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Bootstrapping Your Subscription Community

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An Interview with Peak Prosperity’s Adam Taggart

You don’t need a big team or a big budget to build a Forever Transaction.

Any organization can focus on solving a customer’s ongoing problem or helping that customer achieve an ongoing goal. It’s that Forever Promise that justified that recurring revenue that every organization craves.

In fact, it might be easier than over-focusing on a particular product or process.

I first met Adam Taggart when his daughter was in my Menlo Park, CA Girl Scout Troop. I bet there are lots of other Troop Leaders and Lifetime Scouts out there.

Anyway, several years ago, Adam and his family moved to a rural property in Sonoma County for a less stressful life. Adam left his job in product management for the life of a small business owner, partnering with Chris Mortensen to build Peak Prosperity, a digital community with the following statement of purpose: Massive change is underway in our economy, energy and environment. We connect the dots as events unfold, offering valuable insights on how to protect and grow both wealth and quality of life.

“Massive change is underway in our economy, energy and environment. We connect the dots as events unfold, offering valuable insights on how to protect and grow both wealth and quality of life.” Peak Prosperity

Peak Prosperity is membership organization, with both free and paid subscriptions, what is known as a Freemium model. Unlike many of the examples I share of organizations in the Membership Economy, Peak Prosperity has just two employees, and no outside funding.

If you’re interested in building your own subscription model, based on bringing together like-minded people to learn and achieve shared goals, you will learn a lot from my interview with Adam.

The following interview is adapted from my podcast, Subscription Stories: True Tales from the Trenches. This interview was conducted in March, 2020.

Robbie Baxter: So after 20 years on Wall Street and then as my neighbor here in Silicon Valley, you and your family packed up in 2013 and moved up to a property in Sonoma, up in the wine country of California, where you keep bees, pigs, chickens and you and Chris are running Peak Prosperity remotely. Can you walk me through that process from Wall Street to beekeeper?

Adam Taggart: Sure. I’ll give you the short story, which is I graduated college. I was pre-med at Brown. I come from a family of doctors and was going to be a doctor. My senior year I was about to apply to medical school. And back then it was in the early 90s, when the health care system was being revamped. Every doctor I knew said, hey, the whole thing is changing. It’s going to get a lot less fulfilling for doctors. Take some time off and wait for the dust to settle and then make up your mind. So I had to figure out what else I was going to do and went to go work on one of those Wall Street investment banking analyst programs just because it seemed like a good way to spend a couple of years. I learned a couple of things. One, that the Wall Street culture was not for me. Two, I learned that Wall Street exists to serve its own interests and not those of its purported clients. After three years on Wall Street, I ended up going to business school at Stanford, primarily as a way to get out of Wall Street and to try to find something else to do with my life that might have more meaning. While I was there at Stanford, the Internet revolution happened. So and I went to go work for a startup and then went from that startup to go work at Yahoo, where I spent the better part of a decade and ended up as a vice president of marketing for North America. It was a big role and it was a great place to work. While I was there, I wanted to buy a house. This was probably in 2003. I wanted to buy the most basic sort of starter home that you could find in our area. And the listing price was like eight hundred thousand dollars. And the realtor said, well, if you want the house, you’re gonna have to bid by one hundred thousand over asking. I bid over for it. And the realtor came back and said, well, you were so far outbid that they’ve sold the house. Not that I was going to, but they don’t even want to invite me to counter? Nope, they got enough money for it. And so began the housing bubble of the first half of the 2000s. I had recently graduated from Stanford and thought, look, I’m not the smartest guy in the world, but I’m not the dumbest either. I’m just missing something here. I just spent all this money on this degree. I don’t understand why people are willing to spend so much money for a depreciating wooden box. I went online and began researching the housing market. And interestingly enough, there was a minority of folks whose voices attracted me and what differentiated them from majority is they were the guys who actually had data and they were saying, look, this is a price bubble. It’s an asset price bubble in housing. And here are all the historic metrics, you can see how kind of the beginning of 2000 they began to sort of shooting the moon. And these ratios are going to have to come back to Earth at some point. You know, it turns out that these folks were actually right. So I had kind of sat out the first housing bubble, watched it burst in 2007. The housing start to burst and then the greater market bubble bursting in 2008. And that really gave me confidence that these guys who were initially warning about the housing bubble, but really were describing how it was created by bad economic and monetary policy and too loose lending standards, that they were really onto something. And one of the people who I was reading during this time was this fellow named Chris Martenson, and he had just published this 26 chapter video series called The Crash Course, which predicted all of the economic dislocations that were happening in 2008, but also tied it to resources in a way that I hadn’t seen done before. I contacted Chris and we hit it off and decided, that with his ability to continue to analyze what was going to happen next, and my familiarity with digital media, our partnership really might be kind of a perfect marriage. I could free him up as a one man operator, to not have to worry about the business side of things and just do his analysis and I could then run the business part of things. That’s that 50/50 partnership you mentioned.

