A community is a party. There are many simultaneous and equally interesting conversations occurring. Members join and stay active in communities because of the value provided by other members of the group.
The first obvious question you have to ask yourself is: why the hell do I want to do it? 😋
There are two reasons why building a community makes sense for a founder:
Community as a Product
You want to build a community and monetize it.
Instead of building a SaaS, a marketplace or a logo generator, you’ll create a community that people want to pay to join.
Building a community is a lot like building any other product:
validate an idea ⇒ build an MVP ⇒ gather beta users ⇒ iterate ⇒ monetize
Monetization can mean selling access to the community via a membership.
Examples include Trends.vc, The Hustle, professional groups like Rotary Clubs, The Masons, even certain religious groups could be considered communities of this type (you join to celebrate your religion together and the organization is funded via member-donations).
Or you may sell access to the audience via advertisement.
Examples include Reddit, fandoms, forums, and Indie Hackers (originally).
Community as a Marketing Channel
In this case, you have a choice: to build your own community or to piggyback on someone’s else.
This scenario doesn’t presume direct monetization. You need members to increase your brand awareness or/and more traffic to your website, but you don’t need to monetize the community directly.
Community is used to increase brand awareness, polish your positioning, etc.
The goal of these communities is to send customers to your core product which you will monetize.
Examples: Y-Combinator school (creates brand awareness and power for their venture-arm), Indie Hackers today (maintains brand visibility for Stripe, effectively a permanent advertising deal).
You might think: — Hey, I’d better build my own. If I join other communities, I will be bound by their rules. In my own group I can do whatever I want. —
This is very far from how it works in the real life. As soon as you build a community, you become dependent on the members and what they are interested about.
Recently DAO’s (Decentralized Autonomous Organization) have emerged as well, where membership is not only bought but trade-able.
Members may join for the intrinsic benefits of the DAO or as speculative investors.
We won’t talk much about DAO’s in this guide which have many unique opportunities and potential pitfalls that could warrant another whole guide.
This guide will focus on community type 1, where the community is the product. However, most of these lessons would apply to either.
What’s the difference between a community and an audience?
An audience is a performance.
There is a central speaker who communicates to many others. It’s a one-to-many network.
The speaker may form deep or shallow relationships with their followers, but their followers rarely form connections between each other.
A community is a party.
There are many simultaneous and equally interesting conversations occurring. It’s a many-to-many network.
Sometimes audiences can form a community (think of fan-clubs for any celebrity), but sharing their experience and connecting with each other are not the primary reason why members join the audience, though they may create stickiness over time.
By contrast, a community is about connection over consumption.
Community members have shared interests, yes, but there is no single source of content.
Many members of a community may contribute and participate on equal footing with the community’s founder, if that founder is even still present and known!
Audiences are owned, communities exist outside of strict ownership
Community is much harder to own because a mature community is naturally decentralized.
A community is made up of it’s members and can develop a culture of it’s own. An identity which exists outside of any individual medium or brand. An audience has one culture that is the culture of the founder.
Corey Haines on the different levels of “ownership” platforms give creators over their audiences.
For example, professional communities like Swipe Files, communities which trade stock-tips, communities which trade design feedback.
Tools for hosting a community
There are a ton of options to choose from when considering where to host your group: Slack, Discord, Heartbeat, Twitter, the comments in a YouTube channel, a local community center, the bar down the street...
Don’t get bogged down by platform choice, it’s about the people not the place.
Anywhere people gather may become a forum for building a community.
Tule of thumb: build your community wherever your target members are already hanging out.
It will be much easier and faster than trying to change existing behavioral patterns and “drag” people to a platform they are not accustomed to.
Targeting gamers? Build on Discord.
Targeting tech-workers? Build on Slack.
Targeting local parents? Gather at school or local park. Or use What’sApp chats.
When building a community-business, you may also want to consider how you will gate entry.
You want to charge for access right?
Some all-in-one platforms make this part easier, but it’s often worthwhile to string together some partial solutions if it lets you host your community somewhere users are already used to hanging out in.
Much easier to get started and keep things going if users don’t need to form a brand new habit.
Many founders are still obsessed with the idea to build “a new Facebook” or “a new Reddit”. That is, they want to build a community platform from scratch instead of using existing options.
The obvious drawbacks of building a community platforms from scratch:
Much harder to get started — you have to code everything, or use no code tools. In any case, it will take months just to launch the product which might not take off
Potential to be “gimicky”
More expensive and time-consuming to maintain — all the infrastructure cost will be on you
Harder to sell until you reach scale (not many people can code, therefore not many people can buy a custom-coded platform, but anyone can manage a Slack group).
But the most powerful one: it requires members to form a brand new habit!
If people are used to using Slack or Twitter your job as a founder will be to explain and deliver the value of being a member of your community.
Therefore, building a community platform from scratch is not recommended for most communities, unless it is a core and necessary part of your product experience.
How to monetize a community
Once you have an audience or a community there are many ways which you can monetize that attention. You’ve gathered a specific group of people who likely share many similar problems.
Solving those problems can make you a lot of money
Or if you don’t have anything to self yourself, you can serve as a middleman to those who do, selling access to your curated group of people to advertisers who want to solve their problems.
