Are CaaS (Community as a Service) Startups Here To Stay?
Back in our post that looked back on different brand trends in 2021, we highlighted CaaS for the first time as an emerging category to watch. Most of us are very familiar with SaaS (Software as a Service) businesses, but recently we are seeing a new subsection of companies bubbling up. CaaS companies are moving beyond just fostering community to sell a product or service, and instead are offering community as their primary service.
Of course, this isn’t a completely new concept. In 2020, Adobe’s CPO, Scott Belsky, predicted that there would be a push for channels of one where brands and influencers work to “own their audience,” and we believe he was onto something. Now, whole businesses are built in service of creators’ audiences. Much of conversation about monetizing communities over the past decade or so has been centered around creators being the central glue in cultivating, organizing, and leading content generation. The next evolution beyond creators monetizing their own communities may be entire brands spinning up around an identified community’s need. These new CaaS businesses craft solutions that directly address community needs with a product or platform.
As the idea around how communities are built has shifted, more consumers crave niche communities – and they’re willing to pay for access. This is a critical shift in how we see consumers— many of whom historically have been presumed unwilling to pay for targeted content, community, or utility that can be found for free.
Given that this category is rapidly-evolving, it’s tricky to define new CaaS businesses distinctly. So to create a bit of clarifying top-line definition, here are 3 buckets we have been seeing in this highly-evolving space:
1. Product + CaaS
Product-centric CaaS startups like Barb elevate e-commerce to a movement linked by shared experiences.
Barb is an innovative haircare brand breaking down barriers in the beauty industry by giving short-haired folks a home in the personal care space. Seeing these folks left out of the mainstream haircare conversation, Barb’s founders set out to center their needs and wants.
Deeply inclusive, Barb also offers fun merch and lifestyle accessories that feel like a badge of honor for any Barb to rock.
Insightful product-centric CaaS businesses like Barb know that their community is in the driver's seat! Give their flagship soft clay pomade a try — it’s amazing for brows too— and be sure to chime in on what you want to see next. They’re very open to input as they gear up for exciting, new launches!
We’re proud to have worked with Barb [#client] and to be a part of their vibrant community of like-minded Barbs and Barb allies. It’s rare to prioritize creating warm community right up there with developing great products, so we cannot wait to see how Barb will grow as a brand & community. 💈🌈 😎
Photo by Barb
2. SaaS + CaaS
Platforms like Slack offer community as their primary service— delivered via traditional software as a service.
By now, you probably know and use Slack a lot. It is software that enables teams to work cooperatively and productively in a centralized forum.
Not only is Slack a useful mobile app and desktop software, but “Slack culture” generates a community of people who frequently use it to strengthen their connections on a team or in an interest-based community.
Slack believes in creating a culture of empathy where teams feel empowered to work together.
Premium features like searchability, the ability to build bridge connection chats to other teams, and unlimited stored messages are how Slack garners solid revenue, billed per member to the companies or communities who rely on it.
Photo by Slack
3. Pure CaaS
For some companies, a sense of community is the singular primary service offered to individuals. BeReal is a great example of this pure CaaS offering with an app built to share our daily lives with our friends and colleagues in real-time.
BeReal is a social media platform where every day at the same time, all users are notified to share a photo of whatever they’re doing right at that moment.
By encouraging users to be their truest selves online, BeReal has created an extensive community of users who feel truly connected to each other.
While BeReal is currently pre-revenue, they’re funded by investors and appear to be working towards the “ubiquity first” model of Amazon.
As over 200M Prime Members know, Amazon has become a real staple in so many homes and lives. While they have lean profit margins, they are aiming to get lots of people onboarded and active before worrying about monetization entirely.
Photo by BeReal
Over the past 18 months, we have seen these community-first companies catching the eye of investors. There are over 1,000 companies that fit in this category which have collectively secured nearly $1B in funding. So there’s undeniable interest heating up for funding in this space. While it’s easy to write this new cohort off as a pandemic fluke, it’s clear that CaaS is a sub-vertical of SaaS that’s here to stay and likely to grow.
Do you like CaaS companies? Are you a consumer of any companies that would fit in these 3 buckets? We’d love to hear about it. If you enjoyed this read, be sure to stay tuned for our next post on the topic, where we’ll continue to dig into CaaS and flag some more companies to watch.