Viral Loop | Adam L. Penenberg

Summary of: Viral Loop: From Facebook to Twitter, How Today’s Smartest Businesses Grow Themselves
By: Adam L. Penenberg

Introduction

Discover the power of viral growth in Adam L. Penenberg’s book, ‘Viral Loop: From Facebook to Twitter, How Today’s Smartest Businesses Grow Themselves’. Learn how some of the world’s most successful companies have leveraged the Internet to achieve exponential expansion with minimum marketing efforts. This book delves deep into the concept of viral expansion loops and examines important aspects like network effects, built-in virality, and rapid adoption. Find out how viral winners such as Hotmail, eBay, and Facebook became Internet sensations, and glean valuable insights on the essential characteristics that drive viral growth.

The Viral Phenomenon of Hot or Not

In 2000, James Hong and Jim Young created the website “Am I Hot or Not,” which allowed visitors to rate people’s physical appearance. The website went viral within days, attracting millions of page views and volunteer photo submissions. Hong and Young subsequently monetized the website through advertising and by creating a sister site called “Meet Me.” The success of Hot or Not illustrates the power of viral expansion loops to rapidly grow a user base and create a lucrative business. In 2008, the website was sold for $20 million.

Viral Expansion Loop

Successful online businesses can become lucrative using the viral expansion loop, which is a referral-multiplying mechanism that consists of three parts. These parts include the viral loop, viral network, and double viral loop. By exploiting this mechanism, companies such as eBay, Hotmail, PayPal, LinkedIn, MySpace, Twitter, YouTube, Digg, Facebook, and Hot or Not have become internet giants. A viral loop grows as members refer others, while viral networks consist of intersecting groups formed by its members. Double viral loops grow faster by adding users who create content with minimal marketing efforts. Successful businesses build virality into their design and offer services that people become so attached to that they evangelize them to their contacts, creating a positive feedback loop. The web is the best connectivity medium because it allows people to share videos, photos, links, and various internet services, creating a virtuous circle. The ultimate goal is to find out what people appreciate and to create products that meet their needs entirely from the start.

The Viral Rise of Tupperware

Tupperware, a household name today, owes its success to Earl Tupper’s invention and Brownie Wise’s marketing strategy. In the 1950s, Wise took “Poly-T parties” to the masses and created a viral network of Tupperware dealers and distributors. Tupperware parties, as they became known, skyrocketed the company’s sales, making Wise the first female executive to grace the cover of BusinessWeek. Despite being a $2.2 billion global business, the majority of Tupperware’s sales still come from parties today, particularly in Latin America and Asia. The process began in the US, where Tupperware containers became popular well before the internet era. Today, Tupperware’s success story remains relevant in the era of viral loop businesses.

Mosaic: The Browser That Changed the Internet

In the early 1990s, the internet was a text-based medium mainly used by academics. However, Marc Andreessen, a computer science student at the University of Illinois, developed a new browser called Mosaic while working for the National Center for Supercomputing Applications (NCSA). Mosaic made the internet accessible to everyone, not just academics, and by December 1994, it had over one million users. The introduction of Mosaic generated the first “network effect” on the web, where each additional user attracted more users, leading to a positive feedback loop that propelled the web’s growth. As more people used Mosaic, they created new websites, attracting more users who built more web pages, leading to a self-replicating cycle. Mosaic’s impact was transformative, enabling the world we know today where anyone can access the internet from anywhere with ease.

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