Ryan Lee inspired James early in his online business career to explore the membership model. After some time away from the industry, he’s back to share his story and the lessons he’s gained.
Our marketers delve into the past and present of internet marketing and where the membership business model fits in.
We hear where Ryan is headed after starting a supplement company and selling it.
And James and Ryan share tips for those who want to build a community and start their own membership based business model.
Table of contents
1. When Ryan came onto James’s radar
2. Ryan’s online journey
3. When things went downhill
4. Where Ryan is today
5. The grass is always greener…
6. What works for you changes
7. When it’s not all about hustle
8. From volume and bulk to targeted content
9. What’s changed and what hasn’t for James
10. Where the three Cs really came from
11. Lessons learned in a decade of business
12. Stop obsessing with the tech
13. Where James puts his current focus
14. Setting one’s priorities
15. Finding the best prospects
16. Defining your price tiers
17. How people make money on YouTube
18. The stuff you’ll want to take away
19. Does Ryan have more fun now?
20. Things to look forward to
When Ryan came onto James’s radar
James, recalls meeting Ryan in 2008 at Yanik Silver’s Underground 4 event. Ryan was then a fitness membership expert and a speaker, while James was still a general manager for Mercedes-Benz, trying to establish his own online business.
Ryan’s book opened James’s eyes to the potential of an online business, and he followed Ryan’s content.
Ryan had been deep in memberships before, but disappeared for a time. Since then he’s returned to the subscription membership industry, which has piqued James’s interest.
Ryan’s online journey
James is interested in Ryan’s journey, from being a fitness professional who pioneered the membership model to where he is now.
Ryan started his first website in 1998 and turned it into a subscription site in 2001. He recalls driving to his job as a gym teacher in New York, all set to make the switch – 9/11 happened that day, and he had to delay the launch.
Eventually, Ryan did launch the membership, and it was a success. Ryan became known as the membership site guy, teaching others how to create successful membership sites.
Ryan’s focus shifted when he launched a supplement company, which became a quick success due to his hold on the fitness industry. He became the back end for many well-known health and fitness marketers, and their sales reached seven figures a month.
Ryan continued to experiment with membership sites and launched a dozen of them in different health and fitness industries.
When things went downhill
Then, says Ryan, he sort of hit the peak, and from there his success declined.
He admits a lot of it was self sabotage, which happens to a lot of entrepreneurs. If you’re in the game long enough, you go through the ups and downs. The exception, he says, are the people who are super focused and determined.
Ryan started to think he could do no wrong – he did bad deals, made things too complex, and got away from his core strengths. At one point, he started a print magazine and got a big office space – not smart, he later realized.
Ryan had multiple corporations at one point, which generated stress and impacted his health. He took his eye off the ball with his supplement company, and one of his mentees started a competing business that was very successful – a slap in the face for Ryan.
Ryan believes he could have been more successful if he had stayed focused on strength and conditioning. He advises other entrepreneurs to stay focused and not get distracted by shiny objects.
Amid health issues and wrong decisions, Ryan walks away from the online biz. He still had his toe in, he says, and would do a thing here and there, but wasn’t as visible, and he stopped speaking at events for seven or eight years.
Where Ryan is today
Five years ago, Ryan thought to start another health company. This was Rewind, which began with health bars and transitioned to greens.
Ryan recently sold the company, and now focuses on subscriptions and looks at possibly teaching marketing. He recently turned 50 and is enjoying a newfound freedom, running a simpler business model.
James has never gone for the big office, staff, or physical premises. He maintains a no stock policy, except for a few DVDs and MP3 sticks, and his small team is an essential part of creating the lifestyle he desires.
James and Ryan both enjoy comfort while working, Ryan once sharing a tracksuit pants purchase on his website.
Rewind seemed to have been quite successful from an outsider’s perspective, says James. It was a fun company, Ryan agrees.
The grass is always greener…
Among entrepreneurs there is often the thinking that the grass is greener on the other side. Ryan talks about people looking at other business models and believing they are easier or more profitable than their own.
Someone with a subscription site, for instance, may envy the high-ticket coach who just sold one person for $20,000. However, each business model has its own challenges and drawbacks, such as rising raw ingredient costs for e-commerce and the need for detailed descriptions for digital products.
James highlights the benefits of recurring revenue from a subscription-based business model, which provides certainty of income and reduces stress. He cautions against the wear and tear of the launch cycle style of business and the dangers of scaling too much.
Ryan agrees and advocates a simpler approach to business. Overall, it’s a matter of recognizing the challenges and benefits of different business models and finding what works best for you.
What works for you changes
Ryan and James say their perspective on success and work has changed as they’ve gotten older.
They discuss how scaling up isn’t always necessary for a fulfilling and profitable business. You can have a great life on a couple of million dollars with a really high-profit margin and a small team, keeping things simple.
