Building a community is well-known to be one of the toughest things you can do on the internet, particularly if it’s linked to commerce. While it has often been talked about dating back to the e-commerce boom of the 1990s, few companies have successfully created thriving communities, much less linked them to a marketplace. Lovecrafts is one of the few companies which has made it work with their social marketplaces Loveknitting and Lovecrochet.
Nigel Whiteoak, founder, is challenged to solve many of the thorny issues around building a community and a marketplace, and making sure those different aspects of the company are balanced. We spoke to Nigel to find out the specific challenges he faces, what his experience working at eBay taught him, and why so many companies get it wrong.
- Building communities online is hard. There’s no way to get around the fact that there aren’t easy solutions to this challenge.
- Be prepared to respond to a stroke of luck. Lovecrafts attracted a lot of patterns from independent designers after serendipitous changes to EU tax law. However, they were prepared to act when they got that chance.
- Crafts is one of the few areas where there is a natural fit between commerce and community. Some marketplaces aren’t going to build a sense of community while other communities aren’t suited to buying and selling.
- Networks are one of the most important ways of learning. There are lots of good reasons to build your network, but a crucial one is so that you can ask questions to people who have been in the same situation.
What’s your career journey?
I studied manufacturing engineering at university, which was almost like a mini MBA. I spent about half my time running around factories, which I loved as I like getting under the skin of businesses. I then worked at a consulting firm for a few years, which involved more of the same — albeit with slightly longer hours! After that, and since then, I’ve done e-commerce.
I started at RS Components, which was the engineer’s bible — a huge multi-volume catalogue of widgets. It was very similar to selling on the internet, involving the same challenges around pricing, warehouses and logistics, offering customer support — with the single exception almost all the business still happened by phone and fax! They’ve recently announced that they’ve just passed one billion pounds in annual eCommerce sales, so a lot’s changed since then.
I then worked at Ebay for some time and afterwards at Expedia. I also worked for a German business that invented penny auctions, and for a while I was in subscription commerce, selling high-heeled shoes for Kim Kardashian at Shoedazzle. In 2012, I cofounded Lovecrafts with Cherry Freeman and Edward Griffith, and work on creating social and communal marketplaces for crafters and makers.
What’s on your learning playlist?
It’s an eclectic mix!
I think networks are one of the most important ways of learning. If I’m trying to understand or do something new, then I will ask people that I have worked with before, along with other companies in our VCs’ portfolios. Fostering those networks is something that I encourage all my team to do.
I’ve played a marketing simulation game called Markstrat three times in my career, and I’ve found it very good at teaching the value of segmenting a market, and your positioning within it. It also teaches the importance of getting the customer proposition right, and how you drive sales by positioning the product in the right way for the consumer. It covers the strategic parts of marketing — what people have now taken to calling product/market fit.
The book Say It With Charts is a real oldie, but distills the essence of what consultants do — take complicated data and transform it into an easy message.
I imagine everyone mentions this, but I also enjoyed The Hard Thing About Hard Things, by Ben Horowitz.
This is leftfield, but I’d also reference Playing the Moldovans at Tennis, by Tony Hawks: it’s the story of his crazy bet to see if he can find, meet, and beat the entire Moldovan football team at tennis and thus demonstrate that athletic prowess is specific to a sport, not a generic skill. It captures something about the choices we make about what to do with our lives, and making the seemingly impossible happen if you put your mind to it.
On a similar theme I love the film Groundhog Day, exploring the choices you’d make choose if you knew that they had no long-run consequences for you? Given we all die eventually, that’s an apt description of all our lives, yet perhaps not one we easily see.
Finally, I would be remiss not to mention Walden by Henry David Thoreau. The initial name for Lovecrafts was Broadmargins, after Thoreau’s quote, “I love a broad margin to my life.” It was part of the motivation for starting the business — thinking about what we wanted to do with our lives, and ensuring that we were going to make the most of the time we had left on the planet.
We were inspired by Thoreau’s time in a hut by Walden pond just outside Concord, examining what was important in life. Broadmargins — now LoveCrafts — is our own little hut where we get to choose our work and who we work with.
What is the approach to learning and development at Lovecrafts?
We emphasise the individual’s responsibility for their own personal development in collaboration with their manager, and provide a growing selection of internal “MakingMe” development sessions to help team members achieve their own development goals.
We have a number of different courses that have grown up organically in response to specific situations or requirements, so we have a half-completed menu with some obvious gaps, so we are quickly filling those out at the moment.
Particularly, we’re looking to be clearer about what it means to be a manager here at LoveCrafts, and to provide support for managers, particularly those performing the role for their first-time, to ensure we set and drive high standards.
Why is it so difficult to build communities on the internet?
I think any product which requires the participation two distinct sets of users is hard to get right. Marketplaces are difficult to build because of that: who do you start with — the sellers, or the buyers? It’s the classic chicken-and-egg problem: how do you get things moving and people engaged?
