Article

Christie Fidura
Christie Fidura 18 December 2015
Categories Content, Social Media

Can Community Save the Unicorns?

Some unicorn companies, including well-known names such as Uber, Pinterest and Spotify, have significantly lower valuations for public offerings compared to the VC-funding they've received.

Like many of you, my eyebrows raised when I stumbled across the Zero Hodge article titled, Unicorns Dropping Like Flies: First Dropbox; Then Square; Now Fidelity Cuts Snapchat Valuation by 25%.

 

 

It moved into a full-blown WOW once I started reading the article. These unicorn companies, including well-known names such as Uber, Pinterest and Spotify, have significantly lower valuations for public offerings compared to the VC-funding they’ve received.
 

In other words, they’re upside down on their mortgages.
 

It’s really shocking when you consider that most of these companies’ products have become part of our common culture and our vernacular. In other words, they’re part of us now.
 

So if they have received so much funding that they’re under water if they try to float, what can be done?
 

I wonder if some of these companies haven’t missed a trick to improve their valuation by building community. There are some truly amazing stories out there about community not only proving its value, but also enhancing the overall product line and company. Let me give you some examples:

  • Erica Kuhl, Senior Director of Community at SalesForce.com (and my personal hero), spent 3 months analysing the value of her community. Her analysis showed that active members spend 2x more than non-actives; the average order value was double for members; and actives had a 33% higher adoption rate of the product. It’s clear that these active community members are directly impacting the revenue stream. Read the CMX article here.
  • Harley-Davidson Owners Group actually saved their brand from certain death (bankruptcy) in 1983. By listening to their members, they engaged with their community, building trust. The members felt empowered when H-D started implementing their product requests, directly impacting product design, and building products that they wanted to buy. These enthusiasts are bigger than just a customer base; there is no question that they are the de facto directors of the company. Read the Harvard Business Review article here.
  • Hootsuite require their 1000 Ambassadors in 70 countries to not only raise awareness by generating and sharing content, hosting events, and participating in social media campaigns, but also to provide an 80% response rate in the Support Forum for their 15,000 registered customers. How does this prove value? These Ambassadors are actually working for the company, lessening the requirement to hire full-time employees to do this work. Incredible! Read former Hootsuite Global Community Manager Stephanie Wiriahardja’s article here.

I recently met up with a company who said to me, ‘You seem to want to measure everything.’ Well, yes, I do. Because if you can’t measure it, you can’t prove it’s valuable. And if you can’t prove it’s valuable to the management team, they won’t think of it as an asset. And if your community isn’t thought of as an asset by the management team, the community is at risk for being unplugged. And we all know how painful that can be (see my article about the Reddit community implosion here).
 

So this is my plea to Venture Capitalists everywhere: consider community building and engagement as one of your determination factors. It just might make the difference to the future valuation of that company.
 

And it just might save a unicorn or two.

 

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