How to Make Your Startup Go Viral The Pinterest Way
STEVE CHENEY
posted yesterday31 Comments
On Thanksgiving, Pinterest’s co-founder Ben Silbermann sent an email to his entire user base saying thanks. It was fitting, as Pinterest was born two years ago on Thanksgiving day 2009. Ben had been working on a website with a few friends, and his girlfriend came up with the name while they were watching TV. Pinterest officially launched to the world 4 months later.
Some startups go crazy with hype and users right after launch. And some don’t. I don’t know the founders, but I thought I’d take apart Pinterest’s story to discuss growth and virality in consumer web startups. Pinterest was not an overnight success. On the contrary, its growth was surprisingly modest after Turkey Day 2009.
Take a look at Pinterest’s one-year traffic on Compete from Oct 2010 to Oct 2011, which is the picture in this post, and shows Pinterest rising from 40,000 to 3.2 million monthly unique visitors. I took both ends of this chart and estimated monthly compounded growth over Pinterest’s lifetime, then interpolated the curve using constant growth and put the results in this Google Spreadsheet.
Backing out of Compete’s numbers, we see Pinterest grew about 50% month over month from a base of zero since its inception (on average, smoothing the curve). Today growth is catching fire, as evidenced by the near doubling of traffic last month, and Pinterest’s page views growing 20X since June, according to comScore.
Note these numbers are approximations and also do not count the significant traffic the service sees from mobile (Pinterest’s app currently takes the #6 social spot in the iTunes store). Also my guess is that a lot of its unique visitors arrive out of network (from Facebook / Twitter), and many of these uniques leave Pinterest without registering (more on this below) so it’s tough to know their exact user numbers.
But let’s play pretend and use the data we have to do some projections on where Pinterest could be a year from today. Its recent VCs certainly did this, and decided to give the startup a $200M+ valuation. Ron Conway said recently that Pinterest is growing like Facebook did in 2006. Facebook actually grew from 14 million uniques to 26 million uniques from May 2006 to May 2007, then a year and half later they had rocketed to 140 million uniques, and were growing at about 20 million uniques per month. So monthly growth early on for Facebook was around 10-15%.
Can Pinterest really sustain its wild 45% monthly growth? No, unless it’s destined to be the fastest growing startup in history. However, we can be pretty sure Pinterest has hit a tipping point… their page view numbers are simply insane. If they were to grow 20% month/month over the next year, Pinterest would be at 30 million uniques a year from today. And with 25% month/month growth, they’d be at 50 million. These are pure guesses, but Ron’s statements and last month’s growth make this look possible, so let’s examine virality and Pinterest’s underlying fundamentals.
Virality – Does My Startup Really Need It?
Viral sharing is typically emphasized in products or services where the cost to acquire a customer needs to be low, and you can’t afford to spend money on paid channels, like Mint.com did, or like a Living Social / Groupon. Having a free method, ideally a user-driven method, is critical to consumer web startups.
But there’s a lot of confusion around virality. The reality is that you can build a sustainable business without “going viral” and this point is not understood well among techies or investors. The connotation “going viral” typically means having a viral growth coefficient of greater than 1. For every user that comes on your platform, he or she refers 1 additional user. This ensures a service will “hockey stick”.
But what if every user only refers, say 0.2 new users? Contrary to popular belief, this can also lead to a sustainable business. However, the lack of pure virality implies that you absolutely must retain existing users to grow. This is why daily active users and monthly active users are such important metrics, and are tracked maniacally by CEOs and investors. Churn is your ultimate enemy. Sure, it will take longer to grow if each user brings in fewer new people, but as long as most users don’t leave, you’re all good.
Viral cycle times also factor in – the shorter the “referrer” period, the faster the virality takes hold – for example, if a user invites 1 new user every month, that’s better than if she invites 1 per year. Social games like Zynga historically have extremely short viral cycles; however they must, because churn is extremely high (user lifetime is often measured in hours or days, because users get bored with games quickly and move on).
