Tales of Virality—Automattic

Tales of ViralityTerry Chay

Automattic Meetup (Ignite)September 11, 2010, 10:00 AM

Saturday, September 11, 2010

The last two companies I worked for were Tagged and Plaxo. Both sites are based on virality. When people ask me why I went to work at Automattic, I tell them, “I’m tired of working for evil. I decided to give good a shot.”


A former CEO once said, “Some companies are born lucky, and some companies have to make their luck.” Companies like Hotmail, Facebook, and WordPress were “born lucky” and companies like Plaxo, LinkedIn, Tagged, Zynga make their luck. I'll explain what this means later.

[Friendster,Twitter][Yelp, RockYou, Slide…]

Source: http://www.marieclaire.com/cm/marieclaire/images/poker_hand.jpghttp://whovotedhow.com/wp-content/uploads/2009/10/card_up_sleeve.jpg

Mousetrap


But first let's recall the days before the internet. In those days you first built a better mousetrap, then people beat a path to your door, and then you used marketing to protect that position.

Source: http://ontopinternetmarketing.com/wp-content/uploads/2010/09/mousetrap.jpg


For instance, if we were to look at the advertising budgets of Apple and Microsoft, we’d find that they spend more now on marketing now than they did back when they first started. Even as a fraction of income!

[GM]

Web 1.0

1. Make Superbowl Commercial2. ???3. Profit!


But that became the “Old” economy. In the DotCom boom, the marketing cart came before the product horse. The “New” Economy basically meant that you followed the Underpants Gnomes path to success:

[Or New New Economy]


Step 1) Steal underpants (I mean make superbowl commercial), Step 2)… Step 3) Profit! It got to the point where you were giving free shipping on 40lb bags of dogfood! (just to acquire a customer)

Source: http://www.stefanoparis.com/stefmedia/petsdotcom/sockpuppetlove/puppetlovehalf.jpg

http://www.youtube.com/watch?v=sICSyC9u5iI

Web 2.0


For some strange reason that model failed. And VC would no longer pony up millions to put the up a Superbowl commercial featuring a sock puppet. But what to do about marketing? How do you get users? Well we had this concept of social networks so…

Viral MarketingSaturday, September 11, 2010

Viral marketing. People often use viral marketing and “word of mouth” marketing interchangeably. But they are not the same. For one, “word of mouth” has been around forever. So what is the difference for reals?

[They are as different as i18n and l10n in g11n.]

Source: http://www.socialsignal.com/system/files/images/mouth-to-ear-whisper.hallmark.jpg

Viral Codefunction virality(&$x) { ++$x;}

do { virality($users);} while (true);


Viral marketing means the very act of users using the site brings more users to the site. [Pause or repeat]. The best example is the first one: Hotmail.


When people use Hotmail to send an e-mail… at the bottom of the e-mail was a signature: “Want free e-mail? Try Hotmail.” It grew like hotcakes, bled money, and sold to Microsoft for just shy of half a billion dollars back when that amount was worth something…

Source: http://farm2.static.flickr.com/1290/4690702547_d9d5000e48_m.jpg

1. Make a Viral Product2. …3. Profit???

Hotmail (and Youtube) Strategery


…and Microsoft would have paid far more for it. Okay! this doesn’t exactly solve your Underpants Gnomes problem (unless you are Hotmail) but it does solve the marketing one. How does it work? The key is to realize…


…unlike other forms of marketing, every step in viral marketing can be measured. The page views are measurable. If the user signups are measurable.The contacts they import are measurable. Even if the user views the e-mail is measurable!

Viral Coefficient (v)v<1 v≥1


When you crunch the math you get two curves: Either user growth looks like the first curve, or it looks like the second. The difference is the viral coefficient. Remember the born lucky thing in the beginning? Maybe you build your website your coefficient is greater than 1—that's being born lucky!

[If a user brings in 1 or more other users your growth looks like the first curve, else you do less and it looks like the second curve. Remember the born lucky thing in the beginning? Maybe when you build your website your user growth looks like the first graph.. That's being born lucky The equation looks like this……you have to look to other avenues to sustain growth… And the solutions is new users = e^kt. If k is positive…]

This Smiley can make the difference… :-)


As for making your own luck…For instance, Tagged found that if they added a smiley face to the end of the subject line of the e-mail, 20% more users click would actually bother to read the e-mail. How do we know that? We used a web bug. I did mention that I worked for evil right?

SOurce: http://images.fanpop.com/images/image_uploads/A-Bug-s-Life-a-bugs-life-626985_1280_1024.jpg

:-(


!!!CUT 4But at LinkedIn they found the exact opposite effect. 20% less users!. Imagine if your viral coefficient was .99. Then the smiley face may put you over…or keep you from going viral. [How do you know the difference? You test them!]

[You use AB-testing]


Maybe before you averaging 100 signups a day. After tuning you have a 300 signup day, then 1000! then Barry is pissed with you because your code didn't scale and the servers went down. This is called the “hockey stick” and it matches the the born lucky curve exactly..

Source: http://www.hockeydogs.com/ProductImages/sticks/CCM%20V4.0%20Stick.jpg

Key = Measure + Test

KeyRulerTest


The key is not virality but measuring and testing—and that can be applied anywhere. Want to map out the cost of site speed? Deliberately slow down the site for some users and measure their activity. Use your imagination but remember they aren’t viral problems (the viral curve doesn’t apply)…

[So why mention virality? Want to compare two CDNs? Put a javascript to return your site the page completion times and bin users into A-B.]


Now don’t get too deluded with statistical power. You can’t measure thinks like "word of mouth". Once Tagged applied a Zynga trick for virality. It put our viral coefficient above 1 again. And also got us this…

[adding an X factor to your faith in numbers … Against the objections of many in the company it was implemented.]


Sure for two days before it was turned off we had a million and a half signups, But this article was the most e-mailed article on Time.com for the entire week. That damage is immeasurable… literally!

[—that’s the entire city of San Francisco!]

Source: http://www.time.com/time/business/article/0,8599,1903810,00.html


Oh yeah… the company got sued by the state of New York…Twice! So what’s the moral of this story? It's way better to be born lucky… (even if mean reversion means that your founder is unlucky at cards.) Thank you.

Source: http://ma.tt/

Tales of Virality—Automattic

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Transcript of Tales of Virality—Automattic