio, so it's basically rooted in rich people talking about rich people stuff, mainly being investing. But I think it turns into a little bit of therapy every once in a while, like a lot of groups do. But what did your buddy say?

Shaan Puri

Alright, so I texted our mutual friend Keith, and so did I. He's a real estate guy; he's been on the pod. You can go listen to Keith's episode. Keith's a good dude. I asked him, "You're in Tiger 21, right?" He goes, "Yes, what's up?" I basically asked him what he thinks about it. He said, "It's an interesting group. It's all about investing and preserving wealth. It's mainly for older people." He mentioned that the typical meeting lasts four hours. You do, like you said, a portfolio defense where you talk about what you're holding and why. Other people get interested in it. Sometimes there are speakers; sometimes it's an external speaker, and sometimes it's someone from the group who speaks. There's also a moderator. They do events as well. If you go to the website, you can see that they hosted a Tiger 21 event at Magic Johnson's house. They're definitely trying to build this kind of "who's who" network, this sort of Soho Club, Soho House vibe to the whole thing.

Sam Parr

And it, yeah, so they do that. They also give you deals. A friend of mine sent me a deal where, basically, when you're wealthy, you get this thing called **umbrella insurance**, which you pay $2 a year for. It's just general insurance, and the story they tell you is like, if you get in a car crash and someone Googles you, they're going to see you're rich and they're going to want to sue you for $5,000,000. This protects against all types of stuff. So, they give you a discount on umbrella insurance. By my calculation, I actually would bet they do $30 to $40 million in revenue, and they recently sold to private equity. It's a relatively big business. I read up on it, and someone said there's a **90% retention rate**, which is pretty amazing. I've also been following Reddit's **Fat FIRE**, which is a subreddit similar to this, and it's like tripled over the last year. So, this space has got me incredibly interested. But this is just one example of a paid community. What I wanted to do was go through a few other paid communities that are interesting. I want to explain why I think they work and then where the opportunity is for other paid communities. Does that sound good?

Shaan Puri

Can I start with one opportunity? Why isn't this just a business model for our podcast? Why aren't we starting Tiger 21 for people that have, let's call it, $1,000,000 of investable assets? So, $1,000,000 of sort of like liquid net worth that you can go invest into something. Why don't we start this now? This seems like the perfect thing to do for a podcast like this.

Sam Parr

I think that probably there should be something like this. I agree. If you go to the Tiger 21 website, you'll see the type of models they use on their website is like their ideal customer. It's like 65-year-old white dudes who own insurance companies that are quite wealthy, but not young or not like our kind of crew. So, I agree, I think there's something there.

Shaan Puri

okay so fair enough so let's go into it

Sam Parr

Alright, so let's talk about where we should start. I've done a bunch of research. How about we talk about that?

Shaan Puri

Sorry, sorry, I interrupted you one more time. The thing I just said, by the way, I think is important. I said, "Why isn't that the business model for this podcast?" I think way too many podcasts try to just do ads. We've talked in the past about Supercast, which lets you do like a paid, kind of super premium version of it for your hardcore fans who pay you $9 a month or $5 a month or whatever. I started a rolling fund largely off of the audience from this thing that said, "Hey, I've listened to this guy a bunch. I trust him. He has a good track record." So now that rolling fund is $4,000,000 a year that I get to invest into startups. That's more value than all of the ad revenue that we had before. I think that more people should figure out business models that are different from the content that they're creating. So I'm surprised more podcasts don't have different business models.

Sam Parr

I agree with you, but it is more work. We're in one of the most lucrative niches there is. I mean, like if you're a comedian... what's that show called? The two women who talk about sex all the time?

Shaan Puri

caller daddy

Sam Parr

Yes, like that's a little bit different. So how do you make money off that? That's a little bit different, and that's actually what we're going to talk about with paid communities. So let's actually talk about what makes them interesting and what makes them not interesting. To me, what makes them interesting is that they can grow pretty quickly. You had a podcast, and you do this $4,000,000 fund. Now, building the audience takes a while, but you turned your fund on, and it was $4,000,000 in a matter of months. Yeah, very quickly. So they seem relatively fast to grow. They're really fast if you have an audience, but compared to a software company, which could take 10 years, I think we definitely could build up in a matter of 2 or 3 years. Second, they seem pretty fun to run if the interest of your community is the same interest that you have. If they don't share your interests, then it's definitely not as fun. But it's kind of interesting, or very interesting, if that's what you care about. Third, you don't really need a lot of money to start one. You kind of actually need no money. You really could just start with a paid Facebook group, and you can have a really lean team to do it. Finally, they definitely seem pretty profitable because you could have a lean team. But let's talk about the cons. One, and this is what I've learned with our paid stuff and from friends, I think churn could be pretty high. Did you notice that churn was high in any paid communities you've been part of?

Shaan Puri

Honestly, the churn was not high in the paid community that I ran. I don't measure it.

Sam Parr

the year

Shaan Puri

Yeah, yeah, yeah, for sure. But that was a monthly fee, so you could churn out monthly, right? For trends, I think you charge annually, so you don't know your churn until, you know, sort of later, unless somebody actively cancels.

Sam Parr

So it's not like enterprise software churn where it's like a net, like a 100.

Shaan Puri

negative

Sam Parr

yeah so that that I don't think that exists in most communities

Shaan Puri

By the way, my paid community, just for real numbers, mine was 7% a month churning. Which is like, if you're not adding any new members, you know that doesn't take long for it to go to 0. But I was...

Sam Parr

I think 7% is 1 year

Shaan Puri

no I'll be talking about monthly I was monthly

Sam Parr

I know

Shaan Puri

churning 7% and so so oh you're saying 1 year for it to go to 0 yes

Sam Parr

I think if you have a I think if you have a 4% churn that's 18 months

Shaan Puri

And so, when including my growth, I think my net churn was like 1%. I was adding 6% and losing 7% basically every month. Can you share anything about trends? What was the retention like?

Sam Parr

Yeah, so we had some payment issues when we first launched. Basically, we had some issues where if someone signs up on day 1 and on day 366 they get a renewal, the credit card statements... a lot of the banks will be like, "Whoa, whoa, whoa, what's this? That's fraud." So we actually had a big fraud problem with banks blocking it. But 80% of people were opted in to renew in year 1 or in year 2 in our first cohort. Yeah, ballpark, about 80%, which is pretty good. But it's hard to get new customers on a consistent basis. Okay, so the second thing is a lot of times they don't scale that well. The reason they don't scale that well is if your community is kind of like trends where you value close-knit connections, or Tiger 21, more people actually makes it worse. Now, if your community is content-based, which we're going to talk about in a second, it can actually make it way better. But a lot of communities, like YPO, if there are 150 people at your meeting versus 5 people at your meeting, one is worse than the other, right? Because the...

Shaan Puri

The scale gets worse for two reasons: 1. **Exclusivity**: If the reason to be in this group was that it's exclusive, the more people in it, the less exclusive it becomes. 2. **Quality of conversation**: If the value is in the quality of conversation, as the group grows, it becomes problematic. For example: - A conversation that was really nice with a small group becomes a noisy room of 1,000 people - It becomes too noisy to keep up with - You don't know who these people are - Some people start saying stupid things As a result, people think, "I'm out of here." These are the two main reasons why scalability hurts in these situations.

Sam Parr

Yes, and it can work, though. Because if you're on Reddit, which is a community—not a paid community—but it's a good community, you want more. You need more. You need way, way more people. If you are on Quora, you need way more people. If you're looking at some of the other examples, you need way more. More people is good, and that's great, but it's not always good to add more people. So, what I want to talk about is a few communities that I found interesting. Then, I want to discuss opportunities in the space, and finally, we can talk about what I think you need to build a successful community. The first one that I discovered, and I've actually brought it up here a ton, is called Aventa. Have you seen Aventa? No? Okay, so Aventa... I know the first example is going to be like, it doesn't even entirely apply because I think Aventa is actually a free community, but you need to apply or get invited. So, it's somewhat similar. But Aventa is a community—a professional group, I believe. It has 18,000 participating members, and it's for executives. Are you on the website right now?

Shaan Puri

no I'm on our our notes

Sam Parr

Okay, basically, it's for Fortune 500 or Fortune 100 people. It's people like the... I don't even like... I, because I've never worked at a company, I don't even understand all these roles. But like a CIO, what's that? A Chief Information Officer. So I said CSO. I'm looking at their website, CISO. I don't even know what CISO means. It was that Chief Information Security Officer.

Shaan Puri

yeah ciso

Sam Parr

Yeah, so these are like things that I don't even... Oh, I guess I have CFO. I know what that is: Chief Financial Officer. So it's basically executive.

