I’ve been reading “Once You’re Lucky. Twice You’re Good.” by Sarah Lacy for the last few days and I’m really enjoying it. It gives a useful overview of the whole Web 2.0 scene, but mostly I just find it an entertaining read. It’s amazing how many influential Web 2.0 companies were connected to PayPal alums. Slide, YouTube and Yelp were all directly connected, and Facebook has early investors that were alums.
The book highlights the value of the Silicon Valley ecosystem for starting new companies. Without the help of startup vets, Lacy indicates that many talented founders would likely have been ousted from their CEO position by VCs. Who knows if companies like Facebook would be at their current nosebleed valuations if a seasoned exec were running things? The passion and vision of a founder often count for more than the experience of a replacement CEO. Other times this isn’t the case. Obviously when VCs push for a replacement, they firmly believe it is the best approach for the long-term success of the company. But sometimes they’re wrong.
Reading about these successful companies has been both inspirational and educational. It led me to begin an analysis of the fastest growing startups over the last few years and try to reverse engineer the source of their growth. I’ve been verifying strong growth rates by looking at each company’s Google search trendline and their Alexa chart. Caution: Sometimes Alexa doesn’t capture the real growth of a company because their pages are https or they are distributing a local application. In this case, Google trends is a better indicator of user growth.
Most of the highly successful companies have relied on a key viral driver – either viral invites or a self replicating viral presence (think widgets). I’m hoping to identify new growth drivers around which I can enhance my marketing skills. I tend to find the shelf-life of many successful online marketing programs is limited, so it’s important to continuously refresh my knowledge. I’ll post my findings soon.
Andrew Chen
Brant Cooper
Dave McClure
Eric Ries
Jamie Siminoff
Steve Blank
This looks very interesting. Will order the book right away. Thanks a lot for the tip.Cheers, David
Had to order the book. The idea of reverse engineering the growth patterns sounds great and challenging.
Saku – It’s not quite as complicated as I made it sound. For most of the sites it’s pretty easy to figure out, like Facebook via viral invites. For other sites, like Meebo, I had to strain my brain a bit more. Despite being IM, Meebo doesn’t get the same kind of viral replication as ICQ, MSN Messenger, etc. Users don’t benefit from encouraging others to sign up. I was able to uncover that nearly 1/2 of Meebo’s new traffic comes from MySpace. This is likely the result of their MeeboMe widget. Unlike products that are naturally viral – Meebo created a useful viral widget that extends their brand engagement and replicates virally through a “Get Meebo” link. This widget then drives users to the mother ship – meebo.com. The most interesting growth story is Webkinz – which was the second fastest growing Google search term in the USA in 2007. Not bad for a 50 year old toy and nic nac maker. My kids are big fans of Webkinz, so I had already figured this on out. I’ll be making a blog post soon that explains how Webkinz is growing.
No one can dispute the power of a viral driver. The question is what value the transmitter of the virus is really providing to his/her circle. Is the service valuable enough to warrant virality? As a recipient of the virus, how much does it take for me to engage? (Interesting questions for VCs to ask entrepreneurs.) I have signed up for multiple tools through friends’ recommendation on Facebook that turned out to be fairly useless. The good news is that it was easy to test and quickly discard an FB tool or service.The challenge for most marketers will clearly answering why should I install, use and commit to something new. If you provide real “Blink I Get It” value like Xobni that may not be an issue. But what about the other 90% of businesses out there that take a bit more explaining?
I agree that most viral websites/services/apps today are mostly about replication and very limited on providing real value. As you mention – almost all Facebook apps fall into this category. But the virality of these apps is just step one. Ultimately people will begin to apply viral drivers to worthy services. With virtually no marginal unit cost and no customer acquisition cost (and customer acquisition that accelerates with scale), you will start to see some very valuable businesses created.