Viral Loop: The Power of Pass-It-On

Here's how it works: you read a book you enjoy and you tell a friend. That friend tells another friend, the next friend tells the next, and so on and so forth, until the book becomes that year's word-of-mouth bestseller. That first recommendation gives birth to many. Simple. The concept of pass-it-on is not so new and not so revolutionary - think Tupperware parties - that is, until forward-thinking Web companies got hold of it and created their own, mightily efficient, money-spinning model known as the Viral Loop: the ability to grow a company exponentially because the customers themselves spread it. Super simple. Outfits such as Google, eBay, Flickr and Facebook all employ the model at the core of their business; all have seen their stock valuations skyrocket within years of forming. The genius lies in the model's reliance on replication: what's the point of using Facebook if none of your friends can see your profile, or using Flickr if you can't share your photos? Where's the joy in posting a video on YouTube if no one watches it? Thus, in creating a viral product that people want, need and desire, growth can, and will, take care of itself.