What is the viral expansion loop?

The Meaning of Viral Expansion Loops

First, we'll need to look at what Andreessen meant when he talked about viral expansion loops. To experience a viral expansion loop, a site or service must see a growth in users that compounds over time. If the site or service is monetized, that could translate into an impressive stream of revenue.

To achieve a viral expansion loop, a site would first need to attract an initial group of users. The site would need to offer a compelling experience -- one so interesting that the users feel the need to convince others to join. As the new group of users join, they, too, find the experience compelling and will tell more friends. Each incoming group of people is larger than the one before, and the site experiences an explosion of growth.

In this world, the site's administrators would have two things to worry about: keeping the site compelling and making sure they have the capacity to handle the growing demand from the users. It's a tantalizing vision -- when faced with an investment opportunity, you might find it tempting if the pitchman says your biggest worry is how to deal with becoming incredibly popular.

But is it possible to engineer such growth? Can a site mechanically create an experience that is guaranteed to attract users? And if so, how long can such a growth trend sustain itself before it reaches a breaking point? Eventually growth will have to slow down as the potential user base decreases over time.

While a Web site or service may be useful, intuitive and fun, that's no guarantee that it will be successful. Take a look at any successful service on the Web and you'll find a dozen other products that are similar -- and sometimes superior -- that failed. And becoming huge doesn't necessarily lead to enormous profits. Services like Twitter became popular very quickly and yet continue to operate without a clear business plan. Public opinion isn't entirely predictable -- if it were, there would be many more millionaires than there are now.

A viral expansion loop is really a simple network effect. The network spreads outward as people adopt the service. Eventually, the network stops spreading because most of the links point inward, not outward. That's not to say a viral expansion loop can't exist -- it's just another name for a not uncommon phenomenon.

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