“We” v. “They,” Customer Communities, And Reinterpreting Metcalfe’s Law

Fred Wilson draws out the distinctions between two types of companies, “we” companies and “they” companies, and the respective philosophies of how each interacts with customers:

“We” companies are built by and for a community of users. Everything (including profits) flows from this core value of serving the users. We companies and their profitability are incredibly sustainable.

“They” companies are traditional companies that seek to optimize profitability at the expense of everything else. These businsses are not sustainable and they tend to overreach and ultimately end up in a long and steady decline.

In particular, Fred notes that Apple is moving from the realm of “we-ness” the same-ol’ “they-ness” that has unforunately been the norm. Suing community members (bloggers). Charging usurous fees for third parties trying to strengthen the iPod platform.

I’m going to harp on this meme again.

Transactions => Conversations => Relationships => Community

Move right, young men and women. Move right.

Focusing on transactions alone is myopic. Transactions are fungible.

Conversations and relationships are good. Very good, in fact. But they can be made even stronger by bringing more individuals to the party. Think of what Metcalfe’s Law states:

The usefulness, or utility, of a network equals the square of the number of users.

Now think about the broad definition of the word “network“:

An intricately connected system of things or people…

Grow the community, and it’s possible for all community members to benefit. And yes, “benefit” in this case can include profits for the companies truly engaged in the communities. Exhibit A.