Ask any successful founder about how they made it to the top, and egomaniacs aside, they will most likely explain that they didn’t undertake the journey alone.
Building a company from the ground up involves a group effort – not just between a founder and their employees but across a broader network of industry peers, influencers, experts and enthusiasts.
The savviest founders recognise the value of nurturing a vibrant community around their business, to provide insights, learnings, and expertise, as well as offering support during the inevitable growth challenges, or camaraderie when they are at a low ebb.
Community has always been an important part of driving business growth and adoption. Most founders receive ad hoc unpaid assistance in the formative stages of building their business – from friends, peers, and acquaintances willing to do odd jobs, make introductions, or call in favours from across their networks to help give the company a leg up.
These communities grow organically, often unexpectedly, and at surprising speed. Small startups with just a handful of employees and customers quickly find themselves presiding over a sizable network of helpers and well-wishers.
While this type of informal support is already very handy for early-stage companies, its importance will only grow as the market becomes increasingly noisy and crowded. For example, more than 38,000 new tech firms were incorporated in the UK in 2021 alone. In the years to come, who you know – and how willing they are to support you – could well be the differentiating factor between a successful startup and one that falls by the wayside.
Businesses of the future therefore stand more chance of success if they have the support of strong, incentivised communities, and the ability to grow side-by-side with those communities.
Some might argue that virtue is its own reward. However, I believe that the key to creating a vibrant community is reciprocity – ensuring that the benefits flow both ways between the business and its community members.
Moreover, the most productive, efficient, loyal, and innovative communities are formed when people are genuinely invested in the success of a business or brand. The problem is that there are currently very few ways for founders to formally recognise the community’s contribution, let alone incentivise their sustained effort into the future.
Company ownership schemes such as shares and options can be powerful tools to encourage people to go the extra mile. But these schemes are generally built around employees or investors, rather than informal contributors and advocates, and are too often offered on a transactional basis, with no ongoing incentive for people to deliver beyond the brief.
For example, Figma’s founders repeatedly credited their community to their business’ success. But, when the founders completed a $20 billion exit in September this year, their community got nothing. What if there was a way to share your company’s success with the groups of people who contributed to your growth from the very beginning, from users, gig-economy workers, content creators to contractors? Using this concept, a rideshare app could reward gig-economy workers by tying equity to the number of positive reviews they receive or the number of rides they complete. Or, a streaming platform could reward artists based on how much content they produce or how much their content is streamed and shared.
Our company, for example, is building a new form of ownership to serve organisations who are committed to giving a true stake to their contributors.
Not only does this fairly compensate these groups, but it also allows these groups to be more formally invested in the business’ success. Moreover, this type of milestone-based equity approach can be tied directly to business targets and can support growth, market penetration and brand loyalty metrics, for example. Or in other words, it can directly support founders in achieving their business goals.
Further, just as founders won’t want to dilute their company ownership continuously, they can’t keep slashing their prices or offering discounts to keep the community engaged and supportive. As the macro-economic environment continues to worsen, all early-stage business leaders are under pressure to deliver profitability as well as growth. Attempting to buy a community is an incredibly expensive business strategy.
So we need different ways to incentivise and reward communities – equity-like, legally compliant incentive options that make every last stakeholder feel a part of the company’s success without fundamentally altering the ownership or business model.
Both the technology and the legal framework exist to enable this type of model; indeed, many early-stage companies are already experimenting with tokenised reward and incentive schemes. The biggest challenge for founders may well be educating their communities about how the schemes work and the value that participants stand to deliver – whether that’s near-term or much further down the line.
It’s early days for this movement, but the direction of travel is clear. In the future, a strong community will be the ‘beating heart’ of every successful business. For founders, that means being community-minded – recognising and rewarding people’s efforts – from the get-go.