Robbie Baxter [00:00:00] For context, this interview was recorded in March of 2020 in the early days of the COVID-19 pandemic.

Narrator [00:00:11] We all want a business like Netflix or Amazon Prime. Businesses where once a customer engages with them, it becomes automatic, and part of their lifestyle from then on. But how do you build that Forever Transaction? Robbie Kellman Baxter has been studying subscription and membership models for nearly 20 years. And in this podcast, she uncovers the secrets and strategies of the Membership Economy. Join us for Subscription Stories, True Tales from the Trenches.

Robbie Baxter [00:00:40] I’m Robbie Kellman Baxter. Today’s subscription story features Adam Taggart. For the past 15 years, Adam and his partner, Chris Martenson, have been running Peak Prosperity, a subscription based research firm focused on helping individuals live resiliently, no matter what happens. They provide insight on all areas but their key expertise is health care and money management. Peak Prosperity has been warning a global pandemic and subsequent market meltdown for years before the emergence of COVID-19. Needless to say, the number of subscribers shot up in the spring of 2020.

Adam Taggart [00:01:13] We need to get through this storm and our storm obviously was things going too well in the world and then the breakages that we’re predicting is gonna happen and that’s when we’re gonna get our shrimp in the shrimp boat. And that’s exactly what’s happened over the past month and a half

Robbie Baxter [00:01:25] In this episode, we’re going to talk about how to handle a spike in acquisition, how to build a lifestyle subscription business without outside capital, what it’s like to have a 50/50 business partner and much more. So let’s get started. Welcome to the show, Adam.

Adam Taggart [00:01:43] Thanks, Robbie. It’s great to be here. It’s great to see you again, too.

Robbie Baxter [00:01:46] Great to see you, too. So after 20 years in 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 [00:02:16] Sure. It’s not naturally intuitive to you? I’ll give you the short story, which is I graduated college. I went to Brown and was premed. I come from a family of doctors and was going to be a doctor. And my senior year I was about to apply to medical school. And back then it was in the early 90s and was right when the health care system was being revamped. And every doctor I knew said, hey, the whole thing’s 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. Apparently, supposedly. And I learned a couple of things. One, that 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, really 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. And while I was there at Stanford, the Internet revolution happened. And 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 there. Vice president of marketing for North America, which was a big role and it was a great place to work. And I’ve met a lot of really great people. And while I was there, I went to go buy a house. This was probably like in 2003. I went to go buy just to, you know, 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 if you want the house, you’re gonna have to bid by one hundred thousand over asking. But I did bid over for it. And the realtor came back and said, well, you were so far outbid that they’ve sold the house. Wow. 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, you know, the housing bubble of the first half of the 2000s. And I recently graduated from Stanford and thought, look, I’m not the smartest guy in the world, but I’m not the dumbest either. And I’m just missing something here. I just spent all this money on this expensive degree. And I don’t understand why people are willing to spend so much money for a depreciating wooden box. And 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 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. So I ended up reaching out and contacting Chris and we sort of hit it off and decided, hey, with his, you know, ability to continue to analyze what was going to happen next, and my familiarity with digital media, that our partnership really might be kind of a perfect marriage where I could really 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 that I could then run the business part of things, which is really sort of what we we ended up agreeing into. And that’s that 50/50 partnership you mentioned in there.

Robbie Baxter [00:06:29] So Peak Prosperity, you came in as the business guy. And you built a subscription. That was, that’s the business model you have built. Can you walk me through what the business model is? How much does it cost? Who joins? When can they cancel? All of that.

Adam Taggart [00:06:52] Sure. And, you know, beforehand we had to figure out, OK, is this you know, what are we creating here? What’s the business model to support it? And in which business model are we going to pick? And at the time, you know, Chris is a writer, he’s an idea guy. Right. And I actually end up writing a lot, too. So at the core of our business, it’s a content generation business. It’s a media business. Right. And you look at the media models out there and they largely fall into, OK, either it’s an ad supported business or it’s a subscription business. And I do have to hand it to us. I think we really 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 [00:07:39] 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 [00:07:55] Exactly. We think of the premium part as sort of the “and” to the free part. Right. So everybody gets the free. But if you want the really good stuff, you cross the velvet rope and subscribe, put your card down to subscribe. And our product is basically a lot of forecasting. And this is everything from, you know, what’s going to happen with the economy, what’s going to happen to the stock markets, to, you know, detailed strategies for how to get along better with, you know, the important relationships in your life, like your spouse. I would say probably about 85 to 90 percent of our content is free. And when I say content, it’s written material, it’s podcasts, it’s videos. And what we try to do is build up a lot of capital and build up sort of our following, you know, kind of our list, if you will, to watch subscription.

