Well, I can’t be sure beyond a reasonable doubt, so you be the judge. On Feb 2, I published this post entitled Viral Growth Trumps SaaS Churn, which makes the simple case that the best way to fight churn (exponential decay) is with virality (exponential growth). About two weeks later on Feb 15, Seth Godin published this strikingly similar post on viral growth entitled Viral Growth Trumps Lots of Faux Followers, which makes the simple case that the best way to fight faux followers (exponential decay) is with a viral idea (exponential growth).

Hmmmm…great minds must really think alike!

First I should say, I love Seth Godin’s stuff. I’ve snagged way more of Seth’s stuff than vice versa, for example SaaS Do #4 Craft a Compelling Story is completely Seth Godin’s and is the main topic of his book All Marketers Are Liars (and, is listed in the Chaotic Flow Worthy Reads blogroll). Believe it or not, my wife Christy is currently reading Seth Godin’s latest book Linchpin as I write this (and highly recommends it). But, IF Seth Godin really is reading Chaotic Flow, I think at the very least a pingback or comment is in order. C’mon Seth, share the love.

As an avid admirer of all things ironic and self referential (like…uh…viral growth), I couldn’t pass on the opportunity to examine this particular case study in light of itself. So, I am proposing a second order derivative viral growth vs. big followers principal of Seth Godin’s first order derivative viral growth vs. faux followers principle of the original viral growth vs. churn principle.

Highly Connected Followers Trump Viral Growth

Seth’s principle that Viral Growth Trumps Faux Followers claims that it is better to spread a good idea to a small group and rely on the strength of the idea to move it along through viral growth than it is to spread a mediocre idea to a big group of faux followers by brute force, because their interest will soon wane and your idea will eventually die out. I’ve recast Seth’s depiction of this principle in the chart below.

Seth’s viral growth vs. faux followers chart shows how many people are talking about your idea at any given time. This version, which is more in line with the original viral growth vs. SaaS churn post shows the total number of people who have heard of your idea.

There is an underlying assumption in Seth Godin’s viral growth model that when removed is the source of this new principle. Seth assumes Read more »

Why is Google so successful? Most people reply to this question by saying that it is the company’s superior search technology. This is why Google is so popular, but this is not why Google is such a successful company. Google is successful for one simple reason: it made advertising invisible, thus creating huge value for users and web publishers simultaneously. I believe this is the fundamental business challenge for platform makers of social media (social networks, blogs, rating systems, media sharing, etc.) and syndication (rss, widgets, toolbars, personal home pages, etc.), i.e.,. simultaneously delivering high value for web publishers and their communities without being intrusive.

Social media and syndication sit to the right and left of search. Search is great for catching people when they are already looking for something, i.e., in the middle of a purchase process. It is less effective in creating awareness, facilitating a decision and building brand loyalty. These are the strengths of social media and syndication, because these technologies leverage the organic, local connections of the Internet (as opposed to search which adds them up and presents the aggregate results). As such, they have the ability to reach out and engage the single individual, allowing him or her to discover your content surreptitiously, spread it virally and subscribe to it permanently.

This is enough to make businesses based on these technologies immensely popular. It is not sufficient to make them successful. Becoming an integral, useful and most importantly invisible part of the users purchase process will.

I like to think of Web syndication technologies today (RSS, podcasts, gadgets, toolbars, etc.) as analogous to HTML in the early 1990s. Revolutionary,incredibly useful, competing standards, gathering steam, and very difficult to commercialize.  This won’t last long.

More than once I’ve pointed out that marketers of B2B SaaS applications should look to the consumer side for inspiration to lower costs of sales by automating the sales and marketing process and integrating it thoroughly into the product itself.

However, after sitting on a panel on social media platforms at Digital Hollywood last week, I realized that there is considerable wisdom that can be transferred in the other direction. I’ve often maintained that B2B marketing is actually harder, or should I say more like pulling teeth, than B2C marketing. The reason for this is that B2B marketers have always had the luxury (or burden) of having deep access to the customer’s decision making process. B2B marketers have been engaged in the development of demos, white papers, reference accounts, referral programs, user groups and conferences, influencer marketing in the form of analyst relations, press relations, evangelist/advocate programs, and lead customer pilots, etc. etc. for decades (if not centuries!).

Whereas consumer marketers have been largely restricted to the two A’s of the well known AIDA model, i.e., generating awareness at the beginning of the buying cycle and providing promotional offers toward the end to motivate purchase—until the advent of social media. Unfortunately, the advertising practices and institutions for plugging into the two A’s are so well established Read more »

Viral and loyalty are two words you don’t often see right next to each other as a single unified marketing concept.  Viral marketing is almost exclusively associated with acquisition and loyalty as closely tied to retention, so they are natural opposites…right?  Wrong!  If you read my previous post on the syndication revolution being driven by the natural response of Web businesses to users spreading their time and attention all over the Web with the help of search, the inherent value of the web syndication model begins to emerge.  What if you could virally attract users to your content and then hold them there?  This IS syndication, whether it is RSS, podcasts, gadgets, toolbars, etc.  Syndication at its heart is two simple concepts:  distribution and subscription.  It allows you to follow your audience to the farthest reaches of the Web by virally distributing your content, and then it allows your potential audience to sign up for ongoing, deeper engagement through subscription.  How cool is that!

I am seeing this phrase, syndication revolution, more and more lately–largely related to the growth of Blogs and RSS.  However, I believe that this event will wash over the Web in a way that is much bigger than what have seen so far.  In a recent meeting with Michael Eisenberg of Benchmark Capital last week, he expressed an idea he had been encountering/formulating with other Benchmark portfolio companies that I thought was so powerful it was worth trying to encapsulate.