Shaan Puri

it's just turned into a a glossary section for sam to figure

Sam Parr

out what's her role chro is

Shaan Puri

yeah that's basically your hr the chief chief chief hr officer basically okay

Sam Parr

I guess that one was easy how about

Shaan Puri

a a cdo I don't know that one

Sam Parr

Chief Data Management Officers. Because, come on, a lot of people aren't going to know what this stuff is, but it's a big thing. They have 18,000 members. Check this out: they sold in 2016 for close to $300,000,000. It was actually $375,000,000, and it was for 12 times profit, which means their profit was $23,000,000 a year. Almost all of that profit came from sponsorships. So, the way it works is that they would get groups of 10 or 20 people. They would host a talk, like I think it was mostly an online talk, that says how Walmart is going to handle... how Walmart is going to handle...

Shaan Puri

work yeah

Sam Parr

Remote work and 10 people... I'm just gonna guess what's a Fortune 500 company. So, like, the CMO of Northern Trust... the Chief Information Officer of Northern Trust. I don't know what that is, but it sounds like a huge company. The CIO of Delta, of Chevron, of Nestlé is going to be there. It's only 10 people at that talk, but it's 10 people who each control 20,000 people. Sponsors will pay stupid amounts of money—hundreds of thousands of dollars—to reach these people, enough that it makes $25,000,000 a year in profit. Very interesting. An interesting community. Again, like Tiger 21. If you go to the website, it just kind of looks pretty old school, mostly older white people. So who knows if it's hip or at least in the know of everything. But where does that land with you? Interesting.

Shaan Puri

It's interesting, but I think, you know, if I'm most people, I'm like, "Okay, the hard part of this is going and getting the CIO of Nestlé or the CMO of Delta to join some group." How do you do that? I remember what's the name of the mastermind group that's the more popular company? Not Tiger 21, but like the other one we've both studied. I can't remember the name.

Sam Parr

ito young presidential organization

Shaan Puri

no no the the the one that does like a $100,000,000 a year

Sam Parr

it's a competitive yto

Shaan Puri

yeah it's like

Sam Parr

The... yeah, yeah, yeah, yeah, yeah. What's that? I don't remember what that's called. It starts with a "C," I think. It slips my mind.

Shaan Puri

name as well it slips my brain as well

Sam Parr

anyways like vistage

Shaan Puri

Yeah, yeah, Vistage. Sorry, not as the... yeah, Vistage. So, Vistage does the same thing as this. I remember getting a phone call from some random number. It was, "Hey Sean, this is Wendy from Vistage." I thought, "Okay, have we met?" "Yeah, actually, I've heard a lot about you. You're the CEO of Monkey Inferno, right?" "Yeah, that's right. Again, where do we meet?" "No, no, see, I'm actually the chapter president for San Francisco for Vistage, and I want to invite you to join our CEO network. We have CEOs from this company, this company, and this company, and we just really think you'd be a great fit for our CEO group. We meet up about once a month in San Francisco. It's a great time, blah, blah, blah." "Okay, CEO group? You sound like you know me. You're talking about my city. This sounds pretty legit. So, what are you asking me for?" "Yeah, so the membership is $20,000 a year." I was like, "Oh, okay, this is a sales call. Shit! Good job, you got 45 seconds into the sales call." This is how them... and I don't know if it was them exactly, but it was a company just like them that was recruiting people. They were just cold calling C-level people with a script that made you feel like they were calling for you based on your city, your company name, and your job title. So, I think this is what you would have to do. You'd have to be a pretty badass cold caller, and you'd have to figure out how to get this thing going with just enough brand names where this sounds legitimate.

Sam Parr

I host an event called **HustleCon**. Over the years, I've probably had around 150 speakers and tens of thousands of attendees. When I started it, I didn't know any of these people. I cold emailed them, and there's a way to play it off that it's cool to be part of. There's a way to get customers that I think is a little bit better than cold calling. Now, I think cold calling and cold emailing should exist, and you should do that. I think there are a few different ways, like having a podcast, and there are a few interesting ways to do it. Nonetheless, I think it's an interesting community. The second one that I want to bring up is called **Soul Savvy**. I got hold of their deck a year ago, and I could have invested in it, but I skipped it and passed. I think that might have been a mistake. Have you heard of Soul Savvy?

Shaan Puri

it's like a shoe thing

Sam Parr

yeah it's pretty interesting

David Selinger

it's called

Shaan Puri

sneakerhead lover community something like that

Sam Parr

Yeah, so it costs $33 a month. When I first got their deck, it was basically just a Slack group—that's all it was. I don't know if that's what it is anymore, but there are a lot of kids, probably grown people as well, who want to get insider tips on when a certain shoe drop is happening. They somehow game the system. It's called "cook groups." So, there are these groups where they team up and somehow, I—I don't know anything about this space—but they get insider information on when a drop is going to happen. They collaborate and scheme together on how they can get access to these certain shoes. Now, what they started with was shoes. It was just a Slack group, which I think is stupid, by the way. I think if you're building one of these on a Slack group, that's not the right move. But they get a lot of traction because they have a group of, I think, 5,000 members now. So, that's $160,000 in monthly recurring revenue (MRR). Because they have this contingency of 5,000 really big shoe fanatics, they can probably give them special access to X, Y, and Z. They can do interviews with special people. It's kind of interesting. They raised $2,000,000 recently, and they say that they're adding 400 people to their waitlist a day. I don't know if that's true, but...

Shaan Puri

yeah

Sam Parr

it's an interesting it's an interesting space nonetheless what do you think of that

Shaan Puri

I think you did good by passing on it. I think it's a cool business for the person who owns it. It's definitely not as constructive right now. I don't see how that becomes a super large business worth investing in, or why they need $2,000,000 and how they're going to turn that into a $200,000,000+ company. I don't really see that because, like we said, communities themselves, you know, these chat groups don't scale. You're looking for diehards who are going to pay. If you're paying $33 a month, right? Like, you know, that's more than... it's like you're providing more value than Amazon Prime. You know what I mean? That's double, that's triple the price of Amazon Prime. So, you really have... yeah, the hardcore fans are going to go for it. But also, the more people you let in, the more people who all have access to the same information, the same tips, the same drops that they're trying to go buy, the harder it gets for you to actually go buy anything that's valuable. So, I don't really see how this becomes a big, big venture-scale business. But I think it's a great idea for somebody who's a big shoe fanatic to create a community like this. I think that's an awesome lifestyle business to own, and if that's your thing, that's great. I love it.

Sam Parr

I agree with you so let's talk about 3 ideas

Shaan Puri

Can I give you two characteristics I think make it work? One is **high passion**, and the second one is the **ability to make money** on the other side. This happens a lot with stock trading groups. There are a bunch of stock tip groups out there where people are looking for additional information. They want to be in a group where the crowd is moving in a certain direction. You have this for sneakerheads, you have this for NFTs right now, and collectibles. So, the key characteristic is that it's not just, "I'm a big fan of the Golden State Warriors, so I'm going to join this paid community for them." Typically, that doesn't work as well as if I join this group where I'm going to get tools that are going to help me make more money. So, it's a very simple money in, money out calculation for people. I think that's why it works for sneakerheads, trading cards, and crypto, but it doesn't work as well for people who just love *Gossip Girl*.

Sam Parr

Yes, so there are a few ways I think that if you're going to build this, you have to consider. The first is that the amount of money your company is going to make is exactly what you said, which is directly proportional to the amount of revenue that the attendee or member can make back. For example, if you are an enthusiast of RC cars, the equation here is how much revenue the attendee or member is going to make times how many members there are—people who like RC cars. I have no idea; I just made that up. But there's probably not that many of them, and because it's like a hobby that you don't really make any money from, you probably cannot charge a lot for it. So that probably won't be massive. I mean, maybe you should still do it, but that doesn't mean it's going to be actually that big. So that's the math you have to do: how much revenue is the member going to make, and how many of those potential members are there?

Shaan Puri

Right, or the one, like you said, with Tiger 21. So, Tiger 21 is actually like that. When you go and you hear somebody's portfolio, you're going to get investment ideas. Even a single investment idea, a single improvement to your portfolio, if you have over $10,000,000 in investable assets, one good idea is going to more than pay for the $30,000 a year membership. Excluding the friends you'll make and the deals you'll do together, and that real estate thing you'll buy together, and all that good stuff. Now, on the other hand, if you're looking at something like Aventa or whatever, where it's like, "What is the CMO of Nestlé going to do when she meets the CMO of Delta?" They're not going to directly get revenue out of it. I don't think that's why. I think it's about how hard it is to accumulate this group of people in a room. If it's really hard to reach these people, and these are all high-value individuals, then the membership is worth the value of the people in the group. So, if it's just a bunch of sneakerhead buyers, each individual member is bringing zero clout to the table. But if it's CMOs of different companies, then it's about how much clout they each bring to the table. That's the value, not so much how much revenue they're going to make.

