Product or community-led? Forecasting the future of growth

Highlights

Why community-led growth? Why now?

Pulkit Agrawal: It's not a new concept, it's been around for awhile. There's been the early SaaS-style lots like Salesforce and HubSpot that have done a really great job at building community. Hubspot with inbound.org.

Salesforce is really driven by the whole ecosystem of solutions. But also a lot of recently IPO'd tech companies have been driven by communities. The trend of individuals buying from other individuals is continuing to grow.

So, we're kind of moving away from this world where there's top-down decision-making when purchasing software, especially in B2B. It's a much more dispersed software buying process. People are looking to buy from other people. We’re seeing the rise of influencers in B2C.

So this is really the right time for teams to be thinking about community and what the role of individuals within their community is and how they can be driving success through that. It's a really efficient way to scale growth rather than relying on organic or paid. If you've got a strong word of mouth distribution, then that really helps.

Are we early in community-led growth?

Latif Nanji: It's a yesterday thing. The importance of it has really to do with the nature of your business, especially if you're in B2C, to be able to grab that many eyeballs and attention to direct the right information and facilitate that growth is imperative.

When you think about some of the most successful communities, they help limit the lead gen cost for these brands. Whereas in the early days of a company like Salesforce, so much of their money was put into marketing.

And now, because of communities like Discord and Slack, you're able to leverage them. I think people should be starting to think about what it actually means in their own context.

Gabriel Fraga: About 10 or 20 years ago, community-led growth was a “nice to have.” There weren't a lot of companies that were doing it.

Companies had to be brave to start building communities. Today, though, because of changes in consumer behaviour, it’s a must-have. People don’t want to just buy a product. They expect more from the brand.

I think COVID has also played a big part in that, as well. Everything is happening online now. I was reading today that in 2030, a hundred percent of the world population will have internet access. So, imagine much growth we're still yet to see. Community is a must-have. But today is the right moment to start thinking about what it means to your brand.

How should startups think about communities when it comes to their go-to-market strategy?

Bob Moore: Community is a major part of the brand equity of companies like Shopify and Webflow, but I would also bet if you went back in time and looked at their seed pitch decks, none of them probably have the exact phrase “community-led growth” in there.

What’s been happening in recent years is that there's just been a bit of pattern recognition that's kicked in when you look back on a lot of the companies that have been the fastest growers over time.

It’s about creating dimensions of value for your customers and folks that are in your pipeline. Even all the way up to the discovery phase who have never engaged, or who are really far away from buying. Part of your growth strategy should include allowing these groups to create value for each other, together.but doing things that kind of allow for the existence of a group of those people that have that same common interest to actually.

Partnerships is a perfect example of one dimension where you have a different kind of community at multiple tiers.

There's the community of people that are your end consumers, but also a general audience in the specific industry you’re targeting which is their own ecosystem of other technology companies that their product integrates with. And that may have data flowing back and forth in between. The way in which you work with those companies creates this kind of meta-ecosystem effect, where if you have the same ideal customer profile, but you're not a competitive product.

You can actually multiply the size of the community that you can access and that you can cultivate by working really closely with those partners. And it turns out that one of the fastest and most effective ways to build community.

And the more and more you see of that, I think the more you'll find that you can then tap into the downstream effects of having everyone in one place.

What is the difference between being community-led versus product-led? Do you have to pick one or can you do both?

Bob: There's no answer you can give here that's not going to make somebody angry in some way about the definition being slightly off. But I think in my mind, when I think about product led growth, I think about the way in which actual user experiences that exist within the course of using a product, drive them to become more engaged or, ideally, to actually drive other people into the product and create these feedback loops.

These are viral growth mechanics where the core value proposition of what people are doing in the product is something that ends up extending value out to other people which creates these virtuous effects. To me, with the community-led, you can almost draw a bigger circle around that. Product-led growth you could argue is part of the greater community-led strategy, which is really just saying how, how come.

This is really looking to accomplish the same thing as a positive feedback loop. And it can be done before people are necessarily in the product. You can do it just by virtue of affiliating and associating and following our brand. Make it such that education becomes lower friction. Making people feel like an inside helps to start developing loyalty before they actually open their wallet and pay for a product.

