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| SECTION
4: Case Studies and Riffs |
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| The
Vindigo Case Study
One of the best examples
of a company unleashing an ideavirus is Vindigo. You can find them
at vindigo.com on the web, and you'll need a Palm (or something
compatible) to use the software.
Vindigo is a directory of restaurants, entertainment venues and
stores in major U.S. cities. You download it to your Palm and carry
it with you. Tell it where you're standing (in the illustration
above, you're on the corner of Amsterdam and Broadway in New York
City), and it will show you whatever sort of restaurant or fun you're
looking for. Sorted by distance from where you are. With ratings.
For free.
What a killer app! I need to tell everyone. This is why
they invented handheld computers! IT'S SO COOL!
But, while that alone is grounds for this to become an ideavirus,
as described it doesn't seem particularly smooth. After all, after
a sneezer tells you about this cool software, you've got to remember
the name (vindaloo? indigo?), go home, type it into your browser,
download it, synchronize it, etc. A disaster. No way it's going
to work.
Which is where the smooth part comes in. You see, right on the bottom,
underneath the buttons for eating, shopping and entertainment, is
a button that says "give."
So, when a sneezer is going on and on and on about how cool this
is, you just take out your Palm, they take out their Palm, press
the give button and sixty seconds later the entire product is
now on your Palm!
That's smooth. It's about as close to perfect smoothness as you
can get.
It goes beyond smooth. It's persistent. The next time you synchronize
your Palm with your PC, it will automatically upload all the ratings
you've put into the computer and get you an updated version. Instantly.
Automatically.
The ideavirus has stuck.
Is it working? Well, the folks at Vindigo seeded just 100 sneezers
with the original version of the program. Then they spent virtually
nothing on advertising and waited to see if the virus would spread.
It's now the fastest-growing application on the Palm.
Note that this isn't viral marketing in the sense that Hotmail is.
You can happily use Vindigo for months without mentioning its existence
to a friend. Vindigo works really well, but it also happens to be
optimized for spreading the ideavirus.
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Saving
The World With An Ideavirus
The Prius is a new car from Toyota. And it's the only car that's ever
won an award from the Sierra Club. This is the car that's supposed
to save us from ourselves, to take a whack out of the greenhouse effect
and to conserve our remaining fossil fuels.
How? By using an engine that's a hybrid of gasoline and electricity.
By getting more than 90 miles to the gallon, giving very good performance
and emitting close to zero pollution. I dearly hope it succeeds. THIS
CAR IS IMPORTANT!
Unfortunately, because Toyota is a factory-based company that uses
ideas (instead of being an idea company that owns factories) they've
built the product completely backwards. I'm confident that someday
everybody is going to be driving a car as positive for the world as
the Prius, but it won't be because of the way this car is
marketed.
Let's start with the name. How can you tell someone about a car you're
excited about if you don't know how to pronounce it? Is it pry-us,
or is it pree-us? I don't want to feel stupid, so I just won't say
the name.
Second, is there a smooth way for me to spread the word? A visit to
the Toyota website doesn't even show the Prius on the home page, and
when I search for it, I get a very nice page. But where's the "tell
a friend" button? How can I set up a test drive? Is there a place
for me to give my email address so I can give permission to get information
on when the car is going to be available in my neighborhood? Alas,
no on all three counts.
What about a community activism component with teenagers going door
to door with petitions, hoping to lobby the local government to buy
Prius police cars? Or letter-writing campaigns that spring up from
grassroots environmental organizations around the country...?
But the biggest mistake Toyota made was the way they designed the
car. Unlike the VW Beetle and the Mazda Miata, the Prius is not a
driving billboard for itself. Here's what it looks like:
You could have 1,000 of these cars drive by and you'd never, ever
notice it. You wouldn't notice the styling, you wouldn't notice
the gas mileage or the lack of emissions--and you certainly wouldn't
aspire to own one just by looking at it.
Is Toyota on a mission from God? Are they acting like zealots, aggressively
pushing a car that will change the world for the better, the most
powerful idea to come out of the car industry since Henry Ford perfected
the assembly line? We need passion from our manufacturers.
What a lost opportunity! An idea merchant in search of a virus would
take a very different tack. Instead of trying to make it cheap and
boring, they'd realize that the first people to buy a car like this
are people with money to risk on an unproven technology. Realize
that the opinion leaders and nerds who are most susceptible to this
idea are also the most likely to want to drive an exceptional car.
I'd redesign the thing to be stunning. Different. Unique. Maybe
a permanent bumper sticker announcing my current gas mileage on
an LCD readout. Or a fleet of far-out colors. The first 50,000 people
who buy this car will be doing it to make a statement. And every
person who does will be making that statement to the 1,000 or 10,000
people who see them driving it. A virus waiting to happen.
Remember what I said about the VW Beetle? 180° difference.
Toyota forgot to pick a vector for this car. They don't know exactly
who they want to buy it, so they designed it for everyone. Precisely
the opposite strategy of the new VW Bug. But remember, an ideavirus
adores a vacuum, and there is a very big and very empty vacuum just
sitting here, waiting to be plucked. Toyota could have picked any
vector they wanted, leading to any hive they chose, and yet they
chose none.
And finally, I wouldn't let just anyone buy the first models off
the line. I'd select the very best sneezers, the loudmouths, the
pillars in their community and do whatever it took to get these
folks to drive a car. James Bond? Julia Roberts in her next film?
The mayor of Carmel, California or the head of Greenpeace?
This is urgent. This isn't about making another few million bucks
from a website. It's about infecting the population with a good
virus, and doing it before the vacuum fills up with junk and it's
too noisy to communicate about it.
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Is
UNLEASHING THE IDEAVIRUS An Ideavirus?
Here is the step by step plan I'm using to turn this manifesto into
an ideavirus:
- Describe something
important and cool and neat and useful and new, and do it in compelling,
clear and exciting words.
- Launch the virus to
the largest audience of sneezers I can find. In this case, that
means the readership of Fast Company. Do it with graphic
splash and panache and impact.
- Make it smooth. Post
the entire manifesto at www.ideavirus.com.
Include commentary from big-name authors, pundits and industry
professionals. Include the entire text of not just the manifesto
but the entire book. Make it easy to send the book to a friend.
Include an audio version of the book. Include my powerpoint slides.
All for free.
- Run ads to create
an environment in which sneezers feel comfortable spreading the
manifesto to others.
- Maintain the virus
as it grows by doing speaking engagements and distributing free
copies of the hard-copy version of the manifesto to appropriate
sneezers.
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Moving
Private To Public
One of the challenges facing oldline companies as the ideavirus becomes
more important is that they're used to providing private services.
Your friends and acquaintances probably have no idea what brand of
PC you have, whether you have gas or oil heat, how often you see the
chiropractor or what your favorite kind of wine is.
Because of the private nature of these relationships, the only way
to expand the market for them is for the marketer to spend more money
and interrupt more people with more junk ads. BUT, if they can figure
out how to make them public, if they can figure out how to launch
an ideavirus, the whole equation changes.
Here's an example: your frequent flyer miles.
American Airlines has made a fortune using frequent flyer miles to
induce loyalty, and just as important, to establish a currency that
they sell to other companies.
But none of your friends really knows your frequent flyer habits.
You almost never talk about them unless something exceptional happens
that you want to brag about... like buying tickets for the whole family
to fly to France with your miles.
There are a number of things that American Airlines can do to move
miles out of the closet and turn them into an ideavirus. For instance,
they could allow people to buy, sell or trade their miles. Would this
lead to more mileage redemptions (a bad thing)? Sure. But it would
also turn miles back into a nationwide fascination.
Far more clever would be to make the following announcement at a convention
jammed with business travelers: "If you can find someone at this
convention who has precisely the same number of miles as you do, we'll
give you both a million miles." Suddenly, every person you meet
wants to talk to you about your mileage status.