Sam Parr

Yes, and so let's talk about three groups that I have that I think this could work for. If you want to start a big community, I'm going to start with the bottom one, or I actually think it's the best one, but it's at the bottom of our list: nurses. We've talked about nurses a ton. It's an interesting demographic. I think nurses are kind of cool for this space for two or three reasons. The first is that work could pay for it. Maybe I think work would pay for it. Second, nurses are typically... I've spent time around nurses, so they're typically women. They typically are people who feel downtrodden; they feel like they're forgotten because they're not... gotten.

Shaan Puri

overworked underpaid underappreciated

Sam Parr

Yeah, and that is so... groups that are the "us versus them." I guess I don't know how to explain it, but groups that feel like "we don't have someone speaking for us" typically have that mentality. I've looked into it when I was researching communities. There are so many successful women discussing various topics in these communities. This is just like that. So, I think they have that "us versus them" mentality. And the third reason is, there are a lot of nurses.

Shaan Puri

yeah have you seen this instagram account nurse life rn

Sam Parr

no how many is it

Shaan Puri

It's 1,200,000 members on Instagram. It's run by this guy; I think his name is Eby or Eby. I'm not sure exactly how you say his name. And it's this guy, it's this Black nurse, and there's so much about nursing.

Sam Parr

I went private

Shaan Puri

They just went private. They used to be public, and I think you have to request access so they can make sure that you're a nurse before they let you in. This is part of what communities do well. You know that quote, "I don't want to be a part of any group that would accept me"? The better your gate at the front, the more people will value being in the group. This is a group that mostly posts nurse memes. It's like, if you feel underappreciated or whatever, they'll make a joke out of it. Or, you know, coming home and realizing you still have something on your shoe. It's just relatable memes from the perspective of a nurse. That's how they keep their members engaged—it's just meme content that's a good inside joke for the community. He partnered with the makers of Balla Shoes, which is the nurse shoe brand that's trying to be the Nike for nurses. Basically, it's Nike for medical footwear. He got equity in that company and gets paid every month because he is the promotional vehicle for Balla Shoes, which wants to penetrate this community. So, it's not a paid community as such, but it is a private community. On top of that, what would Incredible Health—the startup that has raised, I don't know how much money, $25 million from Andreessen Horowitz and all that—pay to access 1,200,000 nurses who are engaged and trust this brand and trust this leader of the community? They would pay a lot, right? Nurse job boards... so, if this guy's ambitious, he could create a job board. He could create the next Incredible Health. He could take equity in Balla Shoes and be a part owner of the shoe brand. I think that's where this goes for nurses. I think this is a great example of... 1.

Sam Parr

I think this could crush. I think that guy is sitting in a gold mine. If you fast forward 10 years and tell me that he turned this 1,200,000-person Instagram page into a $100,000,000 company, I won't be surprised.

Shaan Puri

Right, if you go and start truck life right now, I think that's what's going to happen after this podcast.

Sam Parr

**Truck Life 2**: The second one. This is shocking to me, okay? Google Sheets. There's this guy who tweeted at me and he started this thing called Sheets Con, and he had 67,100 people sign up. Is that... I mean, I guess that's shocking because, like, I know that probably 100,000,000+ people use Google Sheets, but... And I guess it also doesn't shock me because I am a Google Sheets nerd and I've dorked out about why I'm...

Shaan Puri

Some of the most profitable online courses in the world are "Become an Excel Master" or "How to Use Excel" or "Become Better at Excel." Those are like... if you go look at the charts of most profitable online courses or highest revenue online courses, Excel is always in the sort of top 5.

Sam Parr

Yeah, Ankur, the founder of Teachable, once told me that there was some guy making $1,000,000 a year. He was like the biggest earner on Teachable on Excel.

Shaan Puri

exactly

Sam Parr

So, Google Sheets... I 100% think you could do a paid community. It would have to be cheap, though, because it's the same as the map of how much money you make for Google Sheets. I think that there's absolutely something there. Then the last thing is this: someone tweeted at me about a community of vetted senior engineers who talk about advanced engineering concepts, like how to scale a tech stack from 100,000 to 10,000,000 users. I totally buy into that. Something like that is incredibly niche and incredibly high-end. There's another component that we didn't talk about with the community: you have to make it so that the information you gather in that group cannot be found online. For example, with Tiger 21, not that many people are going to talk about how, like, "How do I gift my child $15,000,000 without the government getting their hands on it?" That's not something you're going to tweet about because it's embarrassing. The same thing goes for scaling from 100,000 to 10,000,000 users. There just simply aren't that many people who have done it. Yes, so you're not going to find a lot of reputable information on that. That's another trait of these paid communities and why I think this one, in particular, is interesting.

Shaan Puri

I think any job in any any job can do this so nurses is a good one because you have a some are gonna be better than others because you have you know the more people the more potential and the more kinda like insider knowledge is needed the more downtrodden that group feels downtrodden is kind of a negative word but I kind of what you're saying like sort of like they feel that they need to take action in order to like level up in some way the better and so like you know this could work for nurses but it could also work for designers I could see somebody just making a community of you know professional designers at all these different companies it's like yep we have designers from figma and from hubspot and from okta and from github and you should if you're a designer at one of these companies you're making $150,000 a year $200,000 a year why would you not wanna be a part of the like the best network of other designers like you where you can share tools tactics salary information if you're looking for new jobs opportunities if you're looking for new jobs like every job I think needs this and the more new and fringe your job the more they the more the community is needed so like I know that our friend david spinks did this with community because community was like this there's not really like there's no chief community officer at these big companies but all big companies say it's all about community facebook's like it's all about community twitch is like it's all about community and what does that mean and and who in your company show me your who's in charge of community at your company right and there's typically not a c level who's in charge of community so david spinks said well look there's all these like kind of mid level people who are community they run community for these big ass companies and there's no playbook on how to do their job they're underpaid they're underappreciated and they're overworked trying to run all these events I'm gonna make the best community for community professionals and so he made the community for community people it grew pretty large he ended up selling the thing I don't know how big of a business it was in terms of a business outcome he might have been a little early but I think that's a great example of somebody doing this just taking a job and and making it happen

Sam Parr

So, there's my idea. I just wanted to talk about communities because I think they're actually kind of cool businesses. I think a lot of people want to start one, but I also think that there are a lot of mistakes made, like charging too little. I wanted to show a few examples of companies that make like a quarter of a billion dollars in value off communities. So, I think they're kind of cool. That's all I have to say about communities.

Shaan Puri

I'll leave it with this: a lot of people, I think the majority of people who listen to us, would love a non-9-to-5 way to make $10,000 a month.

Sam Parr

and if I was

Shaan Puri

gonna rep

Sam Parr

your I I read that in your your

Shaan Puri

The survey results... Yeah, I wish we could talk about that. But in general, that's the number one thing I think people listening to this would just grab right away. They don't all want to be founders of $1,000,000,000 companies or $200,000,000 companies or whatever. But if I said, "Hey, this is something outside your 9 to 5. It's a side hustle. It doesn't take up all your time and it's going to bring in $10,000 a month," I would say that this, to me right now, is the number one way to do it. I think there are some other ways, right? You could try e-commerce or drop shipping or something like that. You could try to do a newsletter or a paid newsletter. I would do a community if I was going to. That would be my fastest path to that right now. And I'll tell you, you know, the reasons why are all the things you said, which is like it's not that much work to run. The members provide value to each other. It's not all about you creating content all the time. It's not that hard to spin up; you just have to be smart about which group you're choosing and where you kind of have an edge. What's your group? And then the last thing, the downsides of it are that it can't scale super large, but that's not your goal anyways. You're just trying to get to $10,000 a month of free cash flow from your side hustle. And so that is super achievable. You know, $20 a month for 500 members and you're there. So, I think that is where I think this business fits in.

Sam Parr

I said before, I actually do think they can scale, but not all of them can. Some of them can, but I'm someone who has built a paid community that makes many, many millions of dollars in recurring revenue. I would say that it's really hard to start because I had to create a lot of the content early on, and I had to establish the culture of the community. But now, I barely post, and it has its own culture. So, yes, once it's taken off, you create that flywheel, and it works. There are not flywheels.

Shaan Puri

By the way, I just did this in e-commerce. I probably put in a grand total of maybe 8 hours into this thing, and I'll tell you what it is. I wanted to create a community for people who have e-commerce stores, so I created a gate at the front that said, "Your e-commerce store must be doing $100,000."

Sam Parr

a month what's the url

Shaan Puri

It doesn't even have a website. There's no website. It's called **Club LTV**. LTV is like an inside term in the e-commerce world; it stands for **lifetime value**. It's what every e-commerce store owner wants: their LTV to go up. So, I called it **Club LTV**. It's for people who are trying to increase their LTV. I said you have to have **$100,000** a month in revenue. I told...

Sam Parr

so I tweeted it out

Shaan Puri

So, I definitely had a head start because I have an audience. That brought in about the first 35 members who said, "Yep." They would just send me a screenshot of their dashboard, saying, "Yep, here's me."

