Invest in Community, Not Products
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In my 15 years as an investor and operator I've seen the landscape of business building and venture capital shift dramatically.
While the traditional model of identifying promising startups and providing capital remains, a new paradigm is emerging: investing in community. This shift is not merely a trend but a fundamental change in how we approach early-stage investments.
The Old Way: Product-Centric Investing
In the past, the focus was on the product itself. We'd scour the market for innovative solutions, assess their potential, and invest accordingly. The emphasis was on the product's unique selling proposition, its scalability, and its potential for disruption. While this approach has yielded significant returns, it's increasingly becoming a less reliable strategy.
The New Way: Community-Centric Investing
Today, I'm drawn to companies that are not just building products, but cultivating vibrant communities.
These companies prioritize building relationships with their customers, understanding their needs deeply, and creating a sense of belonging. By focusing on community, these companies are not only acquiring customers but building loyal advocates.
Why Community Matters:
Deep Customer Insights: A strong community provides invaluable feedback and insights. By actively engaging with customers, companies can identify emerging trends, uncover unmet needs, and refine their product offerings.
Accelerated Growth: A loyal community serves as a powerful marketing channel. Word-of-mouth referrals and organic growth can significantly boost a company's trajectory.
Enhanced Brand Loyalty: By fostering a sense of community, companies can cultivate a strong brand identity and build lasting relationships with their customers.
Increased Resilience: A strong community can help a company weather economic downturns and other challenges. A loyal customer base provides a stable revenue stream and can even offer support during difficult times.
Building a thriving community is like cultivating a garden. It requires careful planning, consistent nurturing, and a genuine passion for fostering growth.
It starts with you articulating a compelling purpose that resonates with your target audience. What common goals, interests, or values unite them?
Create a sense of belonging by establishing a unique identity for the community. This could include shared language, rituals, or symbols.
The best way to foster conversations is to provide opportunities for members to contribute, share ideas, and engage in meaningful discussions.
Once those conversations start to flow identify and support active community members who can contribute as moderators, organizers, or content creators.
This is apostle making time… very important. Be sure to acknowledge and reward members who actively contribute to the community. This is how you get your community to become the number one growth facto for the community itself.
Actively seek and respond to community feedback to understand their needs and preferences. Try new approaches, introduce new features, and be willing to adjust your strategy based on community input.
By focusing on these key elements, you can cultivate a thriving community that fosters connection, supports growth, and achieves shared goals. Remember that building a community is an ongoing process that requires dedication, patience, and a genuine commitment to your members.
Suddenly things begin to snowball in a feedback loop of growth. Your community keeps getting bigger and more active as more and more eyeballs find your product / service.
Investing in Community
One of my most successful investments was an identify verification platform that I backed in its early stages.
The founder had a vision of using a combination of your face, your government ID and knowledge about your past to prove your identity. Difficult for hackers to gain access to all three. The leadership team focused on fostering a positive community of high-profile business owners and investors, and it paid off. The platform quickly gained traction, attracting key users into a paid pilot program.
What impressed me most was Robert’s (the founder) dedication to the community. He actively engaged with users, responded to feedback, and prioritized their needs. Consistently without exception… especially when there was constructive criticism or any form of negative comments.
This work created a sense of ownership among their users, who felt invested in the platform's success. This strong community not only drove user growth but also attracted the attention of strategic partners, ultimately leading to a lucrative acquisition by Facebook in 2018.
Communities lead to better outcomes, in faster times.
I’ve lived it firsthand.
The Future of Investing
As we move forward, I believe that community-centric investing will become increasingly important. By focusing on building strong communities, companies can create sustainable businesses that deliver long-term value. For investors, this shift presents a unique opportunity to identify and support the next generation of high-growth companies.
The future of investing lies in understanding the power of community.
By embracing this new paradigm, we can unlock the full potential of early-stage companies and drive innovation for years to come.
Through communities we can grow ecosystems that generate revenue, foster new ideas and establish deeper connections with prospects and clients — exactly what every investor and business builders wants.
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