How to Turn Your Customer Base into a Community

HANNAH BATES: Welcome to HBR On Strategy—case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business.

“Community” is a buzzword that gets thrown around a lot in the business world. But what does it really mean to build one—and what does it take to make it last? More importantly, how can businesses create communities that drive long-term success?

Matt Mullenweg, founder and CEO of Automattic—the company behind WordPress—joins HBR IdeaCast host Sarah Green Carmichael to answer those questions. He shares insights on fostering community within a firm—like hiring the right people through auditions instead of resumes—and within a customer base, by encouraging engagement and feedback.

Here’s Mullenweg explaining why what’s good for his customers and contributors is good for his company.

MATT MULLENWEG: For me, it all starts with community. That’s really the beginning– the alpha and the omega. Everything that has been successful for WordPress in the past– and everything for Automattic– has really been part of thinking about what’s the best long-term answer for the wider– I don’t want to say community 10 times– but for the wider audience, people that are part of the ecosystem that makes up WordPress users and developers and the creators and all those sorts of folks.

I do truly believe that working in their best interest is in the best commercial interest of the company long term. Maybe in the short term you make less money, and that might frustrate some of our investors or something. But in the long term, I think you’re much healthier and better off.

SARAH GREEN CARMICHAEL: That’s interesting. So there’s obviously the community of people who use WordPress, which has grown really, really fast and is huge. And then there’s the core community of people, I think, within WordPress– what you might call employees– which has maybe grown a little bit more.

I saw an interview with you last year where you were saying you were taking the brakes off and hiring more people.

MATT MULLENWEG: I’m trying to grow the user base as fast as possible. And I’m trying to grow the employee base as fast as possible, but while still maintaining our culture.

SARAH GREEN CARMICHAEL: So how do you do that?

MATT MULLENWEG: I think it’s just a rate. If you look around the room, how many people have been there more than a year, and how many people have been there less than a year? It’s also, what example are the people who have been there longer setting?

Because essentially what you’re saying– especially if someone’s been there five or 10 years– this person is good. They haven’t been fired. So they are demonstrating what it means to be a part of this organization.

So if you’re at a company dinner and they go and they order the most expensive thing on the menu and an expensive bottle of wine and then they expense it, that’s going to tell you something about the values of the company and what’s the behavior that’s OK.

So I don’t think culture has anything to do with ping-pong tables or any of that stuff, especially since we don’t have them here. Those people are not in our office. It’s really the culmination of 1,000 little decisions and actions that people see and then they emulate. And that starts from the very, very top.

If you’re the CEO or a founder and you walk by a piece of trash on the floor and you don’t pick it up, you know what, everyone else is going to too.

SARAH GREEN CARMICHAEL: Well, and I’m glad that you mentioned your– what we at HBR would maybe a bit formally call a distributed workforce. You are famous at Automattic for having people scattered all over the world and not for putting a premium on– oh, we all have to be in the same city working together. Tell me a little bit about how that informs your decisions around building the company culture and that kind of thing. I mean, your example [INAUDIBLE] walking through the office, maybe picking up a piece of trash– what’s the digital, distributed, virtual world equivalent of that?

MATT MULLENWEG: It’s funny because our designers actually do something– they call it trash pick-up day. They literally go around all of our products and look for things that are just out of alignment or where the colors aren’t right or the typography isn’t well. And they just do little fixes. Generally it takes less than half an hour or 20 minutes. But, yeah, they call it trash pick-up.

SARAH GREEN CARMICHAEL: That’s interesting. So just to sort of finish this interesting company culture jag that we’ve been on– I know one of the things that you have talked about is hiring by auditions rather than resumes. And I’m just wondering, is that something you’ve been able to keep doing as you’ve hired more people? And if so, do you use that to not only see how their work product turns out, but also to see how will this person contribute to the culture that we’ve built?

MATT MULLENWEG: Absolutely. In fact, I still to this day refer people to the HBR article.

SARAH GREEN CARMICHAEL: Yay!

MATT MULLENWEG: It’s actually still totally accurate. The only thing that’s changed is the numbers. We’re now 390 people. In the article I feel like we were sub 200.

So it’s working. It’s scaling. And in fact, the more trials we do, the more times we run the process, I feel like the more people learn about it and the better they get.

SARAH GREEN CARMICHAEL: That’s great. That’s wonderful to hear.