Sam Parr

what did you say

Shaan Puri

Gus, okay, so what I did was make it free to join for the store owners, but you had to have this much value; you had to be this kind of far ahead in the game. What I did then was go to sponsors and basically say, "Hey, I have a group of 75 store owners ranging from $1,000,000 to $50,000,000 a year in revenue, and all of them trust me, like me, and I meet up with them once a month. Would you like to sponsor this?" So I have one sponsor on board. They pay me $5,000 a month. All I do is at the event, I say, "Boom! I do my intro, my high-energy intro," and then I say, "Hey, let me pass it to the guy that makes this possible, that makes this group possible." He says his thing for 2 minutes. He's had... I can't say the names, but I don't know if I... I guess I could just give him a free plug. So, Mercury Bank is the sponsor of it because that's who I would use for eCommerce projects. They have a big push in eCommerce, and from our group, they've had at least 5 different eCommerce stores switch to Mercury just from the sponsorships. They've definitely gotten their money's worth out of it, including one company that's a $2,000,000,000 company that has switched over to them. So, you know, they definitely got their value out of the sponsorship.

Sam Parr

but is and is this still going

Shaan Puri

Yeah, this goes every month. So, all that we do is we have about **one hour** a month of prep and then **90 minutes** a month for the actual event. The one hour of prep involves Ben getting a cameo made from a different rapper every month. The rapper is just shouting out "Club LTV." For example, we had Sean Paul do a cameo one month, and he said, "Hey, it's your boy Sean Paul! Just wanted to give big ups to Club LTV. You guys are all doing so great with your eCommerce store." It doesn't even make any sense, but it's just a video that plays, and people like it because it's kind of goofy. So, we get one cameo ordered, and he sends the calendar invite to make sure everybody gets it. He also sends one reminder email. After the event, he says, "Hey, if you learned something really useful that you're going to implement in your business, email me the one line of the most useful thing that happened for you in the hour." The structure of the event is that we break everybody up into groups of **six**. You're in a group with six other store owners who do between **$150,000** and **$1 million** a year in revenue. The format is that each person shares one thing they did in the last month that's really working and driving revenue up, and one thing that they're struggling with that they might want help from the group. Afterwards, they all email him the most useful things, and he takes that sheet and sends it to everybody. So, he says, "Hey, here were the top insights from the group."

Sam Parr

little thing takes

Shaan Puri

him 1 hour what's that

Sam Parr

why wouldn't you charge for that

Shaan Puri

Because I can actually make much more off the sponsorships. For example, I've been approached by companies that want me to build their e-commerce store on their platform. There are people who want me to use them for email marketing, and there are those who want influencer marketing. Who are you using for Facebook advertising? Who is the agency that manages your data tracking, like your pixel stuff? All these companies are willing to pay multiple thousands of dollars. I just have to onboard them now because I have the group, and the group is where the value is. That's the honeypot. It's the same thing you were talking about with Eventa. They have a free group, and they might be making $25,000,000 a year on the sponsors who want to talk.

Sam Parr

to people more than that

Shaan Puri

Oh, sorry. That's the profit they're making: $200,000,000. But that's the same model that I'm using here. Don't charge the members; just make sure all the members have successful businesses.

Sam Parr

and how

Shaan Puri

do you think

Sam Parr

this is gonna get or do you care

Shaan Puri

I mean, I put zero effort into it since then. But we have 75 people who show up every month to the event, which is like 80-85% of the members. They show up every single month, so they're getting value out of it. I bet if I told Ben, "Hey, go on Twitter and just reach out to these 250 cold emails or these 500 e-commerce stores," because it's very easy to get lists of successful e-commerce stores, I bet we could triple the size of the group if we put some effort into it. But I don't really care about it; it's more for fun. It's cool because it's just free money every month, and it's a good group to be in. I want to learn from these people. I want to learn what they're doing, what's working, what's not, and make these connections.

Sam Parr

That's badass! Well, you know, it's funny... I've built a community as well, but it's like every time I learn something, I realize the way you're doing it is a lot different than the way that we've done it. It's really neat to hear a different point of view and perspective on how to get it done.

Shaan Puri

Right, I optimize mine for how do I spend the least time but get just enough value. Whereas I think for you, it was like a part of your business. You were like, "I'm gonna make this a multimillion dollar thing and we're gonna make it fucking awesome," which is awesome.

Sam Parr

by the way if I had to start over I would have done it differently I would have charged way more money

Shaan Puri

right

Sam Parr

Because I've learned the mistakes, you have to add a ton of people to build a big business. However, adding a ton of people for certain groups isn't necessarily good, right? Fair play.

Shaan Puri

and wanna do one more quick one before we go

Sam Parr

only if it's you because that's all I prepare

Shaan Puri

Okay, okay. I kind of have like a... like an advice thing. This is my PSA, this is my public service announcement. Do you know what the word "inertia" means?

Sam Parr

yeah it's like when something starts moving it's hard to quit moving

Shaan Puri

yeah so I've noticed this and you tell me if you've if this has happened in your life but I've noticed for myself and many people that kinda ask me for advice inertia explains like 90% of why people are doing what they're doing right they're doing what they're doing because they're already doing it and sometimes that's good because like hey the train's in motion so I kept going even when things weren't you know going gangbusters but I just kept going because it was it was already in progress I'm glad I did because I had this good outcome but more often than not whether it's your business your relationship with somebody maybe it's something you've invested in why are you invested in it well I already own it I don't wanna sell it okay but if I gave you that money today would you buy it no so it's like you know there's all these weird things if if I didn't if you weren't already doing this business if I gave you a clean slate tomorrow would you go start this business again no then why the hell are you doing it right and so in my life I've had this kind of like weird moment many times where I realized shit inertia is a bitch and inertia is the reason I'm doing all these things I'm doing not because I actually want to be doing them or think that it's the right thing to do right now and so I just wanted to say this for to a see if this has ever applied to you but b for anybody out there who's listening to this and like something is not going the way they want in their life coach like just check yourself like is this am I doing these things because I really think they're the right thing to do and I want to do them or am I doing them because this is just the way that things were already going and I don't have the courage to change it I remember with my company when we sold our company it's because I had a conversation with my buddy sully and I you know while we were talking we were trying to figure out okay how do we make this bigger how do we make this grow and we both looked at it and we were like I don't think there's a like we don't have great ideas left we've tried so many things we've white boarded all these different ideas it's like do we even believe that this is a big opportunity like knowing everything we know now would I be still doing this opportunity if I wasn't already doing it and the answer was hell no and it was like and so this was my test it's if this project ended tomorrow for whatever reason the company had to fold would I wake up tomorrow and start working on the same project and the second question was if the company had to dissolve the investor you know the company went bankrupt and I needed to go start again would I call these same people like hey you wanna work together on the next thing because if I if if no then I have the wrong people today if yes then I have the right people today if I would call them again and so for me it was always the people were right but the project was wrong and that's when I decided look maybe I should sell this instead of keep going on this for another 5 years and you know just sort of keep going with the inertia so has this been a thing for you in your life

Sam Parr

Yeah, and I'll tell you how I combat it. I think I'm actually really good at combating this. I'm not great at a lot of stuff, but I'm good at combating this. Warren Buffett says it's like bailing out water over a leaky ship. He says sometimes it's better just to get a new boat. The way that I get out of this is I do two things. The first is I burn bridges. A lot of people say, "Don't burn bridges." I say, "No," but I actually do burn bridges. I quit my job, or move to another city, or do something drastic because for me, I've said I cannot focus on more than one thing at a time. I can only focus on one thing at a time. In order to break inertia and create a new type of momentum, I like to create something where my back's against the wall. I think more people should do that. They say that once you have a kid, that changes everything. That's one example. Once you get fired, a lot of things change. So, I like to create those moments where I have those forcing factors. The second thing that I tell people is to just do something really small. For example, if you're starting a business, don't think about $1,000,000. Think about what you can do tomorrow that's just $1. Creating those little tiny things actually helps a lot because breaking the pattern is quite challenging. I love burning bridges; I think that's the way to do it.

Shaan Puri

But you gave advice on two things there. You said basically you cut things off and you burn bridges. That's how you stop current momentum.

Sam Parr

and then start

Shaan Puri

How and when do you start? You start with ultra-small baby steps. I've heard this from many people. When I went to this Tony Robbins event, he used to say, "How many of you have ever had a decision that altered the direction of your life?" Obviously, yes, for all of us. Our life is full of choices, and if we had made different choices, we'd be in a different spot right now. Clearly, choice and decisions are one of the superpowers that we have. But how come there are times where, you know, maybe it's like weight loss? You keep saying you want to lose weight. You keep deciding to lose the weight. You make that New Year's resolution, and then you don't do it, right? Or, you say you want to quit your job and start your business, and then there you are, nine months later, still in your job and still without a business. He says that the word "decision" is something we use too freely. The root word of it, "cision," is like "incision," which means a cut. The word "decision" means to cut off the other possibility. When you decide on X, you remove the possibility for Y; you cut it off completely. He always tells this famous story, or whatever, about a general trying to take over an island. They arrive on a boat, trying to make it to land. He says, "If you want to win the war, you gotta burn the boats." If the soldiers know there are no boats, there’s no place to retreat. There's no boat to get back on and go home. They'll win this island. So, the story goes that the general burns all the boats, and then the soldiers go and they win. The same idea applies here. You're better than most in that when you make the decision, you literally cut off the other option by physically moving, by sending that email, or by taking action.

