Is the community building industry popping?

[rosiesherry]

Is the community building bubble popping?

— Rosie Sherry (@rosiesherry) September 1, 2022

Crikey. How many people decided to stop working at Commsor today?

I wonder if in the years to come we'll think it's odd that a company with very few customers and a product no-one seems to have seen raised $50m at a $500m valuation. 👀#CMGR

— Richard Millington (@RichMillington) September 1, 2022

Core @burbteam philosophy, as informed by @daniellexo's experience leading underfunded community orgs and my experience as a startup exec:

Brands are, at best, fair weather friends to community. https://t.co/s26y06Lsyj

— drew dillon 🏘 (@drewdil) September 1, 2022

Perhaps it’s inevitable in this kind of market where community has had so much attention and so much VC investment, that things are just going to get a bit rough atm.

And of course, it’s not just community that’s experiencing a rough ride, it’s the world and the tech industry as a whole.

It would be daft to assume we are immune to this.

There are signs that I have seen, maybe you have noticed things too:

• Orbit laying off approx 40% of their company
• Community teams massively shrinking or disappearing
• a bunch of new tools have entered the market, how good are they and what difference do they actually make to our day to day community building lives?
• Commsor had 3 leadership team members leave in one day
• The general vibe at the moment is that summer has (understandably) been very quiet, but along side this is the general commentary that people are overwhelmed with communities and not getting enough value from them.
• and really, when push comes to shove, people don’t show up at communities and then realise that their life is often ok without them.

[saranosocks]

Agree and I’ll add a few more signs:

• community consulting opportunities slowly shrinking
• those hiring for community roles are heavily focused on engagement/retention and growth numbers as sole metrics for success
• a general vibe of slowing of community over the last 6 months with the last 3 hitting the VC backed and tech teams

[mhall119]

A lot of the “community-led” hype felt like the “blockchain” hype, and it got a similar flood of VC money when there was nothing really there. Then people mistook VC money for smart money, and assumed that you could just throw these things at whatever you wanted and it was going to automatically be successful.

In both cases people were blinded by dollar signs and never bothered to understand what they were getting into.

[evanhamilton]

I lean more towards what @mhall119 is saying: the community bubble might be bursting (along with a lot of other bubbles), but that doesn’t mean the industry is.

I’ve seen a lot of bad, vague definitions of community from practitioners and a lot of companies investing without knowing what they want over the past 3 years. I’m not surprised that, at the first sign of a downturn, they’re disinvesting. It’s actually the right choice (following the wrong choice).

I don’t know what’s up at Orbit and Commsor but I feel both were aiming for something very ambitious that didn’t have immediate, practical implications. And with all the hype around community, what community pros should have been delivering for the past 3 years is practical results, instead of high-minded infrastructure.

I know plenty of places with mature teams and strong ROI that are continuing to invest in community. But I do think we’ll continue to see a correction from the hype that led many down risky paths.

[Mallclerks]

Everyone got caught up in trying to make Community so easy and cookie cutter, nobody stopped to ask if we should be.

Community isn’t meant to be easy, no Community throughout history has been, yet folks thought you could just hire overly priced consultants who don’t know jack about your business, come in spouting about the latest software made in the last two years, and no company provides any factual return on investment data. Even the big boys like Khoros are still pointing to studies last conducted in 2008 for how to calculate support deflection. The entire industry deserves to be popped because it’s all been built on a house of cards.

Anyone who didn’t see this coming with the absolute joke that was/is trying to tie Community so tightly with NFTs Crypto, the endless “experts” selling their Community wisdom, the endless snake oil, and endless promises that Community solved everything. I’ve stopped participating in most of the industry as I simply can’t handle another person inventing up yet another role the Community space needs.

With all that said, my teams kicking butt, tightly integrating in our platform, getting called out on earnings calls for having such an impact on the business. So is the community industry popping? Maybe. Or it’s just time the industry is cleaning house after realizing a lot of professionals can’t actually prove their worth

And that’s my sassy take on it.

