* Products that require a customer education are best suited to direct selling… if you are unloading blue jeans, direct selling probably isn’t for you, since everyone knows what jeans are and what they are used for [what about cosmetics? Avon?]
* Jim Clark contacted Marc Andreesen after using the Mosaic browser for the first time
* Warren Buffett says “Get greedy when others are fearful and fearful when others are greedy.”
* Network effect: the more connections you have, the more nodes, the more people, the more valuable it will be
* “double viral loop” – every network creator is a user and every user is a potential network creator
* Successful viral expansion loop companies share these characteristics:
o Web-based: suited to the frictionless world of the Internet
o Free: users consume product at not charge
o Organizational technology: no content is created, users create it. Companies just organize the content
o Simple concept: easy and intuitive to use
o Built-in virality: users spread the product out of their own self-interest
o Extremely fast adoption, exponential growth, virality index, predictable growth rates, network effects, stackability, point of nondisplacement and ultimate saturation
* Fanout: Jurvetson noted a “mathematical elegance” to Hotmail’s “smooth exponential growth curves” in the company’s early days: Cumulative users = (1 + fanout) cycles Where “cumulative users” related to the number of Hotmail registered subscribers, “fanout” was the rate by which the product spread and “cycles” was the number of times the product was used in the time period since launch (or frequency multiplied by time). At the beginning, each Hotmail user, on average, brought in two new users each month. (In other words, the fanout equaled 2.)
* Controlled growth at Gmail: Paul Buchheit, the brains behind Gmail, purposely controlled the rate of adoption by instituting an invitation-only sign-up procedure. Because Gmail offered 1,000 megabytes of storage while others gave users only 4 megabytes, Buchheit chose to drag down Gmail’s growth rate so Google could keep the application operational without risking sluggish download times, outages, data loss, or any other performance problem that often emerges with rapid scaling.
* How Max Levchin survived Chernobyl: Fleeing the crumbling Soviet empire most likely saved their lives. When Levchin was eleven, his mother, a physicist who worked as a government research assistant, overheard news of a leak at the Chernobyl nuclear reactor, which was on the verge of a meltdown. Acid rain misted down as the family quietly vacated their home and rushed to the train station in Kiev. After they were onboard, news of the disaster became public, and hours later, as they chugged into Crimea, Soviet guards ordered them to turn back, fearful of contamination. Following an animated discussion, Levchin’s mother convinced them to check for radiation. All were clean, except Max, whose right foot sent the Geiger counter into spasms. The guard said the boy’s bone marrow was contaminated; his leg might have to be amputated. His mother told Max to take off his shoe and he was tested again. This time he passed and they were let through, sans shoe. The culprit was a radioactive rose thorn that had lodged in his sole as they escaped Kiev.
* What early PayPal was looking for: Because Thiel’s ultimate plan was to create a Web-based currency to undermine government tax structures, which would require taking on powerful interests like commercial banking, the cofounders sought people a lot like them: hypercompetitive, well-read, multilingual workaholics who had, above all, a proficiency in math and an aversion to authority.
o Thiel subscribed to a theory of human behavior known as “mimetic desire,” propounded by French historian and philosopher René Girard, who believed that people were essentially sheep who, without much reflection, borrowed their desires from others. This theory has been applied to describe financial bubbles and panics, when investors blindly act as a flock and follow what others are doing even if it flies in the face of economic logic, and to war and violence, which arise when two individuals vie for the same possession, leading to antagonism and strife. Pretty soon the object of desire is forgotten and all you’re left with is the antipathy.
o PayPal Mafia: The day that eBay took over, Thiel, Levchin, and Hoffman, who collectively took in more than $100 million, walked away from the viral company they had started just a few years earlier. But PayPal was simply the beginning for these former employees, and the lessons they learned at PayPal would spread virally to other viral concerns. Thiel founded his own hedge fund, Clarium Capital Management LLC, invested $750,000 in Facebook, and joined the board. Levchin created Slide, a widget maker that counts hundreds of millions of installs of its photo slideshow and other applications across social networks. Hoffman is the CEO of LinkedIn, a networking tool for business that counts almost 40 million members and, since it has multiple revenue streams, boasts that it is profitable. Roelof Botha, PayPal’s CFO, moved over to the venture capital side and became a partner at Sequoia Capital. One of his first investments was in YouTube, which was started by former PayPal alums Chad Hurley and Steve Chen.
* Michael Birch, founder of Bebo’s daily life: While Bebo grew at a fantastic rate overseas, Birch’s family life in San Francisco remained downright normal. He woke up at 6:30 a.m. to help his children get ready for school; then, after dropping them off, he and his wife would arrive at the office at 8:00 a.m., and Birch would spend half the day programming. The few meetings he held were with suppliers and prospective partners or advertisers. With Bebo adding ten thousand new members a week, either he or his head programmer was always on call, since they were the only ones who knew the site’s architecture. Since his co-coder got his kicks from skydiving, Birch would stress whenever he took to the sky. Then he would leave around 7:00 p.m. to see his kids for an hour before they went to bed. A few times a week he attended networking events, for instance, a website launch, and he traveled to England, where he and his wife would combine business with pleasure.
* Summary of online viral loop companies:
o Web-based: Better suited to the Internet
o Free: Users consume the product at no charge
o Organizational technology: They don’t create content, their users do
o Simple concept: Easy and intuitive to use
o Built-in virality: Users spread the product out of own self-interest
o Exponential growth: That is, the virality index is above 1.0, which creates predictable growth rates
o Network effects: The more who join, the more who have an incentive to join
o Stackability: A viral network can be laid over the top of another, helping both grow
o Point of nondisplacement: Becomes virtually impregnable
o Ultimate saturation: A point of maturity when growth slow