Hakuhodo, one of the largest ad agencies in Japan, used a similar
approach and turned it into a national craze. It seems that sending
New Year's cards is a big deal in Japan...much bigger than Christmas
cards.
Most people buy their cards at the post office--envelope and stamp
included. When you send a card, it comes with a lottery ticket, good
for a small prize if the recipient wins (a bicycle, a radio, etc.).
Hakuhodo runs their promotion on the Net. And the cards are free to
send (no stamps, no fee). But the best part is that if the person
you're writing to wins, you win the same prize. So, the more
you send, the happier your friends are, and of course, the happier
you are.
Not only did this promotion go viral, it turned into an epidemic.
In 1998, 25% of the people with Net access in Japan either sent or
received one of Hakuhodo's cards. And Hakuhodo cashed out by selling
ads in each and every one of those cards.
In order to turn these public ideaviruses into useful, long-term assets,
the companies that create them need to gain permission from people
to follow up directly. Then, they go back to private marketing, at
a very low cost, with excellent results, until they're ready to go
public again with another virus.
Of course, going public doesn't mean you have to run a selfishly oriented
promotion. When I was in college, the gay and lesbian center ran a
campus-wide activity called "Wear jeans on Wednesday if you're
gay." Suddenly, something that had been a private topic was now
the topic of discussion among everyone. If you weren't wearing jeans,
was that because you were afraid that people thought you were gay?
Is there something wrong with being seen as gay, whether you were
or not?
One simple act turned the notion of sexual preference into an ideavirus
and generated thousands of hours of intense discussions about how
society (and how we) viewed the issue.
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You're
In The Fashion Business!
Without question, the most difficult part of unleashing a manifesto
is creating something that's virusworthy. And one of the key components
of that art is understanding the fashion moment.
Why do open-toed shoes come and go? Bell-bottoms? Miniskirts?
How is it that every year, multiple clothing designers launch very
similar clothes, without consulting with each other in advance?
Source:
Corbis
Why is it that we rarely
see people dressed like the two women above? Did these folks wake
up one morning and go out and buy the entire outfit at once, or
did it happen gradually?
Why do some Internet businesses (group scheduling, free email, health
portals) seem to appear simultaneously, even though it took them
months or years to launch?
The
fashion moment occurs when a respected hive member takes a chance
and tries out something new.
One of two things occurs when a hive member shows up with a new
"outfit":
- The hive embraces
the new. They start wearing a nose ring or get a tatoo or switch
from using a Filofax to using a Palm. When this occurs, the respected
member gets MORE respect, becomes more influential and reinforces
his position as a powerful sneezer.
- The hive rejects the
new. Many times, the person who introduces the new item will be
ignored or ridiculed (this happens more to the less-respected
members of the hive, but it happens to everyone sooner or later).
When this happens, the person who tried to introduce the new fashion
loses respect, becomes less influential and is usually less likely
to try again in the near future.
Obviously, respected
members are hesitant to lose their positions of influence, hence
the consistency and uniformity among hives.
Some hives are incredibly conservative (go to the Assocation of
American Actuaries annual meeting and you won't see an awful lot
of surprising new innovation), while others are known for their
daring (the trends demonstrated on the New York City nightclub scene
oscillate like the NASDAQ).
Some people--I call them fashion editors--seem to have an innate
sense for knowing when a hive is ready to adopt a new virus. Successful
venture capitalists, journalists, chefs, research and development
labs and record label executives are great fashion editors.
Clive Davis at Arista Records was a stellar fashion editor in the
music business for generations. He launched dozens of breakthrough
acts... from Aretha Franklin to Whitney Houston, Carlos Santana
to Patti Smith. The only thing they had in common was that they
were just right for their time. A month earlier or a month later
and they might never have succeeded. (Well, maybe Aretha would have
succeeded no matter what...)
But no fashion editor is infallible, and if they're not careful,
they fall into one of two traps:
They
lose touch with the hive and fall in love with their own taste.
Without the feedback loop the hive provides, they "lose their
touch." Someone who had a seemingly hot hand starts failing.
Warren Buffet is a brilliant stock market investor with an extraordinary
ability to understand what other people are going to want to invest
in. But when Internet mania started to hit the stock market, Buffet
lost his ability to predict what the hive would predict. I think
he DID know, but overruled his sense of what would happen with his
own common sense. Buffet left billions of dollars of profit on the
table because he refused to believe that the Internet stock ideavirus
would spread across the hive of investors.
They
stop thinking of themselves as fashion editors and start to believe
that they are fashion makers. Rather than acting like
someone who has a sense as to what virus will hit the hive next,
they believe that they are respected enough by the hive to FORCE
them to accept the next virus.
Fashion designers are famous for this, as are rock groups, authors
and product marketers. Take a look at New Coke--the biggest flaw
in the introduction of this product was that Coke believed that
if they willed the consumer to adopt a new formula, the consumer
would do as they were told. Instead of spreading like a virus from
a respected hive member, they tried to ram the formula for New Coke
on the hive. The hive rejected it.
The challenge your business faces is finding or training a fashion
editor. Launching products too early is just as bad as launching
them too late--if you miss the timing, you fail to fill the vacuum
with your virus. Miss the timing and the profit belongs to someone
with better timing and better fashion sense than you.
To those dedicated to the idea that your business is a factory,
all this must sound like heresy. After all, if you wanted to go
into the fashion business, you'd have gone into the fashion business!
But, like it or not, we're all in the fashion business.
A few years ago, there was plenty of cherry wood to go around. People
weren't making much furniture out of it... it wasn't in style. Then
a furniture designer named Thomas Moser decided that his fashion
sense was telling him that cherry wood would make a comeback. That
once people saw how beautiful the wood was, the idea of furnishing
your house in this warm, comfortable wood would spread through his
chosen hive.
Moser built an entire company around cherry wood furniture, and
bought thousands of acres of prime cherry in anticipation of demand.
Today, Thomas Moser has grown more than 30% a year for the last
ten years, with showrooms in New York and overseas selling $5,000
tables and $3,000 chairs. Not because the furniture is great (which
it is) but because he created a fashion that resonated with his
hive, because he launched an ideavirus.
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The
Money Paradox
The
sooner you ask for money, the less you'll make.
The single biggest mistake idea merchants make is that they ask for
money too soon. On one hand, you want to charge early and often, so
you don't waste time on people who are just looking, and so you can
maximize your income before your idea fades. "Take the money
and run" is a cliché for a reason.
But this strategy introduces friction into the system. Many marketers
require people to pay the most when they know the least. For example,
why don't movie studios run a day of free sneak previews to get the
virus started, and then charge more once everyone wants to see the
movie? Today, if you want to taste a new movie, you've got to pay
$8 for the privilege.
On the Internet, dozens of new businesses have discovered how important
this model is. A company called eFax offers a service that lets you
get faxes delivered to your email box. They launched it as a totally
free service. Why? Because it's scary enough to be one of the first
people to try something as flaky as eliminating your fax machine.
And it's even scarier to pay money for the privilege as well...
So eFax has a plan: get people hooked on a free system. Build an ideavirus.
Then upgrade people to a paid system that offers all sorts of extras.
- Fill the vacuum
- Achieve lock-in
- Extract revenue
They can fill the vacuum
by getting in first and furious and spreading the virus. They can
achieve lock-in by making it hard for people to switch to a competitor
(what a hassle to keep changing your fax number!). And finally,
they can extract revenue by offering value-added services or selling
advertising.
In that order!
Will eFax be guaranteed an easy upgrade path to paying customers?
