• Rana

    This is an awesome presentation! Summarizes viral acquisition very well.

  • Seth

    Great presentation on the critical factors for viral acquisition.  Along similar lines, I found this paper about Plaxo’s efforts to optimize the viral equation very informative:

    http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.137.6484&rep=rep1&type=pdf

  • http://getabl.wordpress.com/ markslater

    Thanks for this – very insightful.

  • Ccolehour

    Cycle time…key idea. Like the numerical effect of monthly vs. annual compounding. Thank you.

  • http://twitter.com/tomeduarte Tomé Duarte

    Was the spreadsheet shared?

  • http://www.myindustry.ir Myindustry

    Great slides ! Great description ! the most important factor were not the one that i expected ! Thanks again …

  • Yesuifen20

    Summit, Boston, Sept 2011.

  • Anonymous

    David, thanks for the helpful framework.  In my startup, it’s hard to reduce our viral cycles to a certain number of “invites” in a particular “cycle time.”  I’m thinking of a new user more like an investment that spits out cash flows over time.  We have both active and passive sharing that broadcasts customer activity out to their social graph.  And different groups of customers seem to generate different levels of sharing over time — in the simplest case, “trial” customers come for a couple days and leave, and “subscriber” customers stick around and stay engaged.  In that sense, I’m thinking the “invites” or “impressions” are likely a function of time as well as conversion rate.  

    Have you written or read anything taking this analysis to the next level of sophistication?  Do you perhaps think that may be beyond the point of diminishing returns for most businesses?

  • http://www.forentrepreneurs.com David Skok

    It should be fairly easy to model this using an excel spreadsheet provided you can populate the figures for how those invites get sent out.
    The primary value in modeling something like that would be both forecasting, and also to look for insights on where to take actions. I suspect for most businesses, there will not be substantial new insights beyond those discussed here. i.e you are at the point of diminishing returns unless you care about forecasting.
    I hope this helps.

  • Yesuifen20

    and how to create and optimize viral marketing campaigns or viral products.

  • Yesuifen20

    Sept 2011.

  • Anonymous

    Great Post for other startup/tech related articles go to http://www.legendarymoves.com

  • http://www.feastie.com Valerie R. Coffman

    This formula is naive for two reasons: 

    1. It doesn’t define what makes a “customer”. If the definition of “customer” is anyone who has ever used the product, even once, then this is a good formula (aside from the second issue treated below). But a customer who has used a product once and never returned doesn’t mean anything in terms of generating current or future revenue. A better measure is the number of *active* users. To keep track of this, one must consider a loss rate at every cycle. If ‘L’ represents the fraction of new users who are lost at each cycle after using the product once, you can replace ‘K’ everywhere in the formula with ‘K-L’.

    2. The formula assumes an infinite addressable market. With the formula as it is given, it wouldn’t take that many cycles for the number of customers to exceed the population of the earth if ‘K-L’ is greater than 1. The true number of customers at time ‘t’ will plateau when the addressable market for the product is saturated.

    Considering both these points, the formula should be

    Custs(t) = Min ( Custs(0) * (K – L) [(t/ct + 1) - 1] / [K - L - 1] , [Size of addressable market])

  • http://linkedin.com/in/vibhorj Vibhor JAIN

    good point Valeria… but I think in this specific context you mean to say “L” represents % of “new” user that “don not” send invites to potential new user
    VS. the “active users”

  • http://linkedin.com/in/vibhorj Vibhor JAIN

    David, can you explain a bit more please what do you mean by “cycle time”

  • http://www.forentrepreneurs.com David Skok

    Sure. The cycle time is the time that it takes to go through the viral loop. The viral loop is shown in the article, but is the series of step from visitor discovering your application/game/etc., to them becoming a user, then inviting their friends, to their friends becoming visitors, and then signing up as users themselves.

  • http://www.forentrepreneurs.com David Skok

    Valerie, you are right, the formula did not attempt to model that situation. My goal was not to build the perfect formula as there are a lot of complex additional factors to take into consideration. The goal was simply to help make people aware of the role that K and ct play in viral growth.
    It would be very interesting to build a more accurate model. Right now I don’t have the time. Your adaptation of the formula may cover it the churn issue, but I haven’t validated the math yet. But thanks for adding this!

