Sensing Friendster’s vulnerability, Anderson suggested they build a competitor, an idea that DeWolfe first ignored. Then he received three friend requests from Friendster the next day, and with his company withering on the vine, DeWolfe figured they didn’t have much to lose. Friendster had raised $1 million in venture capital and Google offered $30 million to buy it outright. If they could achieve a fraction of that success, they would be in business.
On August 15, 2003, MySpace went live. Reflecting the scammy background of its creators, it had what Angwin characterized as “a freewheeling ethos” that ignored conventions like copyright and allowed users to post under whatever persona they chose, unlike Friendster, which was all about user authenticity, with one’s social network of friends offering a way to truly judge someone’s character. A conflusion of happenstance changed the course of both companies. As Friendster struggled to scale with server bottlenecks and suffered backlash among users who complained about tight policing of the site, MySpace emerged as a wild and woolly alternative, partly by accident.
A coding glitch made it possible for MySpace users to insert their own HTML code onto their profiles, making them customizable. Profiles became vehicles for self-expression, adorned with colorful wallpaper and patterns, hearts, bubble dots, glitter, and smiley faces; users could also post MP3s of their favorite bands, photos, and video. This led to MySpace being discovered by a powerfully viral segment of the population: teenaged girls, who joyfully shared coding tips with one another. Because it drained bandwidth and slowed down the site, MySpace engineers proposed putting a stop to this, but DeWolfe overruled them. He realized that fighting users was a useless exercise that would only limit their growth. Let Friendster alienate its user base. MySpace would out-friendly Friendster. “Much like you could walk into my house and listen to what music I had playing in the background, see photos of my family, notice what taste I have in furniture, read my diary to find out a lot about me, a person’s profile would be the same thing,” DeWolfe says.
Not only that, but MySpace would offer users the tools of self-expression to accomplish this. The former spyware peddler, who had essentially tricked users into downloading nefarious applications, was suddenly reborn. Now he was all about transparency. This was less a philosophy for DeWolfe than simply good business. On MySpace the users would be in charge; if he didn’t provide them with what they wanted, they would simply go somewhere else. If he could retain them, the company had the potential to grow to obscene levels. “People are going to go and socialize where their friends are, and once you have a person’s friends list in a social community locked in, viral growth really happens,” he says. To foster this, DeWolfe ordered programmers to concoct as many programs for self-expression as possible. They would release an application. If it stuck, they would fine-tune it; if it flopped, they’d kill it. Such pragmatism also extended to Anderson, who ended the memory-gorging practice of plotting out people’s friends of friends of friends networks, that is, Friendster’s four degrees of separation. As he wrote on his blog, which he used to communicate with the MySpace community, at the beginning “we used a ‘network’ concept to show you how you were connected to friends. If Dave knows John and John knows Amy, then Dave could see Amy in the network. When you’d view someone’s profile it’d show if you were friends, or how you were connected to a person.”
But Anderson and his engineers could see this made it virtually impossible to scale, since “the site was slowing down trying to process this relationship each time you viewed a profile.” His solution was to become everyone’s “first friend” by default. “If a user wanted to only see a network of people they actually knew, they could just remove me as a friend.” Inserting this extra step diminished the demands on MySpace’s already taxed servers, and helped MySpace pages download ten times faster than Friendster’s. Most users didn’t care about not being able to track out degrees of separation anyway.
[ TASTEMAKERS ]
Taken with all of their other gripes, Friendster users began a steady exodus to DeWolfe and Anderson’s upstart start-up, famously illustrated by the life and virtual times of Tila Tequila, a self-described actress, model, rapper, and singer, who Time called “the least lonely girl on the Internet.” A twenty-two-year-old bottle-blond Vietnamese bombshell from Singapore who was transplanted to the States as a baby, Tequila (real name Tila Nguyen) was Playboy.com’s Asian Cyber Girl of the Month who shook her assets at car shows and in hot-rod magazine spreads. When Friendster took off, she recognized the marketing possibilities and quickly took to viewing maintenance of her online self as a full-time job. This ran smack into Friendster’s ethos, which expected that each user would actually know their friends. Not Nguyen, who collected thousands of admirers, mostly men, who visited her page to view photos of her wearing next to nothing or read her profanity-laced musings. As a result Friendster kept suspending her, which prompted Anderson to invite her to join MySpace.
