The Maxim like photo is what caught my eye. I admit it. I wanted to know who that ‘hottie’ entrepreneur on the cover was. (She was described as such in the article). I was also interested to know if the article, Ning’s Infinite Ambition, had something to offer in understanding social networking and social networking websites.
I read through the piece by Adam L. Penenberg and came away feeling that the picture had been a red herring (remember that internet mag) and the article, which promised to explain a ‘new concept’ called ‘viral expansion loop,’ didn’t tell me much and make me believe Ning.com was anything special. (Ning is to social networks what Tripod was to personal websites) From the 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.
After reading the piece I realized that this not a new concept and I had learned about it under the name of network effects — a term mentioned in the article. There are other buzzwords people use, but I came away feeling that for some reason the author just wanted to pump up social networks as a business model.
I also happened to notice that if you visit FastCompany.com you will not find a magazine website, but a new social network site where people and ideas meet. (see screen shot below). Thoughts on Fast Company’s new site or social networks as business models?
BTW, it turns out I wasn’t the only one who had problems with the content of the article. Owen Thomas offers his thoughts over at ValleyWag.com.