  • http://www.sismebebekal.com/ şişme bebek

    Great review ;)

  • http://www.touristlink.com/ Touristlink

    Its interesting that as the number of users increases so does the dropout rate so that to maintain a steady growth rate in active users you need to actually increase virality over time

  • http://www.matthewslight.com Matthew Slight

    Quite possibly the best set of slides I’ve seen in a long time. Great analysis.

  • http://www.forentrepreneurs.com David Skok

    Thanks Matthew!

  • http://www.matthewslight.com Matthew Slight

    I have just spent the past hour writing up lots of ideas on the back of this to my co-founder at http://www.eatsocial.net

    We are currently looking at ways to make our social dining service go viral (think meetups in restaurants).

    And by “go viral” I mean grow customer base at a fast yet controlled rate of expansion. The formulae in your slide should help with that.

    It was actually your other blogpost on CAC which brought me to your site (http://www.forentrepreneurs.com/startup-killer/; this was also extremely helpful. We are a B2C service so some of the business parts / terminology didn’t match up but I could draw the lines.

    Matrix looks great. Needless to say we’re working on customer acquisition so right now we’re what you’d call pre-revenue I guess.

    Do you have an early stage partners or contacts in London, UK?

  • http://www.forentrepreneurs.com David Skok

    Unfortunately not. I have one friend in a UK VC firm, so if you’d like to email me an exec summary or investor slide deck, I’ll be happy to forward to them.
    Best, David

  • bhuemer

     Hi Valierie,

  • Jose

    Sorry David, but I think your formula in slide 9 is not correct.

    You said K = i x conv%

    But I think that K = i x conv% / Custs(0)

    Isn’t it?

  • http://www.feastie.com Valerie R. Coffman

    I’ve done a lot more thinking on this since my earlier comment. I’ve determined that “viral coefficient” (as it is used here) is poorly defined and that the dependence on “cycle time” is an artifact of some of the assumptions in this model. Mainly, the assumption that every user has the same cycle time and that the cycles happen in unison basically turn the “cycle time” into a compounding interval. This is why it becomes the most important factor in this model. But in reality, different users have different cycle times and they obviously do not happen synchronously. To model that, you’d need a viral coefficient that represents an average rate of invitations per unit time. More details are here in my blog post: http://datacommunitydc.org/blog/2013/01/better-science-of-viral-marketing/

  • Mohammad Kambiz Fatehi

    I think that this good news is very important for you.

    Change the world with Kurdistan’s industrial revolution

    Kurdaneh, by Kambiz Fatehi: In the world to producing and
    making one megawatt power in different power plant on average needs to huge
    investments from seven hundred to one million dollars for countries to provide
    their needs such as industrial energy, agriculture and urban consume. Although,
    we must taking high expenses of fuel consuming of this power plant into account.
    Now, with invention of new and clear energy of Kurdistan’s
    power which is producing through the modern method of sank turbine in seas and
    dams water and new formula (E> P+1at) by me everything is changed. Although
    the mentioned science were accepted by many expert and technical people, but as

    I told and tell, this invention (Kurdistan’s
    power) in all research center in the world is defendable because it is
    formulized based on applicable hydraulic. Thanks to this, most extra expenses
    in nuclear and fossil fuel power plant in the world will be reduced and removed
    or this old power plants will be replaced with the new science. Also, scientist
    will face to a new method in the science of hydroelectric power. Thus, there is
    no damage to the environment, because this system will be placed in created
    space with different geometrical volumes pipe in deep of water. Then, they
    scientifically will connect to the turbines and generator. So, the result will
    be whole a lot of energy which produced by the play of air and water together
    and with the optimum use of above formula power cycle production will be
    complete. And, if this new technology will be installed in dams, even a drop of
    water won’t be wasted. Namely, with the Kurdistan power invention it’s possible
    to make one dam to thousands of dam in it and making advantages of all head
    statistic potential of these self-made dams water in just one dam and getting
    energy hundred time more. Kurdistan power has
    a great influence in the world which no one will believe and by passing time
    people may little by little believe this incredible source of energy even the
    readers of this paper.

    The simplest effect of Kurdistan
    power in the world is, planning of all countries for remove all of their fossil
    fuel and nuclear power plant. Because, they know the cost of maintenance of
    this power plant and the risky function of it is too high. Also, getting energy
    in this power plants jeopardize the environment of countries and the world such
    as, water pollution level, air and soil also, this pollutions is the main
    reason of most kind of animals and plants extinction.