I wanted to pivot now back to talking about the kind of user community of the people who are actually using your products. One of the things, I think, that some of the big companies who read HBR have struggled with is creating communities around their products. I mean, this is something that people say– oh, we have to build a community around our products– but then when it comes time to do it, it seems there’s hesitation that I think sometimes seems to come from a desire just to control everything.

MATT MULLENWEG: Totally.

SARAH GREEN CARMICHAEL: So tell me about that. Is that something that you have wrestled with– how much control do we give away– or do you just have to trust people? Is it something that internet-native companies can do that established brands just can’t? I would love your thoughts on that.

MATT MULLENWEG: I feel like the equivalent of what companies sometimes do is they invite a bunch of people to their house for a party and they don’t put out any appetizers or drinks or anything. And they’re like, why aren’t people having fun? Why aren’t they having fun? Go have fun.

You know, you’ve got to grease the wheels a little bit. If you were hosting a dinner or a party, you would put out the snacks and the hors d’oeuvres. And you would make sure the liquor’s flowing freely and the wine and everything. You’re giving something to people, and then they start to participate. And whatever it is, the constructive is of what you’re trying to create.

With WordPress, I mean, we give away extremely good software. It’s multimillion dollar software that you can download for free. And so just from the start of it, people feel like they’ve gotten a lot of value.

And for us, in particular– they get so much, again, for free, no expectations of anything– is a lot of people turn around and say, well, what can I do in return? What can I give back? Just like after a good dinner party, you might have a few of your guests helping out with the dishes. Because they’re so appreciative of how good the food is, what a great host you were. So as with all things, it works best when there’s no expectations.

If on your dinner party invite you said, you may come to dinner, but you have to stay for 34 minutes afterwards and clean up, that doesn’t sound like a very fun party, does it?

SARAH GREEN CARMICHAEL: No. And it’s an interesting analogy because I think it’s– the other attitude I would say to continue that metaphor would be there’s a feeling of maybe some people are worried that they’ll have this party and then if people have too good of a time, the partygoers will get drunk and trash their house. And so it’s like, OK, everyone, time to go home because, really, you’ve had enough.

MATT MULLENWEG: Well, again, it’s the example you set. The parties I’ve been to that got a little out of hand, it was usually because the person who was hosting the party was also getting out of hand.

[LAUGHING]

SARAH GREEN CARMICHAEL: Fair enough. One other thing you’ve just sort of hinted at there that I wanted to ask you about was the freemium model, because that’s obviously a model that relies on getting a significant number of people to use the product and then a smaller percentage to actually pay for it. This is something that I think a lot of different companies, legacy companies have looked at as maybe a way to make money in the internet era.

Do you think that something like that would work for more companies? Do you think it’s just something that works for your company? It’s sort of a vague question, but I would love your thoughts on that as well.

MATT MULLENWEG: It just depends on the product. WordPress is relatively inexpensive to run for people. And so it doesn’t cost us a ton to have people use it for free. And so it’s a smart business decision– essentially use free as a mechanism to get more people in the door and then a percentage of them convert. And the economics of that work out.

We have another product called VaultPress. So VaultPress is a real-time backup system. So for the sites that you really care about, you can pay VaultPress $5 or $15 a month. And the instant that you make a change on your site, it’s backed up to nine different places. So it’s literally ultra ultra good backup.

This is a premium-only product. There’s no free version. And that’s because, well, it’s really expensive to run, because we’re storing nine or 11 copies of all your changes in real-time as soon as you make them. So that’s an example.

I think it just depends on the economics of the product as well. Apple doesn’t give away free phones, but they work with phone companies to make the economics more affordable for people in the US. So they could subsidize phones. So you just have to look at your particular business model. The internet does make premium very, very attractive.

SARAH GREEN CARMICHAEL: Yeah. I mean, and I guess the thing is the premium product then has to be worth the upgrade, because if it’s just marginally better, then no one would pay for it. for it. They’d just keep using the free product, I suppose.

MATT MULLENWEG: And that is the hardest part is deciding what to put in the free version and what to put behind the paid version, because the more stuff you put in the free, the more value it is, the more growth you have. But if you don’t have anything that’s super compelling behind the paywall, if you will, no one’s going to bother upgrading.

SARAH GREEN CARMICHAEL: Well, and I guess so many internet companies now rely on advertising to support their business models. And I guess that’s the other question I have is, how much of this can we keep supporting off of ads?

MATT MULLENWEG: You know, advertising is definitely going through a rough spot right now. A lot of the oxygen in the room is being eaten up by the Googles and Facebooks of the world. So I wouldn’t bet my business on advertising. I think if you can have a hybrid model where in good times advertising can support you and in other times you’re providing enough value to your core audience– that they’re paying you directly– I think that can be very sustainable.

