If you are a gamer, or know someone who is afflicted with this lifelong struggle of poor hygiene and low attention spans, then you have probably heard about Discord. For the last 10 years, Discord has been the mainstay of almost every community in the gaming, technology, youth culture, and niche interest world.
However, despite having over 225m active global users and being liked by everyone that matters, Discord is still figuring out what it wants to be when it grows up (read: it does not have a monetization strategy that will avoid alienating its core user base).
Discord’s brand is based on being the last untouched social ecosystem that sits safely outside the long arm of brands and their intrusive sales pitches (Twitch pre-rolls, I am looking at you). By doing so, Discord has kept its users safe from banner ads, sidebar videos, activity feed ads, and cheesy gamification.
They were truly the last “real one.”
TLDR
- Discord is on the same arc as many failed social platforms
- There is an opportunity for Discord to get closer than ever to its community
- It is very possible that an IPO is the wrong way to fulfill Discord’s hopes and dreams
- Discord may be thinking too small, and could miss a generational opportunity
Why Is Discord So Important?
Everyone cool is on it.
Wait! Let’s not drive past this one. It matters.
The story arc of most successful social platforms follows the same formula. Attract a niche core audience, hit critical mass with growth, attract non-core audiences, stuff ads in people’s faces once they are no longer worried people will leave over the intrusion, then slowly devolve into an empty shell of its original cultural moment.
It is like those super cool hot spots in New York or LA where celebrities are willing to descend among the plebs in order to overpay for their avocado toast and imported, fair trade, sustainable, non-GMO, carbon neutral, virtue-signaling flavored cuisine. But if too many dirty commoners show up, then they find somewhere else to go, which starts the whole cycle over again.
Social platforms are in various stages of this evergreen “ascend-to-descend” model for one simple reason: they rely on the ever-shifting sands of cultural relevance in order to attract and retain audiences. But these trends can change so frequently, they will predictably drag even the most successful social platforms out of cultural and commercial relevance faster than Moo Deng can turn dinner into a photo op.
In the same way, no social media platform reigns forever as the underlying anthropology of cultural trends that made them popular are changing faster than the companies can keep up.
For example, look at this list of social media wasteland enjoyers:
- Friendster (first out of the gate) – Dead
- MySpace (birth and deathplace of the Scenester Emo vibe) – Walks among the shadows
- Omegle (unsolicited things of all kinds took place) – Through the looking glass dead
- Orkut (Google’s amateur entry into the “Wasting Money Olympics”) – Wears a false moustache dead
- Google+ (Google’s fully professional, “complete-with-a-bow-tie-and-suspenders” entry into the “Wasting Money Olympics”) – Sort of alive through the authentication feature of Google accounts on 3rd party sites, but otherwise it is I-just-farted-at-a-posh-dinner-party kind of dead
Even though these social media platforms and experiences were once thriving, or seemed to have a real shot at thriving, they are deader than my dreams of ever seeing your abs again.
(lol)
And now, it appears Discord is in the same treacherous place based on the following elements:
- They have crossed over to become a well recognized brand name outside their core audience
- They are still a carefully curated haven for authentic communities to gather without worrying about being advertised to (quiet before the storm)
- A large majority of their audience uses their platform as their main source of community interaction because it is protected
- Brands and ad agencies have gone from ignoring the platform to suddenly being interested because they think media dollars can be channeled here
Now, before a wild grim reaper appears and empties Discord of its social relevance because of its advertising ambitions, let’s dig a little deeper and see if we can salvage something.
I Am Going To Break The #1 Rule Of Consulting
Never directly tell clients they are the problem.
Like, as in find-your-inner-child-and-pretend-they-only-know-your-club-name kind of never do it.
The reality is that we never enjoy hearing we really do look fat in those jeans, or that we are the ones standing in the way of our hopes and dreams because we can’t stop doom scrolling until 1am. Especially when it means acknowledging we have limitations in our capabilities, character, education, network or experience.
But, this is exactly what I am about to do.
Discord, your leadership and investors were already a problem, but not the /gigafacepalm problem you just created when you decided to hire a former Activision exec (mobile gaming!) to lead the charge on your IPO.
What in the actual orangutan’s cakes are you thinking?
I mean, we get it. You want the bag. You deserve the bag. In fact, we want you to get a giant bag after 10 years into this miracle of life we call Discord.
But this? It is the equivalent of declaring war on the very culture and loyal community you built up over the years.
Appointing this type of CEO is a reflection of Discord’s focus, as their existing leadership most likely did not inspire confidence from the institutional investors that will underwrite their IPO.
And, after participating in numerous investor due diligence processes, I am guessing Discord needs a lot of help with its business strategy, operations, and cleaning up its books so they can submit their story to analysts without blushing with WeWork-style embarrassment.
This explains the need to bring in a “seasoned executive”, but Discord is handling community relations all wrong.
(I can say all this because Discord is not a client!)