I have no idea. Some businesses (like email) will be stuck at FREE
forever, thus making the whole journey hard to justify. In this
case, they could offer free faxes with an eight-hour delay before
you get them, but for $5 a month, you get the faxes instantly. So
it's free for me to try out, free to spread, but profitable after
lock-in is achieved.
The challenge, of course, is to figure out which businesses have
a payoff at the end. The challenge is also to be patient enough
to wait, to introduce the friction of charging at just the right
moment.
Watts Wacker catapulted his career by writing The 500 Year Delta.
After the book came out, people started to hand it around, to embrace
his ideas. This led to larger audiences and a dramatic increase
in bookings for speaking engagements. In a few months, I'm confident
he made more in speaking fees than he had from royalties on the
book. By letting the ideavirus grow before trying to extract much
profit, he was able to make more money in the end.
In very transparent markets like the Internet, the fear is that
all ideaviruses will be so competitive that you'll never be able
to extract money. That's why the race to fill the vacuum is so intense.
If you can fill the vacuum aggressively and permanently, it is far
easier to extract money.
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Think
Like A Music Executive (Sometimes)
There are plenty of lessons you can learn about viruses from folks
in the music industry (current behavior notwithstanding, but more
on that later).
First, industry executives realize that nobody buys a CD because they
like the quality of the polycarbonate disc. If you don't like the
idea of the music, you're not going to buy it.
Second, they realize that making money later is way more important
than making money now. They learned this the hard way. Consider radio
for a second. Before radio, music sales were tiny. Why would you buy
a song for your Victrola if you'd never heard it before? How could
you know if it was any good?
At first, radio might seem like a threat to the recorded music industry.
After all, they play the ENTIRE song, not just a few notes. And if
it's a hit song, you can hear it night and day on the radio every
few minutes if you're so inclined.
For a while, the music business fought the idea of radio stations
playing songs for little or no compensation. Then, in the 1950s, they
realized how valuable airplay was--so valuable that a congressional
inquiry discovered that music labels were bribing disk jockeys to
play their records.
Fast forward a few decades to MTV. Once again, the music labels balked
at supporting MTV's insistence that they provide expensively produced
music videos--for free! It took a year or two for them to discover
that MTV made hits--that giving away the music for free turned
out to be the best way to sell the music.
Music execs know that you'll pay nothing to hear a song on the radio,
but if you like it, you'll gladly pay $15 for the CD. And that if
you love the CD, you're more likely to pay $40 for tickets to the
local concert, where you might be converted to a raving sneezer, much
more likely to infect your friends and neighbors with raves about
the band, the song, even the souvenirs!
For some reason, history is repeating itself. Rather than embracing
Napster, the software that lets millions of people listen to each
other's CD collections, music moguls, fronted by the hard rock band
Metallica, are once again complaining about the free distribution
model.
Even if the record companies are able to beat Napster in court (a
likely outcome) it won't matter. There are already dozens of technologies
(like gnutella) waiting to take its place, and each will be harder
to stamp out than the one before.
Patience! Instead of hassling Napster, they ought to figure out how
to license Napster and the others, probably in exchange for intensive
promotion of their hottest acts. Why not let me subscribe to my favorite
bands, paying for live performances or attending private concerts
or buying T-shirts. I'm certain that if the Grateful Dead were still
around, their primary income source would be souvenirs, followed closely
by live concerts. Is that what the record companies want? Doesn't
matter. It's what the network is going to deliver, regardless of how
they feel.
Is the CD going to disappear? Absolutely, regardless of what happens
to Napster. What will determine the future of the record business
is whether music execs are able to redefine their jobs around what
happens after they ignite a virus over Napster or its successor.
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Is
That Your Final Answer?
When a sneezer is ready to spread your ideavirus, what should
he say?
It sounds like a simple, almost silly question, but it goes to the
core of how smooth you can make your virus. If you give sneezers easy-to-follow,
effective instructions, they're likely to follow them, because, after
all, their goal is to spread the virus.
On "Who Wants to Be a Millionaire?" the producers insist
that Regis Philbin repeat the catchphrase, "Is that your final
answer?" almost to distraction. But now it's become a powerful,
smooth tool for sneezers who want to spread the virus. I must have
heard the phrase fifty times and read it in dozens of newspaper columns
before I saw the show for the first time.
By giving loyal watchers a five-word catchphrase, the producers created
(intentionally or not) a powerful shorthand for referencing the show.
Hotmail did the same thing with the sig file in the free email each
person sent. Right there at the bottom of each email, with no additional
work on the part of the sneezer, were specific instructions on how
to get Hotmail.
Buffalo Springfield and the Beatles did the same thing with some of
their songs. It took just a few notes--an investment by the listener
of seconds, not minutes--for them to expose their "idea"
to a new listener. By working so hard on the first chords of the song,
pop music producers (and Beethoven for that matter) made their products
far smoother. It's easier to share the song when you can hum the riff.
For most ideas, the web can be a powerful tool to help with this.
What might a website for sneezers look like?
The first touch, the first impression and first visit, must go beautifully.
It's got to be fast. It should contain exactly what you've tested
and discovered that most effectively captures the attention of the
first time-visitor. You're in control in this moment, and you can
make it work or not.
The site should also be filled with tools that make it really easy
for a visitor to become a sneezer. Get
out of the way. Give the sneezer something to share. Do like
Tom Peters (at www.tompeters.com) and include all your Powerpoint
slides. Don't require registration or permission at this stage. Let
them in, sell them on the idea, then give them the (free) tools to
share.
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| A
Dozen ideaviruses Worth Thinking About
| Company
|
Big
idea |
How
you spread the virus (the medium) |
| Polaroid |
Instant photography |
"HEY! Look at
this," you say at the party. |
| Tupperware
|
The best food storage
devices |
Get your friends
to sell their friends--multi-level marketing |
| Fax machine
|
Documents delivered
by phone |
The more you sell
to your business associates, the better your machine works. |
| Home Shopping
Network |
Shopping via cable
TV |
"Hey Madge!
Look what's on Home Shopping," you say to your friends
on the phone. |
| Fast Company |
Journal of the new
economy |
Company of Friends--monthly
meetings of local fans of the magazine. |
| Carmine's
Restaurant |
Tons of food, tons
of garlic |
Six-person minimum
for reservations--you need to sell your friends to get in. |
| Beany Babies
|
Collectible teddy
bears |
If other people start
collecting, your collection increases in value. |
| Gamesville
|
Super sticky games
on the web |
Word of mouse--email
your friends and invite them over. |
| Hotmail |
Free email
|
Totally viral...every
mail you send promotes it.
|
| Tommy Hilfiger |
Urban preppy chic
|
Logo virus--the more
you wear the logo, the more people see it. |
| "The
Cathedral and the Bazaar"
|
Open source programming
works |
Enabling powerful
web sneezers to spread the word by giving them a powerful
manifesto they can share. |
| Vindigo |
Zagats on my Palm |
"Give
it to me," and a friend can beam it over in seconds. |
|
|
|
Why
I Love Bestseller Lists
One of the critical moments in the spread of an ideavirus is the question
the consumer asks before diving in: "Is it worth my time/money?"
Of course, your recommendation is important to me. Of course, I want
to look as good as you, be as smart as you, have as much fun as you.
But I also care desperately about everyone else's opinion. After all,
none of us is as smart as all of us!
The most common way this popularity is reinforced is that the user
will hear about a new ideavirus from more than one person. Usually,
we hear about something first from a promiscuous sneezer, someone
who has some sort of benefit from making the recommendation, or at
the least, someone who's always recommending stuff. We all
know somebody who eats out every night or listens to every CD or is
into whatever bizarre conspiracy theory has gripped insomniacs this
week.
But then, sometimes we hear about the same ideavirus from someone
else. And then another person. Finally, we realize that something
is really going on, and we investigate.