Obviously, the more viral a service, the more sustainable it is, but it’s really in the details. And overnight success is not a guarantee for sustainability. Many startups are pushing way too prematurely on press before they’ve demonstrated real sustainability. I see this all the time and Eric Ries covered this in his discussion on the danger of vanity metrics.
The truth is that startups often draft off of artificial success that originates simply from hype within the tech echo-chamber. Some sites go from 0 to 100K+ visitors in weeks and people high five one other, then look around and say “what’s next, how do we keep these users happy?”
Pinterest’s Virality and Sharing Examined
Pinterest’s story is much different – they didn’t have the same early “hype spikes” as many other startups do, standing at only 40K uniques 8 months after launch! It took Pinterest quite a while for a network-effect to take hold. Clearly every startup should hope for early virality. But if it doesn’t exist initially, you must work to perfect a soft onboarding of virality that’s based on high engagement, and create a product that people love and will come back to, while layering viral techniques on top of that.
Today, Pinterest is clearly insanely addictive among its user base, and they are sharing. But one reason I see Pinterest as a valuable a case study is precisely because they didn’t experience the early adopter “hype” spike 18 months ago. Like many tech startups, I am sure some content was seeded within the tech community by the founders. But their “normal” user was a housewife in the Midwest, not a techie reading TechCrunch or Hacker News. And I’m sure Pinterest made a bunch of product tweaks early on to iterate around sharing and engagement, as virality took hold.
Let’s compare Pinterest to Instagram for a minute, since both base off of photo content as their primary unit. Instagram has actually done nearly all its user acquisition virally out of network (sharing to Facebook and Twitter) and via word of mouth, with limited sharing in the network. This is remarkable when you think about it. By that I mean that there’s no real sharing inside the network other than liked photos surfacing due to popularity, and manual discovery via hashtags. There is no “regram” if you will. You also can’t follow people or like a photo from Instagram without an iPhone (even if it’s tweeted or posted to the web!) unless you’re a power user on an API mashup (see Inkstagram). All this reveals just how impressive Instagram’s growth has been, as they went from about 1 million to 10 million users over the past year.
Being realistic, Pinterest could have much higher growth than Instagram based on the fact that it’s unconstrained as a platform – it works from web, mobile web, in-app, and has easier baked-in virality around sharing. “Pinning” has this built in because many initial pins start as “repins” of other people’s content. In this way, existing content will often be the seed for a new user’s stream. The pin unit is genius.
Users can also visit the Pinterest site and participate (i.e. browse endlessly) before signing up. This allows full consumptive access before registering and is a secret weapon if done right. Fred Wilson discussed this recently in his post about the logged out user, giving an example of his mom checking his tweet stream without logging into Twitter – she gets value out of the service while ironically bringing down Twitter’s monthly active user metric. Similar value can be granted to consumptive users who visit the site but don’t initially register.
Then when a user is ready to pin content, they create an account and go wild – Pinterest leverages web content from Tumblr like no site that has ever existed, thus riding on top of its network-effect while not requiring user generated content like many services. They’ve also perfected in-network virality (pin, repin, like) in addition to out of network sharing (Facebook, Twitter) to grow virally. For these reasons Pinterest could conceivably grow as fast as any consumer service we have seen in recent memory. It’s fun to speculate on all this when you factor in Ron Conway’s statements comparing growth to Facebook’s early heydays.
And perhaps most notably, though it will surely take a while, Pinterest is already threatening to monetize, as those Midwest housewives are literally using it for shopping discovery, which Pinterest can profit off of by taking attribution for purchases that originate off its platform. I know several friends who’ve purchased stuff spontaneously via random discovery on the site. I expect Pinterest to be thriving a year from now (my guess is 30 million users next Thanksgiving) and also spawn hundreds of copycat startups in other verticals (“Pinterest for that”). Sadly, many of these will arrive on TechCrunch and spike in hype, then fail to nail any true virality before they are slowly forgotten… After all, this is the cycle of consumer startups.