At first she was reluctant. There were millions of people (read: fans) on Friendster and perhaps a few thousand on MySpace. But after being booted off Friendster a fifth time, Nguyen finally decided she would rather switch than fight. She signed up for MySpace in September, feeling, she told Time, “like a loser while all the cool kids were at some other school.” To remedy that, she emailed “between 30,000 and 50,000” of her closest friends (who could keep track?) and invited them to the party. “Everybody joined overnight,” she boasted. Well, not everyone, but she did add juice to MySpace’s virality. Aber Whitcomb, an engineer who was there from day one—and was the third person to sign up on MySpace—recalls that for the first month the site counted roughly a thousand sign-ups a day, but by mid-September linear growth had become geometric. “The more users we got, the more invites they sent,” he says. “It was completely blowing up faster and faster.”
In October, nearly two months after going live, MySpace counted 100,000 members, and soon more than 10,000 people a day were registering. DeWolfe knew MySpace had turned a corner three months after launch. “I remember being at a dinner party, maybe three months into MySpace, and someone asked me what I did, and not only didn’t I have to explain what MySpace was, the person actually said, ‘I am on it,’” he says. “That started to happen more and more. I remember specifically going out and hearing people talking about MySpace three or four times a week.”
Because DeWolfe and Anderson took pains to seed the site with tastemakers in fashion and music, they noted certain fast-growing pockets. Los Angeles was one, New York another, and a third one, which surprised them, was Hawaii. Soon the site surpassed a million users, adding 20,000 more members daily. By May 2004 there were 2 million users, and four months after that the number doubled to 4 million. While Friendster stumbled, MySpace thrived, tripling its user base six months later to almost 12 million. When Rupert Murdoch’s News Corp. bought MySpace for $580 million in July 2005, it counted 22 million registered members, many of whom were spending hours on the site every day. But Anderson and DeWolfe weren’t done, not by a long shot. A year later MySpace was home, by Fortune magazine’s count, to more than 2 million bands, 8,000 comedians, and thousands of filmmakers, performance artists, poets, rappers, models, photographers, and 100 million other social (network) strivers.
It didn’t take long for other viral businesses to glom on to MySpace, creating applications to help users more easily customize their pages. But the first true viral network to take hold was Photobucket, a photo share site similar to Flickr. While Butterfield and Fake’s fortunes were aligned with the blogosphere, Photobucket, founded by a couple of engineers from Colorado, became indispensable to MySpace because it offered space for photos the social network couldn’t handle. That’s because all of this free expression and user customization came at a cost—bandwidth—which led MySpace to severely limit the number of photos users could post on their profiles. Photobucket solved this by allowing users to link to their stash of photos. By September 2006, 60 percent of MySpace’s pages co
nnected to Photobucket as the number of visitors it served jumped to 17 million a month. It was as much a curse as it was a blessing, as bandwidth consumption consumed most of its revenues and, finding no other suitors, sold to MySpace in 2007 for $250 million.
[ YOUTUBE: A VIDEO VERSION OF HOT OR NOT ]
But the viral network to eventually outdo the viral network it launched from was YouTube, which was initially conceived as a video version of Hot or Not. Cofounder Steve Chen teamed up with Chad Hurley and Jawed Karim to create YouTube. Until the site officially went live in November 2005 after six months of public beta testing, viewing video clips on the Web was often frustrating and inconvenient. It required a user to download one of the various players available, such as Apple’s QuickTime, Microsoft Windows Media, or Real Networks. If a video was encoded to run in QuickTime but the user only had Real Networks, he was out of luck. Because YouTube ran on Flash, an animation software, it provided a faster, one-click video experience even if the quality was low. MySpace members immediately gravitated to the service to embed links on their pages, which played the video clip YouTube hosted. These links not only spread the idea of posting a video clip on a MySpace page; it expanded YouTube’s reach across the social network, exposing its millions of members to the site itself, creating a viral loop.