    So, Kurdistan powers
    indeed change the perception of the world toward the simple and normal
    background of hydroelectric. In this method, high level of energy can be
    obtained easily from the dams and seas compare to the past methods and use
    other science for the new method of hydroelectric easily. Moreover, beside
    preventing global warming, most of the time it reduce build and installment of
    power transition line and it can lead all todays valuable and basic materials,
    such as, oil and gas industry toward the specific valuable production and
    related to the energy. Basically, the nice feature of Kurdistan
    power is use of several parallel and set turbines in a float and balance system
    and cycle. Other feature is the simple ways of maintaining of this
    installation.

    The role of Kurdistan power in its economic is very
    important because not only, it has an exclusive place in transaction and world
    energy map, but also, with this invention as a world clean energy pole it
    become the one important reference and pattern in the world. Further, with this
    invention it has an exit strategy to free itself from the problem of single
    production (oil and gas) through presenting policies, transmitting science and
    knowledge of design and build of this based water (Kurdistan’s) power plant and
    joins the developed countries and in action with this technology, beside
    earning privilege of reference country, it has a vital role in all energy
    formulas in the world and within the world markets it can get benefit from all
    production of in need countries to the Kurdistan power as an exclusive
    privilege of its achievement in improve and develop of Kurdistan. In a way that
    even most of developed countries be in a dream of this place. Of course have a
    look on practical values of this extremely valuable technology; its values must
    be mentioned from four aspect of social, cultural, political and especially
    economic by scientists and experts in the future which is out of the mood of
    this paper. This is the latest benefit of Kurdistan power invention, and with
    necessary privilege achievement from foreign governments and companies,
    cooperation and participation acceptance with them, and sharing the benefit of
    these companies it can receive hundred times more benefit from present budget
    of Kurdistan. Also, with creating a mass job
    opportunity in the world it will be complete. And Kurdistan
    in a short distance will be a developed country. Thus, energy price will go
    cheap in Kurdistan and in the world certainly, so, unemployment will fall or
    destroy and you won’t find anyone who is homeless or suffer from hot or
    coldness. Also, with should say, as air pollution parameters fall down or
    abolish, humans food and grain, agriculture will improve and FAOs concerns
    which being a serious problem will drop. At last world health and hygiene will
    improve and get better.

    At the end I must explain that, all world formula after
    the Kurdistan’s invention must be revising and
    define by scientists in different science again. Because, the thing that is
    important is the humans knowledge and notion effect which is concealed in
    mentioned practical hydraulic formula. Undoubtedly, Kurdistan power invention
    must be called Kurdistan industrial
    revelation. Because, this invention not only, can provide an endless source of
    energy in the world, but also, it bring the peace, love and friendly massage
    and a gift from Kurdistan to the world. Actually, Kurdistan
    power demand a world far from the war and violence that, found on the bases of
    peace, respect and reconciliation to all nations.

    The new formula is: E>P+1at

    Thanks and best regard

    Kambiz Fatehi

    A Kurdish
    inventor has found a new method for electricity production under water

    Inventing
    electricity is supported by Kurdistan Region Government and it is decided to be
    implemented and at the same time a committee has been formed by the Ministry of
    Justice so to protect the legal rights of this project to the Kurdistan
    Region.

    Erbil / Wishe No3 Page16 (A Kurdish Newspaper) , by: Mohammed
    Taher.

    In Kurdistan
    still there is the problem of 24 hours day electricity, today a Kurdish
    inventor wants not only to solve Kurdistan electricity, but also via his
    invention he can liberate the world as whole from this polluted energy that
    polluted environment and leads human and animal health into danger.

    A Kurdish
    inventor, Kambiz Fatehi has found a new way for producing electricity under
    water. Although this kind of electricity doesn’t cost much and it doesn’t have
    any bad effect on the environment. This invention has been supported by council
    of ministers, ministry of electricity and Salahaddin University and it was
    decided to implement it and at the same time a committee has been formed by the
    Ministry of Justice so to protect the legal rights of this project to the
    benefit of Kurdistan Region.

    Due to
    cheapness of the energy that invented by Fatehi, it is not wise from now
    onwards to drill the earth for extracting oil and gas and to continue the cycle
    of industry in this way.