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Contributor Steve Cheney is currently Head of Business Development at GroupMe, and formerly an entrepreneur, engineer & programmer specializing in web and mobile technologies. You can follow him on Twitter @stevecheney
CRUNCHBASE
Sunday, November 27, 2011
Social Proof Marketing
Social Proof Is The New Marketing
Editor’s note: This guest post is written byAileen Lee, Partner at venture firm Kleiner Perkins Caufield & Byers, where she focuses on investing in consumer internet ventures. Full disclosure: some of the companies mentioned below are KPCB-backed companies, including One Kings Lane and Plum District (both of which count Lee as a board member). You can read more about Lee at KPCB.com and follow her on twitter at @aileenlee.
As I’ve written about before, we’re in an amazing period of the consumer Internet. Despite a shaky economy, many web companies are in hypergrowth. This is reminiscent of the five-year period over a decade ago when companies like Amazon, Netscape, eBay, Yahoo, Google and PayPal were built.
One challenge, which isn’t new, is the battle for consumer attention. If you’re looking to grow your user base, is there a best way to cost-effectively attract valuable users? I’m increasingly convinced the best way is by harnessing a concept called social proof, a relatively untapped gold mine in the age of the social web.
What is social proof? Put simply, it’s the positive influence created when someone finds out that others are doing something. It’s also known as informational social influence.
Wikipedia describes social proof as “a psychological phenomenon where people assume the actions of others reflect the correct behavior for a given situation… driven by the assumption that the surrounding people possess more information about the situation.” In other words, people are wired to learn from the actions of others, and this can be a huge driver of consumer behavior.
Consider the social proof of a line of people standing behind a velvet rope, waiting to get into a club. The line makes most people walking by want to find out what’s worth the wait. The digital equivalent of the velvet rope helped build viral growth for initially invite-only launches like Gmail, Gilt Groupe, Spotify, and Turntable.fm.
Professor Robert Cialdini, a thought leader in social psychology, has many examples. In one study, his team tested messages to influence reusing towels in hotel rooms. The social proof message –“Almost 75% of other guests help by using their towels more than once” had 25% better results than all other messages. And adding the words “of other guests that stayed in this room” had even more impact (also an example of how A/B testing of small details matters).
In another study, a restaurant increased sales of specific dishes by 13-20% just by highlighting them as “our most popular items”. SP also works on your subconscious – it’s the reason why comedy shows often use a laugh track or audience; people actually laugh more when they can hear other people laughing.
Five Types of Social Proof
If you’re a digital startup, building and highlighting your social proof is the best way for new users to learn about you. And engineering your product to generate social proof, and to be shared through social networks like Facebook, Twitter, Google+, Tumblr, YouTube, Pinterest and others, can multiply the discovery of your product and its influence. Think of it as building the foundation for massively scalable word-of-mouth. Here’s a “teardown” on various forms of social proof, and how some savvy digital companies are starting to measure its impact.
1) Expert social proof – Approval from a credible expert, like a magazine or blogger, can have incredible digital influence. Examples:
- Visitors referred by a fashion magazine or blogger to designer fashion rentals online atRent the Runway drive a 200% higher conversion rate than visitors driven by paid search.
- Klout identifies people who are topical experts on the social web. Klout invited 217 influencers with high Klout scores in design, luxury, tech and autos to test-drive the new Audi A8. These influencers sparked 3,500 tweets, reaching over 3.1 million people in less than 30 days – a multiplier effect of over 14,000x.
- Mom-commerce daily offer site Plum District also reached mom influencers thru Klout, and found customers referred by influential digital moms shop at 2x the rate of customers from all other marketing channels.
2) Celebrity social proof – Up to 25% of U.S. TV commercials have used celebrities to great effect, but only a handful of web startups have to date. Some results:
- In 1997, Priceline.com was one of the first web startups to use a celebrity endorser –William Shatner – not a travel expert, but seemingly obsessed with saving consumers money. It has been a huge win; Priceline now has a $23 billion market cap, and the fee Shatner took in shares is estimated to be worth $600 million.