In the real world, these reinforcements are usually caused by sightings
or physical interactions. Riding through the New York subway last
year, I encountered a kid wearing what appeared to be a black stocking
on his head. But along the hem were the words, "Tommy Hilfilger."
It seemed like an odd affectation and I let it go.
A week later, I saw four more Hilfiger skull caps. In the week after
that, a dozen. If I were in search of genuine urban chic, I certainly
would have bought one at that point, if only to protect my trademark
bald pate from the winter chill.
The same thing happened with the VW Beetle. First there was one in
my neighborhood (a yellow one) and then a few, and then a dozen. With
all these reinforcements, I assumed that it was now a safe thing to
consider, and went to the dealer to have a look for myself.
Online, the rules are very different. There is no physical world to
bump into. Instead (and even better for the statistician in each of
us), there are actual digital counters and accurate, up to the minute
bestseller lists. No guessing. No inferences. The real scoop.
Amazon.com has a bestseller list more than a million titles long.
Visit any title and you can see where it stands compared to every
single other title in the world. Wow. Now we instantly understand
what's hot and what's not.
MP3.com has done the same thing with music. As a track gets played
more and more often, it moves up their digital bestseller list. And
yes, Zipf's law works here too--the topmost tunes are downloaded far
often more than those just below them.
We use the same math when we look at the MediaMetrix list of the most
visited websites, or Variety's tally of the weekly box office numbers
(some people saw "Titanic" just because it seemed that everyone
else was). Various organizations also track bestselling cars, bestselling
vodka and highest-paid executives.
One
of the best ways to facilitate adoption of your ideavirus is to find
a bestseller list that makes sense and then dominate it. If that's
impossible, figure out how to create your own bestseller list and
popularize that!
This isn't just conjecture. A breakthrough paper by Stanford Business
School professor Kirk Hanson demonstrated this in a really profound
way. His team artificially boosted the bestseller status of files
for download on the web (they downloaded one file over and over again,
increasing the counter of how often it had been downloaded). The result?
Heavily downloaded files get downloaded more often! Nothing was changed
but the counter, but users were more interested in seeing the most
popular files. Simple, but true.
Want to launch a new drink using your company's chi-chi liquer? Why
not identify the right bar, frequented by powerful sneezers in the
hive you're targeting. Then pay the bar to post a "bestselling
drinks list." Now, bribe enough folks to go in and buy themselves
a drink. Soon, you'll see your drink climbing the bestselling drinks
list, and this alone ought to be enough to get other--less easily
bribed drinkers--to give it a try.
Of course, sampling doesn't always lead to the spreading of a virus,
but without sampling, you've got no chance, do you?
|
How
A Parody Of Star Wars Outsold Star Wars
According to USA Today, a parody called George Lucas In Love
is currently outselling the new Star Wars movie on video
on Amazon. How is this possible? How can mighty Twentieth Century
Fox be beat by a nine-minute, $8 handmade film?
Because the parody is an ideavirus. And because the medium of the
Net is the perfect place for the word to spread.
In the old days, if you made a movie, you needed movie theaters
across the country to show it. That's way outside the reach of an
entrepreneur, regardless of how clever his movie is.
Videotape leveled the playing field a bit (Blockbuster can carry
hundreds or thousands of titles) but it's still very difficult,
time-consuming and expensive to force your way into nationwide distribution.
But Amazon is a different story. Amazon prides itself on carrying
just about everything. Since they don't have to carry much inventory,
Amazon doesn't take much of a risk by listing a title. And the entrepreneur
can certainly find his tape listed along with the thousands of others
available.
So distribution is the easy part. But how to spread the idea?
Well, the parody fills a vacuum. In this case, the vacuum was "funny
and interesting news about Star Wars." Certainly, the launch
of the videotape was a yawner, the mania about the film version
having largely subsided. Would many people buy the video for their
libraries? No doubt. But it wasn't news.
But now, here's an email telling me that someone has seen the funniest
little video. It's hysterical, my friend says. So I click on over
to Amazon (using his affiliate link, I notice--he may be a powerful
sneezer, but he's also making a profit on this virus). There, I
note more than 100 reviews, all of them positive. I see that it's
a bestseller. I realize that there's almost no risk here, certainly
worth ten bucks and a few minutes of my time. I buy it.
And after I see it, I'll tell five friends. This time using my
affiliate relationship.
A classic ideavirus. Yes, it would have grown faster if the filmmaker
had just put the video online for free, but he was stuck in the
mindset of making money now. Yes, the charge and the wait for shipping
definitely slowed the virus down, but at the same time, it was a
nice balancing act--a slightly slower virus in exchange for tens
of thousands of dollars (and probably a contract for a real movie
from a studio).
If it were me, I probably would have posted a low-resolution excerpt
of some of the funny parts online... it's going to happen anyway,
so the filmmaker might as well do it and thus control what the sneezers
say while also increasing the velocity of the virus.
|
Wassup?
I first heard about the Superfriends parody in an email. Apparently,
some clever animator had taken the soundtrack of the ubiquitous Budweiser
commercial and replaced the video portion with Batman, Superman and
Aquaman hamming it up and having a few brews.
Clicking on a link (pretty smooth transition from interest to exposure,
you'll notice), I see that it's on a reputable site and happens to
be one of the most downloaded files (a bestseller list!).
Soon, I'm laughing out loud. It really is funny. Of course, I've got
to tell three friends, so I do. It's going viral.
A few weeks later, a site launches another Wassup parody. This one
uses the AP photo of Elian Gonzales as the star. But this time, the
virus grows far faster, with more than 100,000 people seeing it in
less than 24 hours.
Why did it grow so fast? Because everyone who had seen Superfriends
and liked it didn't need much coaxing to get infected by this one.
By tapping into a virus-friendly base, it took much less effort for
the marketer to get the message to spread.
(Of course, this is a paradox, because the ideavirus loves a vacuum.
In this case there wasn't a vacuum--the Wassup parody was an old joke.
So, in order to make an impact, it had to be fresh and at least as
funny. But once it cleared that hurdle, the rest was taken for granted.)
This time, though, the ending of the cycle was very different. The
Associated Press fired off a letter to the site behind the virus,
claiming copyright infringement and not interested at all in the idea
of parody and its protection. So the short movie came down.
Inevitably, if you create a piece of digital media that becomes popular,
someone is going to parody it, or at the very least, use it in a way
that you're not delighted with. If your digital media becomes that
popular, odds are you should embrace it, not fight it. Budweiser,
for example, has wisely let the parody virus spread unfettered. Being
parodied online is a shortcut to burning the Budweiser brand further
into our subconscious.
|
Judging
a book by its cover
No question, a great cover can make or break your book. Kurt Andersen
wrote one of the funniest books I've ever read (Turn of the Century)
but, by all accounts, it didn't meet sales expectations. Why? One
reason is the cover, which is one of the worst I've ever seen in my
life.
Remember, the search for Medusa is usually a hopeless quest. But just
as it's difficult to sell someone on your ideavirus with just an image,
it's also nearly impossible to suck them further in if the image is
offputting, inconsistent or boring.
Boring is probably the worst offense. Whether your product is a book,
a trading card, a car or even the tag on a bag of tea, boring is the
obvious, but wrong, solution.
You've worked very hard on the stuff "inside." You've refined,
tested, edited and slaved to make sure that the idea is powerful indeed.
And then it comes time to make the package--the cover. The prevailing
wisdom is to create a cover that's attractive but not offensive. Something
that will attract attention from everyone and offend no one.
This is nonsense, of course. It can't possibly attract everyone and
offend no one. The very best cover images are like a cold glass of
water thrown in your face. They break one or more rules of graphic
design or industry rules of thumb. They play off existing images but
change them in a vital and important way. They're loud. They attract
the eye, but they also hold it. And most of all, they intrigue us
enough that we need to understand what's inside: we set ourselves
up to be exposed to the virus.
