Paid Communities Dilute Value

Shaan Puri and Sam Parr discuss how paid communities face challenges with scaling, particularly around value retention and member growth. They share insights from running their own paid communities and analyze what makes these communities successful.

Key Points:

• Retention and Churn Metrics:

  • Shaan's community had 7% monthly churn
  • Trends (Sam's community) had 80% annual renewal rate in first cohort
  • Payment issues occurred with annual renewals due to bank fraud detection

• Scaling Challenges:

  • Communities focused on close connections become worse with more members
  • Content-based communities can improve with scale
  • Two main reasons scaling hurts:
    • Exclusivity diminishes
    • Conversation quality decreases with noise

• Value Proposition Requirements:

  • Success tied to member's potential revenue generation
  • Community value must align with membership cost
  • High-passion topics combined with money-making potential work best
  • Examples that work:
    • Stock trading groups
    • NFT communities
    • Sneakerhead groups

• Business Viability Factors:

  • Revenue potential = Member revenue generation × Total addressable members
  • Hobby-based communities without revenue potential struggle to charge high fees
  • Value can come from:
    • Direct revenue generation (like Tiger 21)
    • Access to high-value individuals (like executive communities)
    • Exclusive information or opportunities

• Member Value Assessment:

  • Individual member value matters more in professional networks
  • Pure enthusiast communities rely more on collective knowledge
  • High-status members bring inherent value through their presence