- Trendyol, the fastest-growing fashion ecommerce company in Turkey, regularly launches merchandise campaigns with the endorsement of celebrities. This practice increases site traffic by 2.5x and product sell-through by 30%.
- ShoeDazzle launched with celebrity Kim Kardashian as chief stylist. Her involvement helped leapfrog the company to an estimated $25m in 2010 and $70 million in 2011 sales, plus a recent $40m financing. Celebrity endorsement by Jessica Simpson and aesthetician Nerida Joy recently helped Beautymint attract 500,000 visitors in the first 24 hours of its launch.
- The most authentic (and cost-effective) celebrity social proof is unpaid. For home décor siteOne Kings Lane, a 2010 unpaid mention in Gwyneth Paltrow’s influential blog GOOPprovided a 90% lift in daily sign-ups vs. the previous 4 days’ average. Celebrity use onTurntable.fm by Sir Mix-A-Lot and producer Diplo generated viral buzz, helping the company skyrocket to 140,000 active users in just 4 weeks.
3) User social proof – Direct TV marketers are masters at sharing user success stories. (fascination with this was actually the inspiration for this blog post). Companies mastering this digitally include:
- More than 61 million people visit Yelp (working on an upcoming IPO) each month to read user reviews. And reviews drive revenue; a recent HBS study showed that a 1-star increase in Yelp rating leads to 5-9% growth in sales.
- User-generated videos (UGVs) are a growing and important social proof phenomenon. Early visitors to Shoedazzle watched more than 9 UGVs on average, helping catapult sales; and user testimonials on YouTube drove a 3x conversion rate vs. organic visitors for Beachbody, the makers of P90x fitness.
- Negative user social proof is also important to track. The first negative user review on eBayhas been shown to reverse a seller’s weekly growth rate from 5% to -8%. It also hurts pricing; a 1% increase in negative feedback has been shown to lead to a 7.5% decrease in sale price realized.
4) Wisdom of the crowds social proof – Ray Kroc started using social proof in 1955 by hanging an “Over 1 Million Served” sign at the first McDonald’s. Highlighting popularity or large numbers of users implies “a million people can’t be wrong.” Some digital examples:
- Fashion e-tailer Modcloth enables its community to “Be the Buyer” by voting on which styles they think Modcloth should sell in the future. Shoppers take strong cues from the community; styles with the “Be the Buyer” badge sell at 2x the velocity of un-badged styles.
- Callaway Digital Arts finds that when any of their kids’ iPad apps is listed as a top 10 most popular app in the iTunes App Store “Top Charts,” daily downloads vault 10x over the prior week – but being the No. 1 most popular app drives 30-50% more daily downloads than being No. 2.
- Greentech company Opower uses social proof to help reduce electricity consumption. It works: Opower sees an 80% response rate to e-mails citing how a household’s use compares with the neighborhood, which has driven more than 500 million kilowatt hours of savings so far.
5) Wisdom of your friends social proof – Learning from friends thru the social web is likely the killer app of social proof in terms of 1:1 impact, and the potential to grow virally. Some examples:
- Friends inviting friends to play through Facebook and other social networks helped Zyngagrow from 3 million to 41 million average daily users in just one year, from 2008 to 2009.
- Moms, arguably the most valuable demographic on the social web, rely heavily on friends and family recommendations. A recent Babycenter study showed moms rely on the wisdom of their friends 67% more than average shoppers; and they rely on social media 243% more than the general population.
- Friends referred by friends make better customers. They spend more (a 2x higher estimated lifetime value than customers from all other channels at One Kings Lane); convert better (75% higher conversion than renters from other marketing channels at Rent the Runway); and shop faster (they make their first purchase after joining twice as quickly than referrals from other channels at Trendyol)
- They also make better contributors. People who see content from their friends onTripAdvisor contribute personal content to the site at 2x the rate of others, and are 20% more engaged than other users.
Building Your Social Proof
Will one form of social proof work best for your company? Maybe, but companies like LegalZoomhave found that a “mixed salad” of various types of social proof is most effective. The beauty of the web is you can test, learn and iterate quickly to find what works best.