Robbie Baxter: So Peak Prosperity, you came in as the business guy. And you built a subscription business model. Can you walk me through what the business model is? How much does it cost? Who joins? When can they cancel?

Adam Taggart: We had to figure out what we were creating. What’s the business model to support it? Which business model are we going to pick? Chris is a writer, he’s an idea guy, but I ended up writing a lot, too. So at the core of our business, it’s a content generation business. It’s a media business. If you look at the media models out there, they largely fall into either an ad-supported business or a subscription business. I think we made the right call early on to pick a subscription. This was back in 2010 when we started working together. I think we’re a really good example of that term freemium, which I don’t know if people still use today or not.

Robbie Baxter: So that’s a subscription model where some people get something for free forever. And other people pay a premium to have either more, or better, or more supported value.

Adam Taggart: Exactly. We think of the premium part as sort of the “and” to the free part. Everybody gets the free, but if you want the really good stuff, you cross the velvet rope and subscribe. Our product is basically a lot of forecasting. This means everything from what’s going to happen with the economy, what’s going to happen to the stock markets, to detailed strategies for how to get along better in the important relationships in your life, like your spouse. I would say probably about eighty-five to ninety percent of our content is free. The content is written material, podcasts, and videos. What we try to do is build up a lot of capital and build up our following, our list, if you will, to watch subscription.

Robbie Baxter: How big is your list?

Adam Taggart: It’s a little bit over eighty thousand people right now.

Robbie Baxter: Then you have the behind the velvet rope. You have that ten to fifteen percent of the content that you create that is really good. And people pay. How much are they paying for that?

Adam Taggart: Great question. So, yeah, our base subscription is either a one month subscription for thirty bucks, a quarterly subscription for eighty dollars or an annual subscription for three hundred dollars.

Robbie Baxter: How many people are paying for the the velvet rope experience?

Adam Taggart: I’d say in the low thousands.

Robbie Baxter: They are paying that something like three hundred bucks a year, so they’re the premium part of the freemium model.

Adam Taggart: On top of that we have a number of other revenue streams and everything from books we write to personal consultations to conferences that we run and things like that.

Robbie Baxter: You have this expertise and you have this research, this body of research. What is interesting is that you’ve packaged it in several different ways. So there’s the free subscription. There’s stuff on the website that is maybe evergreen. Then you’ve packaged another with conferences. Same content, but with the element of community. It’s a lot of different ways of helping achieve that you know, the forever promise that you have about living life resiliently.

Adam Taggart: Yes, absolutely. We paint with a really broad palette at Peak Prosperity. And we have this framework that we talk about called the eight forms of capital, which sort of gives people an understanding of the different areas in which we are trusted experts. It is everything from money to health to relationships to what to do with your home and your homestead. You want to be really, really crisp on what the customer journey is as they engage with you in your different products. So in our case, it might be that they read one of our free articles on PeakProsperity.com, or they might read that on a number of sites that syndicate our content.

