Here's something you probably don't know about the Internet: Simply by designing your product the right way, you can build a billion-dollar business from scratch.
No advertising or marketing budget, no need for a sales force, and venture capitalists will kill for the chance to throw money at you.
The secret is what's called a "viral expansion loop," a concept little known outside of Silicon Valley (go ahead, Google it -- you won't find much). It's a type of engineering alchemy that, done right, almost guarantees a self-replicating, borglike growth: One user becomes two, then four, eight, to a million and beyond. It's not unlike taking a penny and doubling it daily for 30 days. By the end of a week, you'd have 64 cents; within two weeks, $81.92; by day 30, about $5.4 million.
Viral loops have emerged as perhaps the most significant business accelerant to hit Silicon Valley since the search engine. They power many of the icons of Web 2.0, including Google, PayPal, YouTube, eBay, Facebook, MySpace, Digg, LinkedIn, Twitter, and Flickr.
But don't confuse a viral loop with viral advertising or videos such as Saturday Night Live's "Lazy Sunday" or the Mentos-Diet Coke Bellagio fountain. Viral advertising can't be replicated; by definition, a viral loop must be.
So how does it work? Find out. . .
Text: Adam L. Penenberg, FastCompany.com
Image: Ning co-founder and CEO Gina Bianichi thinks that the company has mapped a route to nearly limiless growth. | Photograph: Art Streiber/FastCompany.com
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