Sam Parr

Or I make the old option really embarrassing or hard to continue doing. A good example is, as we speak, I have a chef in my kitchen cooking for me. It's very expensive; it's a very expensive fee. I'm doing it because I actually got really fit this summer, and then I got a little chubby. Now, I'm going to get fit again, and it costs me a lot of money to have this guy here doing this. I don't want to waste it. The reason I'm doing it is because I'm going to lose weight quickly and eat only their food. I want to stop doing this, and so that works really well. Another example is, if you want to lose weight, you sign up for a competition like an Ironman or something.

Shaan Puri

you can't get out of

Sam Parr

Something you cannot get out of. Those types of forcing functions are, I have found, for me personally—who's pretty lazy and stubborn—it's the only thing that works.

Shaan Puri

Right, I'm the same way. I want to use psychology against myself. I want to use my own psychology to motivate myself. So, if I say something publicly, like we've mentioned on this podcast, "We're going to grow this pod. We're going to make this a top 10 podcast. This podcast is going to be doing 100,000 listens per episode." We've said that now, and there's egg on our face in front of all these people that we think are cool and want to seem cool to. If we don't make it happen, if they don't see us taking the steps and taking this seriously to make it happen, it will be embarrassing. When they see us putting thousands of dollars into our studio, adding video, adding YouTube, and doing more research so we come onto this podcast more prepared, they will see that we are taking massive action towards it. We can't be embarrassed about it. Tim Ferriss used to do this thing where he would say, "I don't know how real this was or if it was just a thing he used to sell his books," but he used to say, "If I wanted to lose weight, I would give my friend a $5,000 check and say, 'Donate this to the KKK if I'm not at this weight by this date.' It's already in the envelope; you just have to put it in the mailbox." He didn't want to lose the money, and he didn't want it to go to the KKK. He thought of the worst possible outcome for himself that would use his own psychology in his favor to serve him in this case.

Sam Parr

Yeah, there's a business around that. It's called "Stick"—spelled with two K's or something; it's a cute spelling. You have a referee for a challenge that you want to do. You fund the account with a certain amount of money, pick something you hate, and the referee determines if you hit it or not. Then that money goes to your anti-charity.

Shaan Puri

Yeah, I think that's a cool idea. I think there's even more people can do to use our own psychology to get us to do the things we really want to do in our life. Of course, you know, these things are kind of external motivators. They're not great. What you would rather do is: - Build great habits - Be internally motivated - Make a decision for yourself that this is a *must* for you You're going to do it; it's not a "should." But, you know, some of these tools can help you get leverage. I'll actually leave it with that.

Sam Parr

well what what changed what are you talking about can you say or no

Shaan Puri

for what what do you mean you why did I bring this

Sam Parr

up yeah

Shaan Puri

I was talking to a friend and I just realized that I can help this friend. The friend just needs to make a change. Then the real realization was that the friend didn't even want to be doing what they were doing anyway. They were just doing it because of inertia. I looked at my own life and I saw all these different examples of where inertia had the drivers, you know, had the wheel. Inertia should not even be in the passenger seat; it should be in the trunk. It's just something you carry with you at the most. I just felt like I need to say this in case there's somebody out there listening for whom this happens. When my friend was in that situation, I explained it, and they were like, "Dude, thank you! I needed to hear that because it made it more clear." Now I'm kind of embarrassed that I was just keeping on doing this just because of inertia. No, that's not a good enough reason for me. I'm going to actually choose the things I do. For better or worse, at least I chose that path rather than being on autopilot.

Sam Parr

I think there's a lot of people listening who might say, "Well, that's pretty reckless." I think you agree with me on taking drastic changes. My answer to that is, "Yeah, if you want a drastic outcome, you'd have to take a drastic risk."

Shaan Puri

Or, like, be honest: what is the real risk? The real risk in almost all of life is mediocrity. You know, my trainer tells me this all the time. He goes, "Most people are so afraid of so many things. It's like there's a lion sitting in the room." He's like, "And I'll be the first to tell you, look, if there's a lion in the room, don't meditate. Don't take deep breaths. Run! If there's a lion, run!" Sure, he goes, but most of the time, there's no lion in the room. Basically, what he's saying is that the things we want to do, we should have the courage to do. The reason we don't do them is fear. We should not be fearful all the time because most of the time, there's no lion in the room. Most of the time, the risk is much lower than you think for the things you're hesitating on. The real risk over the long term is mediocrity—having a mediocre life, a life that's not on your terms, that isn't the way you want. So, you know, I think that's true. I think you can apply this to anybody. Like, Abreu, if I say this to you now, or as you've been listening to this, is there a part of your life that you think is like, "That's inertia"? That's inertia driving, not me choosing. It could be doing this podcast. I don't know how long you've been...

Sam Parr

I hope you won't say that

Shaan Puri

It could be, though. Like, because Abreu has big dreams. Abreu wants to start a company; he wants to do all this stuff. This podcast was a passion for him, and it turned into a job for him. I don't know, like, is this what he wants to be doing with his time? Or does he have a bigger dream and he's just doing this because he was doing this? I don't know.

Sam Parr

what do you think of rayu what do we how what what this is a weird episode

Abreu Andrade

This was the weirdest episode. It kind of became about me, and the community part felt less like a podcast. We could charge for that; there was so much value in there for the right person. I think for a lot of people listening, it was not as entertaining as the stuff that we normally put out, but it was more valuable, if that makes sense.

Sam Parr

yeah I don't know which one is best but I guess I'll find out

Shaan Puri

Beat at us, so we know. Just tweet at us. I don't know if Abreu speaks for the average listener; we think he does, so that's why we ask him. But if you're like, "Yeah, I generally agree with Abreu's grades," then tell us. If you don't agree usually and you're done with that guy, also tell us. Go just go on Twitter or email us or something.

Abreu Andrade

and I don't blame you because I disagree with myself

Shaan Puri

So, oh also, I put this out there... Abreu put the link to the hotline in the description of this. I want to start doing Q&As where we take, ideally, like somebody asking a question. Like you talking, somebody asks us a question, we play it and we respond to it, or we take call-ins or something like that. But me and Sam want to do some bonus episodes. I opted him into this - I didn't even ask him if he wants to - but we want to do some bonus episodes.

Sam Parr

I committed to a third episode. If it's a Q&A, that's like the easiest option; it requires zero work for me.

Shaan Puri

Yeah, I think it'll be fun. We're gonna put a thing in, it's basically a hotline where you can just ask your question to the MFM hotline. We will get those, we'll sort through them, we'll put the good ones into the episode, and we'll answer them. So do that!

Sam Parr

alright I'm out

Abreu Andrade

Hey everyone! We did an interview with Dave Selinger, aka Sully. He's the founder of Deep Sentinel, a really interesting home security company. Dave is also quite fascinating himself; he's a multiple-time founder and a really cool guy. Not only do the guys discuss Deep Sentinel, but they also talk about some of the opportunities Dave sees at the moment. We'll leave this interview here at the end as a little bonus, a little nugget. Hope you guys enjoy it, and as always, leave us some feedback!

Sam Parr

So, we're going to do a relatively quick segment. Dave, do you go by David or Dave?

David Selinger

go by dave go by sally most of my my friends and coworkers call me sally

Sam Parr

sally alright that's a good one I

David Selinger

I sally s e

Sam Parr

Sally, I dig it. Okay, so I invited you to come on because I have this thing called **Sentinel**. Did I say it right? **Sentinel**?

David Selinger

deep sentinel yep

Sam Parr

sentinel my friend noah

Shaan Puri

You mispronounced his name. You mispronounced his company. Is your friend's name really Nella?

Sam Parr

Yeah, people make fun of me because I mispronounce a lot of stuff, but I have been using this... It's quite interesting, and I want to give a summary of what this is. My friend gave it to me. Basically, I had these Ring cameras, and Ring is pretty good. I mean, it's fine; it's cameras. But my friend Noah was like, "Oh, that's cool. You can watch people steal your stuff." I was like, "What do you mean?" He said, "Well, I mean, what's the point? You gotta monitor all of them." I was like, "Yeah, that's actually a great point." He goes, "Here, try this thing called Deep Sentinel." So I tried it, and basically what it is, is it's a bunch of security cameras around my house, and there are security guards watching it all the time. If something is triggered and they see someone at my door that looks suspicious, or even just someone at my door, they say, "Hey, who are you? Do you know the person who lives here? What are you doing here?" I tested it online on my Twitter handle, and I did the secret sign. You can put your hands above your head and do a sign, and someone checks in and goes, "Hey, is everything okay?" It's just like, pretty badass. So, I invited you on because I wanted to learn a little bit about this. Did I describe the company accurately?