Here’s an overview of some different ways that a community can be directly monetized.
1. Selling sponsorships and ads
Many first-time founders hope to build a “Facebook-like community”. How will they monetize? Ads of course!
Communities can sell advertisements even at relatively small sizes if the audience is specific and valuable.
A community targeting first time home-buyers is going to have a much easier time selling ads and make more money by selling ad space to insurance brokers than a Facebook group for people who like monkeys will advertising bananas.
Be warned, it takes a lot of time and effort to grow the community to the level when advertisers might get interested, and you have to be very precise about people who join in.
Advertisers pay for access to a very specific audience (age-wise, income-wise, location-wise).
To provide that value to advertisers you need to either curate a valuable audience for them or reach a scale so massive that it doesn’t matter.
2. Membership fees
In most successful communities-as-products membership fees are a major source of revenue.
They can be pretty high (especially, when you’re selling access to high-value members).
Or they can be low (when you’re selling access to content).
Fees will depend on the value you’re able to provide and how your customers perceive this value. It’s not always the best idea to put a lower price tag: a lower price sometimes convey a low value.
Usually you’d pay an annual or monthly flat fee that includes many services that a gym offers.
But there are always some little nice extras that are not included in the package: massages, extra classes, towel service, etc. These extras are always a great source of revenue for gyms. You can use the same approach in your community.
For example, membership fee would include weekly meetups, access to content, coupons and discounts on the partners’ products, but if a member wants an introduction to a certain person you might want to charge extra.
The main mistake founders make while thinking about extra services is that tend to include them in the higher tier plan.
They craft several membership plans and try to charge more for the one that includes extra services.
Before jumping into this useful activity think: does the service I want to include in a higher tier have a recurring value for a member?
For example, it might make sense for a person to pay extra to get access to all weekend parties.
They won’t pay more on the monthly basis to be introduced to one specific person from your community. As soon as they get this introduction, they will downgrade.
Merch, of course, is something that is sold widely by communities build around brands.
It is doable but only in case your members are very passionate about the idea behind the community and they want convey their passion to the world.
When being a part of your community is considered to be “cool” or signals status.
In other cases, you might expect members to buy your merch only when they want to support you as a founder and sales won’t be as repeatable.
5. Crypto, NFT
These community monetization tools are pretty new ones, and they definitely can become a part of your business model. But only on one condition: if you manage to build strong marketing around it.
You can’t just build a community of people who have Zoom meetings, then mint some coins and expect them to buy.
Again, it can be done once: like a merch selling campaign, if your members want to support you as a founder or believe they can make a quick but riding the way, but you can’t count on it in a long run.
A totally different picture is you manage to create a strong brand and think of using crypto assets in the same way you’d think about merch.
People are motivated to buy something when everyone else around (or an authoritative figure they trust) tells them it’s a great thing to buy
Or when they know: as soon as they buy it, they will be happy to brag about it. And then eventually they will sell it and make profit.
From this perspective, selling crypto and NFT to community members is very much like pitching your startup to investors: they want to make sure it’s trendy and that they will make good money on it.
How to keep a community active
Communities are kept active through:
Selfish reasons to participate
1. New Content
Either user generated, written by you, or curated.
User Generated Content: Content your users create. Forums, Reddit, discussion threads
Written by you: You as the community leader or your team may create content to stimulate discussions in your community and to attract new eyeballs.
One-time or recurring events are a great way to sustain the momentum of your community and connect people in a deeper way than chat-groups.
Online events, hosted AMA’s, live conference, and meetups are all great ways to go about this.
3. Selfish Reasons
Ultimately everyone participates in a community for selfish reasons. Figure out what selfish reasons your community members are here for: new business, new clients, insider-information, etc.
Once you’ve identified those reasons, invest in them!
Make your community the best place for people with those needs to come and your community will never be empty.
Many communities are based around conversations. Conversations are about both knowledge-sharing and about making friends.
As a community-manager your job is to start conversations and to bring relevant people in to conversations.
You can create a virtuous cycle of re-engagement by tagging semi-dormant members in new conversations, drawing them back into the community, where hopefully they will also start a new conversation.
How to build a community that scales
In other words, how to build a community which manages itself.
As a founder, you’ll have to spend hours and hours on growing a community at the very beginning. As every product, it demands a lot of attention.
Unlike a SaaS business, a community takes constant energy input just to keep running. Software keeps running as long as you pay your AWS bills, but communities will quickly die without engagement.
However, your code will never learn to write itself, but a community can become self-managing and self-perpetuating over time.
The founders of Reddit don’t need to post on Reddit anymore, there are more than enough people starting conversations and posting interesting links to keep people engaged.
The self-growing aspect is great but it demands efforts from you as a founder.
To pull it off you have to get a couple important things right:
Create a new habit in your members.
You have to make your members used to contributing to the community. Otherwise, it will always be about you and your personal contribution.
Train members to welcome new members.
You have to teach your members how to welcome new members and how to self-police. There should be a clear-cut onboarding process that involves existing members, help a new member to connect with at least several members instantly, as well as rules and guidelines on acceptable behaviour.
How to grow a community
Growing a community can be similar to growing any other product.
Marketing tactics that work for SaaS, for concerts, and for albums, work just as well for communities.