Engineering Virality Bootcamp

My notes for attending a bootcamp hosted at Stanford GSB on virality.

Julio from Experience Project

Virality: Degree to which something is propagated throughout a population.

Viral: Every affected person leads to at least one other being affected.

Buzz: Conversation generated among people from an event or action.

Left Brain (Quantitative) and Right Brain (Creative, Holistic) approach

The Hotmail example, Facebook platform (driven by invitations)

Andy Smith- Dragonfly model

Ripple effect- Small actions, big change, overtime

Emotional Contagion- Tendency to catch and share emotions

Dragonfly has four wings: Focus, Grab attention, Engage, Take Action

Focus- small, singular; action plan; concrete and specific; true to self; milestones; metrics

Grab attention- (missed this part)

Engage- Understand, tell a story, make it personal, mix media

Take action- Make it easy, fun, promote idiosyncratic, provide feedback, create independent action

Definition of virality: Think Spread, each outbreak begins with an individual, propagation is endogenous (self-sustaining), new infections grow with each generation

Conventional Marketing: Conversions= Prob of conversion x people exposed

Viral Marketing: Reproduction Rate= Transmission Rate x People told, must be >1 to be sustained

Viral leverage comes from increasing the transmission rate

Transmission Rate= Grab attention rate x Engagement Rate x Fit, Ease and Fun taking action

Fireside Chat- Matt, Dave, Ed

Dave- AARRR!: 5- step startup Metrics Model

Acquisition --> Activation--> Retention--> Referral--> Revenue

1 Page Business Model= Users + Conversions+ Priorities

Ed- Conversion Rate-> Engagement Rate--> Invitation Rate

Viral Factor= X*Y*Z

Conversion Rate: Percentage of invited users who install the app

Engagement Rate: Percentage of users who invite at least one friend

Invitation Rate: Average Number of invites sent per engaged user

Concept of A/B testing

Images are really important, using 99designs to see which images are clicked on the most

Tactical vs Long term goal; be cautious of initial messaging

For consumer web, scalable distribution, addictive user experience, design are key

Game mechanics, paid acquisition, social distribution- Zynga

Platform- think more in terms of distribution and monetization rather than features

Iphone apps will go viral first on facebook before on itunes store

Fireside chat- Jeff, Mark, Ben

Jeff invested in Tapulous and they discovered no virality at all on the platform; about 20 million installs

Bootstrapped marketing is all about personally touching people

Ben Katz- Rolodex: Smile, dial and rile; you are Billy Mays, Celebrities: they're just like you, Look big: sleep with Bill Gates, Leland and Yoko, Harness the groundswell: Press, video, social media, email

Getting on techcrunch is prime

Why Startup? (Part 2)

I've left part 1 of my passage on the blog without a continuation for 3 months. I'm feeling a bit sick today so I'm not really "in the zone" for programming, so I figured I should continue this little passage.

Common Misconception

One common perception among common people is that startup founders would become overnight millionaires - that can hardly be further from the truth. The ideal scenario doesn't happen most of the time.

If one founds a startup based on the assumption that his product or his contract projects would make his and his team overnight millionaires, then the very founding philosophy of that startup, is wrong. The superficial reason is that it's a very poor bet - it doesn't happen very often.

The real reason is that it breaks the team.

Why?

The reason of existence of such a company is making short term profit, so people joined the company in expectation of short term profit. What really happens with startups is that, 99.99% of the time, you won't see that short term profit in the beginning. For the remaining 0.01%, the revenue may drop significantly after just a few months (e.g. your army of Facebook users, just happened to have found something new to play with).

What happens to the team, then? It breaks. Team members expecting to get short term profits would go to do other activities giving them short term money.

Never Lose the Team

The most valuable thing that anyone participating in a startup can gain, is the team - it is risk-free and does not come with an interest rate. It's ok to lose money, it's ok to lose customers, but never lose the team.

One may be born awesome - one may have played computer games all day yet he got straight A at school; he went to exam venues with an evil maniacal laughter; he's a 1-in-1000 genius and he knows it.

But, being a 1-in-1000 genius, also means there're something like 1.4 million people who're just as evil-maniacally-smart as him in China, alone. The chance at success of one person alone, is never too good. And then it's impossible for most people to be a 1-in-1000 evil maniacally laughing genius, by definition.

