Going Viral

The viral case is somewhat different than a paid engine of growth. While this is free from a financial point of view, it’s expensive in terms of time. The idea is to create content which people naturally want to share. Once you have their attention, you include some kind of call to action which then turns into a conversion , like a sale, or a micro conversion, like getting an email subscriber.

virus.laura billings.jpg

virus.laura billings.jpg

Once people hear about your idea or your product, then they decide whether to buy it or not, and also whether to share it or not. Nowadays, it paradoxically seems easier to convince people to buy your product than it does to get them to share it (at least for me). 🙂

Matthew Lieberman, author of “Social: Why Our Brains Are Wired to Connect” and professor of psychology says:

We always seem to be on the lookout for who else will find this helpful, amusing or interesting, and our brain data are showing evidence of that. At the first encounter with information, people are already using the brain network involved in thinking about how this can be interesting to other people. We’re wired to want to share information with other people. I think that is a profound statement about the social nature of our minds.

The main reason viral growth tends to be a massive growth engine is the fact that once you get beyond a certain tipping point, the sharing will be so extreme that it reaches disproportionately many people. Numerically, if you see it as a coefficient, it will be multiplied with each person (or step), and that number can quickly get disproportionately large.

Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market.

My high school math teacher had a good example of this compounding effect. Would you prefer to get $1 mln today, or one penny today, two pennies tomorrow, continuing to double that amount for the entire month? This is, of course a trick question, designed to put teenagers in their place. The compounding penny option ends up being a much larger amount than the initial million.

The good thing about a viral growth engine is that it’s pure profit. As you don’t spend any money on building initial awareness, any revenues you do make are fully yours. If you do have financial constraints initially this can be a good place to start.

The main drawback of viral growth is that results tend to be highly unpredictable. Depending on how effectively you make your content unique and engaging, people will be more or less willing to share it. More often than not, all it takes is one share from someone with a large audience, and it will give you a big spike in traffic. It’s just that it’s difficult to get those initial share, particularly if no one knows who you are.

Manufacturing Engagement

The hard part is writing content good enough that people want to share it with their friends. To some extent, you can pre-test this by using what Andrew Chen’s twitter technique. He writes potential headlines as tweets, and then sees if anyone interacts with it. Once the idea is proven, via a favorite or a retweet, he uses that as a basis to write a longer piece on that topic. As a result, his growth hacking essays tend be highly focussed on his target audience’s needs. As a result of forwards, he effectively “clones” his existing audience. The content people forward tends to attract other interested in the same type of content.

Another approach is to use a service like “whattowrite.org”. This is a website where you can create a backlog of writing ideas, and then have your exisiting audience vote on them. This way you are naturally spending your time writing things which is attractive for them. It’s effectively a vetting and prioritization system for content, similar to prioritizing features in agile software development.

Choosing Influencers

One way to approximate who might be able to reach your customer is using metrics like Klout which is some kind of a weighted average based metric of the amount of influence one person has, based on the raw numbers of followers, fans, and friends they have on social networks.

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So for example, Noah Kagan has a guest blog post on Tim Ferris’ blog about launching a product. Kickstarter is his platform of choice. He needs to get the word out quickly, but doesn’t want to be nagging lots of people many times. He’ll quickly lose friends that way.

In fact, he correctly identifies that the 80/20 distribution probably applies here. As a result, he knows that a small number of his existing contacts weild a large influence on social networks. He explicitly goes through all of his existing emails he’s ever received, and ranks the senders by Klout score. This narrows his focus to a handful of people who actually can make a big difference, with very little additional effort, simply because they already have a large audience.

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By spending a lot of time and effort on the people who actually can make a difference, Kagan manages to reach a large number of people very quickly. The actual details aren’t that important. Whether you set up joint ventures or figure out how to draw in big influencers in other ways, the principle is the same. Treat people in your network with disproportionate influence well, as it doesn’t take much additional effort from them to reach a lot of people.

Malcolm Gladwell points out that there are three different types of such influencers. Mavens tend to like sharing good deals with their numerous friends. Connectors like to share friends from unrelated spheres for mutual benefit, simply because they themselves have disproportionately larger networks than most people. Salespeople are exceptionally good at persuading others to their ideas.

From their point of view, though, a common issue is that they are concerned about their audience. Typically, someone who cares about his or her audience, will filter exactly what is recommended. In fact, that’s probably one reason why people follow them in the first place! Such an influencer will only share something “share-worthy”. It can’t look like spam or junk mail. It ideally is unique and engaging. They often serve as curators for their audience.

