This is because there are always two downsides, the risk of investing just before a huge crash, but also the risk of holding out while a boom passes you by. People always psychologically overweight the former due to loss aversion, but the latter is more pernicious.
> Does everyone truly ride the crash down and back up or will some of them panic and leave the market before it recovers?
This is an orthogonal issue. If you DCA for 12 months and then a crash immediately occurs, you suffer the exact same fate (you are worse off than someone who had 12 months of investment returns prior to the crash). Does this mean you should increase DCA horizon to 24 months? The only way your framing makes sense is if you have prior knowledge that a crash will occur during the DCA period.
I have built a couple communities over the years and currently run a community with more than 20 million monthly users.
I'm going to assume the kind of community you're referring to is one where the primary focus is social networking / discussion in the vein of Hacker News, Reddit, etc.
The way you build a community is to start with an existing community.
What I mean by that is you have to find an existing pool of users who are interested in what you offer and bring many of them in at once. From there you can focus on slower organic growth. Examples: YouTube and MySpace both began as dating sites. YouTube focused on getting people to upload introduction videos of themselves. Once they had accumulated a number of people who were willing to film themselves they pivoted over to content creation. Similarly, MySpace was a very crude dating site that allowed people to customize their page. Brad Greenspan was a serial investor who bought up a large number of tiny dating sites. He cannibalized all the revenue from those sites to promote MySpace as a "free" dating site. They had millions of users coming from other sites.
reddit was promoted heavily on Hacker News and focused on a tech crowd at first. Paul Graham threw his endorsement behind the platform a few times and that also helped interest people in checking it out.
For my successful community sites, I'll just mention one experience - I had built a Q&A site from scratch. It was finally done one Sunday night and I decided to go to bed. There were eleven posts on the site, mostly from myself, but also a couple from friends I'd asked to test the site for me. It was obvious there was no community there. I bought a single ad - for $10 - at $0.01 CPC on a Quiz site, then went to bed. My intention was not to launch the site, but to throw a little real traffic at it and see if any bugs cropped up that neither I nor my friends had found. When I got to work in the morning and had finished catching up on my emails I decided to check the site and see if anyone had posted. There were over 100 posts and people were using the site exactly as intended. Not only that but there was about $0.50 in ad revenue already, meaning my monthly run rate was net-positive from day one. I had hit upon a great fit between people who were already interested in asking and answering questions (the quiz site I advertised on) and my product.
In each case I'm familiar with, the formula was to find an existing audience that had an interest in the product in question and bring them on-board ASAP. If the internet were brand-new and no community websites yet existed I would build one by building a non-community website that provided a useful service, and building a community around that once I have captive eyeballs. In other words, to belabor the point: I would start with an existing community.
This is because there are always two downsides, the risk of investing just before a huge crash, but also the risk of holding out while a boom passes you by. People always psychologically overweight the former due to loss aversion, but the latter is more pernicious.