Community Doesn’t Scale — Soho House, MiniClubs & The Future of Social Interaction

For more about Maxwell sign up at maxwellsocial.com as we explore our model for launching miniclubs, signup for our substack newsletter, follow David on twitter, and follow us on Instagram or Facebook.

When I moved to NYC two years ago I joined Soho House. I had spent the last 7+ years living in San Francisco where there wasn’t any real tradition of social clubs, and I had spent a lot of time in London (though never lived there), which was the opposite, so I was excited to be part of one as an actual member. Plus, I heard the pool was quite the scene in the summer.

The rooftop pool at Soho House New York. Photo: Soho House

I was sorely disappointed. On acceptance I was given no onboarding. I realized it was basically a glorified co-working space during the day (and admit, that’s basically how I came to use it as well). No one seemed particularly interested in meeting people — it mainly seemed a way to show off to potential people young creative freelancers were trying to close that they were indeed hip enough to be a member.

I tried to meet people, I actually attended 3 breakfasts that Summit Series, who invested in my first company Mozio, put on in the space and met a few people.

But what I realized was that between 85,000 worldwide members (this has been confirmed by Soho House), 8,000 NYC members (this one is hearsay) the people staying in the hotel, everyone’s guests, well, you might as well have been at any other somewhat trendy bar in Manhattan . . .

Facilities, Not Communities

What we realized is that as Soho House has expanded, they’ve added gyms, spas, pools, cinemas, restaurants and more, and lost track of the fact that for every feature they add, that requires additional members to support it, and for every additional member, that degrades the community.

Traditional clubs get stale by getting on the facilities hamster wheel — once you give up on community, you need to have better spaces, more amenities, more locations. But every extra location makes the need for even more locations greater, every extra amenity makes the need for even more amenities greater because it degrades the main differentiating factor a private club SHOULD have going for it, which is the people.

The Facilities Hamster Wheel: Economies of Scale

And we believe that ultimately every extra member that adds economies of scale reduces the economies of community — the low churn that comes from feeling like it’s your spot and you see familiar faces, the sense of ownership that leads to references.

Economies of Community

Now, I want to clarify — I was a member for a long time. I travel between LA, where I grew up, NYC where I mostly live, and London, where my first company does a lot of business on a fairly regular basis. All have multiple Soho houses. I work from home. I enjoy going to Soho house to have a place that is not my living room to work out of. When I’m in London I go to the White City House to workout in the gym and take meetings. If you don’t have an office, having a place to meet people that isn’t a random coffee shop and makes you seem a little more legit has it’s value.

But that’s exactly what these clubs are mostly good for — they are facilities, not communities.

Community Doesn’t Scale, and it Shouldn’t.

The idea of a “global community” doesn’t exist. Communities should be like town squares, your church, your local pub, college campuses. To quote Michelle Obama, “if everyone’s family, no one is family.”

The backbone of communities is serendipity, and you only run into people spontaneously if there is a relatively small group.

But how do you provide that level of community at a reasonable price? These clubs are as big as they are to keep prices relatively low ($200) compared to what they were historically ($500–$1000).

Miniclubs — The Future of Social Interaction

The future of private clubs are miniclubs — clubs that allow BYOB alcohol, don’t provide food or drink service, are limited to 600 people and don’t allow multiple memberships.

BYOB: No Incentive to Sell Alcohol

A core tenet of a miniclub is that none their profit incentives are linked to alcohol. If they are, the incentive will be to let more people in to spend on drinks, to crowd people in.

This doesn’t mean the club doesn’t also serve alcohol. But it needs to be viewed as a service the club is providing at cost, so feel free to bring your own.

Membership Fee is Primary Profit

Miniclubs will be primarily membership fee based. Sponsorship and Private event rentals will play a part, but we believe that viewing membership fees as the primary profit liberates a club to think about how to build community and loyalty over the long term, not make a quick buck off of bottle service and a $25 cocktail. If an alcohol brand wants to come in and throw an open bar, you are no longer thinking “but that is X amount of lost bar revenue” and are more likely to say yes. If more people want to crowd in who aren’t regular members of your community, you aren’t tempted by extra bar revenue on a Friday night.

No More than 600 Members

The goal should be that every time you walk in the room you see someone you know, or at least feel like the community is small enough that you wouldn’t get weird looks just going up and introducing yourself to someone. We believe that you can’t get that past around 600 people.

Small Footprint: 4,000–7,000 Sq Ft

If you only have 600 members, you don’t need a lot of space. Definitely not the 25,000–100,000 sq ft+ properties many private clubs have.

Social Hours Only

Miniclubs will have one purpose and one purpose only — socializing. No coworking spaces, no day access. The best advice I got from a friend who owned a bar is that you can only be one thing to people — you can’t be the day party brunch spot and the late night spot, etc. This goes DOUBLE for private clubs — you can’t be the spot that people work out of, take dates, power lunches, pool days, happy hours, work out, stay overnight, get a massage . . .

One Location Only/Siloed Membership Base

No community should be more than 600–700 people, and the minute you let random people who are really part of another city’s community drop in, you are becoming a facility, not a community. Miniclubs might have loose affiliations but there will not be easy blanket privileges across clubs — it won’t make sense — if you store your drinks in a spot and one of the reasons you are going to your Miniclub/Maxwell in downtown Manhattan is because of the people you will run into, what are you going to really do at one in Brooklyn anyway?

No Food Service — Keeping Operating Costs Low

If you have a restaurant that does food service, which almost EVERY private club does at this point, you are talking about a massive expenditure on operational costs.

Either you raise membership fees to $500+ a month, or you get more members to make sure those salaries are paid by the meals ordered. There will be clubs that decide to offer this as a perk that are more expensive and keep their small membership base, so this isn’t a hard and fast rule, but most clubs will decide to forgo regular food service in favor of a kitchen that can be used for special events or intermittent catering service.

You’re the Bartender — Keeping Operating Costs Low

Liquor lockers are about to come back in vogue. Miniclubs will lean into the participatory nature of nightlife, giving you a feeling of actually owning the place.

One More Time - Keeping Operating Costs Low

In one of our Something To Look Forward To newsletters we referenced Prune, the NYC restaurant that was struggling during Coronavirus and penned a touching essay in the NYTimes about it.

“The restaurant as we know it is no longer viable on its own. You can’t have tipped employees making $45 an hour while line cooks make $15. You can’t buy a $3 can of cheap beer at a dive bar in the East Village if the “dive bar” is actually paying $18,000 a month in rent, $30,000 a month in payroll; it would have to cost $10.

The girl who called about brunch the first day we were closed . . . She is used to having an Uber driver pick her up exactly where she stands at any hour of the day, a gel mani-pedi every two weeks and award-winning Thai food delivered to her door by a guy who braved the sleet, having attached oven mitts to his bicycle handlebars to keep his hands warm. But I know she would be outraged if charged $28 for a Bloody Mary.”

She’s hit on something — at some point people throw up their hands and say they will congregate at home instead of paying that much for a drink. 80% of Diageo’s sales are off-premise — that means people are already opting out of the $28 Bloody Mary, they have been for quite a while.

The key is by eliminating food and drink service you can minimize staff costs, use the space more efficiently (you don’t have to take up a lot of space with the kitchen) and provide a gathering spot that works economically, and socially, again.

For more about Maxwell sign up at maxwellsocial.com as we explore our model for launching miniclubs, signup for our substack newsletter, follow David on twitter, and follow us on Instagram or Facebook.

Founder & CEO of Maxwell Social

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