Influence Path Analysis

There is a deeper layer here, though. What’s actually the most useful is not really just looking at your target market, but also seeing who influences them. In particular the final buying moment tends to be driven by a handful of close people which sway their decision towards one product or another. This comes from PR. It’s called influence path analysis.

By mapping out the path your customer takes when buying, you can identify the influencers which are actually important in their buying process. The key is to work back from a purchase. Ideally this will be something you can get from your existing customers, right after they purchase.

Understand how your customer actually makes their decision to buy will help you create a similar environment for future customers. This type of analysis can be done without necessarily having customers, as it’s more of an attempt at empathizing with your prospects. You can then iterate on it, as you speak to actual customers later. If you know who the main influencers are in your niche, from the point of view of your customers, then you can use that to your benefit.

On Hatching Chickens, Eggs and Startups

industrial_chicken_farm.socially_responsible_agriculture

industrial_chicken_farm.socially_responsible_agricultureYou may not have not realized it, but launching a new product-based startup requires that you navigate a number of chicken-and-egg problems successfully. Which comes first? While seemingly logical, there are a number of preconditions which you need to meet in order to stop being a startup and become a real business.

I once visited an industrial chicken farm. I had a friend who bought a chicken farm with some investors, hoping that he could turn it around. As it was initially in a state of disrepair, his primary effort focussed around re-establishing a clear marketing and promotional strategy. The original owners only thought of themselves as chicken guys. As a result of that mindset, they had inadvertently positioned themselves as commodities. They could only compete on price.

In fact, he discovered, not only were there 39 different types of chicken-each serving a different purpose either when sold in retail or for industrial purposes, there were a number of things he could do with the eggs. One of the most profitable he discovered at the time was to sell dried eggs as an intermediate component of various baking mixes. For example, pancake mix is just flour and dried eggs. The rest depends on what you do with it. He ended up turning it into a 12 million dollar business.

As a business founder, your primary aim is to make money with your new product idea. Unfortunately, if you don’t have money to invest, you can’t make more money. That’s the first big problem you need to solve. What comes first then, the chicken (the earnings) or the egg (investable product idea)? That’s just the beginning of your worries.

Here are a handful which I’ve experienced both in my previous attempts to launch products, and from my discussions with entrepreneurs:

Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market.

  • don’t know how much time to invest in a specific idea, if you don’t have much resources and you have mouths to feed
  • don’t know who your clients will be, so you can’t figure out the most common need in a particular niche
  • don’t know how to reach buyers, because you haven’t decided who they are
  • don’t know what to sell, because you aren’t sure what will be attractive enough for people to want to give you money
  • don’t know how to position yourself against competition, because potentially anybody is your competition (since what you sell defines who you’re competing against)
  • don’t know how to approach potential investors, because you don’t feel confident or clear enough about your idea
  • don’t know how much money to raise to implement your idea, because that depends on the scope of your idea
  • don’t get customer feedback, because you don’t have any paying customers yet
  • don’t know how to describe your product attractively for prospects, so that they are instinctively pulled towards your idea
  • don’t know what to charge, because you don’t know what you’re selling yet: units, transactions, monthly recurring service, spread, upfront, freemium
  • don’t want to hire more staff to free yourself up to do more valuable things because you don’t have enough money

There’s a very simple way out of this complex mess. To succeed as a business founder, you need to make money first. Ideally, you can re-invest this money in the business.

To get money, you need a sale. For a sale, you need a prospect. To convert a prospect, you need an offer. The offer is the starting point, then, of all business ventures. If you have a powerful offer, you can then proceed to figure out the remaining pieces based on trial, error, and experimentation.

The beauty of starting with the offer and dashing to the sale is that you can re-invest the revenues you earn into improving the offer. Revenue is the lifeblood of every business. Once you have revenues growing, you can redirect the revenues to invest in the business to help you improve the offer. In the case of a product business, this will typically mean actually building out the product.

Why not start with building your business systems around that? Try iterating on that as quickly as possible.

To summarize, if you want to break out of the chicken-and-egg logical loops, here is the sequence you need to iterate on quickly:

offer -> prospect -> sale -> money -> improve offer

Once you get money, reinvest it in the offer. Rinse and repeat.

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Rising Above The Noise With A Story

Imagine you lived in Paleolithic times. Your name is Blug. You live in a cave. You’ve used fire for years, to cook game that you’ve caught or to prepare the hide in order to turn it into leather. In any case, you know it’s hot. You know fire burns.

fire

fireOne day, as you’re sitting in your cave with your friend Geg, the fire lights a dry log lying nearby. The fire spreads quickly. The pathway to the cave entry is blocked by this burning log.

