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Virality & Network Effect
Piyush Gupta | ProductCamp Silicon Valley | March 14, 2015
Retention
Modeling
In Scope
Network Effect
Virality
Engagement
Platform
Not in Scope
Retention
Let’s begin!
Virality – User Growth
Network Effect – Value growth with User Growth
Network Effect ≠ Virality
Virality ≠ Network Effect
Confused?
Benefit is realized by each
party that is directly
involved
“But often times third parties to the
exchange also either
benefit or incur a cost
even if they are not directly involved.”
I pay a security guard to keep an eye on my premise
My neighbors may also gain a benefit of safety even though
they aren’t directly involved and haven’t paid for the service.
My Neighbors benefit – Positive Externality!
I lease my premise to a local rock-band for practice
My neighbors may bear a cost of Noise Pollution without any
compensation.
My Neighbors pay – Negative Externality!
Positive Externalities create
Network Effect
Virality & Network Effect
PRODUCT
User Lifecycle
1. Acquire users
Acquisition
2. Users to stay
Retention
Engagement
3. Users to continue
using
Acquire Users
2. Advertising
3. Partnerships1. Press/PR
4. User (itself)
Communicate / Word of Mouth
Acquisition Channels
User
2. Digital
3. Via Product1. Manual Cheap
Cost
Inherent
Channel Communication
User
Like
Invite
Dislike
No Invite
Immediate After X days
= Conversion
Signup Not Interested
::
Conversion
Virality Coefficient
V.C. = Conversion / Users Reached
No. V.F. Reality
1 0.15 – 0.25 Sustainable
2 0.4 Very Good
3 0.7 Outstanding
Web Consumer Products
Virality is not
It is Science
Random.
Magic.
Luck.
linkedin.com/in/piyushgupta | twitter.com/gpiyush | com.gmail@gpiyush

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Virality & Network Effect