Since it had been planning to distribute video across MySpace, News Corp. viewed YouTube as a threat. First, citing security concerns, MySpace disabled MySpace links, saying it couldn’t vouch for third-party applications. Its users howled and MySpace backed down. As eBay had learned, a viral network is dependent on its community of users. When they band together, they become a force that can influence company strategy. Behind every community uprising is the implicit threat that people can go elsewhere, and there can be a fine line between balancing their needs with those of a company looking to capitalize on its aggregating power.
Then in early 2006 MySpace released its own video player, which showed promise early on but then lost steam. Google and Yahoo also tried to play catch-up with YouTube. All of them would learn what eBay had learned. Once a viral network achieves a viral loop and a point of nondisplacement, it can’t be stopped. By midyear, YouTube’s reach surpassed MySpace’s, even though YouTube was largely dependent on it, with 60 percent of its videos streaming from MySpace pages. Then came the coup de grâce. News Corp. made numerous overtures to buy YouTube, but its founders claimed it wasn’t for sale until Google walked away with the year-old site for $1.65 billion in October 2006.
DeWolfe and Anderson could not have been happy. After all, YouTube, which had been stacked on top of their network, not only became bigger than MySpace; it sold almost three times as much. But YouTube’s viral loop was even more potent than MySpace’s.
Once YouTube had set down viral roots, there was little they could have done to stop it.
10
Tweaking the Viral Coefficient
Bebo, Patterns in Virality, and Critical Mass
While books, magazine features, newspaper articles, online news pieces and endless blog posts have been written about Facebook and MySpace—the Hertz and Avis of the social networking world—one social network you may not have heard as much about is Bebo, started by Michael Birch, a Brit living in San Francisco. After he built it into the third-largest social network in the world and a few years later sold it for more money than Rupert Murdoch paid for MySpace, some believed that Birch was an overnight success. Far from it. The first three start-ups he launched failed miserably.
A long-haired Brit with a ponytail, he was raised in Hertfordshire, England, and studied physics at Imperial College in London, where he met his future bride, Xochi, a California native, in a pub. Graduating into a tight job market in the early 1990s, he took what he assumed would be the most boring job imaginable—as a database programmer for an insurance company. Although right about the insurance part (he found corporate bureaucracy particularly irksome), he discovered that not only did he enjoy programming, he had a gift for it. Later he would wonder what he would have done with his life if computers hadn’t been invented; he didn’t think he would have been good at much else. After he had spent six years of working for someone else, Birch and his wife set out to become entrepreneurs, remortgaging their modest home, which had doubled in value during Britain’s housing boom. With little chance they could raise funding, he decided to create a viral business, something that would propagate from friend to friend without requiring a dime in marketing money. His model: Hotmail.
His first idea was to create tests for tech professionals at job interviews, but he quickly discarded that. Then the Birches began work on Lemonlink, a Web-based self-updating address book, which went live in January 2000. The viral hook consisted of users entering their friends’ and acquaintances’ contact information. Each person added to a user’s address book would be notified by email and asked for contact details. Lemonlink grew slowly. Having a science background, Birch sifted through the data to analyze why. He calculated the viral coefficient was barely .5: each person led to only a quarter of an additional person signing on to the service, which was too low to result in exponential growth. One reason for the laggard growth was that Lemonlink depended on prospective users downloading an Active X application, something many were loath to do. Another hurdle was Lemonlink’s reliance on email notifications. With spam a growing irritation, people were less likely to respond to these kinds of clickable entreaties. Birch coded a plug-in for Outlook, a popular Microsoft email program, and this pushed the viral coefficient to .7. Not bad, but not good enough.