Simply put, the so-called syndication revolution can be viewed as a natural response of web-based businesses to the rise of search.  While the historical web monetization model has been to try and capture users within the confines of your website, search (Google in particular) makes its money by spraying users all over the Web.  Dave Winer’s earliest (pre-Google) posts on syndication characterize search engines as concentrators,  but in hindsight, the effect has been the exact opposite.  It is now easy to find zillions of small, low-traffic websites (like this blog) simply by typing in the right keywords.  Taken in this light, the coming syndication revolution (and it IS coming, it is just beginning) is really just about following your audience by pushing your content out to the rest of the Web and engaging them offsite, because despite how compelling your service might be, that is where they are going to be spending the bulk of their time online.

As the classic R&B song by the Persuaders goes, “It’s a thin line between love and hate.” The Annie Lennox remake of this is one of my favorites from her album Medusa. But, this post is not about my musical tastes. It is about the thin line that major brands are walking as they seek to deepen their interaction with consumers through social computing and other highly interactive Web 2.0 technologies. As anyone familiar with the song can tell you: the thin line is quite simply TRUST. Trust is created through personal investment, interaction and disclosure, the very things that these technologies enable. When trust is violated in a relationship, the deeper the relationship, the deeper the anger. So, the lesson of Facebook’s Beacon stumble is one that every Web 2.0 company should pay close attention to—the trust ante has been raised. Just as Web 1.0 privacy and trust issues sprung from Web 1.0 technologies, such as cookies and tracking a user’s Web surfing behavior, Web 2.0 issues will center on the much more delicate and private matters of personal profile information, social relationships and heretofore private interactions among friends, colleagues, acquaintances, customers and strangers. In Web 1.0, the solution was to never track a specific user’s identity for marketing purposes and to implement permission based marketing schemes. Mark Zuckerburg’s recent apology for making Beacon opt out by default, highlights the fact that in the frenzy of Web 2.0 even the basic Web 1.0 lessons have been forgotten. When in reality, we need stronger rules of the game to safeguard identity at the network and associated behavioral level.

Most of the excitement around Web 2.0 and social networking to date has centered on the unbelievable advertising opportunities it will create by directly leveraging word-of-mouth and micro-targeting. In recent posts, I’ve argued that this is fundamentally bartering a consumer’s privacy (because the service itself is free). I’d like to propose here that there is a better way. The safest and most effective way for a company to leverage Web 2.0 and social computing is by applying their inherent strengths of interactivity and personalization to establish trusted relationships with new customers and strengthen relationships with current ones—not manipulate them and weaken trust in their brands. For example, real-world word of mouth is driven by referrals. Online social networks can easily facilitate this process without disclosing identity or altering it in a fashion that is unnatural to consumers. Let’s take a look at Facebook’s Beacon in this regard. Below is the text from the Facebook site describing the benefits and details of Beacon for businesses using Facebook (clearly the pre-apology policy…but it is still up in this form as of today…need to get those departments in sync Facebook!):

“Simply determine which user actions you would like publish to Facebook and add a few lines of code to your web page. Facebook Beacon actions include purchasing a product, signing up for a service, adding an item to a wish list, and more. When a user performs the action, they will be alerted that your website is sending a story to their profile and have a chance to opt out. No additional user action is needed for the story to be published on Facebook, and users remain in control of their information.”

While Facebook has fixed the “opt out” problem (what were they thinking??!!), my personal feeling is that the service is still not a natural process for consumers in that you usually decide to recommend a service or product after you have tried it, not when you buy it. A much more natural process, would be to ask the user if he or she minds if the business checks in with them in a few days to see what they think. Maybe let them rate the product, and if the rating is good, ask them if they would like to recommend it to their friends. For another angle, compare Facebook Beacon to Amazon’s reviews. Amazon has it right, because it is helping consumers and publishers in their common interests, not one at the expense of the other.

In my last post, I argued that while Web 2.0 technologies offer great promise for more interactive and personalized marketing, they also entail commensurate ability to offend the consumer with SPAM, and therefore require greater vigilance to protect the trusted relationship between a brand and its customers , i.e., the more personal and interactive the communication, the greater the offense when trust is violated. But, I believe this is only half of the Web 2.0 privacy and trust dilemma.

At some point, we must stop and ask ourselves why so many of these great companies, that offer so much value by making the Web more personal, social and interactive are pursuing advertising-based business models where real revenue can only be achieved by asking consumers to barter their privacy in exchange for services. While it may not be much, most of us pay for mobile voice, text and wireless services, cable TV, books on Amazon, movie and game rentals, toys for the kids, and believe it or not, a premium profile on LinkedIn. The best advertising-based businesses, such as cable TV, Google or the Wall Street Journal are completely non-intrusive and often offer enough value to supplement this revenue with direct subscriptions. Are we really supposed to believe that a company like Facebook, with a multi-billion dollar valuation can’t charge for its services?
User adoption often becomes such a religion for Internet startups that it isn’t always obvious when, who or how to start charging for services. In this regard, I think that B2C companies can learn something quite valuable from the experiences in B2B software and SaaS: the cost of time and effort it takes to adopt a new application usually outweighs the price you ultimately would pay for it by at least a factor of 10X. The result is that you just can’t even give away bad software. If you are building a company that is purportedly delivering a service of such great value, but can’t conceive of a business model where some segment of business customers or consumers at some level of adoption will pay for it without bartering consumer privacy, you really should question the inherent value of your offering. Otherwise, you will most certainly end up on the same garbage heap of all the Web 1.0 companies that chose to venture down this same treacherous path.