Daniel Vassallo is a creator and co-host of the Small Bets community. Small Bets is an online community for “small-time entrepreneurs” - mostly creators, digital entrepreneurs, and indie hackers. The community runs on Discord, offering members the chance to interact with experts, get feedback and support on projects, and be found in the member directory.
Started in November 2021, it has been run as a partnership since July 2023 with Daniel joining up with fellow entrepreneur (and Small Bets member) Louie Bacaj. It now earns over $400,000 per year with a growing membership of over 4,500 people.
In this deep dive, we uncover how Daniel built a million-dollar community as a happy accident from a cohort course.
A former Web Engineer, Daniel worked for Amazon for several years before leaving behind his $500,000 per year software job to seek independence as a creator.
Setting out on his own, Daniel’s first big idea was Userbase - a SaaS offering to make it easy to create secure web apps.
He got 1,000 folks to join the waitlist, hit the #1 spot on Product Hunt when it launched, and made the front page of Hacker News. Despite great distribution, it only went on to make $10k per year. To make things worse, he had invested $100k of his own money and a year of his time.
He acknowledged that Userbase wasn’t working out. He needed to change his approach if he wanted to avoid going back to the corporate world so he started to build information products.
Throughout his Userbase journey, he had been sharing on Twitter how he was building it from scratch and everything he had learned over the years at Amazon. To make some money, he wrote a 173-page PDF book 'The Good Parts of AWS,' which he co-authored with friend and former Amazon colleague, Josh Pschorr.
Released on Gumroad and initially priced at $65, it launched on December 25, 2019, and brought in over $45,000 in 14 days, with total earnings exceeding $140,000 from 7,800+ sales for around 160 hours of work.
Later, as his following on Twitter grew past 24,000 followers, he decided to create a 100-minute video course called “Everyone Can Build a Twitter Audience”. This was also launched on Gumroad, in April 2020 for $25, and it has since made him a further $310K ($100k of that in the first 2 months) with some 13,000+ sales. Better yet, it only took 16 hours to put together.
Between these successes, Daniel released various other projects and did some freelancing, too. What he noticed was that it wasn’t time spent on a project that led to the best outcomes. It also proved difficult to predict which business idea was going to take off or make the most money. Applying Nassim Taleb’s thoughts on randomness to online business building, Daniel began to form his Small Bets philosophy.
Daniel began to talk about the need to place lots of small bets: deliberately trying out multiple ideas with the smallest amount of effort necessary to de-risk your entrepreneurial journey.
“Imagine you're searching for golden treasure underground, and you pick one spot, and you start digging in that spot. You can dig as far as you want, but if the treasure is not in that spot, no matter how hard and long you dig, you're never going to find it.”
This led to the creation of the Small Bets cohort course, a $375 hands-on, 6-session, 2-week course that taught others his approach over Zoom on Mondays, Wednesdays, and Fridays.
Each class had around 30 people and lasted 90 mins - a 1-hour presentation with 30 minutes for Q&A. It covered topics like lifestyle design, prioritizing survival over home run outcomes, and how to price digital products.
Daniel wanted to avoid the tedious rounds of introductions common in cohort courses he had taken. He spun up a Discord so that people could introduce themselves there before the cohort instead. Those who signed up got the slide deck and lifetime access to the Discord of people who had taken the class.
The Small Bets cohort course was a hit. It sold out week after week and earned $150,000 in 5 months from 400 customers.
Over time, though, Daniel noticed something surprising. The Discord he had set up to accompany the course had grown into a thriving community.
“It evolved into a community of people helping each other navigate the unpredictable world of business when starting from scratch.”
People didn't just introduce themselves, they came back to share interesting things they had found or to ask questions. Other members were happy to answer those questions and encourage each other on their journeys - all without prompting. Daniel started to realize that the community was proving to be more valuable for members than the course itself. So he changed up the positioning and began leading with the community instead of the course.
From July 2022 you’ve been able to sign up to the community freely without waiting for a course enrolment window. However, he kept the cohort course running, albeit monthly rather than biweekly, and members could opt-in for free.
He ended up running 29 cohorts before finally ending that particular course. Although, they still do some courses on a cohort basis - they’ve recently launched one about starting a newsletter, for example.
Between its founding in Nov 2021 and Oct 2023, it generated $824,409. With costs of $222,514, that means a profit of over $600k.