David Selinger

You nailed it, right? Our motto really is, and one of our marketing gimmicks is that we make a T-shirt that says, "Oh, you have a ring? Congratulations! Now you can watch people steal your stuff." That's literally kind of where Noah got that from. I personally have a ton of cameras; I've been a camera fanatic for a long time. My neighbor had a home invasion, and so, you know, the neighborhood—it's a pretty safe neighborhood—we all freaked out. We were like, "What can we do?" We had the police come, and I introduced myself. I'm kind of the head of the neighborhood watch and blah, blah, blah. So I asked the cop, "Look, my neighbor has all these cameras and an alarm system. Why did she still get a home invasion?" The cop, who I'm now friends with by the way, said the rudest possible thing, which was straight on. He said, "Well, you're the tech guy. What did you think the freaking cameras were gonna do?" It was like this moment of utter eye-opening. What was I thinking? You're right; they're just cameras, and they don't actually stop anything. So I spent the next five years building a product that turns cameras into something that can stop crimes.

Sam Parr

how many subscribers do you guys have

David Selinger

We have about 2,500 customers across the country. About half of them are businesses and half of them are residential.

Sam Parr

and how many security guards do you have and where are these security guards

David Selinger

So, we're bordering on kind of the secret sauce here. I'll tell you, we have a ratio of about one guard for every 100 properties right now. That's how we make it affordable, because it's a starting price of $100 a month. If you think about having a security guard at your house, if you happen to have a bunch of friends who are billionaires, for example, they're spending $30,000 to $100,000 a month for a security guard. Our entire approach was that this is just not attainable for most people. Security is really, really important. So, how do we make it affordable? We use AI and a bunch of technology in the middle to make it so that we can have one guard protecting lots of properties at once.

Sam Parr

Okay, so you don't have to answer exactly, but if I had to guess... I mean, you just said it was around 25-ish security guards. A couple dozen, a few dozen, some number in that ballpark.

Shaan Puri

yep

Sam Parr

And how can this... The question that I had when I was thinking about this business is two things. The first is this whole idea of someone in real life actually doing manual work on the other side of a tech product. It's kind of interesting to me. I remember, do you guys remember when you were younger, there was that service called ChaCha? You could text them a question and they would answer.

David Selinger

it totally

Sam Parr

I think there was a real person on the other end who just Googled the question you had because Google wasn't on your phone at the time.

David Selinger

yep that's exactly what it was

Sam Parr

And that's kind of like what you're doing. So my question is this: how do you scale that? Do you just have to get a ton of guards? And also, what other services can I apply this to?

David Selinger

so that's exactly the way that we think about it kind of inside of our 4 virtual walls of the company so so number 1 the the number one thing that we do to scale is that if you think about the the old business of security right like a a guy or a gal sitting at chair watching the entrance to you know a corporate building that is inherently not scalable right you have no levers because you have a physical chair and what's neat about deep sentinel and and the big kinda moment for me is that there's all this internet stuff that can sit between the cameras and the guards and and when there's internet stuff that means you can instrument it that means you can you can start measuring things and then like what I did at amazon in my last couple companies you once you have data you can start optimizing it you can start looking at what are the real problems what are the things that aren't problems how do I how do I make the guards into superguards right like in fact at our office we have an ironman at the entrance because that's that's the way that we think about this is that our technology turns these you know regular awesome guards into superguards that can instead of having 4 guards protecting 1 property you have 1 guard protecting a 100 1 guard protecting 200 properties because all of the the the ai filters out events it also sends them clips that it thinks are interesting that they should look at like hey here's a clip from 30 seconds ago maybe these things are tied together and so as you do more and more of that it's not like we're getting rid of the people but we're making each individual person more powerful right and more engaged in their work the last thing I'll toss out about this too is that one of the other things that a lot of people don't know about guards is let's take let's take like the most badass special forces guy in the world right like I'm ripped I've been trained for for years and I'm gonna put you on night watch so you get to stay up between 10 am and 6 am and you're in an area that's like that's dangerous it doesn't matter how badass you are really the tendency to fall asleep when there's nothing happening for 8 hours in a row is incredibly high one of the other neat things about what we do is because we spread this across all of our customers there's always something happening we don't have like a lull time where where our guards are just not doing anything they're always engaged and so we're we're able to keep them awake engaged like you know stimulated in in a way that allows us to provide like what you just said you show the the the symbol on your cameras and bam within 10 seconds there's a guard responding you can do that 247

Sam Parr

Okay, and so where are the other opportunities? Like, what do you call this model? I don't know what you call it, where you have real people doing stuff.

David Selinger

Yeah, so the kind of way to still be called a tech company is to make the human the second part. You call it "human in the loop." It's a technology loop, and there just happens to be a human for a tiny piece of the work, versus a traditional services business where the human is doing everything. So, "human in the loop" is being applied right now already in some other industries. For example, cybersecurity uses it. If they detect what looks like an intrusion, or in the case of Verkada, where they don't detect it until after it's done and the hackers release it... you know, that was a jab at them. But the idea is that computers can detect things that are kind of anomalous, but the human really applies his or her intelligence to figure out the last little bit. It's also being applied in medical telehealth. You have these experts, and you use technology around them to ensure that you take an expert who could only generally be regional historically. Now, a cancer expert, because of video conferencing and remote records, can actually have a lot more impact. What we think about is how do we take this in a security context? Because we want to stay in security. How do we expand that to a virtual greeter at a multi-tenant apartment building, a skyrise in New York, for example? How do we apply that to watching elderly folks at home who may need just a check-in every 15 minutes? How do we apply it to hotels where you don't need to have a guard there 24/7, but you need to check the lobby every 15 minutes? And how do we do that at a cost that's 10 or 100 times less than having a physical guard on location?

Sam Parr

That's interesting. How big is that? How big is that market of just checking in on, like, how many doormen are there in New York, you know?

David Selinger

You know, it's a great question, actually. One of the most interesting things about this market is that it's pretty big. So, the alarm side is about **$20 billion**, and then the guard side is like **$20 to $30 billion**. But what Deep Sentinel hits is like this really kind of weird seam where there hasn't been a solution at all, ever. That price point is between about **$100 a month** and **$10,000 a month**. There is nothing in that range. And there's nothing there not because there's no demand, but due to supply-side constraints. There's never been anybody that's been able to create a product that fits in that price band. What we're finding is that there's just this huge vein of untapped demand. For example, let's use a hotel. My friend happens to own a few hotels, and he was telling me it costs him **$3,000 a month** to have this guard who's kind of schlocky, to be completely honest. I don't know if that's an appropriate term on your podcast, but...

Shaan Puri

don't know I've never never heard that word

David Selinger

Am I the only Jewish person on here? Okay, so I don't know another word for it, but he's **schlocky**. He's kind of sloppy. He’s not really going to scare anybody away, and he should.

Shaan Puri

schlep to to use another

David Selinger

slaps up to the place that's right

Shaan Puri

that's right

David Selinger

So, he shows up three times a night. This is for $3,000 a month. He shows up three times a night and just walks around the parking lot for about five minutes. He gets a total of 15 minutes of security over the course of 10 hours, and it's $3,000. Whereas with us, we'd be able to provide that service for maybe $1,000 a month, and there'd be someone watching 24/7 in case something happened. It's just so massive what the disruption is when you create something where there's literally just been kind of a vacuous hole. So, you know, that's kind of a way of me avoiding the question, answering the question, but like it's tens of billions of dollars that's just untapped. There are buildings that would love to have somebody greeting them in New York that don't have someone because their cost would be $20,000 a month. But if it costs $1,000 a month, bam, they do it in a heartbeat.

Shaan Puri

So, what does your security person do when they see somebody that is a potential intruder? Are they calling the cops? Are they yelling through the camera, "Hey buddy, back away! You know I'm a tough guy inside"? What are they doing to actually eliminate the threat?

