Book Review: Viral Loop

February 12, 2011

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Adam L. Penenberg’s “Viral Loop” was published in 2009, but retains a lot of relevance in 2011.  Its subtitle is “From Facebook To Twitter,  How Today’s Smartest Businesses Grow Themselves”.  The book begins by telling the story of the web site “Hot or Not” and how that web site (in 2000) “rode a simple idea to a fortune”, by virtue of “an insanely viral scheme”.

It goes further back in time to the original viral models, Tupperware and Ponzi Schemes and then works its way up through many of the present day (or past-present day) Web 2.0 success stories (e.g. Mosaic, Netscape, Ning, Hotmail, eBay, PayPal and more).

The Viral Coefficient

Early in the book, Penenberg explains the “viral coefficient”, or the “number of additional members each person brings in” (to a web site or service).  The success of a web site, or even a YouTube video, “going viral” hinges on this figure.  Penenberg explains that if the coefficient is equal to 1, the site “will grow, but at a linear rate, eventually topping out”.  Then, “above 1, it achieves exponential growth”.

The early growth of Ning was due to the fact that its viral coefficient was 2.0 – “each person who signs up is worth, on average, two people (compounded daily)”.  And while Ning doesn’t attain the lofty position it once had, its viral coefficient (and how it achieved it) is important in understanding its early success.

Web 2.0 History Lessons

Viral Loop Cover with Social Media icons

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In addition to explaining viral coefficients and how viral loops are created, Penenberg provides interesting history lessons (stories) behind some of the web’s most well known creations.  He tells the story of how Marc Andreessen created the Mosaic browser at the University of Illinois in Urbana-Champaign, left Illinois to move west to Silicon Valley, and there co-founded Netscape with Jim Clark.  Version 1.0 of the Netscape browser was released on December 15, 1994, and Netscape engineers “rigged servers so a cannon fired every time a browser was downloaded”.


In a chapter titled “eBay and the Viral Growth Conundrum”, Penenberg tells the story of Pierre Omidyar, whose inspiration for eBay came from a stock order gone bad – he placed a pre-IPO order for a stock, only to see it jump 50% on the day of its IPO. Omidyar, whose business was called AuctionWeb, hosted the site on because his desired domain,, was already taken.


The chapter “PayPal: The First Stackable Network”, takes us through the very genesis of PayPal, starting with a lecture at Stanford, given by Peter Thiel. Max Levchin was one of six in the audience. They agreed to meet for breakfast the next week and over breakfast, agreed to launch a start-up around Levchin’s ideas for cryptography software.  The initial company was called Fieldlink and went through a few iterations of cryptography business ideas until they settled on the idea that would become PayPal.


Before reaching the Epilogue, we learn about the beginnings of several other well-known names, including Flickr, MySpace, Bebo and Facebook.  In the Epilogue, Penenberg summarizes the characteristics of viral loop companies and compares the similarities to human population growth – “the human population growth  rate [also] mirrors the curves for companies like Skype, Hotmail, Ning, Facebook”.

Penenberg’s book makes me ponder the coming decade (2011-2020). What new viral loop companies will be created (and how) – and who will be this decade’s Hot or Not, Ning and Netscape?

The Future Of Book Publishing

December 11, 2010


I recently published a book, “Generate Sales Leads With Virtual Events“.  I wrote a prior blog posting that described the process of self-publishing the book.

Like other industries (e.g. newspapers, music, entertainment, etc.), the web will have a transformative impact on book publishing.  In fact, my belief is that the coming 2 years will see dramatic shifts – the book publishing industry will never be the same.

Production / Printing

Self-publishing has arrived and it’s here to stay.  Moving the book publishing process into the cloud significantly empowers the author.  Now, authors “prepare the print run” via the web, making tweaks and edits as they see fit.  The cloud has ushered in an era of on-demand printing – or, what I call “agile printing“.  With traditional book publishing, the Second Edition of a book may come out a year later.  With agile printing, it’s possible for the Second Edition to be published the next day.

This does not mean that traditional book publishers will face complete disintermediation.  Instead, I believe savvy publishers will incorporate “cloud technologies” into their publishing process, streamlining the process for editors and authors.  Publishers will rightly conclude that the publishing process could leverage a lot of the same convenience of blog publishing.

Crowd-based Editing

You can put the power of the crowd to work for you and sustain results as good as a single expert. That’s just what Facebook did to enable to be available in 64 languages.  You can add the Facebook Translations application and “join our community of translators and make Facebook available in your language”.

I see a similar opportunity for basic copy editing.  Authors can tap into crowdsourcing providers to have a network of hundreds (or thousands) of “workers” collectively provide copy editing of their manuscript.  To cut costs, traditional book publishers may look to crowdsource copy editing, with a smaller staff of editors in place to “quality check” the resulting work.

Collaborative Writing

What’s better than one author?  Two or more authors.  The beauty of “publishing from the cloud” is that your social graph can be invited directly into the manuscript.  I published my book via FastPencil and it gave me the option of inviting in project managers, co-authors, editors and reviewers to collaborate on my project.

I believe that authors will increasingly bring their social graph into the publishing process.  Survey the suitability of your book to a prior generation by inviting your aunt to review Chapter 2 and then invite past business partners in to write a few chapters.  With self-publishing, we’ll see more “chapter books”, where a collection of experts each write one chapter.

Migration to Digital Readers

While some will insist on sticking to the printed format, we’ll be reading more and more books via digital form.  The combination of digital plus “online” will dramatically change the reading experience in the coming years.  Already, the Amazon Kindle 3 allows readers to copy a selection from the book and share it on Twitter or Facebook.  With digital devices, the reading experience moves from solitary to social.

In the early days of Facebook, I interacted with friends, but it was asynchronous.  I’d post, then an hour later, they’d respond. With Facebook Chat, I’m now noticing that certain friends want to interact in real-time, directly on Facebook.

Book reading will take on similar dynamics. I’ll carry my social graph onto my device (if I choose to) and see which friends are reading the same book as me – right now.  I can start a chat with my friend to discuss Chapter 3.  Or, I can perform a “scan” to see a list of other online users who are reading the same book right now.  The “book of the month club” becomes virtual and global.

Subcription (Rental) Model

On college campuses, Chegg is innovating with a textbook rental business.  With digital books, someone will come along soon (Netflix more likely than Amazon) to disrupt the market with a cloud-based subscription model.  I think the days of “purchasing to own” digital books are numbered.  I think of a digital book like a DVD – I consume it, I enjoy it, I move on.  I don’t need to own it.

With a subscription model, I may get up to 10 digital books per month.  The book content is served up from the cloud, which means I can read it from any device – and I can bookmark the page and move from my laptop to my smartphone.

When I’m done, I “return” the book and can access my next book.  Of course, the challenge will be in the licensing agreements with book publishers – something Netflix has been working through with movie studios for their streaming service.  And, we’ll need an “offline reading mode” for times when users are not connected to the net.


As a new author, I’m excited to see what lies ahead for book publishing.  Based on the web, the cloud and social media, it’s never been a better time to be an author.

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