Robbie Baxter [00:08:42] How big is your list?

Adam Taggart [00:08:43] It’s a little bit over 80000 people right now.

Robbie Baxter [00:08:46] So eighty thousand on the list. And then you have the behind the velvet rope. You have that ten to 15 percent of the content that you create that is really good. And people pay. How much are they paying for that?

Adam Taggart [00:09:06] Great question. So, yeah, our base subscription is either a one month subscription for 30 bucks, a quarterly subscription for eighty dollars or an annual subscription for three hundred dollars.

Robbie Baxter [00:09:17] And then how many people are paying for the the velvet rope experience.

Adam Taggart [00:09:23] Yeah, I’d say in the low thousands.

Robbie Baxter [00:09:24] And they’re paying that something like 300 bucks a year. So they’re the premium part of the freemium model.

Adam Taggart [00:09:31] Exactly. Yeah. We also and then 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 [00:09:45] I think that’s important for our listeners that you have this expertise and you have this research, this body of research. And what I think is really 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. And then you’ve packaged another with, you know, conference’s. 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 [00:10:22] 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 that we can kind of be trusted experts in. And it’s everything from money to health to relationships to what to do with your home and your homestead. And two things that are really important, Robbie, I’m guessing you’ve talked about this before with folks, but you want to be really, 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, oh, they read one of our free articles and they might read that on PeakProsperity.com, or they might read that on a number of sites that syndicate our content.

Robbie Baxter [00:11:05] Can you explain what that means? Because it’s so smart what you’re doing there.

Adam Taggart [00:11:09] Sure. So as I mentioned, you know, when we sat down to figure out what are we doing? You know, we said, well, look, we’re content generators, right? So 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? Well, we can put up a Web site 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. Right. 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, started reaching out to these companies and developing a personal relationship with them, just letting them know who I was that I appreciate that they were running my content and saying, hey, is it OK if I write something that I think is particularly of interest to your audience, that I send it your way? Because that’s actually helping them, right? It’s taking part of the burden off of them. And so over the years, I’ve created, you know, hundreds of sites, 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’ pretty good about them posting that headline on their site.

Robbie Baxter [00:12:45] Yeah. They’ve already done the hard work of gathering a kind of people that would value your content. In the a way that the advertising really can’t.

Adam Taggart [00:12:57] I would completely agree with that. And what’s great about that is once you have that in place, it’s free. Right. The cost to you is the email of sending them the headline saying, hey, I think this one might be useful for your audience. Right. And then all of a sudden you increase your readership by several multiples.

Robbie Baxter [00:13:11] 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 [00:13:30] Right. And again, there are multiple ways of this, but you want to sort of find the main ones, right? 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. Well, you know, we’d probably 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. Right.

Robbie Baxter [00:13:56] 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 [00:14:02] That is an important metric for us, because that person then becomes more engaged. Right. So they’re much more likely to read, their 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. And a big part, and this is something that I think is really 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 really vibrant, really active audience of curious minded, really smart people. I mean, one of the common threads of all our people is they’re very, very educated. But anyways, we’ve given them a forum for ideas exchange. And 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 pretty unforgiving in making sure that everybody on our site community abided by the community guidelines. And we made it very visible when we stepped in and had to discipline somebody for violating them. And the benefit of that, is everybody else realized that, wow, they’re creating a really safe space here for really, like, intense, constructive dialog. Right. Like, I can invest a lot of myself in writing a really meaty post here because nobody is going to rip me to shreds.

Robbie Baxter [00:15:33] 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 [00:15:42] Yeah, I think that’s true. But I do think they do 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, you know, comes there to say, I wonder what this guy said today about topic X.

Robbie Baxter [00:15:59] And these are people who write for you, not paid, just because they’re part of the community.

Adam Taggart [00:16:04] And they do it because they’re very invested because this community has become, the word we use a lot in the site is tribe. Right. And people have really emotionally bought into being part of a tribe. And it’s great for us for a whole bunch of reasons. It’s exactly what we want to create. And 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 [00:16:31] Yeah. And that, you know, 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 wellbeing 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 [00:17:12] Well, thank you. And what this does is it creates a virtuous cycle. It’s almost like a flywheel, right, where their good content attracts other people around it. Right. And 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, right, as they are more and more emotionally bought in to the tribe and its benefits. They’re going out and recruiting people for it.

Robbie Baxter [00:17:38] And so they’re becoming ambassadors to bring in new members. And now you had a pretty, you’ve had a pretty steady following for a while. But I’m guessing that, you know, we’re recording this in spring of 2020, and I got to imagine that there is a spike. Because a spike in acquisition, of course, everybody wants it. But a lot of times companies aren’t you know, 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.