Geg suggests you have three options:

  1. wait
  2. try putting it out
  3. jump over the flames

Initially, you decide to try putting it out. You throw a pelt on the flame. It looks like it dies down, until…wait…the fur on the other side of the pelt catches. The flame grows even higher.

It’s getting harder and harder to breathe because of the smoke. You’ve moved everything else away from the fire in order to prevent it from spreading. If you wait any longer, you’ll start choking because of the smoke.

Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market.

You are left with one option. The only way out is over the rising flames. Having suffered 2nd degree burns as a child, Geg’s terror increases as the hypnotically dancing flames get larger.

You’ve noticed that waving your hand over a campfire feels warm, but if you move it quickly it doesn’t burn. Based on this observation, you decide to take two hops and lunge forward over the conflagration. As you fly through the air, you feel the heat all around you. You raise your knees up high, minimize contact. The jump itself lasts a split second. You land on the other side of the fire, intentionally falling forwards to avoid any contact. You get up immediately, a bit bruised but thrilled you got over the fire without getting hurt.

You yell out to Geg, “Jump over it! I’m fine! Just hold up your knees and jump as far as you can.”
Unconvinced, he counters, “What do you mean? I’ll get burned again.”
You respond, “As long as you go over it quickly, you wont get hurt.”

Geg sucks in his breath. One, two, and clears the fire lifting up his knees, just like you. He lands cleanly on the other side, grinning from ear to ear.

“You were absolutely right,” he proclaims, as you emerge from the mouth of the cave. “You saved my life.”

Afterwards, when Geg tells friends the story of how you discovered this new fact about fire, they repeat it to their friends. The story travels far and wide. Other cavepeople enjoy hearing about your tale of courage, learning about this particular aspect of fire in the process. Before long, you become well-known as the One Who Discovered Fire Jumping. It’s how you’re introduced, whenever you meet anyone new. This story of struggle, this moment when you almost lost your life, enhanced the rest of your life and that of your fellow cavemen significantly.

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Fire Jumping 101, or Why Stories Matter

Storytelling, like many things which are a part of our everyday lives, has been around with us since prehistoric times. It was a key survival skill for human beings, humans as a race. The fact that we could share information in the form of stories meant that knowledge traveled among people. Thanks to stories we learned vicariously, not only from personal experience. Stories made it possible to build and spread knowledge.

Imagine that your product idea gives your customers the power to jump over fires, something they never believed they could do or knew was possible. Or probably, you have some other main benefit in mind. Packaging it into a story will make it easy to explain what it is and how it works, even if it sounds incredible at first. A good yarn helps your product find a context.

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Powerful stories amplify the effectiveness of product teams more than anything else. This is true at the level of the company’s story, at the level of the product’s story, and especially at the level of the offer. Good stories build on one another. For example, the tagline makes sense when you know the company’s story. Both communicate the values of the company as well as product messaging. Most importantly, it helps the product find or create a community for which it’s appropriate.

Start at the level of the prospect’s story. There are five main benefits you get from focusing on the user or the product story.

1. Stories Drive Buyer Action

Stories help to organize all that’s very meaningful. As a result, they drive action. The type of action that both you and your customer want. At the super-early stages, in fact, the main action that we’re looking for is the prospect’s intention to buy.

The story communicates what you’re trying to do for your target audience. A good story gives you the same effect of visualizing or simulating the struggle and how the product solves the problem.

In Made To Stick, Chip and Dan Heath cite a study where this effect of simulating the event, by visualizing it or by hearing it in a story, gives you two-thirds of the benefit of doing something e.g., shooting a basketball.

The story itself is transferring is the experience of having done what the thing is without necessarily actually doing it. It shares the skills needed to overcome a problem. The story helps resolve the protagonist’s struggle, the user’s struggle. It is a way to plant the belief that this product will solve their problem. “A belief,” Elly Roselle observes, “is not an idea held by the mind. Rather it is an idea that holds the mind.” You want your prospect to believe that your product will help them.

In direct marketing circles, copywriters consider emotion to be the key reason people buy a product. Marketing copy, for example on a sales letter, is just stored emotional energy. Stories are an extremely powerful way to trigger or deliver the emotion needed to convince the reader to buy.

Essentially, we’re talking about the persuasive stories that the prospect wants to hear. They draw the prospect in, make them want to find out more, and eventually convince them to buy. The prospect wants to be certain that you understand their story of struggle. Only then will they consider how your product fits into their own story and can end their struggle. The great thing about stories is that they allow everyone to avoid the trap of just following mindless problem solving recipes.