But if you've managed to find a team of 5, who're "only" 1-in-50 smart - not really hard to find in universities coz they did the pre-screening for you - then you've just probabilistically got yourself a massive advantage over that lone evil maniacally laughing genius. And, obviously, 5 people can do more than just one person, and 5 people can specialize their talents (e.g. engineering, project management, market research, sales, etc.) into different areas of business so each one of them is less distracted while running a company.

Why Startup?

As a young 20-something, which includes myself, it doesn't really matter that the first or second startup attempts fizzle out. We may be poor and lack the social power of our older friends who've got high ranking political or corporate seats. But we have time.

We can do experiments, fail, think, try again; systematically eliminate things and ideas that do not work; build relationships and knowledge; build an awesome team that trust each other; look out for opportunities. Try, until succeed, the details don't matter. You can work without an office, you can work a part time job in McDonald's, you can even have another job at Google or IBM - it doesn't matter. Just stay in the game and snowball your advantage. You don't even have to be technically owning a company - e.g. you can be doing an open project in your free time and build a profit making service around it later - as long as you're making progress with your team, it's good. There's always a way, no matter how devious.

The biggest advantage of a 20-something is time. We are the ones who have the luxury to think and act long term, and reap the results. Have the cake and eat it. Just like we have the exponent advantage in the compound interest game, we also have the advantage in snowballing the talent and the experience. As anybody who has played any multiplayer game that involves two brain cells would know, the winners in the end are always those who took all possible advantages that the game can offer them. And that is the real meaning behind founding a startup for a 20-something - snowball advantages not available to our less aggressive friends - the team, the knowledge, the experience. When we win, it won't be because of fairness.

Startup School 2009

I'm down at Berkeley for most of the day to attend Startup School, a very popular one day conference hosted by Y Combinator. The line up could be found on their homepage and I typed up notes for most speakers except two (too sleepy for that presentation and the other one wasn't that interesting...). There are about 700-800 technologists attending today.

Paul Graham

Paul asked founders who he funded about what have surprised them the most:

Emotional roller-coasters are much more extreme

Persistence is key

Think Long term

Lots of little things

Start with something minimal: over-engineering is poison

Engage users

Determination with flexibility: Fast iteration is key

Don’t worry about competitors

Expect the worst with deals

Investors are clueless

You may have to play games

Luck is a big factor

The Value of community

You get no respect

Things change as you grow: Roles of founders

Don’t expect startup is like a job

Summary: Overall, pretty good advice about what to expect when doing startups. The lines and quotes will be posted online soon. Many theories echo with the lean startup movement, which is all about iterating and launching fast and early.

Greg Mcadoo (Sequoia partner)

Economy doesn’t really affect the determination of entrepreneurs

Horrible economy headlines instead create innovation

- willing to try new things

- Often without choice

- especially trying to save money

- competition is less irrational

- landlords are ready to deal

- Everything is at fair price

- Recession rewards much more discipline

- Cash register Ringers: earn revenue early

- Committed Crew

Jason Fried (Founder of 37signals)

Bootstrapping- Day 1 bootstrapped company looks to make money, funded company looks to spend money

Practice making money, learn the art early

Funding is crap and an addiction

You can be as successful as you want to be on your own, don’t need others to anoint you

Best way to get feedback is to price it

Planning is Guessing

Useful > Innovative

Software has no edges

You can’t make just one thing

Apologize the right way: say sorry

Failure is not a rite of passage

Summary: Like last year, 37signals tries to debunk many glorious myths of being an entrepreneur. They are also big proponents of selling products for a price.

Chris Anderson (Chief Editor of Wired Magazine)

Freemium:

- Minority subsidize the majority

- Freeloaders cost little

- Free samples are the best marketing

- Multiple tiers of products

- Market segmentation

- Conversion = loyalty

Games: people will pay to save time, lower risk, things they love, status, if you make them

Feature Limited, Capacity Limited, Seat limited, Customer class limited

Summary: Talked about his freemium theory which is essentially different pricing structure with a free version for people to experiment. Quite applicable to the iphone platform and is what we're practicing with our PURI!