So, I think they're related. I think you could make an argument that one sits inside of the other. But ultimately it's going to be fairly rare that a company can get benefits of one and not also figure out ways to implement the other.

Latif: I might be a little bit at risk of disagreeing here, although I do think that one is a subset of the other, I believe it's the inverse relationship. I’m happy to be wrong here, but I think when a company is starting the most important thing is product-market fit.

The first thing you're actually doing is going to be related to elements of the product, like growth, which are really intrinsic to the product. But after, there's that unique experience with those first subset of users, then you're going out and finding some aspects of the flywheel.

And with product-led growth, I actually see the community as a subset of that, to be able to generate the users that are coming. So that's part of that flywheel, and community-led growth reduces the friction to enable more product-led growth. When you go to that zero-to-one journey, it's almost always about just getting the product and then surrounding it with users to continue leveraging the growth that you.

I look at it as both. It can be a product or a marketing-led function where you want to figure out if you want to be doing a lot of stuff, synchronously or asynchronously.

Once you’ve got that product-market fit, how would you drive growth?

Bob: It has a lot to do with market entry and the sequencing of how the business gets built. We're very much running what I would consider to be like a category creation playbook.

We almost have to go and define what our product is and what the best practices are in how to use it before people are able to actually use it and engage with it. Because we're kind of changing the paradigm for how people use technology in a certain user persona. And because of that, my bias is probably where it's saying the community stuff comes first.

We were writing deep, thought leadership blog posts before we wrote our first line of code because it was very much about that “creation motion.” Whereas I think probably for the majority of businesses it is the inverse. Differentiation is going to come from seeing evidence of that product-market fit. Which by definition requires having a product there.

So, make sure you invest in product-led growth mechanics first, and then it kind of builds up around that engagement. It kind of goes both ways, but it may not be that every company is going through that cycle. Companies start at different spots in the circle based on what their vision is and where they're coming from.

Latif: I love that adaptation to the definition. I agree. We came to a better definition because of those different types of businesses and where you're creating an entirely new category, you're going to have to do those things prior to building the product.

So, I really appreciate that point. And I think the takeaway from the audience is not worrying so much about the definition, but what actually matters to the business and which order you need to actually do them because you've got a perfect exit where, maybe you don't have to go build the product. You have to actually educate the market and segue into it while you're building.

We’ve had user-generated content (UGC) on social media for a while. What’s different about communities today?

Gabriel: The concept of community hasn't really changed. But how community is applied to a business has changed massively. I think social media had a big boom pre-financial crisis in 2008.

And in 2010, there was a lot of heavy investment into social media. That's when I started building community, around 2010 at Sony.

Social is big and everyone is in there and it's noisy. It's also affected by politics. It's difficult to find a space where you can have meaningful and valuable conversations with your customers.

And this has led, in my view, to the micro-communities that we are starting to see where every company must have as their own community in different, closed spaces.

It could be a Facebook group, it could be a Slack channel. It could be their own technology. It really depends on the company. But we're shifting from this massive, Facebook style social platform to micro communities. These are meaningful communities where you can have focused conversations about your company, your product, and what your customers are trying to achieve.

And they don't have to be millions of people. I think this is something that I like to stress as well, because you think of numbers, how big does my community need to be?

There isn't really a right or wrong answer, though. It's just about the community and what your mission is with your customers.

How do you think about which platform to choose for a community?

Gabriel: Back in the day you didn’t have a lot of options. Today you have a broader spectrum and it really depends on what you want to do. Webinars, for example, are a great way of building community. And now you have online event platforms that have community at the core of it, as well. It really depends on what you want to do, but there are lots of different choices.

How do you decide on the kind of community you want to build?

Bob: This reminds me of the work of Alex Hillman. He's a really great thinker on community building. One of the distinctions that he always makes is he says that communities can fall into one or two buckets. You can have a community of interest, or you can have a community of practice.

In a community of interest, people all joined together because they all like Star Wars, for example. A community of practice is where people are all actually working on something together or in the same way and learning how to become better at that thing.