Adam Taggart [00:18:11] Yeah. So we’ve been very fortunate that the machine that we built has been able to scale to handle the volume we’ve had and barely, to your point. And I think that’s the probably first and foremost is to let folks know, which is if you are going to bed at night dreaming for that day that your ship comes in, just make sure that you’ve laid the infrastructure to be able to guide that ship into port, because what kills a lot of people, 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. So, yes, we you know our core part of the business that paid subscriber base has I think tripled probably, right, in the past 45 days, and we had been for a couple of years, pretty, pretty flat at that base. And so that’s the that’s the paid subscriber base has probably tripled. The audience total audience size has maybe gone up 10x in the past forty five days. And a good example of kind 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. So that kind of growth.

Robbie Baxter [00:19:46] 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 [00:19:58] 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. What we’re trying to do is do two things. One is to demonstrate value. To say, OK, look, what we’re putting behind the paywall is worth your money. Right. So we don’t want anyone to put their money down and say, oh, I’m really underwhelmed. The second thing is, is these people are coming in on a very specific topic. Right. 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 is. 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. Right. 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. And 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, oh, I thought these guys when I first, you know, became aware of them 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 [00:21:37] You’re kind of 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. You know, there’s triggers that get people to join and there’s hooks that make them stay. And, you know, 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, you know, is going to help them be more resilient. What advice do you have for working stiffs out there that are working at great companies to have worked at great companies to come from? 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 [00:22:38] Yeah. You know, 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, you know, what you need to provide for your family. Anything above that is gravy. And you’re able to sort of live, you know, something that’s consistent with your personal life mission. It really doesn’t get better than that. I think if I could come up with sort of some general guidelines and really good advice I got from the Stanford or the dean of Stanford Business School before I left. Someone asked him sort of 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. So don’t quit your job and have to figure out the business model at the same time. Right. That’s putting probably too much risk on your shoulders at the same moment in your life. So, you know, I think, talk to people like me, talk to people like Robbie and the people that she interviews, you can get an awful lot of really great how to advice from people that have done this and take a lot of the guesswork and avoid a lot of the rookie mistakes. If you listen well and you can bleed a lot of risk out of the system in terms of figuring out what model to put together. And you can get that company started on the side. And I’d highly recommend, 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, both sort of on the Web site side and like, 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, because my learning curve on some of those things was longer than I would have liked. But 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. And once you’ve got that proven, or at least enough proof, then you’re better positioned to take some of the bigger jumps, like, OK, I’m going to quit my job or maybe I’m going to shift a part time or whatever.

Robbie Baxter [00:25:01] 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 [00:25:24] That’s a great point, Robbie. So, you know, on our end, we were very fortunate that we didn’t have to take outside capital. Our idea was a big idea, but fortunately 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. Oh, yeah. No, no, no. There’s a great plug in for this over here. Oh, there’s a site that does this over here. You can do a lot of this 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. Right. In what you don’t want to do is give away too much early on, especially when you’re at the, you know, version 1.0 phase. Right. That’s when most entrepreneurs are most vulnerable to having somebody saying, well, if I want my money, you’re going to give me half the company or whatnot. But in many cases to get to some, to get to that minimum viable prototype that people can start interacting with. Where you’re really going to get a good sense 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 [00:26:59] Yeah, absolutely. I think this is such an important point for people to take away. 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 listening that 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 focusing on that and resisting the need for outside money, which brings with it outside partners, unless that’s really the path you want to go down.

Robbie Baxter [00:27:50] I want to thank you, Adam, for spending the time with us and for being so candid about your journey, about how you and Chris have built Peak Prosperity, and about some of the best practices that other subscription entrepreneurs can apply to avoid some of the bumps and bruises that you’ve experienced and maybe enjoy the same kind of financial freedom that you give.

Adam Taggart [00:28:17] Well, thanks, Robbie. Was a pleasure to be here.

Robbie Baxter [00:28:23] I’m Robbie Kellman Baxter, and this has been Subscription Stories. Today, my guest was Adam Taggart, Co-Founder of Peak Prosperity. To hear more success stories of entrepreneurs creating their Forever Transaction in this new and exciting Membership Economy, subscribe to my podcast wherever you download your podcasts. Also, please give me a rating or review to help me better understand exactly what you want to hear.

Robbie Baxter [00:28:49] To learn more about peak prosperity, please go to PeakProsperity.com Arnav Gupta and Mark Kirchner, were the audio engineers for this podcast. Arnav edited this podcast. I’m Robbie Kellman Baxter. Thanks for listening and for your support.