Sid Yadav, co-founder & CEO of Circle, on the 3 types of community businesses

We first covered Circle in August 2024 at $21M ARR, up 75% YoY, as platforms were going all-in-one across the entire creator economy.

We recently caught up with Sid Yadav, co-founder & CEO of Circle ($33M raised, Tiger Global), to discuss Circle’s evolution since then and the state of the creator economy.

Key points from our conversation via Sacra AI:

What is Circle in short and what was the founding insight that led you, Rudy, and Andy to start it coming out of Teachable?

Circle is the all-in-one platform for creators and communities.

From a branded website to discussions, courses, events, payments, email marketing, AI agents, and more, we give creators and brands a home for their members.

Soon after we left Teachable, we had 3 fundamental insights we felt a deep sense of conviction about:

1) Millions of people were going to enter the creator economy, start communities, and build online businesses in the next decade

2) Selling “static” content (i.e. downloadables, courses, videos) weren’t going to be meaningful enough forms of value for long-term monetization

3) To build long-term value, creators and entrepreneurs will have to build deeply meaningful communities that transform people

What got us to this insight is that we had seen this play out in the world of online courses at Teachable. The courses that were trying to make a quick buck off selling static video content would have big launches, and then crash.

On the other hand, the creators who were putting in the work *beyond* just selling gated videos would end up a lot more successful in the long run, and build more durable business models in the long run.

Extrapolating this out, it was obvious to us that similar dynamics would apply to anyone looking to make money online—whether it was a solopreneur or a Fortune 500 business—and that all of these customers needed a community-centric all-in-one platform.

You talk about "community-led businesses" as your customer base. Can you define what that means? How is a community-led business different from a creator with an audience on the one hand or an SMB that wants to build community like a creator on the other?

Community-led businesses are businesses that bring people together and create non-zero sum opportunities based on that dynamic. I’d say they’re a key part of our customer base, but not the only part.

We believe that most community businesses can be grouped into three types:

1) Professional networks, which bring people together in a particular industry, profession, or vocation to learn from and network with each other

(For example: a community of B2B marketers, roofing strategists, Airbnb hosts, dermatologists, course creators, or FP& analysts)

2) Learning academies, which aim to upskill people into a new profession or some form a monetizable skill

(For example: a training program to help you become a software engineer, life coach, build an AI agency, or start a new company)

3) Life clubs, which aim to help you improve your personal life mentally, physically, or spiritually

(For example: a membership club for new parents, meditation, yoga, women’s health, or people suffering from terminal illnesses)

There is some overlap with creators with an audience, but not a complete overlap.

For example, we often see niche creators in these spaces start a community, membership program, or a course to offer deeper value prop to their audience, and to increase their monetization potential.

That said, we also see a number of community-led businesses started by non-creators—entrepreneurs *without* an audience looking to build a business in these areas, much like DTC ecommerce brands or startups.

Or to your point, we see SMBs (i.e. startups) add community-led assets to their strategy, much like they’d want to invest in a media property to grow their top funnel.

Circle's product now spans websites, discussions, courses, events, payments, email, AI agents, and more. When someone signs up today, what are they typically coming for—are they community-first, course-first, or something else?

It varies, and people use these words interchangeably. I’ve seen people launch courses on Circle they call a “community”, I’ve seen people launch communities they call a “course”, and all permutations and combinations of anything possible with the words “courses”, “communities”, and “memberships”!

We’ve learned to move past the taxonomy, and to instead focus on the core building blocks that each of these have in common.

Our dream is to build the first and last platform for any creator or community builder online no matter what they’re building. This is a really high bar, because it involves being both all-in-one and best-in-class, which very few products in the world achieve.

We’ve obsessed about the product experience for the past few years, and have teams of people dedicated to each of these building blocks, who’ve essentially made it their life’s mission to make us the best platform for each of them.

This is quite the undertaking given the number of building blocks we offer, and how high customer expectations are with each.

You recently launched a website builder after initially considering it five years ago and then putting it on hold. What changed that made now the right time? What did you learn in those five years that made you build it differently?

To add to my last point, we find that customers don’t give you any credit for “trying to do it all”—and nor should they. They simply expect anything the product offers to work incredibly well, and this takes time to get right.

We always intended to launch a website builder some day, but we had to wait for the core product to first get to a high bar before we could expand the surface area so it didn’t feel like we were disappointing them by taking resources away from the core.

That took time, and we were finally able to get to the point where email marketing and a website builder are core offerings in Circle, in addition to everything else we do.

Circle's AI agents can be trained on community content, answer questions 24/7, and handle platform support. Can you walk us through how a community admin actually uses these—what are the most common use cases you're seeing?

