The Membership Model That Grew From 0-$10M ARR Without Its Own Tech.| Sam Jacobs

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Have you ever learned something in your career the hard way? Often, we only realize the value of lessons much later when we have gained a lot more experience. Today’s guest, Sam Jacobs, learned about humility only after quitting his job in investment banking to start a record label that failed abysmally. He also learned some vital lessons after getting fired multiple times from several different companies over the last decade. 

Sam has had a huge diversity of experiences. He is the Founder and CEO of Pavilion, the premier community and premier development platform for high-growth leaders and their teams at every function.

After grinding for a long time, Sam started Revenue Collective as a group therapy session and community for his friends and peers so that they could support each other, help one another find jobs, and get better at their jobs. He started the community as a group in New York. They got together every quarter to talk about their problems and challenges over some drinks or a meal. People from all over the world started hearing about it. They began reaching out to Sam to start new chapters. So they got some other chapter heads in London, Toronto, Boston, and Amsterdam, and they also added Indianapolis, Denver, and Atlanta. 

Revenue Collective started charging dues at the start of 2018. Sam was still working then, so it was a side-hustle for him. After getting fired from his job a few months later, he decided to do it full-time. He figured that if he got 2000 paying members, he could survive in New York. 

It was a huge success, and they rebranded to become Pavilion. The mission of the company is about helping each person get where they want to go in their life through their work. 

Pavilion was profitable, and Sam was not planning on raising any money. However, he got an email from Elephant Ventures, offering him $25,000,000. So he took the money and used it to build his company to where it is today.  

Getting fired sucks for many reasons, regardless of how much you get paid for severance. Despite making a lot of money at Gerson Lehrman Group, Sam was not happy there. He went through a divorce at the same time as he got fired from GLG, so he lost a lot of money, and his income also dropped drastically. That was the start of a radical transformation for Sam.

Sam went to work for Axial in their very early stage. After getting fired, he went to Livestream. He left there to join TheMuse.Com as their CRO and, after seven months, was asked to leave. They felt he was not a good fit for their culture because he was too hard. He then moved onto Behavox but got asked to leave because he was too lenient. 

Getting fired at the executive level is not quite as crazy as getting fired as an account executive. At the executive level, you get fired as an individual contributor because you did not hit your number. If you get fired as a C-Suite executive, however, it is probably because your vision does not align with what the CEO wants to do, and ultimately, you are in service of the CEO’s vision.

Although he is introverted, Sam loves to help people. Since starting Revenue Collective in 2016, Sam has been sincerely looking for ways to help his friends and the broader community. 

Sam loves hearing about people who work hard, want to be better, do things the right way, and succeed. He recently did a workshop for their Rising Executives Program and realized that 5 of those who joined their January class have already been promoted to VP.

Getting fired from The Muse was a turning point in Sam’s life. That was when he decided to stop relying on other people and start charging dues for Revenue Collective. He also decided to try for sponsorship, so he asked Kevin O’Malley of SalesLoft for $10,000 to put together a dinner for him in New York each quarter. Kevin agreed, and Sam started charging dues of $50 per month. 19 of the 21 members paid their dues. Sam kept on moving forward, and more people wanted to join his collective.

To build a successful company, you need to find a technical person to build a product. Unfortunately, finding engineers is the hardest part of building a company because most engineers want to work for other smart engineers. That is why you need to have a product-driven founder. 

Before, Sam never gave himself the right to believe that his community could get big and never allowed himself to dream. 

Covid was an inflection point because everything became digital, and many networking businesses failed to adapt and went out of business. They adapted very quickly, however, and grew 5x during Covid.

Over the past few months, Sam finally let himself believe that the thing he was doing could be huge. 

A paid membership model is a more elegant way to do things because it forces people to commit, and they can be your customer. 

Sam built Pavilion, which is worth $100,000,000, using other people’s tools. That makes him wonder if we could be moving to a world where engineering talent is no longer the prerequisite that it used to be to build a valuable company. 

Quantifying his values and writing down what he believed internally for his company (then Revenue Collective) was extremely powerful for Sam. In 2018, he decided that if his company grew to 1000 people, he would stay close to the reasons he started in the first place, keep on checking in with those values, and be as helpful and useful to the membership as possible.

You don’t need to be a genius with B2B. You only need to listen to your customers. They will tell you what they want, so keep your mouth shut and listen. 

One of Pavilion’s values is: Listen closely. Act quickly.

All Sam thinks about is what people need.

During Covid, Sam decided to start an exclusive community that people could only join if they were out of work. It was to help people find jobs and provide group therapy for those who could not. He called it On the Bench, and there are currently 200 people in the program. Sam had no master plan. He just tried to do the next right thing.

There are 3 jobs for the CEO:

  1. Never run out of money
  2. Recruit or build a team
  3. Set the vision

You need to delegate effectively. Sam is lazy, which is good because he delegates.

Delegating helps you scale. If you set clear direction and clear values, you can grow.

Telling people to go and figure things out is good for creating their self-reliance. It can also be difficult because sometimes it is better to have someone else help you figure things out.

The top sales and marketing levers that Sam pulled to get the growth he did from a bootstrap perspective for Revenue Collective were:

  1. He created brand affinity by explicitly encouraging people to put Revenue Collective on their LinkedIn profiles. Initially, 50% of the community did it. Now, 82% of the community does it.
  2. He created a multi-level marketing component to Revenue Collective because he shares the money from the dues with people for the work they do for the platform. Some of the members tied their brands to Revenue Collective because they benefited personally from a financial incentive for doing that.
  3. He does unscalable things that lead to scale, like coaching calls, to show customers that he cares. Sam feels that people are overly obsessed with ‘scale’ on the margin.

Venture capital is good if you have a strong product-market fit and a strong go-to-market fit. The limiting factor in your growth is just money, so if you have something that lots of people love, get it into as many hands as possible, and cement your competitive advantage, venture capital can be very powerful.  

Venture capital is a bad thing if you misdefine what you perceive to be your exceptionalism, and as a consequence, you take on a lot of money, obligation, and an expectation of growth that you are not ready to deliver on.

It could take 18 months to 2 years to work yourself into a position to raise money.

Sam cares about a different way of doing business and teaching people that you can split the difference and leave some money on the table. It is okay to do something for someone without asking for anything in return, even if some people take advantage of your generosity. It will all come back to you eventually for what you want to achieve in your life, including making money.

There is a different way to live. It is about helping before asking for help, looking to offer advice, and not treating relationships transactionally.

Links and resources:

Sam Jacobs on LinkedIn

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