Community as a Moat
Community as a Moat
Drive business growth by fostering your community, acquisitions & funding rounds, building a marketing strategy, user research, jobs, events and more
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Community Led Growth: When Community Becomes Your Competitive Advantage
Everyone is overwhelmed with options, attention is scarce as a result, and one of the best moats for that is community.
It’s faster than ever to build an enterprise software product today. Easily deployable infrastructure, APIs that abstract complex tasks, readymade website builders, open-source libraries, Stack Overflow. Companies can copy features in a matter of weeks, if not days. In fact, SaaS founders used to face an average of 2.6 competitors in their first year of business. Now, they are up against 9.7! We have more sales and marketing channels, yet the rise in competition has reduced switching costs and increased the average cost of customer acquisition. It’s more expensive to acquire customers and harder to retain them.
The evolution of enterprise software distribution has played its role too. From top-down, sold by large sales teams with high marketing spend, built and marketed for CIOs and executives, software distribution increasingly turns bottoms-up with end users in the driver’s seat. They try out the new tools themselves, without any directive from their managers, and heavily influence buying decisions.
As consumers get overwhelmed with options, they resort to communities to make sense of the world; their groups of friends, peers or influencers. This is where consumer behaviour predominantly emerges today. Enterprise tech companies across industries take notice and put communities at the core of how they do business. But before we dive deeper, time to define some terms first.
Types of Communities
Communities are groups of people that keep coming together over what they care about. The most vibrant ones offer members a chance to act on their passions with each other. Around five years ago, the word ‘community’ started to show up as a euphemism for users or audience. Communities are sacred. They imply a level of connection, advocacy and energy on the part of the people who are showing up.
A way to understand this is to compare “community” to “audience”. To create an audience, you help people directly. A one-to-many relationship. To create a community, you help humans help each other. A many-to-many relationship. Community led enterprises build spaces for consumers to create value for each other. They pass the torch. It’s how Duolingo runs 600 events per week in 113 countries and 83% of questions asked by Salesforce customers are answered by other customers. There are two main types of communities:
Communities of Product. Built around your product specifically. This serves as a space for users to ask questions about your product, share lessons learned with each other, contribute content, services, or something else of value to your platform, and stay connected with the company. Twilio Champions, HubSpot User Groups and Notion Community, all fall under this category.
Communities of Practice. Built around the common goal of learning about a field. This aims to include all people within a role or industry, leading to a community that spans much larger than your own product. Then, it’s up to the community manager or sales team to engage members about your product use cases and directly contact prospective customers when appropriate. For instance, The Community Club (for community managers powered by community tooling company Commsor), Hack The Box (for cybersecurity enthusiasts) and Bravado (for sales professionals).
More and more companies are building communities of Product or Practice. And I think the reason is the following: By creating well-managed communities, companies provide value to customers past the product experience by facilitating user interactions and knowledge sharing within a community of like-minded individuals, who in turn become advocates, creating a flywheel which strengthens the community further. They understand community is much more than a cost centre or a marketing gimmick. It’s a moat.
Why Invest in Community Building?
This playbook is not entirely new, right? You could see early signs decades ago. Salesforce held its first annual Dreamforce user conference back in 2003. Yet, it’s accelerating so fast in the past years that “Community Led Growth” became a term and hundreds of companies rallied behind it. Community Led Growth is a go-to-market strategy that relies on a vibrant community as a driver for customer acquisition, expansion, retention or even recruiting. This is extremely hard for competitors to replicate. Let’s unpack this here for a second.
Acquisition. Expand your top of the funnel. When I interviewed Haris Pylarinos, co-founder & CEO of Hack The Box, in April last year, he told me:
For the first year, Hack The Box was exclusively a community project. However, it was not that late when the first enterprise lead came right from the community, asking about corporate licenses and exclusive access. Community acts as a great way to penetrate into the enterprise world, as members later become leads for enterprise subscriptions.
A community nurtures a strong pipeline of engaged leads in an organic manner. Prospects that join are more likely to convert. In contrast to the traditional lead generation techniques that propel a bidding race to the top, a community can scale your business, resources and presence much more sustainably, and evolve naturally over the lifetime of the community.
Retention. Lock customers in. Customers get value by participating in the community. They learn from peers, support each other, share insights and reduce their reliance on customer success teams when it comes to using the company’s product. This reduces churn, because where else could users find such a valuable network of peers to interact with?
Insights. Get feedback at scale. Product teams talk directly to existing and potential customers through the community, understand their problems, requests and complaints, and create a continuous user feedback loop. At the same time, customer support benefits from being able to answer issues in real-time, while becoming leaner and decreasing the number of tickets thanks to peer-to-peer responses.
Recruiting. Your best advocates can turn into employees. For example, IppSec, an ethical hacker with over 173k followers on YouTube and 83k on Twitter, joined the Hack The Box team as an employee after being a member of the community first. Tapping into your community is one of the best ways to hire talent that’s passionate about the problem you solve.