When Yahoo! first launched, the company name and logo broke every
rule in the book. But co-founder Jerry Yang will be the first to tell
you that in a world populated with Lycos, AltaVista, InfoSeek and
Architext/Excite, Yahoo! was the easy winner. Easy to spell. Easy
to type. Easy to tell other people about.
And it had personality. It meant something.
Was it risky? I don't think so. A boring, hard to spell, meaningless
name like Lycos was risky.
|
Being
The Most
Turns out there's been a battle going on for a few years--the battle
to make the hottest hot sauce in the world.
At the beginning, you made a hot sauce by using peppers. Hotter peppers
made hotter sauce. And a sauce made from Scotch Bonnet Peppers (the
hottest peppers on Earth) was the hottest sauce on Earth.
Then, some nutty scientist figured out how to extract just the essence
of hotness from Scotch Bonnet Pepper puree. By using gas chromotagraphy
or some other evil technology, he was able to create a sauce more
than 1,000,000 times spicier than your basic pepper.
Why does this matter? Because being the hottest hot sauce ever made
is like being the Mona Lisa. Because if I've managed to eat chili
with the hottest hot sauce ever made in it, I'm going to tell my friends.
I'm going to spread your hot-sauce virus. If it's the second or third
hottest, who cares?
There's
always room in any list for the world record holder. The greatest
basketball player who ever lived, or the nastiest restaurant owner,
or the fastest computer. It's noteworthy. It's news. It's worth sharing.
My dad's hospital crib company dominates the market, making most of
the cribs that are used in hospitals around the world. Their standard
models cost $700 to $2,000 each, and they last forever. How to grow
the business? How to get more attention and more sales?
His engineers found a leading hospital, and together they designed
the best (and the most expensive) hospital crib in the world. With
all the options, it costs about $7,000. Yet it's selling like crazy,
from the Philippines to Tuscon. Why? Because it's worth talking about.
Because it embodies an idea, and it's an idea worth sharing.
Google.com has plenty of traffic, yet they've never spent a nickel
on advertising. How? Because it's the fastest and most complete search
engine ever built. Electronically amplified voices--from nerds to
magazines--are happy to trumpet the idea that there is a faster, better
way to search than using the tried and true favorites.
As you think about a corporate virus or a personal one, consider:
What you are the best or the most at? How can you
refine and amplify those traits to create a Wow! product...a world's
record holder that is worth mentioning?
And by the way, if you're not facing a vacuum (and most of us aren't
lucky enough to be in that position) you've got to be ten times better
than what's already there, if you're going to start your own virus.
|
In
Defense Of World Domination
Targeting
isn't enough. Being a world record holder isn't enough either. You
also need to dominate your hive.
Having 5,000 loyal, rabid fans of your ideavirus is great. Unless,
of course, your audience is the population of Massachusetts. To dominate
Massachusetts you need a lot more fans than that. Without the power
of reinforcement, your virus will peter out. Unless individuals are
hearing from sneezers again and again, your virus will slow and will
probably die out over time.
Imagine, instead, that you have 5,000 fans at Stanford University,
which is a hive with a population of about 15,000. The chances that
you'll be exposed to every other member of the hive is huge. Why?
Because if each one of the 5,000 fans tells just a few other people,
you're already hitting each person more than once. And if the idea
is virusworthy, that's probably enough to dominate the entire campus.
Even the laggards will surrender when they see everyone else is doing
it (even the accounting department at my old company did the Macarana
at the company Christmas party).
Malcolm Gladwell calls this the tipping pointD--the idea that creating
and propagating an ideavirus is not enough. The biggest win comes
the last time your virus doubles in size. The biggest win comes when
you've so dominated the hive that the last folks (who are often the
most profitable folks) can't help but come along. They tip because
they hear from so many respected sneezers that they feel they have
no choice but to get on the bandwagon.
This happened with AOL. A few years ago, AOL was paying $300 in marketing
costs to get one new member. All those CDs that showed up in every
magazine were expensive, but they were effective.
But how could AOL justify spending $300 to get a member who had a
lifetime value of just $124? Jan Brandt, the genius behind the campaign,
realized that if she could win at this expensive part of the curve,
the game would soon turn in her favor. She knew that once she got
over the hump and dominated the hive of people about to go online,
the next generation of users would come along far cheaper.
She was right. Once AOL established dominance for new users, they
established a network of powerful sneezers. Powerful, because these
were folks who until quite recently had been new users. These once-new,
once-lost users had the credibility to spread the word to those just
behind them on the learning curve. They were powerful because they'd
been there, and their personal experience counted for more than any
salesperson's could.
The virus had authority, because every "bestseller" list
credited AOL with being far and away the most popular Internet service
provider in the land. Today, someone at Sun City who until recently
had no idea what they were talking about when they said "Internet"
could proudly recommend AOL to the person in the next condo. AOL now
spends about $100 in marketing to get a new member--because their
virus tipped.
There's plenty of interesting action that occurs before the tipping
point, though. Viruses need to spread before they tip, and a smart
marketer can be quite happy indeed along the way.
Dominating the hive is essential in starting the virus in the first
place. And most marketers make the mistake of picking too big a hive
to focus on in the first place.
If you go to the Consumer Electronics Show in Las Vegas, you'll see
one of the largest trade shows in the world, and you'll also see hundreds
of companies spending millions of dollars trying to dominate the show.
All of them fail. Which is why it's so rare for a virus to be launched
at the CES. It's just too noisy, and there are no exciting but safe
recommendations for the most powerful sneezers to make.
The smart marketers take a different path. They launch at Demo or
Spotlight or Esther Dyson's conference--a much smaller venue, but
a higher concentration of powerful sneezers. Here, for about the same
money as making a whisper at CES, you can completely dominate the
discussion.
|
If
You're A Member Of The Academy, You Go To Movies For Free
If there's an association of powerful sneezers, it's the Academy of
Motion Picture Arts and Sciences. This association of actors, screenwriters
and directors has celebrated movies every year for nearly a century,
and every year it seems to get more popular and more influential.
If your movie wins an Oscar, you can count on a blip at the box office,
and even better, a long, profitable life on video. And of course,
any actor who wins one has a label that will enhance his career forever.
So, how much do the studios charge Academy members to go to a movie?
That's right, nothing. Not only that, but the studios are delighted
to deliver the latest movies to an Academy member's home, on her choice
of VHS or DVD.
Why? Why give the movie away? Well, here it should be pretty obvious.
The leverage that comes from building buzz among Academy members more
than pays for the cost of sharing the movie with them. In fact, the
benefits are so obvious that studios like Miramax have been accused
of trying to buy the Oscars by throwing hundreds of thousands of dollars
of trade advertising at Academy members.
Well, if this is so obvious, why bring it up? Because your idea, regardless
of marketplace, has a similar group. Maybe it's not as easy to find
or as easy to reach, but there
are powerful sneezers in the audience for almost every idea.
It's the money paradox, but on a much smaller scale. Finding these
sneezers and giving them a sample of your idea for free is a no-brainer.
Even better, figure out what it costs to deliver it with impact.
I met with a marketing executive from Hong Kong last week. He's building
a company that is targeting the health care and financial services
industries. He's got a big idea, and if he can persuade some of the
key sneezers in the industry, then most of the other companies are
sure to follow.
The good news is that he was invited to speak at a gathering of 100
top chief information officers from the financial services industry
he's targeting. The bad news is that he was planning just to give
a speech.
What an opportunity! What a chance to talk to all the key sneezers
at once and dominate the hive. We did the math, and it's clear that
even if he needs to buy each one of the attendees a BMW to get their
attention, it's worth it.