2. Talk With Prospects In Their Language

Quite often people are looking for a quick fix, a quick way out, without really addressing the full issue. Without really understanding it. If you’re using some type of mindless format, technique or tip, or something, quite often that’s not sufficiently infused with motivation for you to do anything, or enough motivation for the buyer of these products to do things.

For the last 20 years or so, the amount of information has been doubling annually. That’s overwhelming and continues to be more so all the time. If you look at the number of emails or ads that you get now on a daily basis versus 10 years ago, you can see how much that actually affects you. In addition to email, there’s many other types of communications which didn’t even exist back then. Things basically like chat, text, messaging, Snapchat, or whatever else.

Most people don’t actually want any more information. They’re overwhelmed with information. When they’re trying to solve a problem, what they actually want is the belief that they’re capable of overcoming it.

The thing is, if rational facts and information were so convincing, there wouldn’t be any smoking, obesity, or other “diseases of Western civilization”. Most people who smoke are aware of what the implications are in terms of lung cancer. But, obviously, it doesn’t affect their actions. Whereas a powerful story’s message can be a catalyst, it can inspire them to introduce change.

People want some wisdom or insight into their problem. They want to be inspired to act, to do something with it. They want a better understanding of what’s going on around them, the context. They also want empathy. They want to sense that others understand who they are. Good stories give you all of these things, while dry information doesn’t. Stories make problems much easier to understand on a deep level.

3. Focus Your Team on Business Impact

You want to avoid the trap of executing meaningless to do list items. If you really understand the full story, you understand why you are chasing after a goal. Thanks to a clear story, your team intuitively understands what the end user’s or buyer’s context.

With stories, you can communicate the important details about a product without stating all the details. This refers to both how a user sees things and how your product team understands that user.

For example, if the user’s story is clear, then it’s easier for the supposedly socially awkward software developers to figure out the relevant details needed to address the user’s problem. Even if you are missing certain details, the team can fill in what’s missing.

Good stories operate on many levels: emotional, intellectual, visceral, social. By telling a good story, you have the flexibility to adjust what gets emphasized for particular audiences.

With clearly communicated priorities, it’s much easier for you to focus on the business impact of your work. The following are good ways to visually summarize the impact you want to achieve: Gojko Adzic’s Impact Map tool and Ash Maruya’s Lean Canvas.

4. Easy-Peasy Chasm Crossing

A story that is easy to understand helps you, even at the pre-launch stage, to “cross the chasm”. Geoffrey Moore pointed out, in his fantastic series of books on high tech marketing, that high-growth tech companies face a number of significant audience changes in a compressed time window. Unlike traditional companies which tend to stick to one large group of people and try to scale that way, tech startups often start out by serving the “early tech adopter” community. It’s dangerous to generalize from that audience to a more mainstream audience. In fact, this complete change in audience is an important aspect of the “chasm”. Promising products that don’t make it across the chasm stall when they could be experiencing exponential growth.

In this context, a simple story, which a five-year-old could understand, is one that will be easier to scale up. Because it’s understood by everyone, from early adopters to your grand aunt, it’s very memorable. A clear, memorable, and spreadable story that everyone understands is easier to adopt. The leap from the early guys to the mass market is simplified.

A great example of this is Apple’s byline when they were launching the iPod. Although mp3 players had existed for years, the iPod was “your whole music collection in your pocket”. That story that drove the design specs, manufacturing, and embedded software requirements. This byline also explained to users, even if they were completely non-technical, exactly what the thing did. Unlike most mp3 player manufacturers at the time, Apple didn’t stress how many megabytes or gigabyte of RAM the thing had, or other technical characteristics. Apple just drew people’s attention to the benefit mentioned above. It’s a benefit which summarized the whole point of having an MP3 player, and made having an mp3 player attractive to the target audience.

5. Rallying the Troops

The next reason why you want to have a very clear story, at the user level and when scaling up, is that it sets your organizational tone. If the whole organization focuses on solving the user’s problem, it motivates everyone. Not just the CEO. Ultimately, the customer is the primary source of revenue and profits in a business.

This way everyone understands exactly what needs to be solved. Everyone understands how to make tradeoffs. Decisions are easier when the CEO is not required to be there physically. The team would have a common language for discussing requirements based on the story. This would result in the sharing of essential information needed to act quickly.

Organizational culture just clicks into place, as you’re building out your product later. By helping to act, what this
essentially means is that, quite often, the audience becomes engaged with it. They become more involved because you’re talking about their story. They feel drawn to what it is you’re doing.