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In honour of this I’ve uploaded (above) a pic taken from a screen-grab of Street View of the spot in Leicester where a memorial plaque to Richard III, who some say is buried beneath the streets of the ancient city, is mounted. Except it’s covered up (Google Street View pic taken in 2009). By a lettings advert. For a building which is still vacant. And which is surrounded by barbed wire.

Fortunately the advert has gone now, and the memorial is now visible.

There’s a nice article from the Leicester Chronicle, donated by the Richard III Society, on clues to where exactly Richard III might be buried. Personally my favourite plaque is round near the old castle, which says something like ‘back at the time of the Battle of Bosworth in 1485 the people of Leicester met two kings in three days’. Or words to that effect.

The exact location of the battle between the two kings of England is now on show to the public:

The precise location of one of Britain’s most famous lost battlefields has been revealed today (19th February 2010).

The latest discoveries, announced by Leicestershire County Council pinpoint the exact location of Bosworth Battlefield, where Henry Tudor and King Richard III clashed on 22nd August 1485, and shed new light on the way the battle was fought and where King Richard III died.

The exact location, which has been the topic of much debate amongst historians for years, was discovered as part of a groundbreaking archaeological survey to locate the Battle of Bosworth, funded by a grant from the Heritage Lottery Fund.

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The National Digital Inclusion Conference, which opens in London today, will open with a message from the prime minister. Digital Britain minister, Stephen Timms, will talk about the National Plan for Digital Participation launched this week. Martha Lane Fox, the champion for Digital Inclusion, is expected to reveal further details of the plan to collect “digital promises” from more than 10,000 private, public and charitable organisations.

One highlight will be a cross-party Question Time featuring long-time digital enthusiast Derek Wyatt MP (Labour), Conservative heavy-hitter Baroness Warsi and the LibDems’ Lembit Opik (Lib Dem).

Helen Milner, managing director of UK online centres, said: “It’s wonderful to see support for digital inclusion coming from the top – and just before a general election is testament to the fact this is now central to the wider agendas of economic growth, social justice and the improvement of government services.”

Downloadable presentations here.



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Duncan J. Watts, a network-theory scientist from
Columbia University, has recently challenged the
theory of the influencer and the idea of viral marketing
as concept. Originally inspired by epidemiology,
the idea of viral marketing is that a few agents
can ignite and eventually drive a massive spread.
After analyzing e-mail patterns and setting up
computer simulated tests, Watts and his colleagues
found that even highly connected people are not really
the social hubs we expected them to be.

Watts created computer simulated societies to test this
theory, and they actually managed to create trends.
“The problem, I think, is that we have been defining
influentials incorrectly. They are not a particular class
of people like college grads or news junkies. Instead, the
title of influential migrates from one person to the next
depending on the topic of interest. One person is an
influential for computers, another is an influential for
wine. It’s a function of passion, not position.”

The main conclusion is that for the vast majority
of cases that spread, it was just as much a result
of average people – the ones that didn’t seem particularly
influential – as of those who were. In fact,
even when influentials had forty times the reach of
a normal person, you couldn’t be sure they could
kick-start a trend.

Indeed Dr Watts, interviewed over two years ago in FastCopmany, argued that just targetting ‘influencers’ was a big waste of marketing spend. But he also suggested a way that did work, which while not viral exactly ‘doubled’ the effect and used a bit of basic viral looping (if I may inelegantly call it that). It also rings true for anyone experienced in grassroots political campaiging for example, and no doubt is supported by Obama’s campaigning strategy:

In their hunt for a practical way to create maximum exposure for any given ad, Watts and Peretti developed a way to marry the benefits of old-school mass marketing with clever six-degrees effects. Their first test case came when the Brady Campaign, the gun-control group, asked for help with an online petition.

