Community-Led Growth and the Four Fits: Unlocking Success in the Tech Industry

Glasp

Glasp

Jul 26, 20234 min read

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Community-Led Growth and the Four Fits: Unlocking Success in the Tech Industry

In today's tech landscape, community-led growth is becoming a driving force behind the success of many companies. It's no longer enough for businesses to simply offer a product or service; they must also foster a sense of community and connection among their users. This shift in focus has proven to be a game-changer, allowing companies to build loyal customer bases and drive sustainable growth.

One company that has embraced this community-first approach is Public, an investment app that encourages users to not only invest but also engage in conversations with fellow investors. The idea is to create a space where customers can interact with each other, building relationships and fostering a sense of belonging. This approach goes beyond simply bolting on a forum to the product; it's about valuing community as a core piece of the business.

Morning Brew, a popular business newsletter, is another example of community-led growth. Readers of the newsletter often include a coffee-cup emoji in their Twitter handles to signal that they are part of the Morning Brew community. By actively engaging with their audience and breaking down barriers, Morning Brew has created a space where customers can connect with each other, rather than revolving solely around the company itself.

However, community-led growth is not just about creating a space for conversation; it's about understanding and meeting the needs of the community members. The community space should be tailored to match these needs and should not be used as a platform for pushing product updates. The success of a community lies in its mindset and intentionality, with the focus being on creating a positive vibe and fostering a sense of belonging.

While community-led growth is a powerful strategy, it is not the only factor that determines the success of a company. Brian Balfour, a growth expert, highlights the importance of the four Fits in the SaaS space. These Fits include Market Product Fit, Channel Model Fit, and Model Market Fit. Companies that have achieved success in the SaaS industry have locked in all four Fits, allowing them to effectively target and serve their desired market segments.

For example, in the email marketing space, we can see companies like Marketo, HubSpot, and Mailchimp, all valued at over $1 billion. Each of these companies has differentiated their product based on the specific needs of their target customers. Marketo and HubSpot have focused on catering to enterprise customers, offering customization, security, and scale. They have also utilized outbound sales as their primary channel and have high average customer values (ACVs) to support this channel. On the other hand, Mailchimp has focused on serving the mid-market segment with an "All In One" product. Their offering is tailored to the needs of mid-market customers who value simplicity and efficiency. Lastly, Mailchimp has targeted small businesses, offering a simple and touchless solution.

Balfour emphasizes that attempting to move up or down the market without properly addressing all four Fits can lead to failure. Many enterprise companies have tried to make small changes to their pricing or product in an attempt to target a new market segment. However, successfully attacking a new tier of the market requires locking in all four Fits, which may involve making significant changes to the product, channel, and business model.

To avoid this pitfall, startups should focus on developing hypotheses for all four Fits from the early stages. While product-market fit is often the primary focus in the early days, it is crucial to consider channel hypotheses as well. The market, product, channel, and model are constantly evolving and changing, and it is essential to continually revisit and reassess all four Fits to ensure they align and support each other.

In conclusion, community-led growth and the four Fits are both critical factors in the success of companies in the tech industry. By prioritizing community and fostering meaningful connections among customers, companies can build loyal and engaged user bases. Additionally, by addressing all four Fits, companies can effectively target and serve their desired market segments. To unlock success, here are three actionable pieces of advice:

  • 1. Prioritize community: Focus on creating a space where customers can interact with each other and build relationships. Valuing community as a core piece of your business will set you apart from competitors.
  • 2. Lock in the four Fits: When targeting a new market segment, ensure that you have achieved Market Product Fit, Channel Model Fit, and Model Market Fit. Making small changes to your product or pricing is not enough; you must address all four Fits to succeed.
  • 3. Continually reassess and adapt: The tech industry is constantly evolving, and so are your customers' needs. Regularly revisit the four Fits and make necessary changes to ensure they align and support each other.

By embracing community-led growth and mastering the four Fits, companies can position themselves for long-term success in the ever-changing tech landscape.

Resource:

  1. "Community-Led Growth Is Taking Tech by Storm", https://builtin.com/product-management/community-led-growth (Glasp)
  2. "Why Most Companies Fail At Moving Up or Down Market — Brian Balfour", https://brianbalfour.com/essays/key-lessons-for-100m-growth (Glasp)

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