[enrouteto]

Not sure if it’s safe to do so, but I’ll share my take. It’s hard to separate my experience as someone that has worked at multiple startups and someone that is immediately invested in the overall growth of this market.

Prior to joining Common Room, I did my diligence. I was at Splunk struggling to get a community off the ground that specialized in an emerging market. We were being treated as an add-on, and the only call 2 actions were word of mouth to get people to show up. We also shared a Slack workspace as a channel, so messages would cycle out way too quickly so it always felt empty. I had no means other than anecdotes and intuition to influence a hopeful funding for this community. I’d say how this company is interacting with us in community, or how this company is trying to learn about X here. Through that experience, I discovered that a market for these tools was emerging. And prior to Splunk, I had been the the customer/community evangelist at another startup as part of multiple hats I wore.

I first discovered Orbit ~Dec 2000. I fell in love with the idea of the model and Rosie’s content (shouldn’t come as a surprise). I couldn’t actually use it because I didn’t have the keys internally. However, this was the spark that got me to look at Commsor. Yes, I had even seen a product demo! Common Room was a black box and I couldn’t learn much about them. They seemed like the “enterprisey” crew coming in.

I realized I wanted to be a part of this movement ~September of last year. Luck would have it I was connected to Common Room, and everything just clicked for me.

So now you have my context.

Here’s what I see happening. Community led growth is a real thing. It’s just that I see it weaponized as a hack, rather than the recognition that community does play a role in how products are adopted and value is delivered. The only reason it exists is because there is a relationship between the value users get in community and what they end up recommending, buying, using, etc. The data is starting to prove it out as well.

However, most of this doesn’t matter a ton to the individual community (or devrel) practitioner other than helping to prove the value of the work they’re doing. At the end of the day, someone still has to intentionally build a community. So any tool in the space should either help the practitioner build/run OR prove the value of what the practitioner is doing (although those aren’t independent of each other, and shouldn’t be).

I’d expect that there should be multiple types of products that can be successful given the types of communities and tools for various stages and requirements (integrations, security, use-cases, etc). Regardless of what the product is, users have to adopt it.

Then there is the market readiness - No one historically paid for these types of tools. Yes, there is a forum budget, maybe some discretionary - swag, events, etc, but not for community-enabling tools. Hype doesn’t pay the bills and we’re still relatively early in market creation and awareness. The community-led growth narrative actually helps here as it at least resonates with the folks that create budgets.

Then there is building a startup. It’s frickin’ hard. Most of the companies in this space are from first-time founders. Our CEO, Linda, is a first time founder. She is extremely talented and is able to help us maintain the sense of urgency that keeps us pushing. However, two of our other founders founded a previous company together which helps “see around corners”. I’ve witnessed Viraj and Tom, our CTO and Architect respectively, lean on their experience to thoughtfully architect the product and in how we’ve built the team and organization.

I’d say Commsor is absolutely community-led. They built a community, and then built education. They’ve produced much of their content through the collaboration with community.
One thing that I think has impacted their ability on the product side is Commsor’s early decisions to acquire a bunch of companies. Integrating tech is especially difficult while you’re still building your own product. Plus, you are adding a bunch of new people every time, each with their own take on the market, and their own culture and goals. That’s a ton to take on.

Orbit has also done some great things, especially for elevating the conversation. They’ve had some brilliant content that has served as a way to break down silos. And they’ve built in public. It’s hard to pinpoint what is happening here because they had such a first-mover advantage, and they (with the help of Rosie) coined the terminology in the space. I have some opinions here, and I’m sure the timing of trying to raise money played a role, but the net of it is that something just didn’t line up.

It’s shitty for everyone involved, especially the employees. And tbh, I’d rather the market grow so fast that we all succeed, especially this early on. I’ve never seen anything like this though.

[andymci]

Hot take written on a phone at midnight, bear with me.