To note, I don’t think a social proof strategy will be effective if you don’t start with a great product that delights customers, and that people like well enough to recommend. How do you know if you have a great product? Track organic traffic growth, reviews, ratings and repeat rates. And measure your viral coefficient – if your site includes the ability to share, what percentage of your daily visitors and users share with others? How is the good word about your product being shared outside your site on the social web? Do you know your Net Promoter Score, and your Klout score?
In the age of the social web, social proof is the new marketing. If you have a great product waiting to be discovered, figure out how to build social proof around it by putting it in front of the right early influencers. And, engineer your product to share the love. Social proof is the best way for new users to learn why your product is great, and to remind existing users why they made a smart choice.
P.S. FOMO, or the psychological phenomenon known as “Fear Of Missing Out,” is also a form of social proof. As people are wired to learn from others, they are also wired to want things in short supply. FOMO is a great forcing function on decision-making, as evidenced by the incredible growth of ecommerce flash sales. A friend at another venture firm has posted on his office wall “Is it FOMO, or is it real?” because it also happens in venture financings. Maybe a topic for a future post.
Photo credit: Flickr/anasolinap.
Wednesday, November 2, 2011
Facebook Securiy Flaw
Researchers Flood Facebook With Bots, Collect 250GB Of User Data
In an experiment that reveals as much about the people on Facebook as it does about Facebook itself, researchers from the Unversity of British Columbia Vancouver infiltrated the social network with bots and made off with information from thousands of users.
Around 250GB of data was stolen during the study, including personal and marketable information, and around three thousand users were targeted. Only one in five of the profiles were flagged by the Facebook Immune System, which clearly needs a boost.
The fake UBC accounts, which they call “socialbots,” were created from a few simple scripts, which submitted a the requisite account information: names, pictures, and status updates were trawled from the open web, eventually producing 102 fairly believable accounts. The intelligence organizing this effort is referred to evocatively as the “botherder” or “adversary.”
Next, they sent friend requests to random people. Unsurprisingly, they found earlier that more attractive people get better responses to unsolicited friend requests, so they pulled their profile pictures from the high end of Hot Or Not. Only 20% of this initial random sampling took the bait, but later, when friending one of their network’s 2nd-degree friends, the success rate jumped to 60%. That’s called the “triadic closure principle,” if you were wondering. Each bot made around 20 friends on average, but some nabbed as many as 80 or 90.
Facebook’s fraud detection was avoided by rate-limiting the posts and friend requests to avoid CAPTCHAs. Only 20 profiles were detected by Facebook, all of them, interestingly, the female bot variant.
Considering how easy it was to automate the process of account creation and propagation, one has to question the effectiveness of Facebook as an authentication system. Naturally it can be used to determine identity to a certain point, but it’s certainly no Turing Test. Our own comment section shows that bots and generated accounts are plentiful. Hopefully this experiment will spur Facebook to improve this aspect of their security, as it was intended to. Maybe it will also convince some people to be a bit more selective in their friending process.
And in case you’re wondering whether you might have inadvertently contributed to the experiment and, thus, the sum of human knowledge, rest easy:
We carefully designed our experiment in order to reduce any potential risk at the user side by following known practices, and got the approval of our university’s behavioral research ethics board. We strongly encrypted and properly anonymized all collected data, which we have completely deleted after we finished our planned data analysis.
You can download the full report here. It makes for interesting reading, though for hackers and botnet enthusiasts, it probably contains little in the way of new information.
Tuesday, October 4, 2011
Chart Shows Marijuana Is Cheap in Florida Despite High Maximum Possession Sentence
cybercrimesdefense.com , David Seltzer Pa issues extremely interesting analysis of Drug Prices and Drug sentencing issues
Monday, August 29, 2011
Smart peek at google new algorithms
Tweaking The Algorithm: Google Gives A Small Peek Behind The Curtains
One of the most common complaints critics (and competitors) have against Google is that the company — despite its numerous open products and initiatives — is very secretive about the countless algorithms that power its crown jewels, Google Search. In other words, search is a black box. Google’s argument has generally been that itneeds to be this way — if it told everyone exactly how the algorithm worked, then it would be much easier to game, and search results would suffer.
