Thinking About Virality Before It's Too Late

by Jesse Garcia

While generating viral growth may be hard, it is not difficult to understand ways to increase the likeliness of a product going viral. Some of the companies discussed in Launching Technology Ventures, including Triangulate and Cake Financial, struggled with the challenge of generating viral growth. For these companies, virality became a priority after having developed a business model and begun product development. However, there are opportunities to increase the likeliness of viral growth when developing the company’s value proposition, and so entrepreneurs should think about designing for virality from day one.

The first consideration in determining the virality of a product is the potential benefit from sharing it. Very simply, sharing occurs between the sender and the recipient. These benefits can include social currency, enhancement of social status, entertainment, education, and potentially economic rewards, and must be experienced by both sides. Social currency, which we can define as the utility derived by a sender from benefitting the recipient, is the common denominator present in all cases where viral growth occurs. Triangulate struggled to achieve virality because in dating, an individual can experience both successes and failures, leading to limited opportunities for social currency. Similarly, Cake Financial failed to achieve virality because investing is also an activity where an individual can experience failures. Cake Financial’s struggles were exacerbated by the fact that there was no economic reward to sweeten the sharing opportunity, as there is ample evidence that the investment performance of active retail investors cannot consistently beat the market.

The other variable in the virality equation is the costs associated with sharing. These can include time and effort. Startups can minimize these costs in many ways, such as integrating with Facebook and other existing social networks. Triangulate and Cake Financial both took advantage of opportunities to minimize the cost of sharing, leaving limited room for improving virality by lowering the cost of sharing.

The result is a cost-benefit analysis of sharing, and it is abundantly clear that there must be a net benefit to sharing for a product to go viral. As explained above, Triangulate and Cake Financial failed to solve the benefit part of the equation. Importantly, the options available to either company to provide this benefit were most numerous before the business model was in place. To increase the likeliness of viral growth for a product, a startup should consider accounting for virality, and the necessary positive net sharing benefit, in its value proposition.

By thinking about it earlier, the virality dilemma becomes easier to solve. For example, trying to change users’ behaviors will not likely lead to a positive net sharing benefit. By simply observing existing human behaviors and ascertaining whether a particular activity is inherently social, a startup can begin solving the dilemma. Moreover, a study of human emotions and heuristics could also provide important insights into whether a NEW activity can truly become social. The over-confidence bias, which is based on numerous surveys where more than 50% of a population believes that he or she is better than average, suggests that users do not tend to see themselves as failures and may not want failures associated with them (as in dating or investing). This bias helps us understand why Triangulate and Cake Financial struggled to go viral.

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