But it is possible that when you think of advertising is fundamentally trying to get us to make an action, usually a commercial one. They’ll be able to close the loop on this a lot better. So advertising dollars will get smarter and smarter, where right now they just have a lot of work to do. They’re a little bit lazy. They’ll go to the big guys and folks who are holding people’s attention.

Let’s say it’s a great 8,000-word HBR article that takes 30 minutes to read, and 10,000 people read it. You have 300,000 minutes of attention there. You should be able to monetize that from an advertising point of view just as well as a Google or Facebook. An ineffecient market.

One thing about the future as well is that you can imagine almost every device in your life becoming better when it’s connected to the internet. We’re seeing early versions of this with things like the Nest thermostat– you know, the ability to change the thermostat that’s upstairs when you’re downstairs or things like that, or turn it on when you leave or if you go on vacation.

But also things like– I actually just got– just like an hour ago– something called an Electric Objects frame. And basically what it is is it’s a screen, but it has no buttons, no controls, no notifications, no anything. All it does is a Mac screen that connects to the internet and displays art. And it looks beautiful– like a picture frame.

SARAH GREEN CARMICHAEL: That’s cool.

MATT MULLENWEG: And so now I have this device in my– that looks just like the art it’s sitting next to. And from my phone I can change what’s on there at any given point. And I think things like this will have entirely new mediums spring up around them, that we have a lot more control of our environment and our environments become a lot more complimentary to us, just like how your home can transform when you put a Sonos speaker in every room and you can synchronize them. That sort of tailoring of our environment [INAUDIBLE] mediated by the net. It’s going to be very exciting.

SARAH GREEN CARMICHAEL: Well, and as someone who spends too much time staring at a screen, I sort of am excited about the idea of spending less time with screens. And I think connected objects are a way to get there.

MATT MULLENWEG: It’s ambient technology, right? So it’s a technology that fades into the background even though it’s always there.

SARAH GREEN CARMICHAEL: Mm-hm. OK So in the past I have seen some interviews with you where you’ve talked about different personal productivity experiments you’ve run– changing your sleep schedule or limiting how often you check email. And I was wondering if you have any current ongoing personal productivity experiments that are currently underway– things you’re trying to do differently just to be happier or get more done.

MATT MULLENWEG: Yeah. Something I’m focused on right now is tiny habits. That’s probably the easiest way to put it. Things like, I do two sun salutations when I wake up in the morning, which is very easy, right? But by making sure I’m going to do two no matter how early or late I am or how rushed I am, I often end up doing a lot more. And these daily stretches are a great way to start the day. I do that with some exercises. I try to read a chapter of a book every day– very minimum.

One thing I’ve been more conscious of is productivity, we think of in terms of what you’re outputting. But I think it’s also really important to think of your state of mind that’s creating this. A lot of this, if you break it all down to the million different things you can do.

Breathing– a lot of it comes back to breathing. And a good exercise that anyone listening to this or you yourself could do right now is just to stand there and take a few deep breaths, but take them from your belly instead of from your chest. So your chest should stay completely still. As you breathe in, expand your belly. And as you breathe out, feel it contract. And this just puts your body into a more relaxed state.

And I find that if I can detect when I’m having a conversation or chatting or writing a blog post or something like that, I’m in more of the fight or flight mode. My brain’s probably more reactive and proactive. If you can just take a few deep breaths, it puts you into a great state to be able to really think through things and think through all sides of things and dispassionately examine both your feelings and what you’re outputting in a way that often has much superior results.

SARAH GREEN CARMICHAEL: That’s cool. As you were talking about that, I just tried to do it. And I do feel immediately more calm. So thank you for that.

MATT MULLENWEG: Instantly, right?

SARAH GREEN CARMICHAEL: Yeah.

MATT MULLENWEG: It’s the craziest thing because we all breathe all day. But you think about it for a few seconds, and it changes everything.

SARAH GREEN CARMICHAEL: Yeah. Matt, thank you again so much for talking with us today. It’s really been a pleasure.

MATT MULLENWEG: Likewise.

HANNAH BATES: That was Automattic founder and CEO Matt Mullenweg in conversation with Sarah Green Carmichael on HBR IdeaCast.

We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review.

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This episode was produced by Mary Dooe, and me Hannah Bates. Curt Nickisch is our editor. Special thanks to Ian Fox, Maureen Hoch, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.