They also touch on the importance of not just looking at top-line revenue but focusing on net profit.
James shares that he’s at a place where he doesn’t need to show off his assets and success through material possessions. These things don’t matter as much as he once thought they did – he’s focused instead on making reasonable decisions and feeling comfortable with where he is in life.
Success and happiness can come in many forms, and it’s important to prioritize what truly matters to you. As people age and gain experience, their perspective on work and success can shift – that’s normal and okay.
When it’s not all about hustle
Along those lines, not everyone needs to hustle and grind to be successful and happy. Even Gary Vaynerchuk’s message about endless drive has shifted to caring and enjoying life with family.
To Ryan’s mind, people do not have to feel guilty if they are not working as hard as others – they should find their own path. He once did a call with someone who was living a great life by all accounts, but felt she had to scale because it was expected of her.
James adds that people tend to build complexity until they want to go back to a simpler life. He talks about finding a balance that works for you and suggests benchmarking to see if you can adopt aspects of someone else’s life that you find appealing.
James is also big on looking after the body and extending life expectancy. The value of life, he says, is immense.
From volume and bulk to targeted content
James would like to hear about Ryan’s newsletter activities, and in particular a survey he did that had some interesting results.
It used to be, says Ryan, his memberships were about volume and bulk of content. He realized later it was not sustainable – people simply cannot consume that much content, and there is already an abundance of free material available on platforms like YouTube.
Ryan shifted his focus to creating a streamlined and targeted content approach that would prevent content overload. A survey of his list revealed that the most desirable membership format was a simplified membership where members receive a piece of content or newsletter once a week or once a month.
Traditional memberships with a lot of content uploads were not as favored.
Ryan believes that if memberships are going to work in the future, they have to be super specialized, so specific that people want to dive in deep. And they have to focus on community building.
To do that, the creator has to have a strong focus and cannot take their eye off the ball. Ryan holds up James as an example of someone with this type of focus.
What’s changed and what hasn’t for James
James wouldn’t say he’s a massively driven, focused person. What he has been good at keeping his finger on the pulse.
A commitment to innovation is James’s secret. He’s very good at change, at reading patterns and trends, and adapting and adjusting before it’s too late.
James has had a membership since 2009. In 2013, he dissolved a partnership, which allowed him to bundle his information products into a single platform, similar to Netflix.
In the middle of last year, James switched off hundreds of thousands of posts and gigabytes of training, and started a brand new platform with the minimum possible features.
James believes that having the least amount of things people can consume will provide the best possible result for members. He has added playbooks to his content, which are one-page outlines of a specific topic and its steps – he publishes about one a week from various sources, including his old trainings, what is working in his business, what he has seen clients do well, and his life sheet, which is his cache of everything important.
Overall, James has been quite successful in adapting to changes in the industry and providing valuable content to his members through his platform.
Where the 3 Cs really came from
Interestingly, says James, Ryan’s survey confirms what he already knew – people don’t want stuff, they want an outcome, and they might come for the outcome and still build a community.
So there’s three Cs, he says – content, coaching, and community – which are essential for building a successful business.
And the three Cs, says Ryan, were his idea – everybody uses it and no one credits him.
James didn’t know that, but is quite happy to credit Ryan on this occasion.
Lessons learned in a decade of business
Some lessons, says James, have taken him at least a decade to learn, one being the importance of resetting rates and branding when necessary and focusing on a mid-tier rather than low-tier market to get better results with fewer clients.
He and Ryan also talk about having a benchmark traffic source, such as YouTube, and using email as a sales engine.
Ryan emphasizes the need for simplicity in his business model, using email as his membership platform and delivering content directly to his subscribers without logins or dashboards.
Both James and Ryan agree, as mentioned, that people want outcomes, not just content, and building a community is important for retention.
In short, it’s important to adapt to changes in the market, simplify business models, and focus on delivering value to customers.
Stop obsessing with the tech
It’s important, also, to not obsess over technology when creating a membership site. What’s essential, says James, is to make the platform easy to use and more useful for members.
He recommends Kleq, a platform that combines the features of ClickFunnels, SamCart, and Thrive Cart, and also includes a chat app for private coaching.
Ryan shares James’s frustration with people who fixate on platforms and technology, rather than focusing on marketing and building a list. Some business owners, he says, spend months or even years stuck on the tech, without considering their marketing strategy or target audience.
This can lead to disappointment and heartbreak, as people are distracted from their goal of generating recurring revenue.
James and Ryan agree that while technology is essential, it should not be an entrepreneur’s sole focus, and marketing and strategy should be given as much attention.
Ryan recommends a simple proof of concept, such as an email and PayPal, or even Gumroad, to get started with a membership site. He also emphasizes the importance of offering valuable content and not getting caught up in the noise and commoditization of social media groups.
