CNBC Disruptor 50

13. Discord

Founders: Jason Citron (CEO), Stanislav Vishnevskiy
Launched: 2015
Headquarters: San Francisco
Funding:
$1.1 billion (PitchBook)
Valuation: $14.7 billion (PitchBook)
Key technologies:
N/A
Industry:
Media
Previous appearances on Disruptor 50 List: 1 (No. 3 in 2021)

Persephone Kavallines

Facebook may already have entered the metaverse, but Discord thinks there's still work to be done in building a better conventional social media experience.

The voice, video and text communication service which competes with multiple generations of media tech disruptors from Facebook to Reddit and Skype (parent Microsoft was a suitor of the company before abandoning a bid last year), now counts more than 150 million monthly active users, with 79% coming from outside the U.S. And while it started as a platform favored by gamers who were tired of complaining about Skype, it has grown beyond those roots, with 78% of its users now saying they use Discord mainly for non-gaming, or equally across gaming and other activities. And it boasts a demographic that is valuable, with 68% brand awareness among 18 to 24-year-olds.

Last year was a busy one for the company, as it invested and launched new features to capitalize on the boom in social audio. In March, Discord released Stage channels, giving users a new way to organize and host large audio events. In July, it released Threads, a way to branch a conversation off of a channel's main feed without removing it from the channel. And late last year the company began testing a premium membership feature, allowing creators and community owners to require a subscription to access all or part of their server, tiered perks, and view analytics on member engagement. The company, unlike the first generation social media giants, does not make money from advertisements.

Growth in gaming does remain a core focus. Last May, Discord teamed up with Sony to enable PlayStation players worldwide to connect to the platform, and as of January, users can link their PlayStation Network account and display their activity in their profiles. Discord also made a gaming acquisition last June, Ubiquity6, a multiplayer gaming and tech company.

With gamers viewed as the niche most ready to enter the metaverse, Discord's battle with Facebook may take to the Web3 world next. A tweet from co-founder and CEO Jason Citron late last year in response to speculation the company could be getting ready for its own crypto, NFT and metaverse efforts didn't rule it out. "Thanks for all the perspectives everyone. … For now we're focused on protecting users from spam, scams and fraud. Web3 has lots of good but also lots of problems we need to work through at our scale. More soon."

In September, investors doubled down on their Discord bet, with a $500 million round raising its valuation from $7.3 billion to nearly $15 billion.

With its success among a younger demographic, Discord has faced safety concerns. Its mid-year 2021 transparency report counted 437,190 reports, an increase of over 80,000 from the previous six months. In January 2020, pre-pandemic, that number was slightly over 25,000. Harassment reports (32%) are by far the largest share of incidents on the platform, followed by spam (13%). The company says it is investing heavily to combat this problem, acquiring Sentropy, an AI-based software company focused on fighting abuse and harassment online, last July. It says it removed 19,744,476 accounts for spamming during the first half of 2021 alone. 

A devastating reminder of the negative potency of social media occurred over the weekend, when the shooter in the racially-motivated massacre in Buffalo, New York, was found to have used a Discord community focused on guns and armor as one of his online planning methods (the company said it is working with law enforcement), and other logs of advance attack planning surfaced on the platform. Discord has been dealing with violent extremism on its site for years, and became more serious about its efforts after organizers of the 2017 Unite the Right Rally in Charlottesville, Virginia used Discord.

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