Pando

Greg Isenberg is unbundling internet communities

Late Checkout founder, Greg Isenberg, discusses how to spot an 'unbundling' opportunity and build a monetizable community around it.

By Aimee Pearcy , written on August 25, 2020

From The Interviews Desk

Greg Isenberg is the founder of a communities design firm, @latecheckoutplz. His posts, The Guide to Unbundling Reddit and The Unbundling of Udemy, have inspired hundreds of people to start up their own online communities.

In this episode, I talk to Greg about how to spot an 'unbundling' opportunity and build a monetizable community around it. 

 

 Useful links:

- Late Checkout is Greg's communities design firm.

- redditlist is a website that tracks the most active and fastest growing subreddits. 

 

 

Transcript:  

You've got a really interesting background. So you're a Canadian internet entrepreneur and venture capitalist. You've previously founded interests-based communication app, Islands, which you sold to WeWork, and video discovery platform 5by, which you sold to StumbleUpon. Right now you're a growth advisor at TechTalk and a venture partner at Indicator Ventures, a tech venture fund, and you're heavily involved in building internet communities. You've recently launched a site called Late Checkout -- I definitely want to go more into that -- and that's a company that creates and acquires internet communities.

That's me.

First of all, I want to go all the way back. I did some research on you and it turns out that you started your first internet company when you were 13.

Yeah,. For as long as I could remember, I've been tinkering with the internet. I read a book when I was 13. It was on a shelf in the library. It's a book by Bill Gates. It was called The Road Ahead. This is a book from probably like the early nineties. And he basically outlined exactly how the internet was going to be. That there were going to be social networks, that there was going to be Zoom and video conferencing. He just saw he future and he basically predicted it. And I was like, whoa, I'm living in Montreal, Canada. And it's a big city, but it's not New York or Tokyo or London. I was like this internet thing is going to allow us to sort of...transport. Everyone's going to be using it and all the time. So I just started tinkering at 13 and then been tinkering since.

So what was your first project when you were 13?

First project was really like these e-commerce websites and apps. It was kind of in the eBay heyday, when you could go to this store called future shop -- and future shop was a kind of Best Buy competitor, actually, Best Buy ended up buying it -- and they would have these deals on DVD box sets. So you'd have Family Guy DVD box set season one and there'd be loss-leaders for the company. And I realized that you can buy them for 20 Canadian and then sell them for 50 U S. And so just starting creating eCommerce sites around that. You can also make money on shipping and then, so how do you bring traffic to it? So it just had all the pieces: building a brand, creating a destination, understanding go to market building, building marketing funnels. That's how I got started.

Did it work?

I mean, some of it. I'm 31 now. So this is like 2002 or 2003, 2004, so a long time ago. But there's a magical feeling you get when you create something and people use it. There's a double magical feeling when you create something, someone uses it in some way, and then buys it.

For me, it was just mind blowing that anyone would buy anything that I would create. And in the background I'd be talking to the customers and they didn't know I was a 13 year old kid. And I needed to have wifi during class so I bought these pocket PCs -- they were these phones that ran on Windows -- and I'd be in class checking orders.

That's great. So after that you went to McGill University, right? What happened there?

Yeah, exactly. So I tinkered from 13 to 18 or so. Once at McGill, I studied, did a double bachelor's in computer science and, and international development. But I never stopped tinkering basically and ended up creating an agency with a couple of friends where we designed really cool apps and websites. And then we also built our own.

W e designed wrench.com. We designed a lot of really interesting and above our weight apps and websites. And then we took those learnings and we built our own startups. So we built stuff like startcooking.com, which was one of the biggest video cooking sites on the internet.

We built a network of finance, financial education websites that ended up getting acquired. We would basically find ideas and we would, ask, could we build them ourselves? And I dropped out of McGuill at that time.

Okay. Was that because your business ventures were successful and you just didn't have time to study any more?

I think even when I started at McGill, I was very much trying to do the bare minimum. I was kinda just like there just to take tests. I think a lot of us do, especially when we're growing up. And also when we're older, we do things because the world says that we should do that. That was it for me initially. And then at one point I was just like, I'm not learning. If your goal is to optimize learning, wouldn't you want to spend the time doing the thing where you're learning the most? I was having these amazing meetings and I was feeling so inspired. At this point I was building a big team and making a big impact. I was like, I'd rather learn here than there.