David Selinger

yeah so so there's there's a bunch of different things that that we do and and you know you mentioned 2 things on on kind of the ends of the spectrum right and it's a it's kind of like an escalation spectrum and so on one end right like hey I see a kid right that's the really most innocent thing and the kid's kinda like poking at the door and so we have a juvenile protocol each of these things are in their own little protocol that we train the guards on and that's part of what the technology does the technology helps them know the the potentially relevant protocols to engage here and the and and with the kids you'd say hey hey kiddo I I see you're there do you belong here right and that's kind of the softest just touch right then there's an adult that that may be looking a little creepy and then we say hello this is deep sentinel security can I help you and that way if it does happen to be a friend or family we're not insulting them right so if sam's best friend from college that we've never seen before shows up and he decides that the right thing to do is go right up to the door and start looking through the windows without knocking you know that's the the greeting he's gonna get he's gonna know somebody's there but he's he's not going to necessarily feel insulted right off the bat if if somebody shows up and they've got a crowbar it's sirens on hey stop what you're doing and and the the we automatically escalate to either that guard or another guard is contacting police all of that's happening within about 10 seconds and that's where the neat the other neat thing starts is that because we have somebody watching our calls to police are very different than what they get from like if you have adt or like some some I'll use the word again some other schlocky kind of home security system adt calls and they say hi this is this is becky from adt I have a motion alarm in the living room and the police say well is it the homeowner is it a cat is it the wind is it the dog and she says no no no this is becky from adt I have no idea I'm just calling you because I thought I'd waste your time hangs up when we call I say hey I've got a white male 6 foot 3 he's got a crowbar and I have and he's trying to break into this building here's the address I've just given them a description of the suspect a description of the crime and the existence of weapons every single police department in the nation that's what their dispatch is designed to do and they he just described his name at his own house practicing crowbar combat as a person and that's why 2 way but but like that's a that's a good joke but like that's why two way audio is really important because by the way homeowners do do crazy stuff and so sometimes we see

Shaan Puri

like a

Sam Parr

sledgehammer that I use to like exercise you've just described and maybe work it out

David Selinger

Well, we'll say, "Hey, are you there?" and you say, "No, no, it's me, Sam. Here's my special code word." Then we don't call the police. So when we call the police, it's a 100% verified call. Most people don't know this: when alarm companies call the police and ask for dispatch, it's 99% false alarms. In fact, Freakonomics wrote a little piece about this, and they're just like, "It's horrendous. It's a waste of police time."

Shaan Puri

right

David Selinger

And so, most police jurisdictions have actually passed laws where they don't have to respond at all to alarm calls.

Shaan Puri

Yeah, that's what I was gonna say. In San Francisco, I feel like I can call the police and say, "Hey, this guy's got a gun to my head," and they'd be like, "Well, you know, let's see if you can resolve that with your HOA before we send somebody out there." Right?

Sam Parr

they're they're

Shaan Puri

not gonna

David Selinger

be his name and call us on monday that'd be great right

Shaan Puri

and so how many crimes have you guys stopped

David Selinger

we stop about 15 to 20 crimes a day wow

Shaan Puri

I mean that's crimes means like stealing packages it means everything right

David Selinger

from beats right like it's just it's stealing packages it's attempted break ins it's assault

Shaan Puri

Okay, why don't you have a TikTok channel that just publishes every crime that was stopped? Just the footage of the crime.

David Selinger

we do it's it's it's the stopped video channel send everyone to it

Shaan Puri

okay I gotta get what what is it called

David Selinger

It stopped. It's on YouTube. We're just starting TikTok; we just found TikTok. Right? Like, I'm old. Sorry. So, I didn't really get TikTok. My kids were on it, and they were like, "Look at me dance!" We did the dances, but I didn't really think about it as, "Hey, let's post these things on there." People are loving it on TikTok because...

Shaan Puri

on youtube what is it stopped what

David Selinger

It's the **Stopped Deep Sentinel** video series. Every single week, we produce the best 5, 10, 15, or 20 videos.

Shaan Puri

that's amazing these have thousands of views great good for you

Abreu Andrade

some of them

Sam Parr

some of them have close to a1000000 I think

David Selinger

Yeah, we have a couple that have $1,000,000, and it's cool. What's neat about it is it kind of taps into, you know, if you've ever been the victim of one of these crimes, you want nothing more than to get back. Whether you're getting back at that individual person or just getting back at the world, it makes you feel powerless. One of the neatest things that we actually don't really publicize as a company is that we reach out to people who have been the victims of really heinous crimes. A lot of times, I reach out personally and say, "Hey, I'm not asking you to promote us. I'm not asking you to do anything. I just want you to know that we've created a product that can actually make you feel safe in your own skin, safe in your own home again. I'd love to just give it to you for the next six months." It's the neatest thing. This morning, I happened to drive by a house where there was a home invasion in my hometown last year. I gave the system to these people that live in Pleasanton, and I happened to be by their house this morning. So, I stopped in, and the husband answered the door. He's a big, tough dude, right? He's not the type of person you would expect to say, "I'm really scared in my home." But we all have our kids, our family, or the moments when we're not home or when we're asleep. It was really neat to hear him, eye to eye, say, "This has really changed the way that we live." After something that horrible, you know, it's really life-changing.

Sam Parr

So we only have a few minutes left in the segment, but what I want to ask you is: Where are the opportunities based on what you've discovered? I think... I've actually read about companies that got big 20, 30, 40 years ago, and there's a lot of interesting stories. Like with the beginning of ADP, or... what's the security company? ADT. *[Clarifying]* ADT is security, ADP is payroll and a bunch of other interesting services.

David Selinger

the same company but but yeah yeah go ahead

Sam Parr

A bunch of companies are just like the guy who started, you know, Wonderful Brands. They make the palm water or the palm drink. I believe he got a lot of his wealth from a security guard company. Security guard companies are just kind of interesting to me for some reason. It's kind of weird in this space with this "human in the loop" service in the security space. There are interesting opportunities that I wouldn't know about because I'm not involved.

David Selinger

One of the things that we see a lot of is construction recently. What's interesting about construction yards is that you have these massive amounts of assets with no security—like literally no walls most of the time. Sometimes you have chain link fences, and that's generally the extent of security. Speaking outside of deep sentinel in terms of human involvement, one of the other interesting things we're seeing is that the movement of stuff seems pretty unsolved. There are still companies that make $100,000,000 a year, and they have a line of business called cash. In the age of Venmo, PayPal, Apple Money, Facebook Money, and every type of virtual currency in the world, there are still people getting paid to put their lives in danger to move pieces of paper around. I mean, it seems so absurd. I'm reading *Hitchhiker's Guide to the Galaxy* right now, and in the first chapter, it says that humans are generally miserable because they spend all their time moving green paper around. Green paper doesn't make them happy. This made me think of this business where every year people are scared and die because they have to move the paper around. How dumb is that? There has to be something better. I mean, just vaporize it, take a picture of it, and then digitize it. I don't know, but that area seems to have an asinine amount of risk and opportunity.

Sam Parr

so construction is there one more

David Selinger

What's another? I mean, like most of them are pretty obvious, right? Like car lots. Oh my god, actually, car lots are interesting too because one of the things that people don't realize is that everyone thinks, "Oh my god, car lots! Everyone's gonna come and steal a car." But that's kind of a big crime, actually. The number one thing that we see is people going and breaking into cars at car lots because there are just lots of catalytic converters, lots of stereos, and lots of leather. So, you know, every once in a while, there's somebody stealing cars off the car lots, but what we see a lot of is just these people going in and grabbing the doors. Actually, wait! I'll go with one more: meth. Meth is a horrible thing, right? But what meth has led to is this really weird pattern of mail theft, and I call it agricultural mail theft. One of the things that you'll see a little bit on Nextdoor is, "Hey, I saw this guy going and checking my door handles or checking my mailbox." Then it goes on Nextdoor, and everyone in the neighborhood for like 15 miles says, "Oh, I saw that same gal or guy too." Meth has created this entire lifestyle where these people actually go into farm neighborhoods, and they'll go in on a cyclical schedule, going from this neighborhood tonight to this neighborhood next week, and they literally check every single door and every single mailbox, as if they were tending to their plants in agriculture. And it's just really... it's weird.

Shaan Puri

phenomenon they stealing they're just stealing mail or they're stealing something related to

David Selinger

They're stealing wallets and mail that is typically checked. They're actually pretty careful. When I say agriculture, I mean they're careful about their surroundings. So, when they put your mail back, it's very infrequent that you see them just throwing it on the ground because that ruins their agricultural area. It's actually really interesting. When you see the video, they open your door and are very careful when they put your mail back. The last thing they want is for somebody to find out. Frequently, if you look at Nextdoor, what you'll find—and this is why Deep Sentinel is needed everywhere—is that people will say, "Oh my God, I went back for the last three months, and this guy's been coming every four days." They only happened to notice this one time because he took something too valuable to them. It's just this really consistent theme across America that your doors are getting checked and your mailbox is getting checked way more than you're aware of.

Sam Parr

I've caught a bunch of people. My camera's being weird. I got an email that says a guard intervened. I've caught a few people. I hate it. Yeah, it's almost made me freak out more now that I know. Well, I...

David Selinger

The good news is that you do have a layer of protection. The bad news is you now know, like for real, that if you had a ring, you're getting 100 alerts a day. You just didn't know because who's going to come through all 100 of those alerts every single day? It's just not worth it.

Sam Parr

I appreciate you coming on. This is super interesting. I've been a fan of your product, so it's nice to talk to one of the creators of it. This is pretty badass.

