Sam Parr pitches communities as businesses that grow alongside AI, citing NADA 20 Groups' $13m to $15m a year.
Sam Parr says he heard BNI, an 800,000-member referral network, was acquired for a billion-dollar-plus amount.
Shaan Puri warns Facebook groups carry platform risk but sees outsized whale revenue in card-ripping apps like Triumph.
Communities are the business AI cannot make obsolete
Sam Parr thinks the durable businesses in an AI world are communities, because software is no longer a moat and a paying network is. The examples he gives are unglamorous. NADA 20 Groups charges car dealers $6,000 to $8,000 a year to compare profit and loss statements in groups of 24, and MODA runs 23 Facebook groups where 600,000 members trade watches, cars, gold and jewellery. Neither spends much on marketing, which is why he thinks the model can be copied.
Takeaways
Communities are the business to build now. Sam Parr's case is that people who are not AI people can still make money from businesses that grow alongside AI without being AI businesses. Those businesses are communities, which he calls a good moat now that technology is not one, citing Pieter Levels.
NADA 20 Groups is the template to copy. Auto dealers pay $6,000 to $8,000 a year to join groups of 24, flying to one city three times a year to go line by line through each other's profit and loss statements. Sam Parr estimates it does $13m to $15m a year with horrible marketing.
Boring professions are the next target. Sam Parr's advice is to copy the model and point it at dentists and law firms, where the average owner takes home about a million dollars a year. Shaan Puri sees a 2.0 version built with today's media tools reaching a new set of doctors.
MODA turned watch trading into 23 groups. Its founder started a Facebook group for buying and selling watches in Sioux Falls in 2018. Dealers now pay $1,000 to $10,000 a year after a two-step vetting process, and Sam Parr estimates the business does $5m to $10m across 600,000 members.
Facebook groups give reach but carry risk. Shaan Puri warns Facebook has changed its platform repeatedly and a group owner can lose reach or the ability to add members. He still likes the model for aggregating whales, since a tiny sliver of collectors and gamers produces most of the revenue.
Hampton wants to buy more communities. Sam Parr has been learning about investing because he wants Hampton to buy other communities, targeting hundreds of millions of dollars in annual profit and billions in revenue. BNI, with 800,000 members, was reportedly acquired for over a billion.
The card-ripping boom
A buyer pays $50 to open a pack, the app books about $40.50 and returns $43, so the buyer is $7 from even and the card stays in the app to be sold again.
Triumph has done a billion dollars of revenue in a year. Logan Paul launched his own app, Rip It, and Collector Crypt grew from tens of thousands a month to tens of millions.
The mechanic comes from Japanese gacha, which was banned in Japan, and American games copied it with loot boxes in Overwatch and FIFA.
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On this episode 2
Show 1
A toy-business friend showed an IP holder that mystery boxes produced seven times the revenue of open shelves, even though customers say they like choice.