Definitely. So after university, did you leave Canada?

Yeah. So after university -- or even in university -- I was spending half my time in San Francisco and New York, and then half my time in Montreal, Canada. And then I started a company called 5by, after that. And this was around 2012, 2013. YouTube was getting really big, but it was really hard to find interesting videos to watch. So the idea was , can you curate the most interesting videos and whatever you're passionate about?

And then can you create small group chats or communities around these different topics? And we launched it. It went really well. And shortly after we launched it, it got acquired by StumbleUpon which at the time was one of the largest web-discovery platforms for interest-based content. So the way it worked was, you press the button. If you're interested in astrology, you get the most interesting astrology content. And then I joined the management team there. I moved to San Francisco.and that was fun.

It must have been a big change going from a university in Canada to living in San Francisco.

Yeah, but it was very much a gradual change. 'Cause I was already spending so much time there starting very young -- or as a teenager -- in San Francisco and doing that. I think now it's different. Now I don't know if you have to be in San Francisco to get that whole tech experience. You probably don't. Especially with podcasts and interviews and all the resources available. You can really tap into the ethos of Silicon Valley anywhere, but back then, you really did need to be there to feel it, see it, hear it. But because it happened gradually, it wasn't so much like I literally moved to San Francisco with a carry-on bag.

One of the things that I really want to talk about that I think you've been getting a lot of attention for recently is your 'unbundling strategy' that you've been posting about. So you posted a Guide to Unbundling Reddit a while ago on your Substack. And we found that and we put it on Pando, and that's been getting tons of traction. I was wondering if you could talk a bit more about that. So what inspired that post?

Yeah. So my belief is we're entering a really interesting time with COVID and what has happened even in places like Canada right now. There's not that much COVID but people still don't feel safe into going into physical spaces. I just had a conversation with a woman this morning. She's a religious woman and she doesn't want to go into her church because he doesn't feel comfortable. So what you have this world where physical community has been basically extracted from people's lives.

Now community is unity. Basically, it's oxygen. There's the quote that the five people we spend the time most with were the average of. I think the same applies to communities. The five communities that you spend the most time with, you become the average of. Whatever it is you're into, if it's Esports, or, some Manga community, or just some weird fringe audio file type stuff., everyone has like a couple things.

Reddit has become a really, really powerful place to find those people and access that content, as well as Facebook groups. Facebook groups had over a billion monthly active users, it's obviously a very big product now. Startups are really great at picking particular communities and building something that monolithic large companies cannot.

And my belief on the next phase of startups and the internet ecosystem is that people want bespoke experiences. The analogy I'll use is, you can go to a Starbucks, but you can also go to like your local coffee shop. And why do you go to your local coffee shop? Maybe you want to support them. Maybe you feel something when you're there. Maybe it's just that connection that you have. I think that's a big reason why people end up going local. That vibe.

So the question is, what's the locally sourced food or local coffee shop, but for internet startups? Well, I wrote the post around unbundling of Reddit because I believe that you can actually go into a lot of these subreddits and there's some tools that you can check out redditlist.com, which basically shows you the trending Reddit subreddits, and what are the ones that have seen a lot of growth in 24 hours.

You can go in there and basically be like, okay, this community is desiring a place. They need a place. And it's a really huge opportunity for startup entrepreneurs to be like, what can we build for these people? They're clearly telling us that they need something and since I've posted that on Substack and Pando, I've gotten hundreds of messages from people who've gone in unbundled or tried to unbundle different subreddits and all the opportunity that exists.

I remember when I first read your post, I went on to Reddit straight away and I was scrolling through all of the different subreddits thinking about which ones I could unbundle. It's amazing. I think you're right. Literally anything can be unbundled, for better or...for worse. I'd be interested to hear about whether you've spoken to anyone who's actually successfully unbundled anything.

Since the post, I've probably spoken to 15 to 20 entrepreneurs. Some of the interesting things that I found after speaking to them is that a lot of them had side jobs already. They're working full time. But they read the post. And they went and created something. The ones that have been successful, they basically look on Reddit list and they're like, "oh, I'm also interested in XYZ." And so the people that ended up creating the most successful stuff happened to be the most passionate about that particular project, which makes sense in hindsight.

