Community Rules – Creating Companies based on Networks of Contributors

Hacker News LinkedIn Google+ Facebook Twitter by Abby Fichtner

Eric Paley of Founder Collective facilitated an awesome panel at the 2012 Nantucket Conference around startups whose businesses are built on the contributions not of their employees but of people in the communities they’ve created: uTest (testers in-the-wild for software), Skillshare (learn anything from anyone anywhere), and GrabCAD (GitHub for engineers).

Michael Karnjanaprakorn (Skillshare), Hardi Meybaum (GrabCAD), Eric Paley, Doron Reuveni (uTest)

In each case, without their community (testers, teachers or engineers, respectively) – there is no business.

Getting the Community Engaged

The general rule, per uTest’s CEO Doron Reuveni, is 99:1. You tend to get 90% stalkers (“just watching”), 9% of your users do a little, and then you have 1% that are really active. If you want a thriving community, you need to tap this 1% and really engage them. uTest’s top testers proudly sport uTest t-shirts, meet up at conferences, and help spread the word.

“Find these guys and they’ll lead the way for everyone.”

uTest has done so well at creating a loyal community that Doron told a story of a scary incident when uTest accidentally double-paid their testers. It was through PayPal, and there was no way for them to reverse the transaction. At the time, their revenue was about $1M/month and the extra pay was around $250,000 – so this was significant. Unsure what to do, they put up a blog post explaining the error to their users (a little self-deprecating humor in there – yes, we test our own software, but we still found a bug), and within 1 week, 99% of uTest’s testers voluntarily returned the excess pay.

Can you imagine that kind of loyalty from a traditional, big company’s customers??

Control it or Leave it to the Masses?

Of course, there’s a trade-off you have to make between centralized control for creating an amazing user experience (think: Uber) and a decentralized model where users rule and you can really tap the power of the community (think: Kickstarter). The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations says the most powerful organizations will be those that can strike the right balance between the two.

They all obviously want quality contributors so people view them as a top source of testers/teachers/3D CAD Models. However, GrabCAD found when they’re too strict in what they expect from engineers, it leaves people intimidated and they get less engagement, so they’ve found themselves lowering their preferred bar to find that right balance.

Per Michael Karnjanaprakorn, Skillshare’s CEO, all communities need some type of trust and rating system. Skillshare bases theirs on positivity – highlighting what’s good about teachers and what the students would like to see.

uTest has created a whole system around incentivizing testers who do well. As testers do better, they increase in levels – which means higher rates and more visibility, leading to more work and more money. If someone “misbehaves” or doesn’t do a good job, they end up not getting work and eventually leave. Thus, the system perpetuates advancing quality testers while strongly dissuading the bad apples so they no longer have a reason to stay.

Which audience do you build up: The contributors or the buyers?

Another big question is which side do you go after? The supply (testers/teachers/engineers) or the demand (the people who pay for their work).

Skillshare said this was rarely in balance – they’d go after teachers, then students, then back. But now, they only focus on the teachers because if they get really awesome teachers, students will find them.

Learning from the Community

For all three, a critical role in their startups is Community Manager, someone whose job it is to listen to the community.

GrabCAD recognizes that their success is all about how healthy their community is and so it’s essential that the community manager report up to the very top of the organization.

“You can’t plan how people will use your community. They’ll do what they want.” – Hardi Meybaum, GrabCAD’s CEO

By listening, GrabCAD pivoted from a marketplace for engineers to being the GitHub for engineers. A move that they wouldn’t have predicted but today 10% of the world’s mechanical engineers are registered with this 3 year old company.

Best quote of the panel: when Eric asked the companies how their users use twitter, Hardi replied:

“Engineers don’t use twitter, they use GrabCAD for that.”

Boom.