Lesson: Growth with Josh Elman

Step: #7 Growth Tricks: Tricks for growing at faster rates

One of the key insights as you think about this data tying to product that we had it LinkedIn, was something that over time I started to call the double viral loop. The double viral loop was this recognition that when somebody signs up we often say, "Hey, let's try to get this new user to go invite a lot more people." And that's sort of one level of virality. The double viral loop was, how can we get this new user to reactivate a bunch of people already in the network and then encourage people already in the network to go and invite a lot more people? And you kind of get this secondary effect where somebody signs up, they might invite people themselves but they also might re-engage a bunch of people already in the network to go and invite more people.

At LinkedIn, we had this great realization, and this is probably sometime in 2004, that everybody was signing up and some people were inviting other people but most weren't. But we also weren't getting them to have rich and dense enough networks, so we started to realize, what if we showed them people who were already on the network, that they might know, and the could just connect with immediately? That might actually make them more likely to be engaged with LinkedIn instead of less.

So you typed in your company when you signed up, we showed you other people who were at the company, all of a sudden all ten of those people would get messages saying, "Hey, Josh is now on LinkedIn. Do you want to come and accept his connection?" And then when those people would come back to LinkedIn, they would be like, "Great, you're now connected with Josh. Are there five more people you'd want to invite?" And then they'd go on an invite too.

So we get this amazing secondary affect, which I call the double viral loop, from just me signing up, and then, still, you then go, "Josh, do you want to go and invite more people to your network?" And I actually would go and do that. So you can think about techniques like that for any product, that when somebody new comes in, how can you reengage other people in a meaningful way.

So for a lot of the companies and the things that we have talked about that are really active in the consumer world, the most sustainable advantage is being a long term sustainable network. We talk about network effects all the time. It’s hard to really understand what those mean. What they mean is, every single person that is using the product makes it richer for everybody else. It becomes a little bit monopolistic, so as long as enough of us are in the network, for us to go somewhere else it’s actually hard to go get the same value as we get out of this network.

MySpace at one point felt like a very defensible, very large network, and it sort of decayed and people started to find value elsewhere. It doesn't mean that these things are monopolistic forever or even for five years. But you really want to get to that point where you have enough critical mass, where it is meaningful for everybody and when new people sign up there is more immediate value for them and vice versa. The way you get there is by building meaningful interactions into the product from day one, that make it richer when more people are around.

In general, consumer and Fortune 500 style enterprise companies, they're foundationally, incredibly different. With Fortune 500 enterprise companies, you're trying to solve a problem for a big company that's already running and already operating. You need to deeply understand their very specific problem and find ways to encourage them to try to use your solution. That's a completely different process, than on consumer, where we're trying to get in front of consumers and use light touches to get them to slowly adopt and try something new, and hopefully engage with it in a meaningful way.

There's this new world of SaaS in these like self serve businesses and products that you can sign up for, that end up looking a lot more like consumer adoption. They fundamentally come down to the tenants of, can you get your message in front of the right people at the right time? Can you make it very easy for them to turn that message into actually engaging with that product in a useful way? Then once their engaging with it, can they get trained-up and learn the product without the need of a sales force, or an installation team, or anything to help the team get up and running.

It's turned out that SaaS has really learned a lot of techniques from consumer in order to do that, with the exception that in a SaaS business you're still fundamentally figuring out for a customer, how they can either lower your costs or help you increase your revenues. Every business person, once they're evaluating any tool, is pretty much under one of those two things. In consumer, your life is not about increasing revenues or reducing costs. Your life is about more utility, closer connection with your friends, and these other human needs. Maslow's hierarchy of needs that are really foundational of who we are as people. To a consumer you're always appealing to the entire set of them, whereas in the business context you get to be a little bit more focused on making your life easier, reducing your costs, or finding ways that will actually help you grow revenue.