But it's cool to see that people are actually members of the community themselves building it. A lot of the most successful ones -- and I don't know why -- have been outside of the United States, which is another interesting thing because it shows you that you do not have to be in Silicon Valley to start one of these. You don't need to raise venture capital to start one of these. You can be anywhere, as long as you understand the community, co-create with the community, and build something amazing. That's all that really matters. And yeah, I've seen stuff in all facets: people's work set-ups, a community around knives. I saw a high-end pen community. It sounds ridiculous, but it turns out there's a bunch of people who are into pens and they want a place to learn and hear about pens and talk about it.

Yeah. I've heard pen collecting is quite a big niche.

Yeah. I had forgotten about it. It turns out that they're vocal and passionate. Board games and collectibles and tips about luggage. There's just a lot of stuff.

That's amazing. So do you know if anyone's actually managed to monetize any of this?

Yeah. So, without going into exact examples, 'cause I don't know if the founders want me to to explain their particular business models. But a lot of them have put a monthly subscription on top of their community. Some of them have built specific products for that community too. So for example, the pen community: you can build your own pen and sell it to people if you have the right people. I've seen a lot of that. Some of the communities that we were looking at had a virtual economy. They would sell points, kind of similar to how Reddit has Reddit Gold. So they're their own version of a premium experience. Selling Q&As, selling livestreams, selling access to different influencers. That's the beauty about where we are today and in 2020. There are just so many ways that people can monetize.

It's no longer: "oh, you build something you need to so ads". There are dozens of ways to skin that cat now. And I think we've just scratched the surface with some of the ways we can monetize. We should continue to see new ways.

So the thing we can take from this is literally anything can be unbundled.

Number one, anything could be unbundled. Number two, you can be anyone. Number three, you should co-create it with that community 'cause they understand their needs the best. Number four, the time is now. 'Cause this isn't gonna last forever. I don't see a 20 year window here. It's probably two years, three years, I don't know. But it's a great time to get started now.

The main thing that I'm wondering is, once you've picked something that you want to unbundle, how do you create community around that?

Yeah. So there's, there's two ways. Number one you actually don't stop. You don't build the community at first, you build them like a tool. So for example, with the pen community, maybe you just go and design the coolest pen. And you start with the pen and then you seed it with the Facebook group and you seed it with the subreddit and then you attract that community to it. And then you start adding community type features.

So it's the age old come for the tool, stay for the network. Or as I've been saying: come for the tool, stay for the vertical network. So I think that's a really good way to start: thinking about what these people really, really need right now. And then sometimes there's an opportunity to go and just start with the community and be like: "oh, hey, I'm gonna build like an invite-only community of pen enthusiasts, and here's the reason why."

And sometimes that works, or sometimes it's a combination. It's not as easy as "come for the tool, stay for the vertical network". Sometimes it's "come for the tool, come for the vertical network, stay for the vertical network".

How do you think, how do you think we got here though? Why are platforms such a mess and why do they need to be unbundled?

I first and foremost want to say, it's, it's great that platforms have gotten so big because a lot of good is happening. You just have to spend time in Facebook groups and subreddits to see a lot of like positive connection and positive exchange. But at a certain point, a lot of these platforms are basically monolithic cookie-cutter platforms.

Although they work for 90% of the use cases, they're not purpose-built. There's something about building purpose-built products for particular communities that end up making those particular products really speak the same language as that particular community. And people really realize that and they see it and they feel it. And there's a connection that's made between the customer and the product and the community.

The Facebook groups of the world are only gonna get bigger. And, you know, there's a billion monthly active users now, but it might be two or three or four going forward. But I still believe that even as they get bigger, you'll still see opportunities to just unbundle and unbundle and unbundle.

You kind of have to be a detective. You have to look around and see, and that's a bit of the trick to it.

I recently saw on your Twitter, you've suggested that people create anti-roadmaps. So product roadmaps for anti-Instagram, anti-Facebook, and anti-Amazon. Can you explain a bit more about what you mean by this?

So I'm a big believer in: how do you generate ideas? How do you generate startup ideas? How do you generate product roadmaps? And I find an interesting lens on it. If you look at, let's say, Spotify, and you're like, okay, what does Spotify do? Spotify allows anyone to listen to any song that's out there. That's amazing. It has any playlist. You just type in "rainy day", you're going to find a rainy day playlist. Any playlist you can think of is going to be out there. It algorithmically suggests things. It says, "hey, we think you're going to like this. We think you're going to like that".

