Sunday, August 15, 2010

What do Tupperware & YouTube have in Common?

I never would have realized what Tupperware and YouTube have in common had I not read the book Viral Loop by Adam Penenberg. In 238 pages the author explains how successful companies tap into vast social networks. Beginning with Tupperware the viral networks of companies like Netscape, Hotmail, eBay, PayPal, Flickr, MySpace, YouTube, Facebook and Twitter are explored and the term "viral coefficient" is used to explain how they caught on in the market place.

In the olden days we called it "word of mouth" but with the internet ideas spread infinitely faster, many times within hours. More than one viral loop company has grown so fast that its founders have been awake 24 hours a day for several days making 3:00 a.m. server changes just to keep up with demand. With a viral loop a small business can grow huge in a matter of days. It's Webonomics at it's finest.

Here are 5 quick facts I learned from the book:

  1. Viral loop businesses are web-based, free and users spread the product purely from using it.

  2. You must have a viral coefficient of at least 1 to have truly viral growth. This means for every user of your product, they tell one person each day. On day 1 you have one user and the next day twice as many - and so on. If you have 100 users, on day 2 you would have 200 users, on day 3 you would have 400 users, etc.

  3. Viral loops cannot be initiated and carried out by a marketing department. It has to be built into your product from the beginning.

  4. Be open minded when your product or service shows up or is spoofed on YouTube. Remember the Mentos and Diet Coke experiments? Mentos embraced it and enjoyed $10 million worth of free publicity and a 20% increase in sales. Procter & Gamble CEO A.G. Lafley is quoted as saying, "The more in control we are, the more out of touch we become. But the more willing we are to let go a little, the more we're finding we get in touch with our customers."

  5. Don't hold back on viral opportunities because you are afraid of growing too fast. All of the viral loop companies grew too fast and were glad to figure out ways to overcome their obstacles.