David Selinger

Well, thank you guys. Yeah, I mean, as you can tell, I'm super proud of it. I'm happy to talk about it any day. If you put me on for 5 hours, I'd keep going, right? Like, I love it. It's the neatest company I've ever had a chance to touch, and I'm so proud to be part of it.

Sam Parr

able to touch people on did you help build ring or did you do you

David Selinger

work at amazon I worked at amazon yeah so I I was there way before ringtimes

Sam Parr

how what year did you start there

David Selinger

2002

Sam Parr

holy moly I bet we should have you on another time to just ask stories about that too

David Selinger

I have lots of stories. There are many people that have great stories about Amazon. Amazon is such a neat company to have watched grow. When I joined, every single quarter, the Wall Street Journal would run a story asking, "When does Amazon shut down because it just isn't sustainable?"

Sam Parr

What number of employees were you? Oh gosh, you guys were in the thousands at that, right?

David Selinger

probably like 3,000 something like that

Sam Parr

you haven't sold too many shares congratulations

David Selinger

all of them

Sam Parr

oh my god

David Selinger

But good, good news though: I sold them in order to start Redfin. I held on to some Redfin stock.

Sam Parr

I did not know that dude you've been doing the wait redfin the real estate thing

David Selinger

redfin the real estate thing

Sam Parr

I didn't know you started that so you've done all types of shit man

David Selinger

I tried to... yeah, it's been really neat. I've had a very blessed career. But again, what's neat about this one is, you know, Redfin's really, really cool. We invented interactive mapping. But this business, the number of times I get an email every single week that says, "You changed my life," that's... there's nothing that could be tougher.

Shaan Puri

Tech companies get criticized for, like, "Oh, you're just building toys and frivolous stuff." But, in reality, it's like you're literally saving lives. So, you've got to do both. You've got to create fun tech with all kinds of crazy stuff involved, and at the same time, you're saving lives. I like that. I'm jealous of my friend James, who invested in you guys early on. I should have invested. I remember seeing him post about it on Facebook, and I thought, "This is a pretty good idea." What I didn't think about at the time was, "How are they going to scale this up?" I thought, "Oh, they're going to do labor arbitrage. They're going to get people in the Philippines to watch your stuff, and it'll just be a lower hourly rate." You know, and the price will be sort of high and unachievable for most. But what you're saying is smart. One guard is going to have a hundred houses under monitoring. Most of the time, nothing is happening, so you don't need eyeballs on the screen. The AI is going to basically say, "Something's going on in house 42," and 42 pops up. Human eyes then decide, "Is this good or bad?" Next, swipe to the next. So, it's really more than just human in the loop. In my opinion, these should be called something else. They should be called, you know, "super services" or something like that because it's taking a...

David Selinger

service based business

Shaan Puri

And it's scaling it like a superhero. Where it's like, "Oh, what if that security guard could not just watch one house, but actually could watch a hundred houses?" Now you have a super service that can scale in the way that services typically can't. I think that's even more... I know for pitch decks you use "hoop in a loop," and I've seen that a bunch, but I think this is...

David Selinger

actually I freaking love that dude I'm I'm gonna steal that from you if that's okay

Shaan Puri

Yeah, that's great! I think this is awesome. Now I'm kicking myself because I'm like, "Oh shit, this actually... if I'd asked one question earlier, this would have made sense to me." And now it does. So thanks for coming on and explaining it to us.

David Selinger

Hey, thank you! If you're still interested, we're raising another round this year. So, let me know!

Shaan Puri

See, the only problem is I'm a cheap Indian dude who's like, "Oh, the price back then..." The price then would have been, I don't know, what you raised your first round at—maybe $10 million or something like that, $20 million. I have no idea what it was, but now I bet... have you raised an A round?

David Selinger

we're in the process of raising the a right now so

Sam Parr

oh you guys have a

Shaan Puri

good actually I'm gonna email you I'm gonna invest in this company anyways I will

Sam Parr

I mean no no no no no no I you gotta send it to me too look you guys have

Shaan Puri

I'm not taking your spot we could both get in baby

Sam Parr

can we I mean you've raised $24,000,000 right or 23

David Selinger

We’ve raised a bit. We have a really unique investment vehicle that’s open right now. So, you know, if you’re serious, there is an opportunity.

Shaan Puri

Because you know, ADT and these guys... What are the other security companies? The big ones. I've looked into this before, but they're all multibillion-dollar, sort of sleeping giant, incumbent types. For them to do something like this, they either have to buy you or they have to like change their DNA inside their bodies, which is not gonna happen. So ADT...

Sam Parr

Has a $6,000,000,000 market cap. Wait, I'm so confused. ADT has $5,000,000,000 in revenue and a $6,000,000,000 market cap. Is that right?

David Selinger

If you look at their enterprise value, that's the secret. They have a $6 billion market cap because they have $10 billion in debt. So, they actually have an enterprise value of $15 billion to $16 billion.

Sam Parr

okay so there's some oh okay by the

David Selinger

The other way we could do this is if you happen to have $10,000,000,000 I could borrow. I could do that too.

Shaan Puri

Yeah, this podcast doesn't pay.

Sam Parr

Yeah, we missed that one. But dude, send me the information. I'm definitely interested. If you wanted to talk about it or you're willing to have either of us, let me know.

David Selinger

that sounds awesome happy to do it

Shaan Puri

It's funny how such small things make a difference. I saw the video Sam posted, and the operator, the security guard who spoke back, was clearly not like, you know, my relative in India. I was like, "Oh wait, this is actually going to feel totally different to have a human who's got your back, who feels like a trusted American voice."

David Selinger

right there with you

Shaan Puri

Right there with you. And then, like, right now in my neighborhood, our front gate has a doorman just sitting there all day. He couldn't stop anybody if he wanted to, but you know, he's just sort of useless. There are all these little points of failure, whether it's the mail, the doorman, or your personal house. For example, in e-commerce, our warehouse spends a lot of money just on guarding because they have millions of dollars' worth of goods in their warehouse. It's just so inefficient—so capital inefficient—the way they try to secure those things nowadays. You have alarms, which are just going to be kind of like a sound, you know? You're playing an MP3 to protect you, or you have a human with a club.

David Selinger

on the spotify now by the way mp threes are the old ones so they they started on spotify for you

Shaan Puri

We're going to stream the security to you, or you have a guard who's 99.9% of the time gonna do nothing. And so it just doesn't make sense, right? Like I said, finally... a solution that makes more sense. And no, I'm not paid to say this, it just makes sense to me.

David Selinger

Well, if I can, I'll tell you one more story. One of the things that got me off my butt to do this was the story of an elephant that escaped from a zoo. The video was of the elephant—okay, not a small animal, right? Like an elephant.

Shaan Puri

right

David Selinger

And the elephant did not escape the zoo by going around the guard. The guard was sitting at the gate, and, you know, the chair is tilted back the way that you expect. The guard is totally asleep, and a freaking elephant walks right by him and leaves the zoo. You're just like, "There has to be something better than this. This is ridiculous."

Shaan Puri

Has there ever been a conversation about this? In San Francisco, there are all these car break-ins. Can a city adopt this? Do you think a city will realistically ever adopt a system where the cameras are on the street posts or on the lights? Basically, you could guard the whole street of cars that way. Or no?

David Selinger

You know, we've talked to a couple of cities about it. The thing that I don't like is I don't like the idea of Big Brother being involved.

Sam Parr

part

David Selinger

Of the government, like, one of the things I really like from kind of an ethical perspective—I'm a pretty principled guy, I like to think—is that by making this surveillance private and focused on private property, and protecting that property in service to that individual, you don't have that like panopticon risk of turning into the evil eye. And, you know, we never question who our customer is. Our customer is the person that pays us and owns this property. It's a tried and true, like, deep principle of...

Shaan Puri

right

David Selinger

you know american liberty

Shaan Puri

that's fair enough I like that yeah the person who buys it is the one who's opting into their own protection basically yeah

David Selinger

yeah that's right

Sam Parr

If my... someone just rang my doorbell, and I know that because I just got a notification on my phone that Deep Sendal is talking to him.

Shaan Puri

that's where you're gonna

David Selinger

get my awesome by the way dude

Shaan Puri

people people are gonna be like you didn't know they rang your doorbell because they rang your doorbell like

Abreu Andrade

oh I

Sam Parr

I can't hear them now. I can't... I can't hear it, but I know that I could. I can see on my phone; I just got the notification. I love it.

David Selinger

It makes me feel so much safer for my... I've got two little girls, and I absolutely love it.

Sam Parr

it's great I'm digging this I'm I mean I can see my wife in our courtyard this is awesome I'm a fan

David Selinger

Well, thank you guys! I love getting the opportunity to be here. Thank you so much for bringing me on and for being a good customer.

Sam Parr

thank you good talking to

Shaan Puri

you man