Paul Buchheit (founder of Friendfeed and gmail)

Limited life experience + Overgeneralization = Advice

Shared delusions in organizations if one works too long in it

Don’t be too comfortable

Way of internalizing knowledge is by trying and doing

Summary: Paul is obviously a brilliant entrepreneur. He had all the characteristics since he was young and his advice is to just do it and try things out because there isn't a formula to success and everyone has different background and circumstances.

Twitter (Evan Williams and Biz Stone)

So what if it’s just fun and not useful (think ice cream)?

The team likes the product and engages with it.

Engineering: Don’t go overly-clever

Make real effort of communication. Don’t assume you know what others are working on.

Advice they took is gut-checking

API is huge

Summary: Nothing too interesting here. They are probably hiding a lot of things that they couldn't share.

Mark Zuckerberg

Build an incentive structure to share information

Learnt from watching how people use the site

Went after the least receptive audience

A lot of mistakes could be overcome if you’re building something valuable

Management team has steadily evolved and improved

Focusing on technology culture

Google has a more academic culture

Facebook prides on building things fast, keeping a good engineer-user ratio etc.

Biggest risk you can take is to take no risk.

Be measured about doing things that are bold

He’s big on trends on openness and transparency

What tradeoffs are you willing to have to set the direction and values of the company?

Summary: First time listening to Mark speaking and I was impressed by his responses to most questions. He focused a lot on talking about Facebook culture and how it's different from that of Google. He's also big fan of iterating on both products and the management team.

Tony Hsieh (founder and CEO of Zappos)

Two books he recommended: Good to great, Tribal Leadership

Most parts of the talk are similar to the pitch that he gave at Stanford which I blogged some months ago.

What’s the larger vision and greater purpose in their work beyond money or profits?

Difference between Inspiration and Motivation

Don’t keep making compromises regarding hiring

Alignment: It doesn’t matter what your core values are…as long as you commit to them.

Vision and culture can inspire passion and purpose

Happiness: Perceived Control, Perceived Progress, Connectedness, Vision/Meaning

Types of Happiness: Pleasure/Rock Star (Chasing the next high), Passion/flow (Engagement- time flies), Higher purpose/Meaning (Being part of something bigger than yourself)

Summary: As usual, Tony loves talking about culture, vision and how Zappos could deliver Happiness to customers. This time, he has a little more analysis on Happiness and how we could break it down and analyze them.

Mark Pincus

- Control your destiny

- Aspire to be a great CEO

Treb Ryan, CEO of OpSource

Notes for Today's class featuring Treb Ryan (CEO of opsource.net):

- Cloud generation expectations: Immediate availability, sharing and collaboration, Ubiquitous Access

- Enterprise Storm Coming- Security and Compliance, Standards, Support, Management and Control, Performance

- Next CIO will demand the cloud

- Immediate availability = Complete Flexibility; No commits (can turn it off as fast as turn it on)

- Ubiquitous Access= Web+ Programability ; application can call infrastructure to work with increasing user or more need for CPU power etc; calling resources as you need it

- Sharing and Collaboration= Community Resources; users creating images

- Private Cloud not equals Enterprise Cloud

- Private Clouds are Virtual Environments Built on in-house infrastructure

- Security and Performance= Compliance and SLA's

- Standards= software and hardware

- Single User Systems= No Enterprise Control

-Multi User Systems= Management and Control; Private communities, Projects, Departments-->Centralized Control and Billing

- Sell additional support and services once customers use regular service (Good SaaS companies do this like Amazon)

Reid Hoffman

It's raining really hard today so I came in late to Hoffman's talk but here are some notes

Notes:

- He was mentioning the book Regional advantage

- Vision of modern career- individuals become a brand, small business, need network and manage their opportunity flows; what's my competitive edge?

- Theory of Internet: everyone is a publisher

- Linkedin on how work will happen globally across professional circles: Innovation happens when combining pieces and refining them. Trading work practices

- Most startup strategy is island hopping (finance, operations, finance...)

- Startup lesson: Trying to see something that others don't see (right now they think you're crazy but 2 years later everyone will be like duh...)

- Take competitive issues seriously

- Be willing to take a risk and be wrong

- Internet: Distribution, Distribution, Distribution

- Sites that get large can be thought of as platform for all kinds of things

- Part of entrepreneurship is just GO

- Philosophy applying to business is to think crisply but also think about possibilities

- Spent only 2000 on Adwords at the very beginning of company

- Virality: Create incentives to make it easy for others to share the site

- Zynga: how much fun social things are instead of Halo and other deep games. Chips as incentives.