His thesis is that the communities of practice are the real communities that work and that really communities of interest can, ultimately, fall victim to not being a source of real social connection and engagement. This happens when the communities get too wide and note deep enough.

So I think about it like this: how effective are we being at building a community of practice and what does that look like?

Even when there’s a common interest, what we really care about is the fact that they're getting really good at using Crossbeam by virtue of participating in that community. They're becoming better practitioners of the thing that they're there to learn more about.

What are the challenges in building an effective community?

Latif: When thinking about a community and the responsibility of it, your brand needs to be the first consideration. What is the brand mission and what are you trying to contribute to that mission? Second, determining how wide and horizontal you want to start, or if you want to go deep vertically.

So when I think about the challenges of creating that community, it’s starting with where is your business at?

If you're in a company that's like 25 to 50 people, you want to be able to start to build out the tentacles of interest. Start making people aware that these potential communities of practice could exist in the future. And so one of the things, as an example, we did, as we looked around and said, “what right now are people gravitating for but people aren’t paying attention to?”

And that’s how we decided to build out podcast community. We decided, okay, the types of users that we're serving are PMs and they love async information because they're really busy people and they want the highest quality so that they can download best practices and use them as data points.

We wanted to make sure that it was in line with our brand and we wanted to get the top and best people we thought that could speak to specific areas of interest. So they were very topical subjects throughout the themes of the year. Then we also had to make sure that we continued to maintain that level of quality of content over a period of time, because the bar always continues to get higher and higher.

What are some tips you have in attracting members to a community and then engaging them?

Gabriel: The main challenge is understanding the purpose of your community. After you build a following, the community members want to understand their role here. What are they here to do? Once you nail that then you can figure out which technology platform is right for you. Podcast? Newsletter?

Typeform actually didn’t have a house for our community. But that community exists. So you have to go out there and attract that community and bring it home. And that was our main challenge. Where's our community? How do we bring it to one home? And we didn’t have all the answers at the beginning. We had to go through a bit of trial and error.

We also humbled ourselves. Although we built our product, we allowed Typeform users to educate each other and the best ways to use the tool in practice.

Bob: I do think there are these different tiers of community within your product. If you're doing product-led growth, you'd look at something called a user maturity curve. In anybody's product, they might be different things, but you know, for us, it's a signal of like, have they added other users to the platform?

Have they connected a data source? Have they connected with a partner? You can kind of do a similar version of that as like a community maturity framework. For example, have they subscribed to your newsletter? Okay, if they’ve subscribed, have they opened the newsletter?

Looking at the engagement and activity allows you to go through this process of micro-funnels.

How do you measure the success of your community building efforts?

Gabriel: There are two things that you need to look. One is activity ratio. Are they attending webinars? Are they messaging other community members? Are they creating their own posts?

This helps you understand how helpful your community is for your customers. Sometimes you might find that communities are actually faster at helping your customers than your own support teams might be.

And then you have engagement. This is what we’re looking at at Typeform right. We want our community to drive more product engagement. Is our community helping our customers do more with our tool?

Sometimes measuring the success of community can be hard, but we know that if we build one then our customers will be more loyal to the brand.

How do you market a community pre-launch, especially if you have a small following?

Bob: This is when you’ll have to do that classic Paul Graham thing of doing what won’t scale. Very early on, we latched on to anybody that we could have a conversation with. Anytime we saw them get fired up, we’d turn them into micro-celebrities in our own little world. Whether it was interviewing them for our blog or putting them on the website, we’d use them to build up credibility and thought leadership.

We really tried to make the first dozen or so people in our community feel like as if they were founding this company with us. We weren’t shy about sharing the spotlight. We wanted them to feel a certain sense of ownership in this.

The more people feel invested, the more likely they are to post or tweet about you.

Learn more about our panelists

Pulkit Agrawal
Co-Founder & CEO at Chameleon
Connect with Pulkit on LinkedIn

Latif Nanji
Co-Founder & CEO at Roadmunk
Connect with Latif on LinkedIn

Bob Moore
Co-Founder & CEO at Crossbeam
Connect with Bob on LinkedIn

Gabriel Fraga
Sr. Community Strategist at Typeform
Connect with Gabriel on LinkedIn