Viral Expansion Loop
Friday: May 2, 2008 10:50 AM
Interesting article in this month's issue of Fast Company. The article spotlights a new Web 2.0 company called Ning that is run by Gina Bianchini with Chairman Marc Andreesen (Netscape Fame). The article describes an interesting concept called Viral Expansion Loop which basically attempts to define the process that happens when you see viral growth in a social application. Something along the lines that one person tells another, who tells two friends, who tell two friends, and so on. The ultimate conclusion is that like the network effect, the more users you can get in the network the greater the value to the business. This is similar to the business model used by Netflix where the more people actually use the product the more valuable it gets. One specific comment caught my attention where Andrew Chen commented:
This critical insight is worth a lot of money and the few people that understand it are all running their own companies
I think I might disagree on the idea that a few people understand the concept but I would agree that only a few people can actually make it happen. That's the core difference from those that can research and regurgitate ideas but having the ability to make it happen is worth a mint. I see this inside organizations when it comes to Enterprise 2.0 or Web 2.0. While many people understand the concepts and can deploy applications, very few understand what it takes to get viral growth over an extended period of time. It does take a good product or tool but that's the price of entry. And with Open Source, that price is relatively small. The one thing I would say is that many of the concepts described also apply within the enterprise as much as they do outside.
There are some differences that do come into play. First, enterprises can’t afford to have low contribution rates as we see in other Web 2.0 applications. I routinely see 1% or 4% contributor numbers being tossed out in the research. Clearly, that won't fly in a large organization that only has 100,000 people for a collaborative type solution. Perhaps, for a blog that might work but not many of the other tools. Second, you have to be much more focused on providing customer support since you don’t have a large population of young folks.
It is a great article and well worth the read.
Interesting article in this month's issue of Fast Company. The article spotlights a new Web 2.0 company called Ning that is run by Gina Bianchini with Chairman Marc Andreesen (Netscape Fame). The article describes an interesting concept called Viral Expansion Loop which basically attempts to define the process that happens when you see viral growth in a social application. Something along the lines that one person tells another, who tells two friends, who tell two friends, and so on. The ultimate conclusion is that like the network effect, the more users you can get in the network the greater the value to the business. This is similar to the business model used by Netflix where the more people actually use the product the more valuable it gets. One specific comment caught my attention where Andrew Chen commented:
This critical insight is worth a lot of money and the few people that understand it are all running their own companies
I think I might disagree on the idea that a few people understand the concept but I would agree that only a few people can actually make it happen. That's the core difference from those that can research and regurgitate ideas but having the ability to make it happen is worth a mint. I see this inside organizations when it comes to Enterprise 2.0 or Web 2.0. While many people understand the concepts and can deploy applications, very few understand what it takes to get viral growth over an extended period of time. It does take a good product or tool but that's the price of entry. And with Open Source, that price is relatively small. The one thing I would say is that many of the concepts described also apply within the enterprise as much as they do outside.
There are some differences that do come into play. First, enterprises can’t afford to have low contribution rates as we see in other Web 2.0 applications. I routinely see 1% or 4% contributor numbers being tossed out in the research. Clearly, that won't fly in a large organization that only has 100,000 people for a collaborative type solution. Perhaps, for a blog that might work but not many of the other tools. Second, you have to be much more focused on providing customer support since you don’t have a large population of young folks.
It is a great article and well worth the read.
