Have you started your social network yet?

Or rather, 230,000 of them? That’s the promise (and achievement) of Ning, the latest effort by serial entrepreneur Marc Andreessen. The principle is simple: let people create their own social networks, for whomever and whatever reason. The results are amazing: the site is growing at 0.4% per day and aiming to host 4 million networks by the end of 2010, with billions of daily page views. That is a lot of users and a fortune in potential revenue.

Now, this is all information you could get elsewhere, like this excellent article from Fast Company. Andreessen is arguably the greatest entrepreneur of our generation, maybe of the entire Information Age to date (John Rodkin, my Business of Entrepreneurship for Lawyers seminar lecturer, thinks so). He is not the richest, of course, but Andreessen has a remarkable string of entrepreneurial successes. He co-founded Netscape (with Jim Clark, one of the founders of Silicon Graphics), which went public and was later purchased by AOL for $4.2 billion. He then founded the web hosting services company Loudcloud, which went public, sold a division, and was acquired for approximately $1.6 billion. That’s quite the record. Ning now has a valuation over half a billion dollars. Taking that into account, Andreessen has a simply amazing record.

Part of the reason for Andreessen’s success is his use of “viral expansion loops” (like viral marketing, but on crack). From the Fast Company article:

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.

Ning takes this a step further with “double viral loops;” a social network, by definition, is a kind of viral loop (think Facebook, MySpace, etc.), while a network of (or platform for) social networks gives each user the opportunity to create their own viral loop. Thus, the double viral loop, perhaps the most fiendishly clever marketing device yet thought of, is born.

Andreessen is probably as good a model as the enterprising web geek could want. If this is interesting to you, I strongly recommend checking out Andreessen’s blog and soaking it all in. Meanwhile, think you can build a community around your obscure hobbies? Ning has you covered.

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