In a community, it’s common for at least 20-30% of the things people ask and need help with to be fairly basic—i.e. answerable by using the information that’s already in the community.

A community builder on Circle can easily train up an AI agent that helps their members answer these types of questions based on the knowledge in their community—for example, their member discussions and course content.

Now, when a member joins their community and wants to get started, they have an AI agent they can simply talk to and get answers right away, in their own time. So instead of feeling silly for asking a basic question or feeling like they’re bugging someone, they can get instant help thanks to AI.

We see some customers go even further than this, and train it to be a coach to their members as well, using their training content.

My belief is that there are limits to what AI can help with—for example, tacit or “network knowledge” that can only come from humans with real-world experiences. But for most forms of propositional knowledge, having an AI agent deflect these conversations increases the bar for the types of conversations people do end up having.

Who is the "typical" Circle customer and how has that evolved since 2020? Are there particular verticals where Circle has unusually strong product-market fit?

When we first started in 2020, we focused on any creator with an audience building a community for their fans.

Over time, the typical Circle customer has evolved to be a lot more mature and established.

As I mentioned above, we now see “community entrepreneurs” who use Circle not just as a fun place for fans to hang out, but as a much deeper part of their value proposition for their audience, which they monetize directly.

The community becomes “the” product they’re selling, instead of supplementing their existing product.

We now see a surprising number of 7 figure businesses get built and be entirely hosted on Circle, which wasn’t the case at all in the early days.

One “non-typical” customer type we hadn’t anticipated is the enterprise, and the very established segment.

It turns out that when you build a platform as powerful and flexible as Circle, it’s not just creators and entrepreneurs that want to use it—it’s also the Fortune 500, non-profits, and highly established organizations.

A fact I’m proud to share is that we now host communities for the world’s most famous university, most famous celebrity, most famous author, and most famous private company.

This was largely unimaginable in the early days.

You hit profitability recently and are approaching $50M ARR. Can you talk about what drove the inflection point? Was it product maturity, market timing, go-to-market evolution, or something else?

We hit profitability a few months ago, and are now at $50M+ ARR.

To give you a sense of our numbers, we went from $1M to $4M ARR in 2020, $4M to $8M in 2021, $8M to $16M in 2022, and $16M to $30M in 2023.

We’ve roughly doubled for the past few years, while getting to profitability and a rule of 65+.

It’s very difficult to say what drove the inflection point—I know this is a trite answer, but I think it’s all of the above, with the core being that we’ve been very heads down on product, and we’ve managed to keep up a crazy shipping velocity for so many years.

I can think of very few companies in the world that have shipped 30+ product improvements every single month for 5+ years, for example. Anyone can scroll through our monthly product updates or my X account to verify our consistency.

My theory is that at its core, a team of passionate builders who can achieve consistent product velocity is something customers tend to notice, and that starts spinning a flywheel of strong word-of-mouth and trust from customer to customer.

We have customers from our 2020, 2021, 2022, 2023, and 2024 cohorts who made a bet on Circle back then despite certain features we lacked at the time. Over time, they were rewarded for that bet, and now continue to see improvements in the product well beyond what they signed up.

As we launched email marketing, some of those folks moved their email stack to us.

We’re starting to see that with the website builder too. I’m blown away by how fast we’ve seen certain customers churn off their existing website builders, something I thought might have taken at least a year or two post launch.

There's a spectrum of community platforms—from pure discussion (Discord, Slack) to course-focused (Kajabi, Teachable) to all-in-one (Circle, Mighty Networks). Is that how you categorize these kinds of companies? How do you think about where Circle fits and what customer needs you're uniquely solving?

If I’m being truly honest, I think Circle is inventing a new category of a product, and we’re currently a category of just one.

These products you’ve listed do aspects of what Circle does, but none do everything that Circle does, or even the majority of what we do.

For example, Kajabi and Teachable have weak community offerings, and don’t offer features like built-in live streaming/rooms, events, DMs, chat spaces, a member directory, connect, AI agents, AI workflows, and an end-to-end deployed branded app.

Mighty Networks and our other community-focused competitors might offer community features, but don’t offer email marketing, a website builder, AI workflows, AI agents, an API, and Headless capabilities. Their live capabilities are extremely weak, and are far from being a Zoom replacement the way we are.

It’s my belief that we’re at least two years ahead of these companies even if they wanted to catch up, which is unlikely since each of those you’ve listed are 12+ years old and have an abysmal shipping velocity compared to us. They’re on the end of their S-curve.

By comparison, we’re barely 6 years old, and we’ve built a product much more powerful than theirs with a substantially better user experience.

