I can’t help but think that the startup world is a bit drunk on the concept of viral distribution. Distribution is a huge problem for startups, so I suppose that I can’t blame them.

First of all, I want to point out that I think viral distribution freakin’ rocks. It’s amazing. It’s awe-inspiring. If you can build virality into your app, do it– and do it early. What I’m focusing on in this post is when a startup is presented with a choice of “viral or value”. Either in the very earliest days when deciding what idea/problem/space to pursue (”We really love this idea, but this OTHER idea has soooo much inherent virality!”), or when making choices about features and initiatives in your startup (”THIS would make our users happy, but THIS would really bring in the new eyeballs!”). While we all like to go on about all of the hats we wear as entrepreneurs, it’s damn hard to be maniacal about making your users happy AND be investing time and energy in distribution.

So, as I watch myself continue to back-burner features at RescueTime that have viral/SEO potential, it occurs to me that it’s probably worth running through my thoughts on WHY. Thus this blog post. You can run through my thoughts with me.

“It’s easier to build a great business on top of an existing viral engine than it is to build virality into an existing business”

This was said to me by a hacker who was working with a team on a “stealth viral business”. At the time, I found myself nodding. You can’t throw a rock in Silicon Valley (or Seattle) without hitting a startup that has tried to staple on a viral loop to their application or service. “I know!” Manager X says. “Let’s add a tell-a-friend bucket to our app. And we need to widgetize it. Oh, and we should probably make a funny video about it! Then we’ll explode!” It turns out that viral loops are HARD.

But, as I think about it, I can name something that’s a LOT harder, and that’s building a product that people really want. In fact, I can fairly readily name off a long list of Facebook Apps and widget companies that have, with fairly minimal effort, built apps that are viral. I can’t as easily name off companies that have created great products that people love over a long weekend of coding. Products are HARD. Virality is, comparatively, much easier.

Another point to illustrate this– Top Facebook Apps are hemmoraging active users (some have lost 30-40% from peak). Presumably, these app creators are alarmed. I can imagine small teams huddled over a table frantically running through how they can make their apps more fun, more useful, more real. Here is an army of smart and well-financed people who are trying to add a great product onto an existing viral loop. I don’t think many of them are having a lot of success.

Virality Isn’t New

It’s important to note that virality isn’t new, especially if you argue that word-of-mouth is the same thing. For the purposes of this post, I’m talking about the type of virality that Andrew Chen (who is one of my absolute favorite bloggers) defines as:

“I tend to think of Viral Marketing that include both systematic and unsystematic ways that your current customers acquire new customers… In some of these cases, the virality has been “built-in” to the system - for example, but chain letters explicitly promise you something in return for sending on a letter, as do Multi-Level Marketing systems like Tupperware. These incentives and systematic design are originated with the intent to propagate a viral process.”

In the standard word-of-mouth model, you have:

1. User tries product.
2. User loves product.
3. User evangelizes product to everyone they know.
4. Some subset of those preached to (greater than 1) tries the product.
5. Rinse, repeat.

Think Google, Apple, Microsoft (in the early days), etc.

In the viral-focused model you have:

1. User tries the product.
2. As part of trying the product, they (sometimes unwittingly) tell everyone they know about the product.
3. Some subset of those victims tries the product.
4. Rinse, repeat.

Think Facebook Apps, chain letters, tupperware parties, Geocities, and Hotmail. Or, let’s roll back to another web investment mini-craze– the SEO/Vertical Search business. Any SEO/user-generated content business is inherently viral. User creates account. Some subset of new users create a page of content. Content gets indexed by search engines. The new page brings in some traffic. Eventually, that user-created page converts a visitors to a content creator. Rinse, repeat.

Paul Graham (”ah, yes– the obligatory PG quote”) talks about the concept of getting upwind of revenue:

“In Patrick O’Brian’s novels, his captains always try to get upwind of their opponents. If you’re upwind, you decide when and if to engage the other ship. Craigslist is effectively upwind of enormous revenues. They’d face some challenges if they wanted to make more, but not the sort you face when you’re tacking upwind, trying to force a crappy product on ambivalent users by spending ten times as much on sales as on development.”

What I THINK he’s also advocating for is the concept of getting “upwind of distribution”.

It seems to me that when you remove the “user loves the product” step, you’re failing to solve the CORE problem that needs to be solved to build a great company. If you can’t create and maintain unique value with your widget or Facebook app, you’re doomed to experience the same fate as chain letters, mood rings, and GeoCities. You might well be able to get in and get out (with millions of dollars in your pocket) before you “jump the shark“. If your startup has a user-generated-content component, you might be able to amass enough SEO-fodder to make a healthy living on advertising, but that has its own challenges.

Hopefully you’ve got some grand capital-efficient plans to get it in front of your target market (WE do– we haven’t even gotten started at this front). But if your wondering why users aren’t coming to your web site, chances are you have a product problem– not a marketing problem.

Tony Wright is an active entrepreneur in the Seattle area.  His startup, RescueTime, provides time management software for individuals and businesses.  He blogs about web startups at Tony Wright dot Com.