Community is a broad term in SaaS. What does it actually mean?
In my view, community is defined as a startup’s ability to own the conversation in their marketplace.
As a reminder.
This matters dearly because in category creation markets, the market winner will have to carry the burden of leading the conversation in the market AND winning the market by building the best product and then selling it better than the competition.
For example, SalesLoft was acquired for $2.3b whereas Outreach was worth $4.4B in their last round of funding. That is nearly double the valuation for a product that to the untrained eye, looks nearly the same. Why is that?
In my view it is because Outreach had far superior execution with community building. They acquired SalesHacker and released valuable content from day one that gained more mindshare than SalesLoft.
Scroll down, and with a quick sniff test, you can see some proof of this. Outreach has 144k followers on LinkedIn, whereas SalesLoft has 96k. If you check other metrics like Twitter followers, Facebook likes, email subscriptions, etc., you would see the same thing: Outreach winning and Salesloft in second.
I cannot tell you how many founders I have met that vastly underestimate how important community is and how hard it is to get right. I will not pretend to know how to fully reach escape velocity with the community, but I will share what I do know and what I have learned from failure and some success. I do know that if it is not a core focus from day one, at the same time as product and sales, and you are in a new category, then you really do not stand a chance.
For technical products in new markets as a company at the end of the day you are changing behavior when users buy or use your software. This is the hardest challenge of a new category.
In the early days of the now multi-billion-dollar experiment tracking MLOps market in 2018, I remember showing a demo to the VP of AI at Grammarly, and him saying, “I have never seen something like this before. How would I even explain this to my leadership team and data science team?” Just think about that; you have this amazing improvement to offer a company. We're talking about a 10x better way of working, and they have no clue how to explain it to others, what budget it would come out of, how to use it, no concept at all.
The same thing happened when I met Jason Yonski, the founder of Uber AI. They were the nicest team, invited us on-site, saw the demo, and then said, "Hmmm, yeah, we are going to build this ourselves. We have a few developers devoted to this." Think about it, now what? You are a five-person startup with virtually no competitive set, no case studies, and only a few customers. How do you tell Uber, "Oh no, don't build that, but use my platform"?
The most proven way is to win the hearts and minds of your early adopter market via community. They need many quality interactions with your company to build trust. Trust is built when they gain value from content you produce as a company beyond just your product. This means the content has to help them and cannot be found easily in other places. So many founders fall into the trap of thinking, "Oh, I will just build the best product, and the users will come." That could not be further from the truth. This mindset will set you up to fail. To create a $100 million ARR SaaS business, you have to win by profitability disrupting your product better than the competition. Having the best product is table stakes.
Another example of a community winning a new market we can study is access management. Clearly, Okta won, reaching a $12.45 billion market cap, whereas JumpCloud is private at $2.56 billion, and ForgeRock's market cap is $1.95 billion. Just a quick look at Okta's mindshare across easy-to-access metrics, and you can see just how much the own the conversation in their market. It is not even close. Okta ranks as the 315th website globally, whereas ForgeRock is ranked 331,458th.
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