Watts and Peretti set up a regular mass-market ad buy, running banner ads on several prominent blogs and news sites. Like many ads these days, they added a button on the ad that allows people to forward the ad to a friend–a way of collecting eyeballs for free. Typically, people ignore this “share with your friends” pitch. But Watts and Peretti included technology called ForwardTrack, which displays the route the ad travels once you’ve forwarded it. This turned ad forwarding into a piece of social cartography. People would pass the ad specifically to those friends most likely to keep it moving. It became a Facebook-like contest to sign up the most friends.

The technique marries Watts’s two main epiphanies: Cascades require word-of-mouth effects, so you need to build a six-degrees effect into an ad campaign; but since you can never know which person is going to spark the fire, you should aim the ad at as broad a market as possible–and not waste money chasing “important” people. And it worked. The pass-around effect doubled the number of people who saw the Brady Campaign’s ad. They paid for 22,582 hits and received an additional 31,590 for free. Another campaign they ran for the Oxygen network quadrupled the audience size, adding 23,544 hits to the initial 7,064.

Neither was, technically, a viral hit. Neither passed the disease threshold, where the meme spreads exponentially and engulfs the mainstream. “But you can double your impact, which is still pretty good,” Watts says.

The ultimate irony of Watts’s research is that, if you really buy it, the most effective way to pitch your idea is … mass marketing. And that is precisely what the wizards of Madison Avenue, presiding over our zillion-channel microniche market, have rejected as obsolete. “But that’s the thing about magic,” says Watts. “If it sounds too good to be true, it probably is.”

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A few slides to layout the principle of different feedback loops between your online community, your site, contributors, readers and other blogs and communities. Any feedback?

…And thanks to tweet-feedback from Jenny Ambrozek (@sagenet) for the wider context around the power of feedback loops – see the Fast Company article on how Ning is using this concept (what they term a ‘viral expansion loop’) to great effect. [I'm currently at the British Computer Society at Covent Garden, so looks like I'll be reading the print-out over lunch].

PS: It’s also a key way in which the world’s biggest social network site Facebook, by implementing the ’status update’ feature, managed to rapidly grow its membership, as I outlined in a recent post. In other words this is a very powerful tool if done well, and with something people want. Anyone want my viral loop consultancy better get in touch quick as I’m off to see a London-based social media agency about this on Thursday!

In the meantime I’ve ordered Adam Penenberg’s book ‘Viral Loop’ (see the Amazon widget on my homepage to order a copy) after a ‘winning streak’ of blog posts on the power of networks & feedback loops led me to his virtual door. If you fancy creating some feedback loops, or plain user flows for that matter, I’ve tracked down what appears to be a useful site: Product Planner. It allows you to create your own viral loops and check out some that have already been created.

And of course I did a very quick search today on Twitter on the key phrase ‘viral loops’ which unearthed this gem of a slideshow, from Josh Jeffreys (Interactive Creative Director at BusyEvent) which provides (in his words) an overview of how to build applications that have built-in mechanisms for driving users to recruit additional users through normal use of the application. Look out for the new acronym ‘UDU’ (users drive users):Viral Loops: Making Self-Marketing Apps

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A great example for charities on why social media is both scary (you can lose control of the message) but also powerful (losing control is OK), from an example of a Greenpeace campaign over naming a whale. ‘Mr Splashy Pants’ was the name over 70% of people online wanted, but it wasn’t what the charity wanted people to choose. Who won the day? Please see below…

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Wayne Gretzky-Style ‘Field Sense’ May Be Teachable http://shar.es/m3E8W An application to social networking influence is my thought. Cheers!

My tweet today (above) follows my last blog post on the importance of location, rather than the number of connections, in determining an individual’s influence: “we may have got too focused on valuing networks in terms of who is the best connected. In fact the most influential person in the network comes down to location, rather than connections,” according to the research paper ‘Identifying Influential Spreaders in Complex Networks’.

In other words if location is important, and if networks are dynamic, then maybe you can get better at being in the right place at the right time to maximise your influence? Perhaps the sports science of ‘field sense’ has something to offer here to online social networking strategy? It’s just a hunch for now.

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A recent research paper suggests we may have got too focused on valuing networks in terms of who is the best connected. In fact the most influential person in the network comes down to location, rather than connections, as outlined in this blog extract:

The importance of hubs may have been overstated, say Kitsak and pals. “In contrast to common belief, the most influential spreaders in a social network do not correspond to the best connected people or to the most central people,” they say.

At first glance this seems somewhat counter-intuitive but on reflection it makes perfect sense. Kitsak and co point out that there are various scenarios in which well connected hubs have little influence over the spread of information. “For example, if a hub exists at the end of a branch at the periphery of a network, it will have a minimal impact in the spreading process through the core of the network.”

