The Changing Landscape of Social Networking: Discord and the Buyback of VC Investors

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Aug 16, 2023

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The Changing Landscape of Social Networking: Discord and the Buyback of VC Investors

Introduction:

The world of social networking is constantly evolving, with new platforms and apps emerging to cater to the needs of different generations. Among these platforms, Discord has gained popularity as a hub for Generation Z users, providing a unique space for communication and collaboration. However, Discord is not the only player in this field, as other platforms like Houseparty, Squad, Twitch, and more have also made their mark. In this article, we will explore the impact of Discord on the social networking world and delve into the concept of buying out VC investors, using Buffer's experience as a case study.

Discord: A Gathering Place for Generation Z:

Discord stands out from other social networking platforms with its distinguishing features. One notable aspect is its ability to quickly show who is online, allowing users to easily connect with their friends. Additionally, Discord provides voice rooms, which function as permanent chat rooms where users can engage in conversations without the need for traditional phone calls. This convenience and accessibility have made Discord the go-to platform for Generation Z, as it offers a seamless way to communicate and collaborate.

Expanding Social Graphs and Venturing Outside Existing Groups:

As we enter the next decade of social networking (2017-2027), the focus will be on expanding social graphs and venturing beyond existing groups. However, as the user base of social networking platforms grows and connections multiply, these platforms can become stifling and make it difficult for users to express themselves authentically. The pressure to perform and the overwhelming number of connections hinder genuine self-expression. Platforms like LINE cater to real-life friendships, while Discord serves as a place to connect with online friends, creating a hierarchy of communication channels.

Reimagining Social Media: A Return to Authenticity:

Social media platforms initially promised to connect people, but over time, they have deviated from this core promise. The idea of a stage, where performances take place, is prevalent in today's social media landscape, primarily driven by influencers and media creators. However, it's essential to step back and reconsider this approach. Instead of focusing on performance-driven stages, platforms like Houseparty aim to create an environment that feels more casual and fosters genuine connections. Discord, with its focus on chat rooms and communication, aligns with this vision.

Lowering Communication Barriers:

There are several ways to lower communication barriers on social networking platforms. One approach is to provide conversation starters, such as Instagram's Stories, Zenly's location sharing, or FRYDAYS' calendar events. Another method involves leveraging the power of anonymity, as seen in platforms like Question Box, Boxfresh, and Nyago. These tools allow users to initiate conversations without the pressure of personal identity. By offering features reminiscent of early social networking platforms like Mixi and Mobage, it becomes possible to create inclusive communities where users can connect effortlessly.

The Rise of Discord Communities:

Discord communities have gained traction, particularly among gamers and top YouTubers, who use the platform to connect with their fans. This utilization of Discord as a space for influencers to engage with their audience highlights the platform's potential in fostering meaningful connections. The concept of spending time together virtually, opening various apps, and engaging in different activities (People First) has become a prevalent approach. Discord has transitioned from being solely a gaming tool to a comprehensive chat platform, attracting a diverse user base.

Buffer's Journey: Buying Out VC Investors:

Buffer, a social media management platform, embarked on a unique path by deciding to buy out its main VC investors. This journey involved significant financial considerations and detailed negotiations. By purchasing the shares of seven out of its sixteen Series A investors, Buffer aimed to achieve long-term sustainability and provide returns to other shareholders. The decision to buy out VC investors was driven by the realization that traditional VC funding was becoming less aligned with Buffer's vision and culture.

The Process of Stock Buyback:

To carry out the stock buyback, Buffer first had to build up sufficient cash reserves. They then approached Collaborative Fund, their lead investor, and other key investors to discuss the possibility of a buyback. The process required approval from a majority of Series A and preferred shareholders, ensuring transparency and consensus. Ultimately, Buffer successfully bought back 67.29 percent of Series A shares, solidifying its commitment to long-term growth and sustainability.

Actionable Advice:

  • 1. Foster Authenticity: Encourage social media platforms to return to their roots of connecting people genuinely, rather than focusing on performance-driven stages. Prioritize platforms that facilitate casual and authentic communication.
  • 2. Cultivate Inclusive Communities: Create spaces where users can connect effortlessly, just as early social networking platforms like Mixi and Mobage did. Implement features that lower communication barriers, such as conversation starters or anonymous interaction options.
  • 3. Embrace Long-Term Sustainability: Consider alternative funding models and explore options like buying out VC investors to align with the company's vision and culture. Prioritize financial sustainability and create opportunities to provide returns to shareholders.

Conclusion:

Discord's rise as a social networking platform, particularly among Generation Z, highlights the evolving nature of social media. By embracing authenticity, cultivating inclusive communities, and prioritizing long-term sustainability, social networking platforms can foster meaningful connections and provide users with spaces for genuine self-expression. Buffer's journey of buying out VC investors serves as an example of how companies can align their goals with their funding strategies, ensuring a sustainable future.

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