When you have an opportunity to dominate not just a hive, but the
sneezers in the hive, you need to spare no expense to do
so. Don't just give a speech about how your product works well. Fly
in three satisfied customers to tell their stories in person. Don't
just give a speech and ask for questions. Sponsor a cocktail party
afterward so you can meet individuals and answer their questions.
Don't just give a speech about how your product is safe and secure.
Give each attendee a first aid kit for their car. By focusing on this
key moment, by over-investing, you can lay the foundation for a virus
to come later.
|
How
An Ideavirus Can Drive The Stock Market
When you think about it, the stock market is nothing but thousands
of ideaviruses. (That's right, thousands. An ideavirus doesn't have
to dominate our entire culture to be an ideavirus... some last for
just a few days in a very isolated hive, then disappear.) When you
buy a share of stock, you don't really get anything--just the right
to sell that stock to someone else tomorrow. So... if a positive virus
catches on and the demand for the stock skyrockets, you win.
The market's respect for ideavirus thinking starts before the company
even goes public. Choosing an investment bank for your IPO is a first
step. Firms like Goldman Sachs and Alex.Brown are powerful sneezers
(even though they can easily be bought off with millions of dollars
in investment banking fees by eager companies looking to go public).
If one of these firms aggressively recommends the stock to institutions,
the virus starts off on the right foot. The alternative--marketing
the stock through a smaller, less respected (and perhaps cheaper)
investment bank--is almost certain to lead to a lower return.
The next step is pricing the IPO. The current rage is to underprice
the stock being offered to the public, because that will lead to a
huge first day appreciation in the stock. It's not unusual for an
IPO (like Globe.com, Martha Stewart Omnimedia or Street.com) to dramatically
increase in price on the first day of trading.
Why do this? Why leave all those proceeds on the table so that the
folks lucky enough to buy into your IPO make the money instead of
your company? The answer is simple, and it has two parts:
First, by rewarding the powerful sneezers who are lucky enough to
buy into your IPO, you maximize the chance that they'll participate
and will tell their less powerful (but more numerous friends) about
this exciting new investment.
Second, the rapid rise in the first day of trading allows other powerful
sneezers (the news media and brokers you don't have direct contact
with) to talk with excitement and amazement to the next group of potential
investors. In other words, this is cheap marketing. It's a way of
communicating news (this is a hot stock) to large numbers of people
in a powerful way.
After the stock is public, the company has its work cut out for it.
There's a multi-layered community of intermediaries between the stock
and the people who want to buy it, and the company must work the hive
to find the most powerful sneezers able to spread the word about the
stock.
The first stop is the market analysts who cover the stock. Once again,
the marketplace sees this group as being powerful sneezers (when one
analyst recommended Amazon.com, the price of the stock doubled in
just a few days). By courting the analyst community, a company can
find a way to communicate the story they've created around the stock.
Don't underestimate the power of the story. There are almost no other
cues available to persuade someone to spread the word about a stock.
You can't see it or touch it or smell it--it's just an intangible
right to make money in the future. As a result, the story must be
able to describe the reason why the stock is selling for x today but
will be selling for 3x tomorrow.
Brokers are a fascinating component in the spreading of an ideavirus
around a stock. Remember, they're not paid unless people trade. Buy
and hold is the enemy of most stockbroker compensation schemes, since
they only charge for trades and are paid by commission. Yet, for many
decades, brokers were seen as powerful sneezers, especially if they
helped make you money in the past. In fact, they've always been promiscuous
sneezers, motivated (whether in the short term or the long term) by
their ultimate financial gain. A "good" broker is one who
realizes that if he postpones financial gain in exchange for helping
his clients make money in the long run he'll get more and more clients.
All this is changing as the world shifts to trading online, and more
important, getting stock news online. Suddenly, anyone can talk about
stocks, anyone can post to a bulletin board, and anyone can spread
a rumor.
As a result, stock ideaviruses spread much more often and much faster.
In one case, the public markets knew about a CEO's plan to quit before
his board of directors did. Because the individuals who post these
notes are anonymous and possess unknown motivations, the chances that
they'll develop into powerful sneezers is slight. But the sheer number
of posts (more than 100,000 a day on Yahoo!'s bulletin boards alone)
means that they have influence.
An astute CFO or CEO can look at the key factors in the creation and
spread of a stock ideavirus and launch a campaign to move the virus
with a velocity and vector they're comfortable with, and more important,
aim it at the appropriate hive.
Note, for example, that some stocks, like Iomega, are the darlings
of online stock bulletin boards. As a direct result, those stocks
are far more volatile than the average. Live by the sword...
Yahoo! has worked hard for years to manage the story about its stock.
Gary Valenzuela, the legendary former CFO at Yahoo!, was obsessed
with three things:
- Become a blue-chip
stock, one that institutions would happily own.
- Become profitable,
to distinguish the Yahoo! story from its competitors.
- Underpromise and overdeliver,
always beating the "whisper numbers" that analyst established
for the company's quarterly earnings.
As a result, Yahoo! stock has consistently and regularly outperformed
its competitors. And due to the success in labeling Yahoo! an Internet
blue chip, the stock is much less susceptible to swings due to rumors.
Was that expensive in the short run? No doubt. When the market was
looking for good news and hype, Yahoo! often refused to deliver.
Short term gains were forsaken for building a story, a story that
could become an ideavirus to be delivered by analysts and other
powerful sneezers.
One way to predict the future of a stock, then, is to see beyond
the story and understand whether the company is actively managing
the ideavirus, and doing it in a way that will move it to the right
hive.
|
Bumper
Sticker Marketing
Years ago, I was a walking parody of a high-tech yuppie.
I worked as a poorly compensated marketer at a start-up software company
in Cambridge, Massachusetts. I drove a dented old Saab. I used a Macintosh.
And on the back of my Saab I proudly affixed a bumper sticker that
read, "I'd rather be driving a Macintosh."
This is an ancient form of ideavirus marketing, of course. I used
my car as an amplifier, exposing my message to hundreds or thousands
of people. But even better, given the neighborhood I was driving in,
I was focusing the message on an appropriate hive, and given the car
I was driving, adding power to my sneezing.
Think about it. If the bumper sticker had been on the back of a junker
Chevy, rusting outside an abandoned farm in Oklahoma, you would have
had a very different response to the message, no?
The neatest thing about this technique is the way Apple converted
the private (what sort of computer do I use) to the public (my proclamation
of how happy I was to be a Mac user).
There are countless opportunities for marketers to do precisely the
same thing today. And not just on your bumper. Some marketers ride
along with their product--the Ralph Lauren pony, for example, is advertising
on the front of your shirt all day long. Others manage to make it
a more political choice--Marlboro, for example, was one of the ten
largest marketers of imprinted clothing a few years ago.
Picking
the medium for your "bumper sticker" is important, but it's
just as important to determine why someone is going to be
willing to stick his neck out to promote your product.
Personal pride is an excellent tactic! If people are willing to sneeze
on your behalf because they're proud of you, your product and their
association with it, you're in. Now all you've got to do is give them
a smooth way to spread the word.
|
No,
You Go First!
The challenge of the new idea is that very few people want to go first.
Who was the first to swim in the Charles River in Cambridge, Massachusetts
after years of it being off limits for health reasons? Who was the
first to give their kid the chicken pox vaccine? Which company chose
to be the first to file its taxes electronically?
One of the key reasons to launch an ideavirus is that you can give
people a risk-free, cost-free way to check out the safety of your
idea before they commit. And more important, you can create
an aura around your idea--an aura of inevitability, of invincibility.
When everyone is buzzing about a new technique, tactic, service, musical
style, club, food--whatever--it's far easier to put fear aside and
try it.