- Very good to be focused, simple and clear to punch through the noise

- Don't do something that you think is just money

Kai Fu Lee's talk

Kai Fu Lee came to Stanford to promote his new incubator Innovation Work. I am honored to have the chance to give him the parking permit :)

Here are some notes I've taken:

- He started with the meaning of his name- Kai Fu (Beginning to revive China

- China Internet Market 338 million users; mobile users 155 million

- Chinese people use IM more than email (partly because of SMS and because of QQ built by Tencent)

- Music and Gaming growing really fast; Blog as well

- E commerce is only 1/3 of US

- Average age of internet user is 25 in China

- Young people rely completely on internet for news

- News and blogs have increased expression (this is with regard to censorship)

- Users are very curious: Eye tracking result (Chinese users browse the whole page)

- Internet cafes only break-even; they make money from instant noodles and coke; people stay for 12-24 hours there; they are also really good for dates

- Overcoming E-commerce obstacles like lack of trust and few credit cards: Escrow Payment, Bicycle Delivery, IM Micro Payment; they needed trusted brand; 50 X potential

- Entertainment Centric and Busy Pages

- 6-10 top 10 internet companies is in gaming space

- He mentions couple smart observations that have created huge businesses

- 90% users pay nothing; the remaining spends a lot (1000-5000 US)

- Real beauty certification !!!

- Cloud computing (software managed by server and can be modified from server); it allows you to charge money (internet connectivity)

- Video and news could not get license

- Pause ad- everytime you pause, pops up

- Mobile internet (China is 3G everywhere, government support)

- Usage was highest in Guangdong province because Guangdong mobile has the best flat rate plan (when price comes down, the market will explode)

- Google's Android is going to be huge according to Kai Fu

- Shenzhen Inc's reverse engineering capability is absolutely insane (Shanzai phone)

- Home Court Advantage will soon take over returnee's benefit

Bruce Chizen, Former Adobe CEO

I'm back blogging partly because I need to take notes for this class: CS 309a. Great seminar featuring awesome speakers (cs309a.stanford.edu). Today the class features Bruce Chizen and he looks a little like Steve Jobs.

At Microsoft, Bruce gets some sense of Microsoft culture. At Claris, he met the best leaders he has ever met Bill Campbell. At Adobe, Bruce balanced it to become a great company to work for and a company that is performance driven and result oriented (early day Adobe was 'fuzzy').

Bruce emphasized taking a step back and restating their values. He thinks every CEO will agree with it's much easier to make change when the company is in crisis mode.

Acrobat platform was built so that tools and other enterprise software could make a lot of money. Photoshop is really a platform too. Flash was critical to Adobe and therefore they spent 3.1 billion to buy Macromedia. Omniture's acquisition is also because of leveraging the flash component.

A question asked: Will Google docs make pdf obsolete? Bruce suspects yes and says it's up to Adobe to figure out the file format (he open sourced it).

Much of the open source initiatives are innovations on top of what a commercial company has already created, Bruce comments. Bruce thinks it's interesting to watch what's happening in the browser space and he guesses one of the two: Chrome vs. Firefox will dominate browser space. Also watch out for HTML 5 and Silverlight.

Strategic review: where are the cash cows, where are the potential homeruns; teams couldn't understand why resources are poured into other products that are loosing money (it's down to the management team to keep those projects from pre-mature deaths).

Once you have data, you go with intuition (great quote...). Need to be humble enough once you made a stupid decision (The Kinkos deal).

It's hard to make money on consumer software. Adobe will continue to play the consumer space as a defense play from competitors.

Do you cripple your own product? No. Need to target marketing messages carefully. This is regarding Photoshop vs photoshop elements.

Bill Campbell advice: Never compromise your integrity. What's the right thing? Is it for the company's long term benefit?

Engage all level of the company.

Don't live in an artificial world (story of Bill Gates not knowing PDF has taken over the file format because Microsoft is all using Microsoft office file format)

Anytime you compete with free, it's really hard. Spend a lot of time with customer to understand why they select one product over the other.

The leader must be intimately involved with the product, technology and the customers otherwise you can't make the right decisions.