Virtual Virality

by Natasha Prasad

In the summer of 2009, Zynga launched Farmville, an unglamorous, copycat game that no one could have predicted would one day become the most popular application on Facebook.  Today, Farmville has 80 million monthly users and yet, for all its successes, Zynga games continue to be called everything from “ludicrous” and “mind-numbing” to “spammy” and “exploitative”.  Love them or hate them, Zynga has exploded and the lean startup philosophy, it seems, is plastered all over it: customer-centric design, split-testing, rapid iteration, data driven decision-making and, perhaps most impressively, viral engineering.

As startups grapple with that fundamental challenge of generating long term value in excess of customer acquisition costs, Zynga, it appears, has found the Holy Grail.  Campaigns, SEO, partnerships, Facebook ads, CRM – none of these buzzwords come cheap and, with a non-zero churn rate, it is tough to extract sufficient value from a user before he/she jumps ship.  Virality, on the other hand, is free, rapid and self-sustaining.  Contrary to its cringe-worthy popular usage, virality does not just mean “explosive growth”; rather it refers to the number of additional users brought in by each new user on your site. David Skok deconstructs viral growth into a Viral Coefficient, K and Viral Cycle Time, T.  

·       K = X (number of invites) *Y (acceptance rate %)

·       T = time between a new user discovering the site, inviting another user and that second user coming to the site.

So how do you make your site viral?  Can’t you just bump up X and Y and dial down T?  And why have so many lean startups struggled with virality?

Triangulate’s Sunil Nagaraj was so confident in the viral capabilities of his wingman-based dating concept, that he christened his startup Wings.  He later abandoned this angle (“pivoted”) in favor of a better matching engine.  Aardvark’s Ventilla and Horowitz created product evangelists (“Aardvocates”) and encouraged users to broadcast their answers on social platforms.  Neither strategy worked.  Dropbox, on the other hand, saw 4 million users generate 2.8 million referrals; thirty-five percent of 2010 signups originated from referrals and 20% from shared folders.   Why?

To draw on learnings from another HBS class, we can think of it in terms of the difference between “meet” products and “friend” products.  Online dating is a meet product: you are there to connect with people you don’t already know; roping in your offline friends adds little value to your situation.  DropBox, on the other hand, is a friend product – you want to share folders with your friends and so you actually derive value from having them join the network.  Building products that are intrinsically viral requires, in my opinion, scratching beneath the technology stack and developing a deeper understanding of human psychology and sociology.  It also depends, somewhat tautologically, on the nature of the solution itself. 

That said, adding a layer of virality to a product or site appears relatively straightforward, especially when you have some kind of currency to reward successful conversions with.  Paperless Post (coins) and Gilt Groupe (free shipping) have harnessed a more traditional approach while Groupon (deal tipping) and Living Social (group discounts) have been slightly more creative.

This aspect of virality, I believe, is where lean startup practices can help.  Hypothesis testing and iterative development can help introduce and manage viral layers, while rich customer data can help inform social strategy.  Maybe it won’t lead to Zynga-esque gangbusters, but at the end of the day, there’s more to startup life than virtual virality.