By contrast, “a less connected person who is strategically placed in the core of the network will have a significant effect that leads to dissemination through a large fraction of the population.”

In some ways though this sounds little like the maxim about being in the ‘right place, at the right time’. Certainly from my own experience this seems a worthwhile approach, rather than growing the number of connections in my social network. I suspect it may help if you (to use another saying) ‘keep your eyes and ears open’ to achieve this too!

Download: Identifying Influential Spreaders in Complex Networks (PDF; 3mb). Ref: arxiv.org/abs/1001.5285.

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To value your own online network why not try the ‘Facebook Visualiser’ tool created by Sebastian Van Sande below to to graphically explore your Facebook connections?

“You can use it to see how all your contacts are connected to each other, and in the process disclose unknown common friends. Other FOAF (friend-of-a-friend) disclosure would be interesting, but unfortunately, the Facebook API doesn’t include this important bit of data.The tool allows filtering your network by Gender and Relationship Status (single, engaged, etc). You can also choose to see the inner connections of your Facebook network and play with the distance between nodes (friends), ” says Sebastian.

There’s also some fun tools out there for Twitter, such as TweetValue. Sadly my profile wouldn’t even buy me a second-hand Buick!

I see the social network for business Xing has created a Facebook api which also helps you value your network, though with only 136 fans that hasn’t really caught ‘fire’.

Of course if you get bored of these tools you can get serious and look into some of the theories about network value in a wider sense, as in the case of the Forbes article ‘How To Value Your Networks’ which gets into “Beckstrom’s Law”:

“Here’s an example: Say you purchase $100 worth of stuff from Amazon each month over the course of a year. You could probably buy that stuff offline for about the same price, but you might pay extra for gas to drive to the store and an opportunity cost for your time. If the brick-and-mortar commerce cost amounted to $50 a month on top of the $100 you spent on books, then the value of Amazon’s network to you would be $600 a year. Subtract from that the cost of connecting to Amazon’s network, perhaps $40 a month for an Internet connection and computer hardware, and you have a value of something like $120.

“That’s the value you get from Amazon’s network. Add up that amount across all Amazon users, and you have the total value of Amazon’s network.”

And here’s the catch – at some point more network members actually negatively impacts on the network’s value:

“Beckstrom says that network value should be a big concern for social networks like Facebook and Twitter, which all want to scale to massive numbers of users. Since users are typically concerned only about how much the network is worth to them, there can be an inflection point where suddenly each new user makes life harder for existing users. That’s where Bill Gates comes in. For him, the value of Facebook’s network decreased with every new user who sent a friend request his way. The idea contrasts with a popular assumption called Metcalfe’s Law that values networks based on the square of the number of users.”

Does this predict the eventual demise of Facebook? Let’s suck it and see, I think. In the meantime if you are in the business of online social networks check out some of the ideas already patented thanks to the Xyggy Patent search engine. For example, check out Jaime Solari’s invention which provides a method, system and program product for calculating relationship strengths between users of a computerized network.

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Really liked the link made in the fourth programme of the BBC’s The Virual Revolution between Norbert Wiener’s feedback loop for anti-aircraft gunners in WWII (ie breaking down the division between people and systems, to allow gunner’s to hit their airborne targets) and the radical impact of the status updates within Facebook (and the likes of Twitter…) on driving the internet revolution.

So here’s my question. What would happen if you applied fighter pilot military strategist John Boyd’s concept of “the decision cycle or OODA Loop, the process by which an entity (either an individual or an organization) reacts to an event. According to this idea, the key to victory is to be able to create situations wherein one can make appropriate decisions more quickly than one’s opponent” (see wikipedia page) to understanding of how *we* interact online?

I wonder if anyone’s applied this to produce an effective counter-cyber warfare strategy, as I can see the ‘fit’ from a theoretical point of view? [pause while *we*make a quick check..] oh yeah, see here for example as part of the University of Washington’s resource page on cyberwarfare.

More practically perhaps I wonder what would the OODA loop mean in explaining differing peoples’ actions online in the context of the BBC programme’s ‘Web Behaviour Test’ experiment?

Of course on a more practical social media level I have already blogged recently, thanks to HP Labs paper, on the value of creating good feedback loops with your top contributors:

This paper demonstrates that submitters who stop receiving attention tend to stop contributing, while prolific contributors attract an ever increasing number of followers and their attention in a feedback loop.

We demonstrate that this mechanism leads to the observed power law in the number of contributions per user and support our assertions by an analysis of hundreds of millions of contributions to top content sharing websites Digg.com and Youtube.com.

Download:  Feedback loops of attention in peer production (PDF; 0.5 mb).

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