The world has changed. A new normal has been accelerated by over 10 years in the space of a few months. Habits and behaviors that would have materialized over the coming decade have calcified in days.
The future isn’t remote so much as it is the present. The most obvious place where this is noticeable first was always going to be work. Remote is less about the future of work and more important to the future of living. Cities will be unbundled. Relationships will evolve. Real estate must adapt.
Everything will be affected.
Even areas that assume they will be immune will change.
One of these areas will be venture capital.
We are emerging from a period of ‘product-led SaaS’. This was defined by software tailored to the end business user rather than organizations directly.
The focus was on the user — providing a great UI/UX — using the feedback they provided to optimize product iteration.
The difference between it and previous models was pace. Products became trojan horses that expanded rapidly inside organizations who typically never saw it happening. This virality led to rapid growth. The CAC was incredibly low meaning massive margins.
The problem? They relied on users to become the community. Evangelical support isn’t a nice to have, it’s a pre-requisite. This isn’t a problem initially but it is eventually. That support often fades as momentum peters out.
The creators of many of these products are recognizing why this is a problem. Their products are not anti-fragile. They are the shiny thing that everyone wants for a minute but relevance is often fleeting.
A new paradigm is beginning to emerge. Product-led SaaS is being replaced by community-led SaaS. Community-led SaaS can resemble product-led SaaS but is fundamentally different. Community is purposefully organized around a deeper alignment. Product-led SaaS is driven by features. Community-led SaaS organizes and progresses around the collective.
Why is this relevant to venture capital? As costs come down, money is less important while community is exponentially more so. Product-community fit is more important than the market. This is often achieved pre-product.
Venture studios are a burgeoning trend. Funds develop a thesis on specific areas, evolve the idea before attracting world-class talent to lead creation. Similarly, talent accelerators do the same things from an alternative perspective. They start with incredible people and manufacture collisions. This has worked to varying extents, while it appears to be becoming more successful.
Directionally they are interesting.
I believe there is a more logical next step.
Community-led SaaS enables a decentralized and more remote model. The creators are the most ardent supporters.
‘It is what it is’ achieved much of the above. Though there was no product, they showed the potential for community-led SaaS as a model. A group of the most talented people in the world self-organized for a short period of time and achieved something meaningful. This will emerge as a mechanism of creation.
This happening already. The Collective is the users and the community of support. It’s decentralized corp-dev run across innumerable organizations. The users are the owners. The evangelicals are the creators. The flywheel is that they use these things themselves.
The problems they collectively identify while working at the cutting edge of emerging trends are unique insights seen by nobody. Their solutions solve problems for millions/billions of people who haven’t even experienced them yet. The periphery is occupied by few who don’t have to see around corners because they are already at the apex.
More than ever, founders and larger groups of angels are funding the innovation where they have experience problems themselves. ‘Party rounds’ was coined negatively but the reality is that the party is a community.
They are community-led SaaS products being driven by venture collectives.
These founders, investors, angels contribute far more than capital to the ‘party’. Their helpfulness is as customers, users, salespeople, recruiters.
Success is dictated not by the money they invest but the time. Capital is an auxiliary benefit to the support and belief they lend to each project.
The size and scope of these collectives will grow.
I believe some of the world's biggest problems will be solved in this manner across the next decade.
Would you participate in a venture collective?