All of that income comes from memberships. Bucking the subscription trend, members pay a one-time fee for lifetime membership. Between November 2021 and November 2022 that was priced at $375.
Profit margins for the Small Bets community are around 75%. Costs include events, deals, payroll, refunds, and other costs such as software, including Gumroad which initially took 3% but that since increased to 13% now.
Events
A core part of the community offering is its weekly roster of live events. They host 1 or 2 events per week, covering a range of topics useful for those building online businesses, for example, a guide to mastering LinkedIn by Justin Welsh, podcasting tips from Espree Devora, and a getting started session for YouTube with Aprilynne Alter. Many of the presenters are community members who have mastered a particular topic. From SEO and media to taxes, business ethics, and self-employment. Members also get access to an archive of its past recorded events.
For events, the standard rate he pays to guest speakers has been $1,000 per session.
In total, Small Bets has spent $83,500 on hosted events since the community began. They’ve been able to reduce the total spend on this by either Daniel or Louie running some of the events, but otherwise, it’s something they’re happy to invest in. It’s the main pull for the community and a key part of how they keep the buzz going within the community.
Deals
Deals are another part of the offering that Small Bets provides to its members. Daniel has negotiated group discounts on courses created by creators. He’d offer the course creator a $5,000 one-time fee, so that members could access the course, either for free or in some cases, for a significant discount. For example, Hassan Osman’s ‘Create & Sell an Online Course on the Side’ course is free, while you can get 30% off Arvid Kahl’s book, The Embedded Entrepreneur.
The total spend on putting together its portfolio of deals has been $31,000 to date. However, Daniel regards this as something of a failed experiment. Some members have made use of them, but there hasn’t been the same interest as there has been in events. He puts this down to them not having a specific deadline like an event does, folks can redeem and get around to the course at some point, but most never do.
Other costs
- Payroll: $14,608 - they pay $1,000 each month for operational support (moderation, customer support) and a further $500 for video editing.
- Refunds: $17,010 - refunds are offered with no questions asked -this accounts for approximately 2% of purchases.
- Other: $19,466 - this is mostly software costs for things like Zoom.
.webp)
Twitter has been the main source of members for the Small Bets community. When it launched, Daniel had around 77,000 followers and is now at 160,000+. Daniel says that until around May 2022, most of the people who joined came from his audience. However, they’ve also come from his past products and his email list. There was no master plan for his prior projects rolling up into the creation of the Small Bets community. Those projects had spanned a software business, a programming book, and a social media course. However, a throughline across them all has been his commitment to building in public, and sharing his progress, which has meant much of his audience are indie hackers and digital entrepreneurs who are interested in learning and discussing how to make money online - the ideal audience for the Small Bets community.
Of late though, the word of mouth engine has begun to kick in. For the first time, they see members sign up who don’t follow Daniel at all sign up. Word of mouth is the main channel they’re focused on driving, trying to offer so much value that members feel compelled to share it with their network.
In 2019, most of my income came from a programming book ($140K sales). In 2020 from a social media course ($310K). In 2021 from freelancing ($220K). In 2022 from a discord community ($720K).
Ads
They’ve done some experimentation with ads. Daniel estimates he has spent around $5,000 across Twitter, Reddit, and newsletters, but with mixed results.
Here are the results for the following ad from its first 12 days:
Affiliates
Another small part of their growth has come from affiliates. It’s just a few folks, but they get a 20% referral fee for new members.
Pricing experiments have been a key way that Daniel has maximized revenue from his bets over the years. Essentially whenever he sees growth slowing, he’ll try out pricing changes to reinvigorate interest. He did this with his information products and he’s continued this with Small Bets, too.
Daniel took a big bet on lifetime pricing with the Small Bets community. His thinking here was that folks are over endless subscription-based services. What’s more, he’s found that churn among membership communities is super high. No one subscribes to a community forever, so in effect, he’s seeking to charge a member’s lifetime value upfront. This gives him more immediate revenue and also gives him room to run pricing experiments to spike interest and growth.
The Black Friday effect
Daniel has tried out a few pricing experiments during Black Friday. The first was to offer 50% off in November 2022, making the lifetime deal $185. That did so well that he kept it going until May 2023. From then until November 2023 it became $245. From Black Friday again this year, they offered it at $185 for lifetime but also added a one-year option for $99.