Robbie Baxter: Can you explain what that means? Because it’s so smart what you’re doing there.

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Adam Taggart: When we sat down to figure out what are we doing, we said, well, look, we’re content generators. It’s a media company. So that content is our currency. And so the question is, how can we get that currency out there in the world and get people interacting with it? We can put up a website and post our article to it. Great, that gets everybody that finds us. Well, how do they find us? Well, maybe somebody tells them about it. Maybe a search engine picks it up. And there all these ways that you want to try to optimize each of those channels. But there are a lot of sites out there, particularly in our world, where you’ve got these are big interest areas, money, health, et cetera, and they’re are big aggregator sites in each of those categories where they’re bringing in headlines from a bunch of different places and their job is to try to bring in the best stories on the Web on any given day around those topics. So what I did initially was I’d go to Google Analytics and say, oh, well, who’s sending us traffic? And oh, it looks like this guy picked up one of our stories. So I reached out to these companies and developed a personal relationship with them, just letting them know who I was that I appreciate that they were running my content. I would ask if I can write something that I think is particularly of interest to your audience and send it their way. That’s actually helping them, right? It’s taking part of the burden off them. So over the years, I’ve created hundreds of sites, formed relationships with hundreds of sites, so that when I post an article on our site, I then go through my list and say, well, who’s this relevant for? And I blast it out on anywhere from 10 to 90 different sites. And the hit rates are pretty good about them posting that headline on their site.

Robbie Baxter: They’ve already done the hard work of gathering a kind of people that would value your content, in a way that the advertising really can’t.

Adam Taggart: I would completely agree with that. And what’s great about that is once you have that in place, it’s free. The cost to you is the email of sending them the headline saying, hey, I think this one might be useful for your audience. Then all of a sudden you increase your readership by several multiples.

Robbie Baxter: So you were starting to walk me through the customer journey, which is so important for any subscription business to really think through. So somebody finds an article on one of these sites that has been syndicated by Peak Prosperity and then they find their way over. And then what happens?

Adam Taggart: There are multiple ways, but you want to find the main ones. OK, well, let’s say somebody reads one of our sites, our articles on Site X, and they find themselves on Peak Prosperity. Great. Well, what’s the next thing we want them to do? Right. We would love for them to create a free account at Peak Prosperity because that then lets them start contributing to the community dialog here. We have the ability to post comments and articles.

Robbie Baxter: So they have to have an account, a free account in order to participate in the community. And that’s an important metric for you.

Adam Taggart: That is an important metric for us, because that person then becomes more engaged. They are much more likely to read, the probability of signing up for a premium subscription some day jumps up dramatically, as does their probability of buying one of our books, purchasing one of our paid webinars or coming to one of our conferences. A big part, and this is something that is critical for those people that have community in their businesses, particularly if it’s a business like mine where content is the real king. We have cultivated a vibrant, active audience of curious, smart people. Our members are highly educated. And now we have given them a forum for ideas exchange. If you’re familiar with a lot of other content sites across the Internet, they generally have a pretty low standard. We made the decision really early on to be just tenacious and rather unforgiving in making sure that everybody on our site community abided by the community guidelines. We made it very visible when we stepped in and had to discipline somebody for violating them. Everybody else realized we were creating a safe space here for intense, constructive dialog. A member can invest a lot of themselves in writing a really meaty post here because nobody is going to rip them to shreds.

Robbie Baxter: Tell me if I’m getting this right. It sounds like they come for your brilliant writing and they stay for the community.

Adam Taggart: Yeah, I think that’s true. But I do think they come for the community, too, that we’ve got enough people there who have sort of emerged as thought leaders or domain experts in certain topics, that the community comes there to read what this guy said today about topic X.

Robbie Baxter: And these are people who write for you, not paid, just because they’re part of the community?

