Apr 22, 2020
Product-Led Communities Need Picks and Shovels
As product-led community startups continue to evolve, they are driving growth in another area: tools that build, support, and monetize communities.
Last month, my colleagues Shripriya and Sara and I put out a series of blog posts outlining our investment thesis in something we’re calling Product-Led Communities or PLCs. As we’ve continued to go deeper into our research, we’ve discovered an exciting new area of growth: companies that serve PLCs of any size/scale — from mass-market fitness and learning communities to niche and hyper-local groups.
A PLC is what happens when a company has a valued product or service, as well as an authentic, thriving community at its core.
This goes beyond the idea that customers “come for the product and stay for the network.” At true PLCs, the network enhances the consumers’ experience with the product and helps them reach their desired outcome in a faster, cheaper, more enjoyable, or more accessible way — improving the customer engagement and experience by 10X or more.
PLCs are typically found in areas that require a significant investment of time, energy, attention, money or identity from the consumer, and where feedback loops are otherwise few and far between, such as learning, improving your health, lifestyle shifts, career shifts, lifelong hobbies, etc. PLCs align incentives between the platform and the consumer, which ultimately enables productive, trusting, and authentic communities to flourish. It also puts the company as close to the consumer as possible and leaves little space for competitors to find a way in.
We are confident that multiple massive PLCs will emerge and create new markets as they change people’s lives for the better. We want to invest in and be a part of these companies. We also believe there will be thousands of micro-PLCs. They’ll look like the course creators who have a unique audience on Teachable, the fitness influencers who have an Instagram presence and their own DTC product, a community creator passionate about bringing remote sales professionals together, or an open-source developer community. These micro-PLCs will need tools to help them build the best community and product experience. We are also interested in investing in these tools.
According to CMX’s 2020 Consumer Industry Trends Report, 88% of companies polled believe “Community is critical to our company’s mission.” Anecdotally, we’re hearing more founders talk about community as a need-to-have, not just a nice-to-have. Founders in the earliest days of building their companies are thinking about how to bake community into their product in a meaningful way. Doing so early allows them to earn trust with early users, who can later help inform product decisions and drive brand awareness and customer acquisition.
We’ve talked to hundreds of PLC founders, community managers, and community experts to learn what kinds of tools they are looking for.
Here are the areas where we are seeing a need:
I. Community-as-a-Service: We have seen companies leverage a variety of solutions including Facebook Groups, WhatsApp, and Slack to enable community connection, but eventually they fall short due to lack of integration with the rest of the product experience and, in some cases, the incentives of the platforms don’t align with community itself. There is room for software to deliver integrated community solutions and tools to help manage communities across various platforms that can scale as companies and communities grow.
Communications and Community Management tool examples: Geneva, Circle, Mighty Networks, Tribe, Vanilla Forums, Quill, Flick, Disciple, Khoros, Higher Logic, Commsor, Zulip, Spectrum, Countable Pro, Openland, Zyper, Comradery, Upstream, Rocketchat, Playgroup, Slack, Discourse, Discord, FB Groups
Event Hosting and Community Connection examples: Icebreaker, Hio Social, Vibely, Run The World, Superpeer, Teohh, Hopin, Remo, Hey Summit, Whereby, Toasty.ai, Crowdcast, Bevy, Braindate, Shindig, Boon.tv, Moment House, Tame, Airmeet, Sococo, Rally
II. Community moderation: As communities grow, so too does their need for moderation to ensure that content does not become toxic. In communities where moderation is vital, like group therapy, these solutions can augment human moderators and allow services and platforms to scale. AI-based moderation is rarely cost-effective for a platform to build in-house. Furthermore, because toxicity can be adaptive, the best systems will cut across many platforms to identify trends and threats from across the web.
Examples: Koko (exited Spero portfolio company), Sentropy Technologies, Marigold.
III. Monetization: PLC’s sell products or services. They don’t require ads so they need tools to help them capture some of the value they are creating for their users and community. Tools that allow creators to monetize their content and digital products. Many of these monetization tools double as creation tools that allow creators to create professional-grade content and digital products. A common starting point for creators is content to build a following, which they can then monetize through services like classes, coaching, premium content, etc. Operationalizing monetization — creating offerings, pricing, segmenting customers, accepting payments, etc. — requires infrastructure which creators need not re-create. Example companies include:
Examples: Patreon, Bunches, LaunchPass, Substack, uScreen, Pico, WhereBy.Us, Playbook, StructClub, Podia, Teachable, Kajabi, Jumprope, Anchor, Stream
If you are a founder working on a startup that fills any of these gaps to support PLCs, we would love to hear from you. Please reach out to stephen@spero.vc.