These deals have done well for them. They had their first $100k revenue month in November 2023, alongside its best 1, 7, and 30-day signup numbers:
Keeping the Spark Alive
Small Bets wasn’t Daniel’s first foray into online community. He had launched a Circle-based community called 'Profit and Loss' back in December 2020. He charged $5 per month and got to 1,000 members in just a few weeks. Activity in the first couple of weeks was high, but it didn’t last - “the energy just died,” says Daniel. After that, he tried without success to revive things and the community lingered on for the next two years.
This was a key learning point for Daniel. When it comes to community, you need to keep the spark alive - you need to give people a reason to get together regularly.
This worked with Small Bets initially due to the cohort courses and his longer-term solution has been the rolling schedule of events. He says that events work especially well for this because “Even if they forget about the community, they will get a notification on their calendar.” He suggests that accountability sessions, sync-up sessions, or other regular meetups could also work, but you need something to keep people coming back. All signups get added to a mailing list.
“Every month or so I remind them of the benefits from the community. I tell them about the upcoming events that are happening.”
Plus, they’ve also created some channels for celebrating small wins and a meetups channel that gives folks a regular reason to post inspiring stories or share photos from recent meetups. It also helps keep the energy up within the community.
The other reason Daniel says Small Bets has succeeded where Profit and Loss didn't is because of his choice of platform. Discord has its issues, says Daniel, but it feels casual, more like texting with friends, than the formal nature of contributing that he found with Circle.
Daniel cautions, though, that running a community isn’t a great choice for generating passive income. Hosting and organizing the events for example takes up a lot of time. From researching guests to scheduling and hosting, as well as the day-to-day need to be in the community chat itself.
“You can't expect community building and running a community to be a passive income type of thing.”
Within Discord, the Small Bets community is mostly structured around topics of interest. There are channels to discuss newsletters, tax and legal issues, real estate, audience building, and several other topics.
In addition to those, there are more operational channels, including #general for open discussion, which is also where new members are encouraged to introduce themselves. #Calendar includes a regularly edited post that lists all known scheduled events. #Recordings is where links to past event recordings are posted. Each event gets a page on Notion with a transcript, the recording embedded, alongside a download link and links to any other resources. There are also specific channels to ask for feedback, to flag opportunities for paid work and small tasks, as well as to share your small wins from the week, and finally one to arrange in-person meetups.
Onboarding is minimal - there’s just a confirmation email sent via Gumroad with an invite link and a #welcome post in Discord that lists out channel descriptions and encourages you to introduce yourself and add yourself to the member directory. Everything else is pretty free-form - there are no member guidelines or code of conduct.
Daniel and Louie are in the process of building out a website for the community to get around what they see as shortcomings with the Discord platform. This includes events, deals, and recording listings, a member directory, an embedded version of the Discord community so that you don’t have to use the Discord app itself, and some pages to manage settings and your profile. For an off-the-shelf solution, Nas.io does much of this too.
Until recently they used Luma to manage event registrations, but they’ve now built that functionality into the website. Event times are shown in your local timezone on the events pages. When you register for an event, you get a confirmation email with the Zoom link and a calendar invite. This makes registering for events super simple.
Be open to new opportunities
The Small Bets community came about by accident, and a common thread among Daniel’s successes has been his willingness to experiment and jump on any opportunities that show promising results. It’s easy to become attached to our ideas or to stick with things that aren’t as successful as we’d hoped. Daniel shows us that you can experiment with lots of different ideas and double down on what works.
Keep a consistent audience across experiments
Daniel has made money in many different ways, from writing books to creating videos and software products. His projects have spanned software security to social media and digital entrepreneurship. However, by sharing his experiences of how each project has been progressing, he didn’t just build an audience of people who are only interested in software or social media but solopreneurship and making money online more generally. It is this audience that enabled him to accidentally spin up a membership community that now brings in more than $34,000 a month.
Don’t be afraid to go against ‘best’ practices
When creating a membership community, most people would opt for a subscription-based model without too much thought. It’s what most folks do. Daniel wasn’t afraid to try something different. In his case, it brought in a lot more money upfront, securing his freedom from corporate life and giving him the capital to invest in a robust set of guest speakers, which is now the lifeblood of his community.
Gareth has spent 15 years in founding marketing roles at community-led startups. He shares his learnings through deep dives.