Adam Taggart: And they do it because they’re very invested because this community has become, the word we use a lot on the site is tribe. And people have emotionally bought into being part of a tribe. It’s exactly what we want to create. We feel wonderful about bringing that into the world and the good that it does. But from a business standpoint, these people are generating a tremendous amount of high value content for us daily that is free.

Robbie Baxter: The concept of a super user, which is in my language, is somebody who’s both paying regularly for the services that you’re providing and getting value and they’re contributing their own time and or money for the well-being and the success of the group. And you do a really good job at what I call building super users. That people, the kind of people that come in in the first place are more likely to be writers and thinkers and sharers. And then you make it easy for them to have, as you said, a safe space to write and communicate and share their ideas.

Adam Taggart: Well, thank you. And what this does is it creates a virtuous cycle. It’s almost like a flywheel, where their good content attracts other people. Then it attracts other super users who want to get involved because they see the example and they want to follow it. But it also turns these people into evangelists, as they are more and more emotionally bought in to the tribe and its benefits. They’re going out and recruiting people.

Robbie Baxter: And so they’re becoming ambassadors to bring in new members. And now you’ve had a steady following for a while. I’m guessing that, because we’re recording this in spring of 2020, and I have to imagine that there is a spike. Everyone wants a spike in acquisition, but sometimes companies aren’t number one, they don’t know how to take advantage of a moment and then they don’t know how to convert that into subscription revenue.

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Adam Taggart: We’ve been very fortunate that the machine that we built has been able to scale to handle the volume we’ve had, but barely. I think what’s probably first and foremost is to let folks know, if they are going to bed at night dreaming for that day that their ship comes in, just make sure that they have laid the infrastructure to be able to guide that ship into port. Because what kills a lot of businesses is the dream happens, but they’re just not structured to actually take advantage of it. We’ve been very lucky to date. We you know our core part of the business, that paid subscriber base, has tripled in the past 45 days. But we had been rather flat for a couple of years at that base. The audience total audience size has maybe gone up by ten times in the past forty-five days. A good example of the second order effects of this is our social media channels have just blown up. Our YouTube channel took us about 10 years to get to fifty thousand subscribers. That’s where we were at the end of January. Here we are now, kind of nearing the end of March and we are above three hundred and thirty thousand now.

Robbie Baxter: So your goal, I would imagine, is to keep the people that have joined your premium service. How are you onboarding people so that they stay?

Adam Taggart: I think our main focus with this is we have so many new people now that we are putting more of our focus on them. We’re trying to do two things. One is to demonstrate value. To show people that what we’re putting behind the paywall is worth their money. We don’t want anyone to put their money down and then be underwhelmed. The second thing is, these people are coming in on a very specific topic: The coronavirus. And, you know, we do not want to be all-time viral experts to these people, that’s not the only thing we want to be. We have all these other things that we are experts on and honestly, that’s where most of our content normally focuses. So what we’re trying to do is, is connect the dots in their mind that, oh, these guys who are my I’ve decided are my trusted voice on the virus, they’re telling me they could be my trusted voice on this other thing that’s relevant to my life. And for better or worse, for the world, what’s helping us out a lot here is the coronavirus looks like it has become the trigger for the economic crisis that we’ve been predicting. So we have a lot of people who came to us because they were researching the coronavirus. But at the same time, they’ve just lost 25 percent of their 401k over the past month. They’re reeling from that, too. Well, we can spend an awful lot of time explaining to them exactly what’s going on there, giving them day to day market updates with our projections of what’s going to happen next. And these people are beginning to shift and say, I thought these guys were just virus guys. But actually, they’re experts on money. And that’s something that’s really important to me right now. So we’re trying to bring them into some of these other areas.

Robbie Baxter: You’re doing two things. One of them is you’re taking them organically to the next place that they want to go. And you’re also introducing them to this bigger concept that Peak Prosperity isn’t a coronavirus research firm, but that you have this broader media mandate. There are triggers that get people to join and there are hooks that make them stay. The trigger that’s getting people to join is the pessimism and the fear and maybe the joy is what’s going to keep them. But this idea of this lifestyle that they can live that, is going to help them be more resilient. What advice do you have for working stiffs out there who are working at great companies and they’re still there and they want what you have. They want recurring revenue. They want interesting work, meaningful work. What is your advice to them?

