Yet, if you become too complacent and assume your advantage will last, then that’s when competitors will most likely swoop in and fix all your mistakes. Along with ROI, I’d say the biggest factor in a lot of startups’ success is product improvement and development. Listening to people who are interacting with your product (especially the first users, since they are the Innovators who will spread the word about your service).

And, Jesse, I completely agree. Going “viral” is overrated in the sense that it does not equal out to profit always. And, plus, a lot of things that go viral didn’t even mean to go viral. I witnessed that firsthand and was unprepared.

Yeah, I think people people see “going viral” as an unequivocal good. Everyone who responded to the article latched onto my talk about operational costs, which was the weaker objection, so I’m glad you spotted the stuff about demographics.

A viral process is darwinian — it selects the users who are best at propagating the virus, not the users who are best at monetizing.

There’s at a non-zero chance you wind up with a huge site filled with users who won’t pay you one red cent.

Just read your article. Awesome stuff! First time I’ve heard the concept of why “almost viral” can be better than viral (viral coefficient 1 or greater). Makes a lot of sense that you’d want to control demographics etc. For example, if you have a storage cost associated with your viral product and a 1% upgrade rate to a premium version, part of your acquisition cost is paying the storage cost for the 99% of people that don’t upgrade. It’s hard to make this math work. But if you have a 4% upgrade rate in certain geographies, you can focus your marketing dollars seeding these markets… The case is generally even stronger for an ad supported business where CPMs are much lower in 3rd world countries. I can’t wait to dig into some of your other posts. For anyone else that wants to read the article, it’s here: http://20bits.com/articles/almost-viral-a-hybrid-acquisition-strategy/

Sean

I wrote an article last week about using almost-viral growth to lower your cost of acquisition without hitting the viral gas pedal, here: http://20bits.com/articles/almost-viral-a-hybrid-acquisition-strategy/

That strategy seems to dovetail nicely with what you’ve written here about building out your paid channels before accelerating your growth to the point where the competition takes notice.

Do you have any thoughts about that?

Best,
Jesse

I just wanted some clarification on this article. Are you looking at web 2.0 and other sites that don’t charge customers? I run a web 2.0 site and I would have a hard time imagining how you can measure the ROI of paying users. Web 2.0 sites only gain power and market value if there is a critical mass of passionate users. Most likely the users you pay will not be passionate users and may no longer use the site when no longer paid. But what they might establish is a sense of community and create initial content. This could encourage passionate users down the road to get involved. Measuring the ROI of these paid users will be very difficult because the benefits of paying users will not be seen for a long time.