But just as people are hesitant to be the first to buy a fancy new
product, many are hesitant to try a fancy new idea. There are plenty
of people who want nothing to do with a new song or a new book...
they're happy to wait until it's been screened, filtered and accepted
by the mainstream.
So, depending on the hive you choose, you
need to make it clear to that consumer that your idea has arrived.
That the water's warm, the air is safe to breathe and your idea is
a comfortable, tried and true one.
One way to do this is with bestseller lists. And with testimonials.
And by exposing the digital word of mouth record to let them see the
countless people who have tried it and liked it. Do it with the specific
objective of reminding people that others have taken the risk and
happily survived. If you work at this and do it on purpose, you'll
be amazed at how much water you can drain from the river--how easy
it is to bring the rocks to the surface, how powerful you can make
the message when you expose the connections that led you from person
A to person B. It's in this sort of active ideavirus marketing that
many brands are able to run rings around the competition.
Even before you do this, offering your idea in trial-sized, bite-sized
portions is critical. Many companies have created neat, effective
online products, only to see them fail because they required consumers
to go through a time-consuming download before they could use them...
and if they couldn't use it, they couldn't understand why they wanted
it! Catch-22: a product you don't know if you want to download until
you download it.
Give them a version instead that doesn't require a download and doesn't
work as well--but still makes their life better. Why? Because now
that I've sampled it without risking a virus or taking a lot of time
or trying to understand the arcane intricacies of downloading in Windows,
now I'm willing to invest the time to do it.
|
Digital
Media Wants to Be Free
When was the last time you bought some table salt?
Odds are, you didn't pay very much. Salt is cheap. Why? Because once
you own a salt mine and pay for a salt factory, the cost of making
a pound of salt is low indeed. But because there's more than one salt
mine out there, the competition for getting salt sales is pretty intense.
And given that all salt is pretty much the same, why pay more?
Pricing battles are certainly not unusual in physical goods. In fact,
almost every competitive category of item that's entirely physical
(without an idea attached) uses cost-based pricing. In other words,
it's a commodity. When those rules are abandoned (as they were with
crude oil during the Arab oil embargo) consumers are shocked and angry.
For a number of reasons, this pricing approach hasn't really kicked
in with intellectual property. It only costs McKinsey a few hundred
bucks to write a report for Chrysler, but they happily charge a few
million dollars for it. One more copy of a Bob Dylan CD only costs
80 cents to make (less than a vinyl record!) but it sells for twenty
times that.
Why?
The biggest reason is that intellectual property is rarely a commodity.
There are many kinds of salt, but there's only one Bob Dylan. And
when you want to listen to Dylan, it's not clear that 10,000 Maniacs
is an acceptable substitute.
Because intellectual property is unique, it has long resisted a
trend toward commodity pricing at the margin. In fact, the price
of most forms of intellectual property has increased. Barring
one big exception:
Stuff that went from being expensive to being free.
The most popular web server software (the programs they use to run
most giant websites) is not sold by Microsoft. And it doesn't cost
$10,000. It's free.
The most popular web browsers are free.
The cost of listening to a Beethoven concerto went from $30 (at
some fancy theater in London) to $0 after radio was invented.
The cost of watching a movie on network television is zero.
The mathematics of the ideavirus make it too compelling for the
creators of viruses to stay greedy.
The
more people know your virus, the more it is worth!
Thus, if charging people for exposure to your virus is going to
slow down its spread, give it away.
Apple just cut the price of WebObjects software from $50,000 a copy
to $699. That's a 98.7% decrease in the price.
Why? Because Apple realized that unless a lot of people use their
software, no one will use it.
Take a look at www.mp3.com. Pick
an obscure music category like Celtic. Go to the end of the bestseller
list: there are 1,168 songs listed. These are not illegal copyright
scams, where the music has been stolen by the artist. These are
real songs, posted by the artists or their labels. The whole song...
not part of it.
Why would anyone do this? Give away an entire album of music when
Bob Dylan can charge $16?
Look at it from your point of view. An unknown artist is
a commodity. An unknown artist is the same as a box of
salt. If you don't know why the artist is unique, why pay?
Look at it from the artist's point of view. The cost of giving away
songs is literally zero. Once you've made a record, the cost of
one more copy of an MP3 is nothing. And if it helps you get listened
to, if it helps you build your virus, then you're one step closer
to no longer being a commodity!
In fact, many artists would pay people to listen to their
MP3 cuts if they thought it would help them break through the clutter
and get famous. Take a look at the Payola section of MP3.com. You
can do exactly that... pay money to have your song promoted so you
can give it away for free.
Of course, once you're
famous, you can go ahead and charge $16 for your CDs.
Or can you?
Sure, there's going to be room for collectibles. For live events.
For autographed guitars. But once something is no longer hot and
fresh and the latest, rarest thing, why wouldn't the self-interested
artist go ahead and give it away free to stoke the ideavirus for
the next release? In a competitive marketplace where there's transparent
information about who's listening to what, the Internet becomes
radio. And artists know that charging radio stations is dumb.
This same logic applies to books. And to just about any other sort
of digital media you can think of. Unless there's an extraordinarily
unique property of the media being offered, I maintain that sooner
or later it's going to be free. The Bloomberg machine used by stock
brokers, for example, commanded a huge price premium for years,
because the combination of excellent data and locked-in user interface
meant it wasn't worth switching. But as the web replicates more
and more of the data available, it's inevitable Bloomberg's market
share will decrease--and their prices will as well.
The exciting thing is that people who go first, who put their previously
expensive digital media out there for free, will gain the lion's
share of attention and launch bigger and longer lasting viruses.
So. Who wants to go first? And who wants to go... last?
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Van
Gogh Lost His Ear To Prove A Point
When Vincent was painting, he often sold his work for just enough
money to cover the cost of paints and canvas. Back then, his ideas
and his paintings were one and the same, and neither was held in very
high regard.
Over the last hundred years or so, something has changed. Instead
of selling for $200, or $2,000 or even $20,000, it's not unusual to
read of a $10,000,000 sale of a Van Gogh. Over time his paintings
have increased in value with each sale. But the paintings haven't
changed at all, have they?
What's changed is the value of his ideas and the popularity of his
ideas--not the ideas themselves. It's easy to get a reproduction of
a Van Gogh. For a few hundred dollars, you can even get a painted
reproduction that only a trained expert can tell isn't the original.
So why pay twenty million dollars?
Because you're buying a souvenir. An expensive souvenir, no doubt,
but a souvenir nonetheless. The original painting is a priceless keepsake
that reminds you of the idea Vincent Van Gogh first unleashed on the
world. And unfortunately for Van Gogh and his heirs, it took far too
long for the ideavirus to spread.
Compare this inexorable and dramatic increase in value with the resale
value of a newspaper.
Today's newspaper is "worth" fifty cents to a dollar. The
combination of recent news and events in one handy packet makes it
a reasonable purchase. However, yesterday's paper is virtually worthless.
And if you've got a big stack of them, you're going to have to pay
me to take them away.
Why? What happened? Simple: the newspaper is a vessel for ideas with
very short half-lives, and once the ideas aren't fresh any more, they're
worthless. Imagine, though, how much you could sell tomorrow's
paper for--especially if you sold it while the stock market was still
open.
This is a lesson in one way to make your digital media valuable: keep
it fresh. It's getting harder and harder to do; they used to send
Charles Dickens' serialized novels over here by boat--news that was
three weeks old was considered fresh--but that doesn't mean you can't
succeed.
By focusing on souvenirs and speed, creators of digital media can
create two effective ways to profit when we play by the coming new
set of rules.
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Answering
Ina's Question
So how is a bookstore to make money? Or a publisher? Or an art dealer
or a consultant or a music label?
The biggest objection to ideavirus thinking is that it represents
a substantial change from standard operating procedures. Successful
companies are in no hurry to rock the boat... especially if it represents
a significant change in the status quo and a risk to planned-for revenue
and profits.
