"Why most online communities fail — and how to build a better one! AI: Startup Vs Incumbent Value"

"Why most online communities fail — and how to build a better one! AI: Startup Vs Incumbent Value"

In today's digital age, building and maintaining successful online communities is both challenging and crucial. Many online communities fail to thrive, often becoming what is known as "zombie communities" with little to no engagement. On the other hand, AI startups have faced their own set of challenges when it comes to capturing value in the market. In this article, we will explore the common points between these two seemingly unrelated topics and discuss actionable advice on how to build a better online community and increase the value of AI startups.

Starting with the concept of cognitive dissonance, psychology tells us that if someone buys into something, they are more likely to stick with it. The same principle applies to online communities. Getting members to buy into the community's purpose and values is essential for long-term engagement. To achieve this, it is important to curate the community and identify positive contributors who genuinely want to engage rather than simply promote their own content or tap into the audience for personal gain.

Furthermore, the size of a community does not necessarily equate to its success. Quality should always take precedence over quantity. Instead of focusing on growing a massive community with little activity or filled with spam, it is more valuable to have a smaller, curated group of active and engaged members. This concept aligns with what is known as "Dunbar's number," which suggests that individuals can only meaningfully engage with a limited number of communities. Therefore, it is crucial to provide a strong value proposition to stand out among the thousands of online communities competing for attention.

To ensure the success of an online community, investing in onboarding is key. Joining a community can be overwhelming, especially if there is no clear guidance on how to introduce oneself and get involved. Designing a thoughtful onboarding process is vital to help new members feel welcome and understand the community's expectations. This initial experience sets the tone for their ongoing engagement and can significantly impact their decision to stay or leave.

In addition to these foundational principles, finding new ways to add value is crucial for engaging and retaining members. Providing daily value through meaningful discussions and connections is essential, but creating those "magical" moments that illustrate the community's value and create emotional connections is equally important. Understanding why people are coming to the community and finding the best channels to deliver this value is a strategic approach that can lead to increased engagement and member satisfaction.

Now, let's shift our focus to the value captured by AI startups versus incumbents. In previous waves of technological innovation, such as the internet and mobile, the majority of the value went to startups initially, with some captured by incumbents who extended their presence onto these platforms. However, in the case of AI, incumbents have dominated the value capture, leaving startups with a smaller share. This trend can be attributed to the incumbents' distribution, capital, and pre-existing product moats, making it challenging for startups to compete.

To overcome these challenges and beat incumbents, startups need to build products that are dramatically better or focus on untapped customer segments or distribution moats that incumbents cannot serve effectively. A 10X better product is often necessary to disrupt the market and overcome the advantages of established players. However, there is reason to believe that this dynamic might change in the current wave of AI innovation.

Unlike previous AI startups, the current wave benefits from a technology sea change. The advancements in AI, such as transformer models and unsupervised learning, enable the creation of products that are significantly stronger and can overcome incumbent advantages. While incumbents still capture a significant portion of the value, there is a growing opportunity for startups to claim a larger share.

Infrastructure-centric companies that focus on AI, such as OpenAI, Stability.AI, Hugging Face, and Weights and Biases, have gained broad adoption and rapidly growing usage. This ecosystem provides startups with access to the necessary technologies and creates more opportunities for them to succeed.

Furthermore, AI technology has the potential to automate highly repetitive and highly paid tasks, such as coding and generating marketing copy or images. This opens up new possibilities for workflow tools that leverage AI features to enhance productivity and efficiency. The key to success lies in identifying actual end-user needs and unserved product markets that can benefit from the application of AI technology.

In conclusion, building a successful online community and capturing value as an AI startup can be challenging but rewarding endeavors. By focusing on member buy-in, quality over quantity, thoughtful onboarding, adding value in new ways, and understanding end-user needs, online communities can thrive. Similarly, AI startups can increase their chances of success by building dramatically better products, targeting untapped markets, and leveraging the advancements in AI technology. Exciting times lie ahead for those who embrace these principles and adapt to the evolving landscape of digital communities and AI innovation.