Community got a boost thanks to the pandemic. Ditto for e-commerce. Everyone was stuck indoors. Online social experiences were the only social experiences.

Longtime players in the space rode the wave. So did the opportunists. Some of those are the same opportunists who started chasing crypto as that took off. They’ll move on to AI or something else soon, I’m sure.

The industry, as a whole, has more attention and activity than five years ago. That’s an overall win.

Commsor did a lot there with Community Club. It felt organic and positive. Prior to that, most of the industry resources felt pretty cold and corporate.

Where things went sideways, I think, was in the hype and flurry of activity and funding leading folks to place bets and make risky choices. Those all didn’t work out, for one reason or another.

But, again, as an industry, we’re in a better place than we were five years ago.

I’ve always thought of community as a given, especially for software companies. Asking “what’s the value of a community?” might as well be asking “what’s the value of our users?”

Now we have more resources to make the connection between community programs and business impact, and more people thinking about that connection.

Ten years ago it was about call deflection and offsetting support costs. That’s still valuable. But now it’s easier to make the case for so much more.

Similarly, we have more tools to do it, thanks to that flurry of investment. I’m becoming an annoyingly big fan of Common Room, for example, because of the focus they’ve put on their product.

…deep breath

All of that’s to say, while there’s plenty of turbulence, we’re still in the air.

[MattM]

I think this crude graph I made really explains it.

For the most part, community is on a long slow incline upwards. As a vendor, it’s taken us a long time to make progress (that said, we’re bootstrapped and profitable and have resisted VC money for a boost).

COVID forced a bump as people’s lives changed drastically and a lot of people bet heavily on that continuing for years but it didn’t.

What we’re seeing is a return to the growth that would have happened anyway with that temporarily bubble deflating.

The community industry is fine. It’s always been fine. It’s not a get-rich-quick scheme, for brands or vendors.

[Kaelon]

Community is Everything. But not everything is community.

Full disclosure: in addition to founding and leading several successful communities, I am also a technology executive and have served as a C-Level officer in client experience, customer success, and corporate operations for SaaS companies. For the past 20 years, I have worked in client services and built a career out of digital engagement, including campaigns, communities, and both for-profit and non-profit sector engagement.

There are five hard truths right now:

1. Community is increasingly being seen as a gimmick.
   Even for those of us who saw community as more than just “support deflection,” user-generated content and contributions are largely seen as worthless and - in the age of fake news, and the vast penalties that ‘democratized’ content receives on search and social - is now largely a net negative for companies that don’t manage it aggressively.

2. The ROI for Community Management is poorly measured.
   More mature client engagement disciplines - like customer success management - have clear causation between monthly leading indicators (like CSAT, NPS, Net New Opps opened, Adoption metrics, etc.) and the financial outcomes (namely, Net Recurring Revenue, inclusive of upsell and cross-sell). Community Management has very little of this: there are very loose correlations between community ‘engagement’ and revenue retention, but these aren’t consequential and predictable. Instead, Community Management tends to fall into marketing metric traps - which historically have far worse returns than more mature disciplines.

3. Tech is going through a severe (and overdue) depression.
   Those of us who lived through the Dot-Com bust will tell you that what this is, it’s far worse and much more existential to the entire technology sector. This is not just ‘new’ companies or startups popping due to market forces moving against them in some sort of recalibration; this is about widespread cash unavailability leading to two dire consequences: (a) exposure of massive saturation in the SaaS space, where about 60-70% of the SaaS providers are demonstrating themselves to be largely undifferentiated and unvaluable, leading to insolvency and irrelevance; and (b) the inability for startups and mature tech providers of all sizes to have access to capital to continue their operations, many of which were cash-strapped and dependent upon easy financing to begin with. The layoffs that you’re seeing already eclipse the start of COVID 2020 layoff season, and we’re starting to accelerate in frequency and depth of these layoffs. These aren’t layoffs to optimize operations - these are layoffs to prevent the company from going bankrupt in 2 quarters, because financing has ended and they’re not going to be able to make payroll; the layoffs will buy them a couple more quarters to find a buyer or to exit the business gracefully, probably through an M&A or restructuring exercise. Either way, about half of the technology brands that you know and love today, and their associated ‘communities,’ are vanishing before our very eyes. And it’s long overdue given this widespread saturation, but it’s telling that it stems from a technology bubble that was largely manufactured by easy cash and short-term mindset.