At some point, you have to define a category with products that are closer to 1-1 replacements, and we don’t see that with our community or course-focused competitors.

By this logic, we also compete with Webflow, WordPress, and Wix for website builders, or Mailchimp, Kit, and Beehiiv for email marketing, or Zoom for live events—which gets crazy.

Discord has 200M+ monthly users and recently launched Server Subscriptions to let communities monetize. Slack has Communities. Where are either or both of them well-positioned to win and where do community-focused platforms like Circle win?

To build on my answer before, there are aspects to Discord and Slack that are indeed competitive with Circle.

That said, I wouldn’t say Slack tries to actively compete in communities (though it’s certainly used that way by folks), or Discord with the non-gaming/”fun” community segment.

I think those products offer a good experience for simple and free/fun communities, much like WhatsApp does as well.

But ultimately, the types of customers that choose us do so not just because of our core community features, but because of the tens of other features we offer in addition to those, and the fact that it allows them to give their members a unifying home for everything.

Stan and Whop grew to $20M+ ARR quickly by embracing digital products traditional platforms avoid—resell rights, betting Discord groups. How do you see these “grey area” marketplaces playing out?

If I’m right about our fundamentals, I see the market we’re in as a $200B/year+ market over time from a GMV perspective. I believe we’re at the start of something monumental, and people don’t yet understand how big this can get.

They don’t get just how many categories there are in the world, the disruption of the 9-to-5 career path, the creativity of the world’s entrepreneurs, and the depth and types of businesses that are possible to build.

Given the potential market size, I think there’s ample room for marketplaces that “bend the rules” and offer folks to sell things that Stripe and other payment platforms wouldn’t be OK with—so long as they can keep getting away with it.

At Circle, we’re focused purely on legit and non-scammy businesses with minimal chargeback rates, so I personally tend to have no interest in bending the rules ourselves—nor do I see the need.

Patreon pioneered creator memberships and has processed billions, but they've had multiple strategy pivots and growth has slowed. What do you think they've struggled with?

The comparison I like to make is that if startups like Patreon are building a fancy tollbooth, we’re building the entire highway system.

Going back to my 3 fundamental observations from our early days, I think they missed that the patronage model is purely a toll booth for static video content, and static content isn’t going to be enough for creators to monetize large amounts for long enough periods of time.

There are only so many people you can sell gated podcasts to for essentially a “donation”-like experience until your market taps out, and creators feel hamstrung by their monetization potential.

At a broader level, I think most people tend to limit their imagination with what people are willing to pay for on the Internet, and will be surprised to see how large and crazy this market really gets.

An unfair advantage we have at Circle is that we get to see the data, and the data is simply mindblowing from a breadth and depth perspective.

“Gated podcasts” isn’t where the creator economy needs to end!

You've emphasized that Circle only allows "legitimate communities" and distinguishes itself from "scammy marketplaces." What does that mean operationally? How do you enforce that, and how do you think about the tradeoffs?

We aren’t building Circle for anyone looking to make a quick buck, or offering ways to make quick bucks to others.

At a concrete level, we rely on Stripe’s KYC to process payments, and we like Stripe’s policies on the types of customers it allows, as well as its focus on maintaining low chargeback rates.

You simply can’t sell the types of things on Stripe that you can on Whop, for example. And a lot of those products tend to have high chargeback rates because they don’t deliver on what they promise, or they promote something sketchy to their members.

At a more abstract level, our mission is to help the world build transformational communities.

Similar to the way Apple thought of building its products to enable “the crazy ones”, we like to think of our core customers as the “transformational ones”—people who want to build meaningful communities for members to grow personally and professionally.

While anyone can use Circle, we want to attract these types of folks to build on Circle, and we actively encourage the “not-so-legit” type of communities to use our competitors. This part is less so a hardcore policy, and more a cultural preference.

Meta launched "Channels" in WhatsApp and Instagram as broadcast tools for creators. Do you see these chat-based community formats as complementary to forum-style communities, or are they competing for the same creator use cases?

I see them as fairly complimentary. We have certain customer types that don’t use us for the core engagement paradigm because their members live on WhatsApp or Slack, for example, but use us for everything else.

That’s perfectly OK with us—we’re not the type of company that says: “Unless you want a forum-style medium, you’re not fit to be a Circle customer.”

We also hope that we can win them over some day :)

Willingness to pay has historically been a challenge in the creator economy—Linktree is mostly free, ConvertKit has a generous free tier. Circle starts at higher price points. What have you learned about what drives a community builder to pay for infrastructure?

