"Truly viral" premium web services?
The Penny Gap post by First Round Capital that I talked about in my last post got me thinking. He had a provocative statement: “I can’t think of a single premium service that has achieved truly viral distribution.”
As I posted on his blog, I guess it depends on your definition of “truly viral” (and maybe even “premium”, which I took to mean “no free offering”), but there were two mentioned in the comments: Netflix and SmugMug.
Obviously, there’s orders of magnitude difference here, but the point remains. Netflix grew initially much by word-of-mouth using loyal customers and those bright red envelopes of theirs. They’re clearly a massive success, clearly premium, and clearly truly viral.
60-80% of SmugMug subscribers are referrals from other SmugMuggers. There’s a gray area where we don’t have enough data, hence the range, but we think it’s on the high side of that figure. We’ve had >100% growth every year, every customer pays, our subscribers are akin to religious fanatics, and we’ve been profitable since year one. Our marketing budget mostly consists of customer service costs – there’s almost no money spent on traditional marketing. (We view Customer Service, or our Support Heroes as we call them, as a marketing expense. I should blog about that sometime…). By my definition, we qualify.
So that’s two. But surely there are more and I’m just having a brain fart. Can anyone think of any others?