Now for fun, what if you took Spotify and flipped it on its head? How would you create something that's human curated? How would you create something that deepens the relationship between the listener and the artist. How would you allow listeners to directly support those artists?

And when you start asking yourself those questions and flip each company on its head, you end up coming out with a bunch of key insights. For years you have customers who get really used to a particular product -- but they have some pain points. For example, for Spotify it's, "I really want to get to know the artists that I'm listening to". And it's really hard to do it on Spotify.

So something I always encourage founders or product people designers to do is just to try to flip it on its head and create the anti-roadmap and see what you come up with. And the other beauty about it is if you do create it and it works, the cool thing is it's often very hard for those companies to replicate what you're doing, because it goes completely against their model.

So once you do hit product market fit and it's working, they do have to do a lot of untying of how their product works to actually succeed.

Do you know any of any existing companies that are, for example, anti-Facebook?

I mean the greatest example, although it was copied would be Snapchat. Snapchat's key insight was that it looked at social networking, looked at Facebook and was like, "oh, hey, turns out that it's annoying that everything is permanent. What if things disappeared and we created a business around that that's worth $30 billion or $35 billion today?"

Even though stories has been copied on Instagram, it's a $30 billion business with a lot of impact. Classic anti-product roadmap idea.

Okay. Do you think you could do an anti-Snapchat company?

I think right now is a great time to do an anti-Snapchat. Totally. I know people working on it already.

So moving on from that onto your company -- or platform -- that you've recently started called Late Checkout. First of all, where did the name come from? And what does it do?

A late checkout is something that you get at a hotel because you're enjoying the experience. You're there in a hotel and you're about to pick up the phone and you're about to call the zero, the operator or someone at the desk and be like, "hey, like, is it okay if I get a late check out?"

And, and then if you do, you kind of sigh of relief. "This is great. Let me enjoy myself." And that's the experience that I and team ultimately want to deliver to customers.

What inspired that?

Pre-COVID I loved just like spending time in hotels. I think it came to me in Palm Springs or something, and I was like, "I just want to enjoy this place".

We do three things: we have a product studio where we literally come up with ideas on the thesis of unbundling Reddit, unbundling Udemy, unbundling LinkedIn, unbundling XYZ. We create products for communities that we fully own.

The second thing we do is we help a few select brands and companies do that same thing. We work on product designs, strategy, and implementation for XYZ company trying to target this community or trying to expand this community. So we help them do that.

Then the third thing we do is we have a fund that acquires profitable internet communities. So we look at some communities that the founder maybe wants to sell, or just doesn't want to do it any more, or is looking for a partner. We basically buy between 51% and 100% of companies.

Okay. Do you have any projects you're working on right now that you can tell us about?

Not right now coming soon.

Another question that I'm kind of interested in, do you think COVID has opened up any more opportunities for unbundling?

Yeah, I think it's a hundred X or a thousand X the opportunities. I think there's not enough founders working on bundling for the amount of problems that exist. The question is, are we going to let Facebook groups create platforms to customize solutions? Or are we going to do it ourselves? We'll see what happens. That's why I wanted to write about it. And I want to open source these ideas 'cause I want more and more people that work on it.

Yeah. I think it's really cool. I'm really looking forward to seeing what comes out of it.

Me too. I think the world needs more products that speak to audiences. So I think the more we can do there, the happier we can make people.

Before we go, what tips would you give to people who are looking for things to unbundle?

Start with yourself. What are the things that you're really passionate about? What are the things that you think about a lot, if you're at a party and you're talking to someone, what's something that you just end up talking about for an hour, 'cause you are just so interested in it. It could be 16th century American history. It could be pens, it could be life hacks.

Do an analysis on yourself. Start with yourself. And, and then go to Reddit list and platforms like that and try to join Facebook groups and join Discord chats and like get in there and get your hands dirty. And then start. Start writing an idea every single day and make it a part of your process to write an idea every day.

And get started. Even if you're not a developer, and you're not a designer, with the rise of the low-code, no-code movement. there's just so much opportunity to go and test. So I would take just, just have fun.

Thank you so much, Greg. It's been really good to talk to you and I'm looking forward to seeing what you unbundle next.

I'm looking forward to see what you unbundle next.

 

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