I Am Going To Break The #2 Rule Of Consulting
Never give away advice that would otherwise make you a lot of money.
The unspoken reality, is that Discord is in danger of losing its pristine brand status, and significantly damaging its community relationships by how it navigates its IPO.
So, I am going to say something important. So important I resisted putting a meme next to it.
Discord, please create a highly visible creator and community council to guide your monetization strategy, and next phase of growth.
Make crowd participation a key part of your IPO build up so this becomes a case study in “gracefully going corporate” for other success stories within the gaming industry.
That wasn’t so bad was it?
Maybe we don’t love the idea of a Discord IPO, but it does not need to be done as a shameless cash grab designed to please investors.
The good news is that an IPO can be done as a shameless cash grab that pleases both the investors and the Discord community.
Ta-da!
Since a company’s financials and plans for increasing revenue are just a part of what investors look at, Discord’s path to IPO should be laid out like a community approved battle plan, not just a financial equation.
Normally, IPO-hungry companies rely on a cadre of flying finance monkeys in expensive suits to model how many users will be lost with whatever banner ads, pre-rolls, and boring “quests” get rolled into a monetization strategy.
Instead, Discord could take a very different approach by involving creators and the Discord community in ways that are both meaningful and highly publicized.
Doing this solves two problems:
- Discord can improve its monetization approach by actually talking to its users, and mitigate user loss when it gets rolled out
- Tell a story for “The Street” that the monetization approach will result in great short-term gains, as well as be a platform for stable, long-term growth (Reddit stock price, I am looking at you)
Not to mention, there are some incredibly smart creators out there who run massive business empires with their teams. They would jump at the chance to advise Discord on their next steps, both in terms of monetization and platform evolution.
Does Discord Have Other Options Than Offering An IPO?
Yes, but it depends on what they want to do with the investment, and who is calling the shots.
For example, if they want to stay loyal to their community but need money to evolve the platform into something new, partnering with an endemic, but wildly non-brand safe, company like Stake / Kick is an option.
Even though Stake / Kick seems mostly focused on knocking Twitch out of the race over the next few years (have fun with that), this could be a way to take a giant leap forward. For one, Kick does not allow ads on the platform, so integrating Discord and Kick would be a major alignment in terms of community-focused ecosystems that do not rely on destroying their street cred through poorly received monetization. Not to mention, it would diversify the strategy to take down Twitch, as owning more audiences only helps to grow Kick’s brand and reach as a media platform.
However, despite the ambitions of the hubris-laden team at Stake / Kick, the price tag might be too high.
Discord turned down a $12b buyout offer from Microsoft in 2021, which is literally insane. In comparison, Instagram was purchased for $1b, but that was in 2012 when money was still money.
Okay, so then what about a giant media platform like Amazon? They already own Twitch so it kind of makes sense. If Discord could figure out how to use Amazon’s ad network within their ecosystem, like how Roblox is now using Google’s ad technology, there could really be something to explore. A partnership between Amazon and Discord would combine their analytics, audience insights, and behavioral data into something really unique that can still be appealing to Discord’s audience.
This may never happen though. Amazon seems too busy launching millennial has-beens into space for a Discord deal to take priority.
There are a lot of other alternatives for investment, but without speaking to Discord’s stakeholders it is hard to know what their goals are, and what partners might make sense for them.
Wrapping It Up
I hope Discord is not thinking too small, they have a massive opportunity to reshape multiple industries if they play it right.
A few years ago, I identified Discord as the last “real one” that had the brand, community, and global reach to become the first “next generation” media company.
By doing so, it would have the power to steam roll Twitch and Kick, and the mainstream entertainment industry, as a simple byproduct of just getting out of bed in the morning.
However, if the monetization strategy involves the same tired playbook of increasing revenue through ads, expanding its user data partnerships (we are the product!), and introducing more uninteresting gamification like “Quests”, then the game is already lost.
If done right, Discord has a chance to evolve into a place where the next xQc, Kai Cenat, or Pokimane could start and build their careers in ways the current live streaming and entertainment industry never imagined.
Discord just needs to:
- Have incredibly large ambitions to change the world
- Get a branding and PR agency (I know people, hit me up)
- Build a strong leadership team to strategize and execute this industry-shaping vision
- Get a well-stocked war chest from the right sources so they can get the runway to make this all happen without “non-believing” interference
(Yes, this is vague, but I am not going to share what Discord’s new evolution can actually be. I already broke the #2 Rule of Consulting while writing all of this!)
Despite all of Discord’s potential and goodwill with its community, their IPO has a high likelihood to begin its inevitable descent into diminished relevance. Thus, opening the door for competitors to finally move in and replace the last “real one” in our hearts and communities.
I hope not, Discord. You are truly standing on the edge of something amazing.
As always, if you want to speak about any of this, I am always up for fun discussions with likeminded people. Hit me up through the contact form below and let’s get crazy.
