7 Smart Books: The Best Fall Reads

Viral Loop

By Adam L. Penenberg
Reviewed by: Thomas E. Weber

After months of recession, tales of business growth are a welcome diversion. In “Viral Loop,” Adam L. Penenberg tells inspirational stories about companies achieving growth at such a phenomenal rate that you might be tempted to whip up your own business plan — or at least consult with your broker. In Penenberg’s case studies, small start-ups attract thousands of members or customers within days, illustrating the book’s focus: the “viral” loop in which each new customer winds up recruiting, on average, more than one additional customer. That circumstance — a “viral coefficient” above 1, as Penenberg explains — results in supercharged growth. (Readers of a certain age will recall the old television ads for Fabergé Organic shampoo: “I told two friends…and they told two friends…”)

The case studies of “Viral Loop,” not surprisingly, focus mostly on Internet businesses that took the web by storm, such as Hotmail and Facebook. Though the details will be familiar to some, it’s a provocative time to assess the viral model at these businesses. As Penenberg, a writer for Fast Company and journalism professor at New York University, points out, the big viral success stories tend to provide free services that make it easy to get that viral loop going.

When it comes to paying the bills, these free services are typically hoping that advertisers will provide at least part of the answer. But as the book’s case studies show, assembling a mass audience isn’t the challenge it once was — meaning advertisers have more choices. Which raises a question for those eyeing the next big viral business: As the economy shifts into a recovery phase, how much are a million users really worth?