The young couple now had a baby and moved on to a second business that hit closer to home, Babysitting Circle, a subscription service they believed would be inherently viral since parents of young children often know one another. The Birches hoped to rely on word-of-mouth endorsements as a viral mechanism to attract families to the service, but it was a hard slog. It was simply too niche. Families were willing to pay, but not in sufficient numbers to make a profitable business. The Birches resorted to spending money on advertising, which brought in a wider pool of members but not enough to get them over the hump. Any additional revenue went straight into paying for more marketing. Eventually they concluded the business would never be viral enough to sustain itself. With cash running low, Birch partnered with his brothers on a do-it-yourself online family-wills business. “I didn’t particularly want to do it,” Birch says, and wasn’t surprised when it proved to be a bust. All along the way, however, he was learning what worked and what didn’t, vowing not to repeat mistakes.
[ TWEAKING THE VIRAL COEFFICIENT ]
Finally, they hit pay dirt in 2001 with their fourth business, Birthday Alarm, which began as a way to remind people of their friends’ birthdays. “It was incredibly simple, an incredibly short viral loop,” Birch says. “Everyone has birthdays, so there is no reason you wouldn’t email everyone you know to ask them when it is.” To seed the site, Birch paid $99 to the Cool Site of the Day, and on the first day five hundred people signed up. The site grew slowly, with Birch tweaking things until he could get it right. Initially he had plastered the site with privacy notices (promising not to sell users’ emails, etc.) but found it slowed page load times. Faster downloading led to an uptick in virality, and no one complained about the missing privacy notices anyway. Simplifying the instructions also helped. In fact, the rule seemed to be, the simpler he made things, the more viral the site became. People, it seemed, were turned off by anything that required them to think.
The big breakthrough came when he added a cut-and-paste function. That way, users didn’t have to type in friends’ email addresses and birthdays; in two keystrokes they could transfer them from other programs. This pushed the viral coefficient above 1, with ten thousand people a day joining. The site generated revenue from banner ads through advertising networks that took a 30 percent cut, and the Birches added e-cards, since it was natural that users would want to send greetings to their friends. By the time the couple
relocated to San Francisco to be closer to Xochi’s family, the site was bringing in $10,000 a month, enough to rent an apartment and a tiny 20-square-foot office in the Valley’s bubbly real estate market.
Two years after Birthday Alarm’s birth, the site practically ran itself, and Birch sought other viral business ideas. One day he came across Friendster. After clicking through it for about half an hour and marveling at its simplicity, he sat down to create a copycat site on top of his Birthday Alarm code base. Thirteen days later he unveiled Ringo.com, named after the former Beatle. The Birches blasted an email to 3 million Birthday Alarm users announcing the new site, which resulted in 30,000 sign-ups—a conversion rate of 1 percent, decent for any email campaign. They also incorporated an invitations mechanism for users to bring in their friends, and in the span of three months Ringo.com grew to 400,000 users, making it the second most popular social network on the Web. Most users were American, but Birch found it interesting that a viral cluster had also formed in Australia, where a quarter of the site’s traffic originated.
While thrilled to have cracked the formula for a successful viral loop business, Birch didn’t have the resources to scale. It was just he and his wife squeezed into a box of an office, swamped with customer support questions and service outages. The site, which was pulling in $30 a month in revenue, was becoming slow and buggy. He couldn’t afford more hardware, hire engineers, or move into a larger office space. Birch had a choice: either find angel investors or sell Ringo.com. In December 2003 he received three offers in one week, and sold to online quiz purveyor Tickle.com for a couple of million dollars in private stock. No cash, just shares. In fact, the Birches wouldn’t see a dime for eighteen months, when Tickle (known for the classic online IQ test and the silly What Kind of Dog Are You?) sold Ringo.com for even more to Monster.com, where it became a photo-sharing site. Part of the deal required Birch to agree to a noncompete clause, which meant he couldn’t start a social network site for eighteen months and agreed to work at Tickle for three months. He enjoyed being around other engineers and stayed half a year.
Viral Loop Page 21