Finding Community/Market Fit
There is no formula for fostering a community. Developing a community is like building a product. It’s a long-term play and there’s no one way to do it right. Nevertheless, in all cases, the goal is the same: Community/Market fit. How to get there?
Find what community means to your organisation. To build a community with staying power, teams need to figure out if and how this fits with their vision and raison d'être. Communities are hard to build and require lots of effort and resources. So before jumping in, you need to think about whether it’s the right thing and what that would uniquely mean for your organization.
Run community discovery like product discovery. Find where your community gathers today (it has to exist already and hopefully be within a growing market, otherwise you wouldn’t have potential users for your product). Talk to potential members and identify their needs and motivations. Define who your community is for and, even more importantly, who it’s not for. Think about the niche that you can specifically cater to and why would people join.
Your customers are going to join your community because of benefits, not belonging. Belonging comes after someone has been a part of a community and formed relationships. What’s going to get them in the door in the first place is a clear understanding of how the community will help them solve a problem or achieve a goal.
Build a Minimum Viable Community. Find the 100 people who give a damn and build a space for them to create value for each other. In the early days, do things that don’t scale to market your community to people and onboard them smoothly. Start by providing value to that group. This generally takes the form of sharing knowledge freely, facilitated by the company’s stakeholders initially (e.g. podcasts, newsletters, conferences with world-class guest speakers) before it can be scaled by the community members (e.g. open-source software, Discord groups, member-generated content publicly shared online).
As soon as you get a community off the ground, the only thing that matters is reaching Community/Market fit. This boils down to one thing: build a community that people want. And you can always feel it when it’s happening. New people join just as fast as you can onboard them, you put together a community team because your capacity is maxed out, members constantly reach out with ideas and feedback and find ways to share content originating from your community in public. Ironically, once a community is successful and you ask the team what made it so, they often cite all kinds of factors. Yet in almost every case, the cause was in fact Community/Market fit.
Thanks Mark Tsirekas for feedback and comments!
Startup Jobs
Looking for your next opportunity? Check out job postings from Greek startups in Greece, abroad, and remotely.
News
British online supermarket and technology group Ocado acquired robotics startup Myrmex. Ocado had previously acquired a minority stake in the company in 2020.
Metanomic acquired Intoolab, an AI company focused on Bayesian Inference, to empower developers with real-time player insights as part of their video game development and web3 analytics platform.
Flexcar raised €210m in debt and equity from Fasanara Capital and other investors to expand its flexible car leasing service to more countries.
TileDB announced a strategic investment from Verizon Ventures to accelerate the development of its universal database and scale go-to-market functions.
Health tech startup, inne raised $10m to provide women with hormone insights to understand and act upon their health. If you want to learn more, you can read this interview I did a while ago with Eirini Rapti, founder & CEO of the company.
Katanox, a startup founded in 2019 that facilitates the distribution of travel accommodation inventory and payments, announced a $5.7m round.
Peek raised a $2.5m Seed round led by GFA Venture Partners to streamline the leasing journey for renters and managers.
Timberhub, a digital timber marketplace raised €1.5m pre-Seed to help thousands of SMEs grow sustainably and contribute to a greener future in global manufacturing and construction. The investment was led by Speedinvest with participation from angel investors.
Rabbit is a new online delivery startup launching in Athens, following the dark stores model of operations. More details here.
Startup Profiles
Axelar, Axelera AI, Yodiwo, Simpler
Interesting Reads & Podcasts
How Moosend's marketing helped it scale from startup to acquisition by Alex Souchoroukof, Content Writer at Sitecore, here.
A post by Joseph Alvertis, SVP Product at Orfium, on Product Managers and early-stage startups.
Mikri Kouventa episode with Diomidis Spinellis, Professor of Software Engineering at Athens University of Economics & Business, on open source software and open data, Greek universities, and more.
Stop repeating your user research and experimentation mistakes with Andrew Michael, founder & CEO of Avrio, here.
Navigating the current tech job market with Antonis Kalipetis, Software Engineer at Platform sh, and Paris Kasidiaris, CEO at LOGIC, here.
VC, 4 years in from Dimitris Kalavros-Gousiou, General Partner at Velocity Partners Venture Capital, here.
A podcast with Alexander Embiricos, co-founder & CEO of Remotion, discussing remote work and how to manage remote teams.
Events
“Η Καινοτομία στη Βόρεια Ελλάδα και οι φορείς που τη στηρίζουν” by Endeavor Greece on May 27
“Secure Minimal APIs with .NET 7 and Azure Active Directory” by Thessaloniki .NET Meetup on May 27
“Tezos Greece Social Meetup” by Tezos Greece on May 28
“Getting into product leadership roles” by Product 360 on May 31
“Dopamine Driven Development & Lazy Tester” by Ministry of Testing Athens on Jun 2
“Virtual MLOps and Kubeflow Meetup” by Athens Data Science, Machine Learning, MLOps and Kubeflow on Jun 2
“How to create a high-impact customer education program” by LearnWorlds on Jun 7
“Kubernetes Athens vol16” by Athens Kubernetes Meetup on Jun 9
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Thanks for reading and see you in two weeks,
Alex