DISQUS

Hi Nic,

Nice post - and thanks for using the Betfair case study as an example!

I like the concept of refining what your service does to the "essence" before going for broader applicability. This is a theme that I have begun calling product progression. I believe that too many of the Internet services launching today are building what the finished product will look like, instead of starting with the simplest building block to serve an early adopter need.

Second, I tend to agree that if you don't have an early adopter/power user segment that will love your service in the early days, you are in for an uphill battle. Understanding the needs of the early adopter crowd, as opposed to the mainstream user, is vitally important at launch.

How about this for a how-to guide for launching a consumer Internet service:

1. Identify the early adopters / power users and understand what they need from the service
2. Don't get ahead of yourself building the product - focus on what the core essence of the service should be and build the product to that spec
3. Figure out how you plan to get distribution for the service

Note: All three of these should be thought through simultaneously, as each will impact the other.

Hi Nic,

I couldn't agree more with your post. I think the big catalyst for this change was digital cameras hitting critical mass and the plethora of photos now available to be shared. Images, not text, is what attracts people's attention and forms the basis of community. A picture is indeed worth a thousand words!

Nisan

Hi Sean,

My definition of network effect is a product or service that inherently gets better the more users it has. Sites like Slide.com and RockYou are viral, but don't have super strong network effects. The experience of creating a slideshow isn't so much better for user number one million than it was for user number one thousand.

There are plenty of sites out there that would benefit from network effects, but lack viral characterisitics. Wikis are perfect examples of this.

Thus, I think your point that sites that demonstrate strong network effects tend to be viral is true. However, people don't spread the word because they recognize the service will be better with network effects. They spread the word so that they can get direct benefit.

Hope that rambling helps some.

Nisan

This question about why imitators are not as successful I think has a pretty simple answer - the leaders are able to establish the initial buzz and hence tap into mainstream PR, thereby "super-charging" the viral distribution and reaching the mass consumer much more quickly. In many of the cases there were less successful imitators (Reddit vs. Digg), (Metacafe vs. YouTube), (Bebo/Piczo/others vs. MySpace) ... but none of these secondary players were able to leverage PR quite the same way as the leaders. Furthermore, in many of these cases as the network effects of the leaders begin to kick in, they provide a much more compelling product for consumers and greater value prop for business partners.

Ronald - I think that a podcast content site such as yours can grow, but it is unlikely to attract a mass audience quickly. I think that businesses such as these take time to develop - usually 5+ years. Don't get too frustrated by the fact that you aren't seeing massive growth - comparing yourself to Youtube is not a fair comparison. Keep producing good content that people want, and work hard to secure distribution through syndication deals. You can do a better job today of natural search optimization. I don't understand why podcast sites don't have full text transcripts of the podcast for search indexing purposes.

Hi Nic,

Well-written post and thanks for linking to Startup Review. I have been giving a lot of thought to this question of virality and will be writing an article on the topic in the next couple weeks. One of the main points that I will make is that for something to be viral, its core function must be communication. Information-oriented services are not viral. The term viral is tossed around too loosely in my opinion. Good Internet products can have word of mouth marketing, but that is different than viral marketing.

I agree with most of the points you make above. Mainstream PR is in my opinion a crucial element to achieving scale. Initial distribution can greatly increase the probability of success, but some companies didn't need it to be successful, mainly because they were highly viral services. A few examples of this are Facebook, Hotornot, and Xfire.

Hi Matt,

Thanks for the coverage of my Startup Review blog. I'm glad that you find the content useful. The writing is targeted towards Internet entrepreneurs and investors, and thus I try to target the insights for that audience. While the insights for well-known companies like MySpace and Facebook might not be that different from coverage elsewhere on the web, I believe that there are good insights provided for the lesser known success stories. You won't find the type of insight on companies like Rotten Tomatoes or HOTorNOT anywhere else on the Internet in my biased opinion.

Thanks,
Nisan

I have a fairly detailed analysis on why I think Digg is reasonably worth $120M on my Startup Review blog. Please see the "Exit Analysis" section and the comments.

http://www.startup-review.com/blog/digg-case-st...