Mighty Words (an Internet articles publisher) is aggressively targeting
traditional book publishers and re-sellers by creating a new online
business that cuts out all the middlemen and lets authors sell works
(preferably 15 to 60 pages) directly to readers. Go to their site
and you can find thousands of articles, priced from $3 to $30 each.
Mighty Words gets half the revenue, the author gets half, the reader
gets insight and wisdom and everybody wins. By creating new markets
for mid-length ideas, the company seems to be filling a niche. Of
course, then they can turn their success into dominance by integrating
up the food chain until they disrupt all the competition in the publishing
world and profit mightily.
So you'd think that the concept of ideaviruses would be attractive
to this maverick company. After all, they're only a few months old.
Not true. It bugs them terribly to give away ideas, because it flies
in the face of their brand new business model. After all, if an author
profits most by giving away her work, how does Mighty Words make money?
If you catch yourself asking this question about a new business model
innovation ("How would we make money?") you're headed for
trouble. The
Internet doesn't care how you make money. The Internet isn't
going to wait while you figure out how to react. Instead, there's
some crazy entrepreneur who's willing to spend years of his life making
you miserable by wrecking your business model.
Email didn't ask the fax companies if it was okay with them if a new,
instant, permanent, digital communications tool came along and wrecked
the fax business. Matchmaker.com didn't hold meetings with the extremely
profitable video dating services out there to find out if it was okay
for them to launch. Who cares if Matchmaker.com never makes money?
What matters to the existing businesses is that these new kids on
the block have wrecked the business landscape for the old providers.
Giving digital media away is a reality. Non-dominant players in any
industry will always succeed more by giving away digital content and
then profiting later than they will by holding back to preserve somebody
else's business model.
It was a mistake for the record companies to fight radio and MTV.
It's a mistake for them to fight Napster. Rather than fighting to
patch the leaky bucket, perhaps they could redefine their roles so
they can figure out how to profit from a "free" world.
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Crossing
The Chasm With An Ideavirus
In his brilliant book, Crossing the Chasm, Geoffrey Moore
unleashed a powerful ideavirus about how new businesses and new ideas
get spread. Basically, there's a chasm in the product adoption cycle.
The curve used to look like this:
On the left are early adopters, the nerds who love new stuff, who
want to get their hands on anything neat and potentially wonderful.
On the right are the laggards, who are still having trouble getting
rid of their steam engine cars.
The meat is obviously in the center. That's where the vast majority
of us live, and where the combination of big audience and pretty
decent pricing is most attractive to a marketer.
In the old days, people believed that you could introduce a product
to the early adopters, use the high profits from those sales to
ramp up production and advertising, and then roll the product out
to the masses.
There's a problem with this view: there's a gap in the curve. A
chasm.
What happened? Turns out people on the right side of the chasm aren't
just lazier or less intellectually curious than the folks on the
left of the chasm. It turns out that people on the right are fundamentally
different from the folks on the left. How?
Pre-chasm
people want something cool. Post-chasm people want something that
works.
A nerd wants the latest personal digital assistant. An executive
wants to keep her appointments straight.
A cutting-edge IT guy at Allstate wants a device that will use satellite
technology to update claims instantly. The CEO at Nationwide wants
something that will reduce costs.
A fashionista wants the latest haute couture outfit from Paris,
regardless of how ridiculous it looks. The party girl wants something
that'll get her a hot date next week.
The foodie wants maple-jalape-o corncakes, layered with crème fraiche
and bourbon. The hungry person just wants something to eat.
As you can see, focusing on the folks who will give you early feedback,
be your initial sneezers, your first customers and probably your
start-up's employees is a one-way ticket to doom. Their advice will
help you make stuff that's expensive, heavy, hard to use, awkward
and difficult to understand. You'll be the darling of some well-respected
sneezers, and then you'll fail. This is why many ideaviruses start
with plenty of powerful sneezers but end up dying.
It happened to Apple with the Newton. It happened to Microsoft with
almost every product they've ever launched (Bill Gates is to the
far, far left of the chasm--that's why it takes Microsoft to version
3 to build something that catches on). It happened to Reebok and
to Stephen Sondheim and to Lou Reed. In every case, they indulged
the pre-chasm audience and lost the big wins on the right. (Of course,
in some cases--like Microsoft--sheer staying power is able to force
you over the chasm.)
The challenge in launching an ideavirus is to understand who the
pre-chasm sneezers are, and using them but not letting them use
you. In other words, they're the ones who are most likely to embrace
your new idea and talk about it, but if you don't get past them
to the rest of the curve, you're doomed.
Why do Woody Allen movies consistently sell so few tickets? They're
certainly adored by critics, nominated for awards and attended by
a core group of sneezers. The reason is simple: the virus hits a
chasm. There's a huge gap between the Woody Allen audience and the
rest of the population. Because of this chasm, the word rarely spreads
as far and as wide as it could.
The success of his latest movie, "Small Time Crooks,"
points to the problem. This movie has box-office results that rank
among the top four he's ever released for one simple reason. During
the month it was released, it was the only clean family movie available.
By focusing (intentionally or not) on creating a wry, funny movie
that was understandable at many levels and worth bringing your kids
to, Woody crossed the chasm. Suddenly, the sneezers were saying,
"This is a great movie for your family," instead of saying,
"this is another great Woody Allen movie."
Some viruses are just never going to cross the chasm. Try as they
might, the computer nerds are having no luck at all getting normal
people to start using Linux. And the guys who sell the hottest hot
sauce in the world are just not going to find themselves on the
table at TGI Friday's restaurant.
But that's okay. It's okay because these idea merchants understand
that the hive they're targeting is not everyone. They understand
that if they choose the right hive, it's okay if it's small, it's
okay if it's not everyone. The caveat, of course, is to match your
expenses and your expectations to the size of the hive you've chosen.
If you spend big on product development and marketing, figuring
that will get you over the chasm, it better.
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The
Myth Of The Tipping Point
One of the most seductive ideas in Gladwell's The Tipping Point
is that somehow a magic moment appears when the entire population
goes from blissful unawareness of your offering to total and complete
infatuation.
While this certainly appears to happen, it's not a reality for most
companies and most ideas, and it's not even a requisite for mindblowing
success. There are two related reasons for this.
The first is that it ignores the power of the hive. The chances that
you're going to launch an ideavirus that consumes the entire population
is slim indeed. After all, there are seven billion people out there,
and all of them have very different needs and communication cycles.
Even if you just boil it down to the United States, or to Republicans
with Internet access, it's pretty clear that large hives very rarely
tip about anything.
The second reason is that winning and tipping aren't the same thing.
In order to really win with an ideavirus, you have to concentrate
your message very tightly on a specific hive. But even then it's not
clear to me that you have to tip to win.
Let's take a look at eBay, for example. By almost any measure, eBay
is a winner. It's employees are millionaires and billionaires. Early
investors are delighted. Users are happy, with time spent on the service
going up all the time.
But has eBay tipped? Certainly not in terms of awareness among the
general population. When asked to name an online service, only a tiny
fraction of the population picks eBay as their first choice. But it
gets even more obvious when you ask people where they go to buy and
sell used junk. The vast majority of people are using classified ads
and garage sales, not eBay.
Yes, the management of eBay is on the cover of Fortune and
Business Week at least once a month, or so it seems. Yes,
every meeting at certain high-tech companies includes the sentence,
"But will this allow us to become the eBay of [insert business
here]." Within a very small, very focused, very profitable hive,
eBay is a winner. But it didn't happen because some magical
tipping process took place. It happened because a smart, focused,
powerful ideavirus started and spread across a concentrated hive of
investors and pundits, and this led a tiny company to have a huge
stock market valuation.
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