Communities share this challenge: you have to encourage both content creators and content consumers to come. Why would a content creator publish on your site if there is no one to see it? Why would the audience come if there’s no content?
We’ve seen communities rise and fall throughout the ages of the internet, although Facebook’s done a great job of bucking that trend: although they’ve also hedged their bets by acquiring some of the fastest growing insurgents.
What were some of your specific Challenges?
A really important part of our community has been independent designers: pattern-writers who publish the instructions for turning crafting materials into finished objects.
If I’m honest, we had a stroke of luck when the European Union’s tax law changed a few years ago. The change meant that VAT had to be paid based on the location of the consumer rather than that of the seller. We clearly had to adapt to that change, but so did the Independent Designers selling directly, most of whom, unsurprisingly, didn’t want to deal with that VAT complexity.
One of the challenges of building a community is the quality of content posted there, particularly when you’re attracting a new audience early on.
Most pattern writers weren’t even VAT registered, but the law said that if the transaction was cross-border, you had to register for VAT, right from the first euro cent of sales. If you sold a single pattern to a French person, you were responsible for filing for French VAT for that single sale — crazy, I know.
It was a challenge to get our business ready for that change, but it was also an amazing opportunity, because as a result we had hundreds of Independent Designers flocking to the site to publish their patterns and continue to be able to sell, and thanking us for solving their VAT headache.
One of the challenges of building a community is maintaining the quality of user generated content, particularly when you’re first attracting a new audience.
We had a vetting process in place for patterns from the start, but that VAT change, and the resulting influx of independent designers, meant that we couldn’t keep up with the volume. We had to quickly rethink our process and figure out simple ways to assess the quality of designers, and whether they required human vetting.
How do you balance the commercial and communal aspects of what Lovecrafts does?
It’s difficult! We use OKRs to set our overall company objectives and we always try to ensure that there is a nod to both of those aspects in those goals. Practically speaking, though, it depends on the ebb and flow of the business.
We passionately believe in the long run that we will become the place that folk come to find inspiration, share photos of what they’ve made — where crafters hang out, and find inspiration for their specific craft.
However, sometimes the operational and commercial goals take priority. It’s coming up to our biggest sales period, and there’s a lot of work to be done to ensure that we’re ready operationally so these aspects naturally get more focus at the moment.
What did you learn from your time at eBay?
I learnt two key things from my time at eBay — about communities and about second, third, and even fourth order effects. While I was there, eBay had a very active, vocal and passionate community, particularly comprised of small to medium sized sellers. They were on all the message boards associated with the site, and always had strong opinions about the changes that we made to the site.
The loudest group of people, even if they are the most passionate, do not always reflect the views of the average person
It was important to be able to harness that passion, but at the same time, we realised that they weren’t always representative of all, or even the majority of users on the site.
It’s a reminder that the loudest group of people, even if they are the most passionate, do not always reflect the views of the average person: so it’s important to find a way to ensure you hear all voices, and balance their competing priorities.
What I learnt about second and third order effects stems from a pricing change made at my time at eBay. We made what felt like a relatively small change to give certain listings, that were cheaper for sellers, greater visibility on site. We figured if those products were available, we should make sure they got put in front of shoppers on the site.
Sellers noticed that change, and we saw a massive shift in their behaviour toward using this type of listing — which of course meant that lots of buyers saw and bought that particular type of listing more often: it was a vicious cycle.
Pricing in marketplaces is like taxes — any change will also produce a change in behaviour
That shift had a big commercial impact on eBay: as these listings earned eBay far less money. It’s possible that someone could have predicted what would happen, but there were a number of changes of behaviour that you had to think through before it became really apparent.
Pricing in marketplaces is like taxes — any change will also produce a change in behaviour, which might result in a completely different outcome from that predicted.
Is Lovecrafts the future of e-commerce?
People have talked about content, community, and commerce on the internet since I started working in the mid-‘90s. Most of the attempts to bring those three things together have ultimately felt awkward — largely because in many product categories there isn’t a natural fit.
However, one area where I think there is a fit is crafts. If you go into a newsagent, you’ll see stacks of crafting titles — there is already a thriving content market for crafts. If you open those magazines up, they are nearly all instructions and patterns. You need materials to make those patterns: there’s effectively an ingredient list at the start of every pattern, so there is a natural symbiosis of content and commerce.
Crafts are a hobby: a passion that people spend a huge portion of their time devoted to, often in groups. It’s part of what defines a person, so there is also a natural sense of community.
Blending content, community and commerce has been talked about for a very long time, but there aren’t many great examples of people successfully doing so.
A company which has got it right, and whom we think that we have things to learn from, is the interior design company Houzz. We look a lot at how they have managed to build a community of interior designers publishing images of rooms, and at the way that that is tightly coupled with commerce.