It'll be interesting to see how that model holds up to another 2-3 years. The few invite-based communities I've been a part of started to degrade as the social graph grew out and started to pick up the occasional undesirable.

It was harder to get rid of them because they knew someone who knew someone, and trying to push them out had a network effect. It might be obvious to someone removed by 3+ levels that a bad element is bad, but the person who invited them might not see it.