Let’s talk through the current situation PASS faces. Your business has had its main revenue source devastated by a raging pandemic. To raise revenue from other sources you plan to announce a new online learning and networking service. Except your website is down for five hours on the morning of the rollout, and even after that, there’s still no mention of the new service on the front page of the site. It seems like the term “botched rollout” is used quite frequently when it comes to our community organization, more often than not in fact. In normal times, we can laugh, but when the organization is facing financial peril, execution and decision making are absolutely critical. In this post, I’ll talk about PASS, their new service offering PASS Pro, and my vision for saving the organization.
Let’s Just Talk About Economics
Before I talk about my opinions on the Pro membership offering and how it could work, let’s talk about basic economics of the PASS organization. PASS’ major source of revenue is Summit—in 2018 revenue was about $9MM USD, and Summit made up about $8.9MM of that revenue (thanks to Steph Locke for her excellent research into the budget). Summit isn’t happening in 2020—the conference is going virtual. However, given the reality of a global vaccine distribution process and depressed business travel budgets, even if it happens in 2021, revenues will be likely be down. Which likely places PASS in the awkward situation of trying to run a conference that may have costs which significantly exceed revenue.
Focusing on 2020 for now, PASS Summit is virtual, as are VMWorld, AWS reInvent and Microsoft Ignite. Ignite and reInvent, which are typically around the same cost of the physical Summit, is free as in beer, and VMWare is using a freemium model which only costs $299. Virtual PASS Summit costs $599, or $999 with precons. I’m not pointing out these differences in cost to be petty—those other conferences are subsidized by the vendors who run them, and you won’t get the deep level of database content you’ll see at PASS Summit. However, those other conferences present headwinds that could slow the number of attendees that attend virtual PASS Summit. If PASS were to have 2000 attendees that attended precons, they would only have $2MM of revenue. I think having 2000 attendees is probably optimistic given Zoom fatigue, the fact that other events are free, and the depressed economy, but we’ll run with that number.
The Other Problem
As Steph mentions in her post, and I’ve mentioned before, C&C is a for-profit consulting firm that performs event management and community management services for PASS. There is no meaninful difference between PASS and C&C. PASS Board members have stated that C&C has hired staff just to work with PASS full-time (which brings into question labor laws about contractor status both in the US and Canada, but I’ll leave that to lawyers). In fact in that same post, C&C is referred to as PASS HQ. C&C, in a typical year, charges PASS around $4MM in services. You should also note that there are no PASS board meetings that happen without C&C representation. C&C has a non-voting seat on the PASS board, in the form of their CEO, Judy Christensen.
For those of you who are math majors, or are Business Intelligence specialists, you’ll note that $2MM Revenue < $4MM Expenses. PASS does have some cash reserves, but they aren’t sustainable forever, and frankly why should our community continue to subsidize a private firm as we are losing money. The search for other revenue sources is a good idea, but is six months late, and millions of dollars short.
PASS Pro Membership
Yesterday PASS announced a new Pro Membership model. I know a lot of work went into this effort, over the course of many months and the mission is noble. I have colleagues who are developing excellent content for the platform that I think is quite good. However, there are a few problems. First, I know of a few community members who in recent months who were asked to host community networking events without being told these events were associated with a paid service. As someone who speaks and writes for part of his living, I’m fine with doing something for free to help a community organization (I’m receiving no compensation for speaking at PASS Summit), but when something is to purely support a for-profit effort (even community leaders have to pay for access to the new offering), to quote a wise man, “#$%@ you, pay me”. The bigger ethical issue is these community members were not informed that these “Community Connects” events were for a paid service. This changes a community organization into a for-profit business (which is mainly what it was before, however this makes it explicitly clear).
Beyond those issues, I just can’t see this working as a successful business (and I hope I’m wrong), PASS Pro is both on price and mostly business model competing with Pluralsight and LinkedIn Learning (formerly Lynda, disclosure: I have training videos on LinkedIn Learning and DCAC is compensated for them). PASS also faces competition from other folks in the DBA space who have their own successful private training services. However, those organizations have a wide base of training offerings, and a steady pipeline of content, and more importantly are both public companies with large coffers to help them pay content creators to build a continuous pipeline of content. While, PASS is paying content creators for the new service, this model is likely unsustainable over time without major capital investment to fund content creation.
With all that being said, let’s just run some numbers. While PASS always talks of the 350,000 people on their email list, that number is just a dream. The data quality is awful, and everyone who is involved with the community knows that the actual number is an order of magnitude less. I’m going to be generous as say PASS has 50,000 active members. (I personally think the number is closer to 10-15k). If they get a 20% adoption at $120/year, that represents revenue of $1.2 million/year. This would be a significant revenue enhancement, however in a crowded marketplace, I just don’t see 10,000 people signing up for the service, nor do I have faith in C&C to build a service that’s attractive to a broad audience. In my decade plus long of working with PASS, while Summit has been successfully run, nothing else has.
To the Botched Rollout
The website going down on the morning of the launch was bad luck. However, it’s part of many systemic failures that we’ve seen throughout the years of C&C’s leadership of PASS. Computers break, but not having monitoring and automation in place to repair your website is just poor form for an IT professional organization. However, the bigger failure is that PASS hasn’t clearly defined what the benefits of the Pro membership are. From the blog post the following benefits are defined:
- Download access to PASS Summit 2019 Learning Pathways
- Exclusive partner discounts
- PASS Community Connects networking sessions
- A PASS Pro Member badge
I received a copy of the email sent to community leaders announcing this service—there are a number of “we aren’t sure yet” or “this service is new and we’re figuring things out” in the email that tells me the business model and the service were not fully thought out. There’s also mention of new features including an educational series, but no clear definition of what that is going to look like, and a PASS Training Record (which is based on surveys I’ve taken, probably leading into a certification of some kind, which is exceptionally hard and expensive to execute well, especially in a cloud world where exams need revisions every few months). This is a pretty limited set of benefits compared to Pluralsight, which already has a fully featured offering, with certification preparation and an excellent website/mobile experience.
I like the idea of diversifying revenue streams, however this offering is not fully baked, and in my opinion is unlikely to be successful. (I hope I’m wrong). Additionally, this offering was only introduced in a blog post, is not on the front page of pass.org, and as of 24 hours after the announcement, has not been emailed to members.
You Talk a Lot, What Would You Do?
If I were on the PASS board (and I’m thinking about running for the PASS board) I would do everything I could to reduce costs dramatically over the medium term. I would pursue termination of the contract with C&C, and probably look to downscale Summit in 2021, to be more at the level of a SQL Rally event. I just don’t see conference attendance returning to pre pandemic levels in 12-14 months. At that point, you are reducing costs to the level of hosting the websites for SQL Saturday and Virtual Chapters, other properties. I start planning for a Summit in 2022, to be back at the level of 2019, and look at all other opportunities to reduce overhead. These are desperate times for the community org, and I care far more about preserving the organization than propping up a for-profit consulting firm.