Roelof Botha played an integral part in the building of two of the most successful Internet companies of all time: YouTube and PayPal. The 33-year-old venture capitalist made a fast fortune for Sequoia Capital on Google’s $1.65 billion acquisition of YouTube; eBay bought PayPal, where Botha was chief financial officer, for $1.5 billion in 2002. Newer investments include AdBrite, Insider Pages, Meebo, Xoom and Zappos.
Botha has learned a few tricks to boost consumer adoption–all without spending gobs on advertising. A sampling:
Many people think the word “viral” is interchangeable with “word of mouth”–implying that the product or service is so good that people are compelled to talk it up with their friends. But there’s more to it than that. Google (nasdaq: GOOG – news – people ) and Amazon.com (nasdaq: AMZN – news – people ) are both great Internet companies, but they aren’t viral businesses.
“Word of mouth is when I tell you to shop on Zappos because I think the service is great,” explains Botha. “It becomes viral when you have to be ‘in the system’ to use it. For example I can post a video on YouTube but then you would need to go to the site in order to see it.”
A truly viral business is “like a disease,” says Botha. “It needs to be transmitted from one person to another”–and the other person has to catch it. Once the next person catches it, he or she becomes a carrier too. Here are some good examples:
— PayPal. If Bob sends Mary $25, Mary has to join PayPal in order to claim her money.
— Evite. John e-mails you an invitation to his bachelor party but in order to read the details such as when and where, and to RSVP, you have to log onto Evite. E-card vendors work the same way.
— Plaxo. A friend or business associate sends you an e-mail asking you to update your contact information. Once you log onto Plaxo to correct your phone number, you’ve caught the virus. Other services such as Birthday Alarm use the same strategy.
— Skype. In the beginning, the only way you could make a free phone call over Skype’s Internet voice service was if the person you were calling was also a Skype member.
Like Botha, the founders of YouTube are alumni of PayPal. When they started YouTube they knew they wanted to replicate the same viral e-mail strategy to attract new viewers. That’s why the founding engineers designed all YouTube links to be super short–never longer than one line. The logic: When you e-mail grandma to show off clips of your baby’s first steps, long links tend to wrap around and get cut off. Broken links are a sure-fire way to frustrate potential customers and keep them from coming to your Web site.
“E-mail was the primary way YouTube grew its user base,” says Botha. “People would find interesting videos on the site, then copy and paste links in e-mails to their friends.”
Forget about adding “viral” to your marketing to-do list after your product is already on the market. You need to bake it into your business model from the very beginning. “Viral isn’t something you can just make happen,” says Botha. “It has to be inherent in your product.”