Adam Taggart: It’s not easy. Nothing is guaranteed. I will tell you, nothing’s better than being your own boss. And once you have a cash flow positive business that doesn’t take on debt and it’s spitting out, what you need to provide for your family. Anything above that is gravy. And you’re able to sort of live in a way that’s consistent with your personal life mission. It really doesn’t get better than that. I got some good advice from the dean of Stanford Business School before I left. Someone asked him a similar question and he said it’s really important to take risks in life. I’m all about taking really good calculated risks. Don’t take a dumb risk. But, you know, if you’ve kind of really done your homework and line things up, go for it. Just don’t take too many at the same time. Don’t quit your job and have to figure out the business model at the same time. That’s putting too much risk on your shoulders at the same moment in your life. Think, talk to people like me, talk to people like Robbie, and you can get an awful lot of really great how to advice from people that have done this. It takes a lot of the guesswork out of it and avoids some of the rookie mistakes. You can get that company started on the side. I probably spent too long pinching pennies and not investing in the technologies and stuff that I needed. If I could do it over again, I’d probably invest in getting better systems in place earlier on. I could have used more help on the Web site side I probably should have hired a good funnel marketing expert and database marketing expert, a consultant early on just to kind of really help me design things and get it set up. My learning curve on some of those things was longer than I would have liked. You can hire that. It’s not that expensive. And you can put a lot of those building blocks in place and get to your minimum viable prototype and get people running through your system all while you’re still working somewhere else. Once you’ve got that proven, or at least enough proof, then you’re better positioned to take some of the bigger jumps like quitting your job or going part-time.

Robbie Baxter: The last thing that I wanted to talk about was not taking outside capital. And maybe if you could talk a little bit about the kind of structural side, because many people start a company, a media company, and their whole thought is, how do I grow this thing as big as it can get, even if I have to take outside money and have outside partners in order to make it happen?

Adam Taggart: That’s a great point, Robbie. We were very fortunate that we didn’t have to take outside capital. Our idea was a big idea, but fortunately we had the ability to start small. The good news is if you’re getting into, I think most of online businesses that are especially if you have a virtual product, those businesses are not very capital intensive to start up. And it’s a wonderful time to be an entrepreneur. I mean, even compared to 10 years ago, right now, there are so many off-the-shelf solutions for things that I used to have to pay developers to do. This again, too, is why I think it’s so important to just talk to as many people who are in the field doing what you’re interested in doing, because they’re going to give you, you’re going to find some mentors there who are going to give you all the shortcuts. You can do so much more inexpensively with less capital than you used to. And tied to that is the more capital you take on, the more control and ownership you normally have to give up. What you don’t want to do is give away too much early on, especially when you’re at the version 1.0 phase. Right. That’s when most entrepreneurs are most vulnerable to having somebody saying, well, if you want my money, you’re going to give me half the company. Until you get a good sense of whether your current vision is going to fly or not, I would resist taking out any outside capital, if you can, or at least not capital that’s that’s tied to equity being given up.

Robbie Baxter: Yeah, absolutely. I think this is such an important point. And your point that a lot of this can be bought off the shelf, you know, accessed as a plug in, learned from a friendly fellow entrepreneur. I think that’s such good advice for everybody. If you’re trying to build something out, remember that a minimum viable prototype, a minimum viable product is just that. It’s the smallest thing that you can put out into the market and get real feedback on. So focus on that and resist the need for outside money, which brings with it outside partners, unless that’s really the path you want to go down.

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Robbie K Baxter

Robbie K Baxter

Author of THE FOREVER TRANSACTION & THE MEMBERSHIP ECONOMY; Leading expert on membership models and subscription pricing. http://www.robbiekellmanbaxter.com