Where James puts his current focus
James has made some major innovations in his business, such as selling only monthly subscriptions instead of annual ones, and partnering with a few select clients on performance-based deals.
These partnerships have been very successful, with the top one or two clients making more than all of his other members on other platforms. James was inspired by Jay Abraham, who suggested doing more rev share deals instead of selling high-ticket workshops.
Setting one’s priorities
As far as priorities, Ryan values freedom above all else and says he cannot work for anyone. He is not motivated by money and would not take any amount to work for another person.
James also puts a premium on freedom but enjoys collaborating with others to create good products, taking a small percentage for his contribution without any of the business’s downside. He is also interested in making good art and learning about design.
Finding the best prospects
Ryan opens the topic of taking on a rev share partner – does James prefer to work with someone who is already up and running and generating revenue? Ryan knows he does.
James shares that skepticism around taking on someone who has not yet proven they can take action. You can’t steer a parked car; you don’t even know if it has an engine.
He looks for self-motivated individuals who already have a solid product or service that they want to promote to his audience. He also wants to ensure he can trust them and that they have a good track record of paying their dues.
Furthermore, James prefers working with people who have a team to support them, so they can implement and scale his ideas without losing momentum.
Defining your price tiers
At the risk of being the interviewer, Ryan wants to know, what is James’s definition of low, mid, and high price tiers for products or services?
James defines low ticket as high volume, sub $100 products, mid ticket as products or services priced between $1,000 to $3,000, and high ticket as offerings priced at $5,000 to $10,000 per month or more.
For Ryan, on the other hand, low ticket is products or services priced between $10 to $30 per month, mid ticket is between $30 to $100, and high ticket is something you might require permission from a spouse or business partner to purchase.
The two acknowledge that context is critical when defining price tiers. What is considered affordable or high-priced can vary depending on factors such as location and market.
James notes that he deals with mostly business markets where the focus is on return on investment, while Ryan comes from a fitness market where products or services are likely to be priced lower.
How people make money on YouTube
As they were talking before about marketing and channels, Ryan wants to bring up YouTube. He has been studying it and notes that people can make a lot of money by turning on ads, with some making $250,000 per month just in AdSense revenue from YouTube ads.
Ryan says people in the business and marketing space can make $20-$30 RPMs (revenue per thousand) for their videos, so if a video gets 100,000 views, they can earn around $3,000.
James coaches people who make $30,000-$50,000 a month from YouTube as their primary income source. It helps that YouTube content stays up and performs for a long time, unlike other platforms that function as news feeds.
The two touch on the importance of producing high-quality content and creating effective thumbnails. MrBeast for instance, who spends days and thousands of dollars creating the perfect thumbnail for each video before creating the content.
James suggests that the key to success on YouTube is to start with an idea, then create a thumbnail, and then edit the video.
You can tell people this, says Ryan, but inevitably most will take shortcuts. He, however, plans to get back into video content with that formula.
And where will that happen, asks James? At ryanlee.com?
Ryanlee.com, says Ryan. You can sign up there for his newsletter, but he’ll be posting the videos there as well.
The stuff you’ll want to take away
The big snapshot from this episode, says James, would be the importance of finding ways to generate recurring income, and keeping things as simple as possible.
He and Ryan also recommend using YouTube as a strong driver for income and building an email list as a solid foundation for controlling your audience.
They do caution, however, against focusing on vanity metrics, such as follower count, and stress the importance of consistently emailing your list with quality content.
They also point to the benefits of building a community and having flexibility in running your business. Set expectations too from the beginning, they advise, and treat people how you would like to be treated.
Overall, their focus is on providing consistent value to your audience and setting your own rules in your business.
Does Ryan have more fun now?
Is Ryan enjoying his business more than he has for a while?
Ryan says he finally has joy in his life. In the beginning he had high peaks and really big lows, but he knows now who he is and where he wants to show up in the world, and is secure in himself.
His family is doing well, too, and that is the most important thing to him.
Ryan has also gained resilience, which is essential, being able to bounce back from setbacks.
James agrees with that – setbacks are inevitable, and it’s important to be able to adapt to change. He loves what Ryan does – his emails, his website, his social posts referencing the 80s – and has enjoyed watching his journey.
Things to look forward to
Ryan appreciates James having him on, even if it is late in the show.
His own upcoming podcast will be tentatively titled Ryan Lee TV. He’ll be sure to have James on within the top 1000 episodes, together with their mutual friend, Kevin Rogers.
Just don’t put him on right after Kevin, says James, he can’t compete with a comedian.
If you listened to this episode and join Ryan’s list, reply back when he asks you to tell about yourself. Tell him you heard about him on Schramko’s podcast.
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