Great post! I think there's a lot of interesting math here that applies to a lot of businesses.
Maybe Andrew is purposefully focusing entirely on the mathematical part of the viral loop-- but I think a key missing point is user value (or the lack of it).
A great viral loop can bring in the eyeballs. Facebook apps are a great example. Ning is a great example. If a friend is using something or seemingly is advocating that I use it, I'll take a look. In the case of Facebook, I'll probably install it (as that's really the only way to take a look).
At the end of the day, the viral loop gets you sales leads (nicely qualified due to the "recommendation" implicit in the viral loop), but you have to provide value/fun to make the sale (convert the "looker" into a sustained user).
IMO, best way to pursue a business is:
1) Create something people really freakin' LOVE to use and/or something that solves a painful and pervasive problem.
2) Start honing your viral loop. Hopefully, this loop is already in your product. It's not just adding a "tell a friend" feature, so early thinking on this is critical. Andrew's previous post on this is fabulous.
(http://andrewchen.typepad.com/andrew_chens_blog/2007/09/fund...)
Skip the first step (or make something that people kinda like) and you'll be left scratching your head. The only reason so many crappy FB apps have done so well is that FB stacked the cards very heavily in favor of the app makers-- it let 'em cheat. FB is rapidly closing the loopholes and making it pretty hard to succeed without having an actual product that you WANT to tell your friends about (imagine that!). In short, the party's over.
Maybe Andrew is purposefully focusing entirely on the mathematical part of the viral loop-- but I think a key missing point is user value (or the lack of it).
A great viral loop can bring in the eyeballs. Facebook apps are a great example. Ning is a great example. If a friend is using something or seemingly is advocating that I use it, I'll take a look. In the case of Facebook, I'll probably install it (as that's really the only way to take a look).
At the end of the day, the viral loop gets you sales leads (nicely qualified due to the "recommendation" implicit in the viral loop), but you have to provide value/fun to make the sale (convert the "looker" into a sustained user).
IMO, best way to pursue a business is:
1) Create something people really freakin' LOVE to use and/or something that solves a painful and pervasive problem.
2) Start honing your viral loop. Hopefully, this loop is already in your product. It's not just adding a "tell a friend" feature, so early thinking on this is critical. Andrew's previous post on this is fabulous. (http://andrewchen.typepad.com/andrew_chens_blog/2007/09/fund...)
Skip the first step (or make something that people kinda like) and you'll be left scratching your head. The only reason so many crappy FB apps have done so well is that FB stacked the cards very heavily in favor of the app makers-- it let 'em cheat. FB is rapidly closing the loopholes and making it pretty hard to succeed without having an actual product that you WANT to tell your friends about (imagine that!). In short, the party's over.