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Communities / Culture Builder / Design

Why are software companies turning to community building?

Pushing beyond users, a wave of tech companies invest in “many-to-many” relationships. A dbt Labs director explains the reasons.

How much is even a file-sharing app actually a "community company?" (Photo by Flickr user Kārlis Dambrāns, used via a Creative Commons license)

Written by Technically Media CEO Chris Wink, Technical.ly’s Culture Builder newsletter features tips on growing powerful teams and dynamic workplaces. Below is the latest edition we published. Sign up to get the next one.

Anna Filippova’s tech job has less to do with technology than it does with people.

Filippova is the director of community at dbt Labs, the company behind a popular open-source tool that makes it easier to manipulate big data with SQL. Founded in Philadelphia, where the company still maintains an office, dbt Labs now employs more than 400 people around the world and has a curious fixation: its community of users.

Filippova represents the simple premise that product is more easily replicated than people — a big trend in business that has spawned what many call “the community company.”

“Community and investing in community for your company is the differentiation,” Filippova told Technical.ly in a recent Culture Builder Live interview. “It reminds you to build for the human beings and to solve the problems that the humans in your community are solving.”

dbt Labs has a vibrant online forum, a robust event series and a true fan base — all of which are places for its users to interact without intermediation from dbt staff. This community is not just a metaphorical moat to slow competitors but also a strong feedback loop to improve product, Filippova said.

While it may surprise some that a tech unicorn would take a community approach, the movement is growing. After the Great Recession, business execs wondered whether companies needed a community approach to reconnect with people. The more recent wave of community is responding to unrelenting competition and ingrained industry tumult. Successive generations of software and applications have built on top of each other, rendering once-Herculean technical feats into one-click upgrades. As technical advantages are eroded, companies seek ever-new territory for differentiation. People are in vogue as of late.

It has the makings of a modern business principle: The more established a given technology, the less its value is determined by technical wizardry, and the more it relies on those who use it.

Every company pursues customers, which represents a key sign of “traction” as the popular startup euphemism goes. Most customers (or users, as many consumer technology companies call us) only interact with a given company in a one-to-one relationship.

Community companies propose something different: encouraging us to interact with each other.

This is most obvious in social media companies. Few of us would take interest in Facebook or TikTok if nobody else used those platforms — and, of course, without users and the data we leave behind, their own technologies would not be anywhere near as interesting. Yet nearly a third of people on the planet have a Facebook account.

Outside of so-called data unions, social media users have little direct control over the product they use. Today’s self-identified community companies brag that they go further, developing their products with the “many-to-many” relationships they foster. dbt Labs could presumably power its software with occasional user interviews; it instead puts considerable effort into engaging and supporting means for its users to connect.

Filippova’s role reflects dbt Labs’ bet on this principle as a core business strategy.

“Ultimately, creating leverage is about people and letting people focus on the problems that are most important to them,” Filippova said.

dbt Labs is hardly alone. Open source software long had communities, since hundreds or thousands or, yes, even millions of contributors had to coordinate and have some shared identity. dbt Labs is in tricky territory: The company has raised more than $400 million from investors who are banking on above-market returns — a goal that risks conflicting with serving a group of people. Filippova and CEO Tristan Handy argue that the motivations can remain aligned, though.

Others bet the same. In 2019, events-software company Bevy acquired CMX, a “community of community professionals” to indirectly bolster its sales engine. In fall 2020, seed-stage investment firm Flybridge Ventures backed The Community Fund, a small, $5 million experimental investment vehicle targeting companies that used community as differentiation. Earlier this year, Lolita Taub, who helped launch The Community Fund, announced she founded Ganas Ventures, a firm that would focus on community companies.

It’s increasingly common for startups that style themselves as platforms to “invest in community.” Across them all, proponents say community companies acquire customers more effectively and keep them around longer — always quantified with the industry lingo of “customer acquisition cost” and “lifetime value.”

Whether the community company is a big shift or a temporary fad will come down to performance. If firms like Airbnb, MongoDB and Duolingo — all of which are bandied about as ideal modern community companies — outperform peers and produce insights, this will be an important trend. If not, it won’t last.

As for how one gets a title like Filippova’s at a tech company, she got her start at local tech meetups. She was active for a time with Pittsburgh’s coworking community Code & Supply and later found her way to Singapore. For her money, local tech communities will remain important despite the pandemic disruption. Important skills development and relationships happen within communities, both offline and on. Her path to shepherding one of open source software’s newest global online communities started in-person — perhaps a circuitous route.

“I think that’s true for all community leaders,” she said. “No one really has the same journey.”

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Companies: dbt Labs
Series: Builders

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