    Due to
    largeness and effectiveness of this project, so many people in the government
    and universities of the region do not believe that a Kurdish person can shake
    the basics of world energy, therefore Kambiz Fatehi has tried for one year to
    go to the government institutions, the parliament and the university so as to
    understand this project and as a result of that the significance of this
    project has been increased in both internally and the world as a whole and
    implementation decision has been made.

    According to
    the opinion of Kambiz Fatehi regarding Einstein’s formula, he believes that
    Einstein’s formula negative effect on the world, but Fatehi said “I can try to
    rectify the negative effect of the world by new formula”

    Up to date,
    some countries asked this Kurdish inventor and they told him that they can
    provide him with all the requirements on the condition to implement the project
    in their countries but he refused them and said “This project is invented by
    Kurds and it should go down from Kurdistan to the world and its income should
    be for all Kurdish people”

    Kambiz Fatehi
    was paid his attention to all kinds of movement of nature so as to find the
    best way to obtain clean energy, but one day by chance he looked an accident in
    a film, then he got the idea of this invention. In this film a submarine body
    holed, then sea water entered into it quickly as a result of that life of
    persons in the submarine will be under threat so from that time Kambiz thinks
    although this idea was very simple and primary but Kambiz takes benefit of his
    experience in the field of purifying water and turbine and based on other
    sciences. Later he developed the idea and reached to a stage that he said “ I
    found the cheapest way of electricity production. It is very cheap that I can
    say it is free.

    According to
    Fatehi’s opinion, Kurdish people via its invention will be the superpower of
    the world & Kurdistan and will be the
    owner of this science and the world as a whole and they have to buy this science
    from Kurdish people.

    Due to the
    cheapness of this energy, Kambiz thought it is not wise to drill the ground for
    extracting oil & gas and the cycle of industry rotates in this way.
    Constructing atomic station for producing power that humanitarian & environmental
    disasters have happened may be stopped from now onwards. 80% of global
    pollution returns to human being and affects them by spreading breath, eye,
    heart, brain, skin and some other diseases. According to world statistics every
    year three million people die due to pollution of environment and climate.
    Although the United Nations has made some limitations for industrial factories
    and vehicles so as to reduce the pollution of environment, but according to
    Wikipedia website statistics, for each five persons in the world three of them
    are under threat of polluted air.

    According to
    Kambiz’s idea Einstein’s formula for energy affects world badly, but today this
    Kurdish inventor say “I try by new formula to rectify the world”. According to
    Kambiz’s thought, this invention can be a basic for thousands of inventions in
    the field of industry and lead industry into new clean way and to serve the
    humanity positively.

    As Kambiz said
    oppressed Kurdish people via this invention will be one of the superpower
    people of the world. Kurdistan will be the
    owner of this science and the whole world will purchase this science from
    Kurdish people. Today Kurds in Iraq
    are happy for finding out (90) milliard barrels of oil under its land. Kambiz
    believes that if this becomes the source of clean energy in the world, then it
    will be rich one thousand times than its oil & gas, in spite of that all
    Kurdish people will be respected throughout the world because their country
    becomes the source of healthy people.

    If the Kurds
    do not get benefit from this opportunity and not register this invention under
    their name, then other scientists of the world have similar idea and then
    change this idea into construction, then Kurds not only be the owner of this
    wealth but also its oil & gas resource cannot buy by good price so as to
    depend on it. This is not first invention of Kambiz Fatehi, but also he has six
    inventions more that one of them after studying by scientists in Iran has been
    awarded a certificate. Kambiz Fatehi is originally from Sina
    City in eastern Kurdistan
    and he is the specialist of water purifying. He has been worked in this field
    for 23 years. As he said that he loves environment and all his inventions are
    for protection of environment, human & all other creatures. Three of
    Kambiz’s inventions related to electricity production in a clean way. One of
    his inventions related to prevention of dust fall that registered in Iran .
    He also has two other inventions regarding atomic environmental protection
    field that one of them protect atomic stations and the other protect people
    from atomic natural sources.

    Thanks and best regard

    Inventor Engineer

    Kambiz Fatehi

    Email:
    abfa1348@yahoo.com

    The new discovery of an amazing new clean energy formula ( E
    > P+ 1 at ) from water and its effect on World Economics and Politics!!

  • Peter Son

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