4. Equity is re-evaluating risk-raking, and community is on the chopping block.
   As happens during downturns, private equity looks to pull back from creating whitespace through marketing and instead doubles down on market fundamentals. Community is a small slice of customer engagement, and it is steadily increasing - of that there can be no doubt. But the largest tech private equity firms - namely, Insight and Vista - they are largely side-stepping community and putting half of their software portfolios on ice. Again, user communities and partner communities are the first to evaporate in this consolidating exercise, especially as many of these companies are getting merged, reconsolidated, and sold off.

5. Customers are exiting communities in droves.
   Just as there has been a severe saturation in software companies, there is also a dramatic information overload that has reached its breaking point with users. You see this in all online community spaces - including social media very broadly - where users are pulling back from contributing, and when they do contribute, it is becoming far less meandering and explorative (breaking the critical community engagement chain-cycle of awareness, education, and action), and much more transactional and expendable. This is, in turn, caused community members to flee online spaces and brands - which, remember, were always fairweather friends to community anyways - and instead go back to basics. You see this in shopping habits where consumers are moving away from brands that supposedly had ‘sticky community’ value (and expensive marketing budgets) and going to equivalent generic and store-brands. This is proving the business case that, at the end of the day, community does not dramatically drive loyalty alone; and many companies had considered using community as a panacea for deeper go-to-market, vision, and engagement challenges.

Bottom line: Yes. The Community Industry is popping. But that’s because it was a bubble created by people who thought of community as something it is not.

Today, ‘community’ and its radical shrinkage from commerce, is a very exaggerated look at the underlying technology and digital ecosystems as a whole. These ecosystems were largely disrupted by the radical connectivity of our digitally connected age: individual people could put corporations out of business with a great idea. But this has now been largely optimized by (you guessed it!) the biggest corporations, which now really cannot substantially be disrupted by individuals or communities. And now that this optimization has taken place, the overall economic reconfiguration - which is playing out over the next 6-9 months before our very eyes - will properly restore both the size of the tech sector (to have a fraction of the total number of logos participating in it, now that cash is disappearing), and the role of community in its proper place: as one component of a broader marketing, communication, and engagement strategy for businesses, organizations, and institutions to consider.

[andymci]

@Kaelon

the role of community in its proper place: as one component of a broader marketing, communication, and engagement strategy

Calling this out for emphasis.

[mcwumbly]

Hehe, I first read the title and thought we were wondering if this industry was “popping” as in “this place is poppin’”

[rosiesherry]

Hah, I think it’s both popping and popping. What do you think?

[mcwumbly]

In all honesty, I really don’t know! I’ve been part of a number of communities and involved in building a few over the years, but I’ve only recently become more aware that a community industry really exists with an identity of its own. So I feel very new to all of this in that respect and I’m learning a lot by reading all the topics here.

[Edmund]

Lots has already been said on this topic but I’d urge you to think of the latest events as part of an evolution for community. There’s been a lot of over investment in community and this seems like an evolution. The question is what will this become.

I think much of the companies that raised money - at absurd valuations - for literally a social CRM with data enhancements and integrations will shrink to their true value of die off. Perhaps this will take much of the attention off of community as another VC growth hack and give the real practitioners the space to make the practice better.

[rosiesherry]

Adding to this: recent layoffs at Bevy/CMX.

Jenny Weigle (she/her)

[HAWK]

Yeah that fascinates me.

This from the latest Gartner market guide (sorry, I can’t share the whole thing).