In any case there’s plenty of mystery around Search, which is why the video posted today to the Google blog is so interesting: Google has given a quick video walk-through detailing how its engineers gradually adjust the algorithm, which — according to the video — gets tweaked more than 500 times per year.
The video is only four minutes long and is worth watching in its entirely, but here’s a quick rundown on how a change to search goes live:
- First, Google engineers identify a set of “motivating searches” that aren’t working as well as Google would like them to.
- Next, engineers try to identify various signals (Google doesn’t really get into what these signals entail) that could be used to better answer that query.
- These new results are then rated by a trained worker that isn’t a Google employee.
- Next, the results are pushed live to a small number of users.
- An analyst is then assigned to objectively look at the change and how it’s performing in tests.
- And finally, the proposed change is presented to the search quality team, which either approves or denies it.
The video also goes into a quick anecdote about what Google calls ‘Full Page Replacement’. This refers to the times Google looks at your query, decides you’ve misspelled it, and then presents the results for the correct spelling, rather than just suggesting the proper spelling and displaying the results for the misspelled results. To test this, Google looked at how many times users explicitly clicked on the link for the results for their original query (which Google believed was misspelled) — Google decided that so long as this ‘escape hatch’ was only clicked 1 in 50 times, it was a good change. And it passed the test.
Wednesday, April 27, 2011
Qwiki is now most downloaded Ipad ap in the world
Qwiki Founder: "iPad Traffic Is Already Crushing Web Traffic"
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After just two days after its launch, Qwiki is the 4th most downloaded iPad app in the world.
Founder Doug Imbruce tells us, "Daily iPad traffic is going to crush daily web traffic today, and we're very happy with our web traffic."
As of last month, Qwiki was getting roughly 5 million monthly pageviews and 600,000 uniques, so that's saying something.
Check out our review of Qwiki's app, here.
For the latest tech news,
Read more: http://www.businessinsider.com/qwiki-founder-ipad-traffic-is-already-crushing-web-traffic-2011-4#ixzz1KkLx9TZQ
Thursday, February 3, 2011
BLOOM ENERGY
Bloom Energy
After spending eight years operating in “stealth mode,” Sridhar’s Silicon Valley outfit finally unveiled the Bloom Box, a device that converts natural gas into electricity with drastically lower carbon emissions. The box can work anywhere, from greenifying the headquarters of big corporations (Google, eBay, FedEx, Wal-Mart, and Coca-Cola are already customers) to electrifying developing nations, where an estimated 2.5 billion people live off the grid. Sridhar, 49, is aiming to have his mini-power plants in every home within 5 to 10 years.
After spending eight years operating in “stealth mode,” Sridhar’s Silicon Valley outfit finally unveiled the Bloom Box, a device that converts natural gas into electricity with drastically lower carbon emissions. The box can work anywhere, from greenifying the headquarters of big corporations (Google, eBay, FedEx, Wal-Mart, and Coca-Cola are already customers) to electrifying developing nations, where an estimated 2.5 billion people live off the grid. Sridhar, 49, is aiming to have his mini-power plants in every home within 5 to 10 years.
Thursday, January 27, 2011
Googles API periodic table ...all things Google
MG Siegler13 hours ago
Google is a behemoth. They’re a behemoth with a massive amount of APIs that millions of developers use around the world to build millions of apps and services. There’s simply no good way to keep track of them all. But Google comes close with a pretty nifty way: a periodic table.
As you can see on this page, Google has a full periodic table built out showcasing their APIs and developer products as of January 2011.
Along the top are various categories that the APIs or products fall under. Included are: Mobile, Search, Gadgets, Data APIs, Social, Misc, Ads, Geo, Tools, and Chrome. Hovering over any of these will highlight the corresponding “elements” on the table below it. You can then click on any of the elements, and it will take you to the page dedicated to that API or product.
Again, nifty. And useful.
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