We’re most probably not the best place to start if you don’t have an audience or an email list, but we’re perfect once you start to build distribution and sell deeper forms of value to your audience.

It goes back to the 3 observations from my early days, and making a bet on what monetizes well in the long run—which is really a bet on fundamental value.

It’s our thinking that “transformation” is worth paying hefty amounts for. But in order to truly transform people, you have to offer more than just PDF giveaways and gated video content.

How do you think about expansion revenue? Are you seeing communities start small and grow into higher tiers as they scale membership, or is there a different expansion motion?

Most definitely. Something I point out frequently is that Circle is the ultimate “journey product”. Once a customer builds an initial audience, we’re the perfect platform for them to make a bet on for the rest of their journey.

Expansion happens through usage and pricing tiers, as well as horizontally through expansion add-ons like Email Hub, AI agents, APIs, and more.

Whatever the direction of expansion is and however long it takes, the thesis of Circle is that you’ll need to do more things as you grow, and you won’t want to pick a new platform every three months, or end up with a highly complex stack by accruing point-solutions over time.

Customers should be able to pick just one platform and focus on the uniqueness and excellence of their core value, instead of obsessing about point solutions and building a Rube Goldberg experience for their members.

ConvertKit and Beehiiv have built recommendation networks to help creators cross-promote. Substack has its discovery features. Does Circle have plans to build network effects between communities, or do you see yourselves more as infrastructure like Shopify?

We have some ideas around this that I’m really excited about—and it’s worth noting that even Shopify has Shop App and Shop Pay, which have been instrumental to their success.

But for now, we’re focused on being the best core platform we can.

Communities have historically lived in free platforms—Facebook Groups, Discord, Slack. What's the wedge that gets someone to move to paid infrastructure like Circle? Is it monetization features, brand control, better member experience, or something else?

It’s usually scale and control.

At some point, people realize that they don’t truly have control over their audience on those platforms (i.e. no access to emails on Facebook Groups), and that as they scale, this lack of control is going to limit them over time.

Once a customer gets serious about this, we tend to naturally be the platform of choice.

Courses used to be the monetization model for creators, then it shifted to memberships and communities. Now there's a shift toward coaching, masterminds, and high-touch. How does Circle adapt as the monetization models evolve?

I’m not sure if I see it as “shifting” vs. more options emerging.

In the zeitgeist, there is always a new monetization opportunity creators are excited about. My view of this is that people tend to over-exaggerate these as shifts, when it’s really just new SKUs emerging, and adding to the potential of existing, more lindy-proof SKUs.

That said, we tend to be a great option for anyone who wants to experiment with monetization models thanks to how flexible our paradigm is with spaces and access groups.

We have hundreds of communities that use us to sell access to coaching or mastermind groups, and this is despite us having ever built a use case specific feature for these types of communities.

If you want to set up coaching or mastermind groups and manage them centrally, for example, I’m not sure if there’s a more flexible option than Circle.

You raised $30M but your last priced round was in 2021. You're now growing on cash flow. What degrees of freedom does that give you versus venture-backed competitors who need to show aggressive growth?

Thankfully, we’ve 15x’d our ARR from the last round, so they’re already in the green, and already very pleased with our success and momentum.

With that said, our goal on growth vs. profitability is quite ambitious, which is that we aim to operate at a rule of 50+ for years (and hopefully, decades to come).

Right now, the biggest problem we’re facing is that we’re *too profitable*, and we’re looking to ramp up investment as fast as we can since we’d ideally just operate slightly above break-even, while investing those extra dollars as wisely as we can to grow.

It’s a good problem to have, and one I’m not used to since it’s quite the opposite of what got us to profitability!

You talk about an "integrated system that learns from every interaction" with AI woven throughout. Five years from now, what does an AI-powered community actually look like? Is the community leader still the one showing up daily, or does the AI agent do most of the engagement?

In the future, I think entrepreneurs with dreams will be able to “vibe build” their dream experience, and spend very little time on the mundane, repetitive, and templated tasks.

There’s a lot of detail we think about internally towards this vision, but I’m going to leave it at that, and let our product do the talking over coming months.

If everything goes right for Circle over the next 5 years, what does it become and how is the world changed?

In the next five years, the dream would be to have hundreds of thousands of successful communities on Circle serving over a hundred million members, leading to millions of transformations every year.

Beyond that, the goal would be to build the one-stop-shop for “transformation”—a place where members and creators would engage in highly meaningful, transformative, and monetizable experiences, creating hundreds of billions in economic value for the world. (Someday, I hope that’s in the trillions.)

If we can capture even a slice of this to funnel back into the flywheel, it’s going to be a great world.

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