This story gets it backward. Jack Smith came up with that idea. Sabeer Bhatia makes this explicitly clear in Founders At Work.
I'm surprised nobody here has mentioned it yet.
Livingston: You had a tagline in the body of the email encouraging email recipients to set up their own free Hotmail accounts. How did you come up with
this?
Bhatia: It was actually Jack’s idea to do that. We ran it by our VCs just to make sure it was OK. When you alter somebody’s email, you’ve got to be very careful.
You’re sending an email to a friend of yours, and we are kind of violating the sanctity of that email by putting in a tagline at the end of it that says “This message has been sent from Hotmail. Get your free email at hotmail.com.”
So we asked Tim if it was OK that we did this. We said, “We don’t want to be perceived as the evil company by altering their email.” And he said, “Absolutely, you should do it.”
And the next thing we know, he claims that this idea was his. He’s given a number of interviews literally claiming that he was the father of web-based email — without him it would not have happened. I can’t believe he’s just taken
credit for everything — including the tagline (which later became known as the classic example of viral marketing). He blatantly claims this at conferences, which I don’t think is right.
Livingston: He claimed that web-based email was his idea?
Bhatia: That it was our idea, but without them, it would not have happened and that we would have done JavaSoft. Their version is that “we told them to do web-based email at that [first] meeting.” Why would they tell us to do web-
based email?
Without any more information, there's no reason to believe that the unspecified evidence was more reliable than Sabeer.
A) Who was the source of the evidence? How many people were even there in the room? What does Jack Smith say?
B) As for the disparaging, unless the evidence was all the other VCs that Sabeer talked to, it sounds like the source of both these claims was DFJ saying "nuh-uh!" What else would you expect Tim Draper to say, "yeah, I badmouthed them and stole credit"? Based on their other behavior, which scenario seems more plausible?
"An anonymous source denies Bhatia's claims" is not very solid evidence.
They still do this, too. I got an email from someone using Hotmail a few days ago and this was appended to the bottom:
Hotmail: Free, trusted and rich email service. Get it now.
Hotmail: Trusted email with powerful SPAM protection. Sign up now.
Hotmail: Trusted email with powerful SPAM protection. Sign up now.
Your E-mail and More On-the-Go. Get Windows Live Hotmail Free. Sign up now.
Hotmail: Trusted email with Microsoft’s powerful SPAM protection. Sign up now.
I kid you not, 5 lines. Something tells me that they're getting desperate.
I just got an email from a Hotmail user too. The tagline was:
Hotmail: P.S. I love you. Get free email at hotmail.com.
Hotmail: I tell you I love you and your response is to move me to your spam folder?
That really hurts.
Hotmail: I saw you with someone else last night. Who was that?
Hotmail: I just want to make you happy. Please respond.
Hotmail: Can't we go back to the way we were? Weren't we happy then?
Hotmail: I've infected your computer with a remotely-controlled bot and will be
deleting your hard drive if you don't respond in the next 5 minutes.
Hotmail: You won't be able to read this for a while, as your current computer has
been permanently disabled, but when do you get back online, I just want you to know...
Windows Live Hotmail has powerful SPAM protection.
Ok, so "the power of viral loops" basically amounts to:
1) Spend time and effort build your product
2) Give it away for free
3) Embed a tagline into the product so that users are "involuntary salespeople"
4) ???
5) Profit!
There isn't really anything new here. Applying viral marketing is trivially easy for email, or other social-media apps (which is not to say it will work, just that's it's a natural fit). What I would like to see is an analysis on how to adapt viral loops to non-social settings. How would someone like LifeLock.com apply this message, for example?
If you think it's easier, switch your idea. Everything is easy and obvious after the fact; e.g. The Pythogarean Theorem. For anything that can be easily explained in a few minutes of class or blog post, it took years for the brightest of scientists, mathematicians, or inventors to come up with.
Does this approach yield similar results for you? I could imagine iPhone applications spreading this way (much like those damn Facebook quizzes), but what about for more specialized markets?
It's a funnel you can optimize like any other. For example, Hotmail could have A/B tested the footer copy to see which resulted in the highest conversion rate.
That would also have told them something about how their product should be positioned in the market (e.g., whether people care more about flexibility or security).
The iPhone is hard because you don't have many hooks. Loopt tried to make it work and then blamed it on an errant "bug," but it was clear they were trying to get a viral loop running over SMS.
Really you can do this over any social network, where "social network" is defined in the broadest sense as a collection of people with message-carrying connections.
This includes email, IM, SMS, Facebook, snail mail, etc.
More specialized markets work, too. For example, Xfire spread this way through gaming circles, and Raptr is trying to do the same thing except over third-party IM networks like AIM and Yahoo!
It only works if the product is great. There are a few rocket ships that are great products that have grown with word of mouth that don't have the structural virality (as with Facebook quizzes or the Hotmail footer) - Mint and Dropbox immediately come to mind. Google, as well, if you go back a few years.
It depends on your definition of "works," I suppose. The above "works" for Tagged, but I imagine most people on HN would say that that isn't "working" -- it's spamming.
The best kind, obviously, is the sort people like Seth Godin write about, where people are so passionate that they are actively seeking to spread your product.
Unfortunately it's often easier to fall to the dark side ("easier, more seductive") and spend time optimizing your viral loop than building a product your customers are excited about.
We've had some success with this type of thing, especially in more niche business markets. Business software usually has a much greater lock-in factor than consumer sofware, so you often have to worry less about retention than you do in most consumer viral apps, which makes the effect even more powerful. If you augment the basic principle with other things (video, etc.), it can really go crazy.
An example: We have a product that performs a type of very specialized financial analysis in an automated fashion, for free. The analysis was normally done only by real estate and tax attorneys during specialized commercial property transactions, at steep hourly rates. [The analysis itself is a very rarely needed thing for very obscure clients...so we are not operating on a "try one, buy more" basis. We just use it as a loss-leader intro for some of our other services. It was just supposed to be a 'show off' piece.] Our initial marketing campaign for the service fell flat, because people simply didn't believe we could do what we said we could do. Both the automation and the free aspect were so unusual that it sounded "too good to be true," so people thought it was a scam of some kind. We're also not attorneys or tax professionals (although we have some on staff), so we lacked credibility. And why would we give away a multi-thousand dollar service - that the rare client may only need once - for free?
We started adding an "Analysis completed by EXXXampleService.com" statement to the bottom of the tax/legal documents in this market that we handled in our own business, and to those that we provided for law firm clients on an outsourced basis. We also added the same statement to the bottom of outgoing emails that dealt with this part of our business. Importantly, the statement in the email was a hotlink to a <2min video that explained what our service did in the most general terms and why we did it. Below this, there was another link to a longer-form video that explained the analytic process in more detail and showed the before and after result.
The uptake on our service surged after we implemented the document statements and email links. A large number of potential clients ended up viewing the longer-form video. We now have about 22% of all clients in the US that need this service performed. Which is still a very small market. And we don't make any money on this initial analysis. But - and this is the viral loop aspect - now that we have these clients, all of their legal and tax documents for the transaction are already in our document management system. And these documents have to be used by both parties in the transaction. And we have some enticing features built into our system that can be used for most types of these transactions, including 'normal' transactions. So everyone involved in the transaction ends up trying our software for "just this one specialized deal" because the docs being there will save them a tiny amount of time...but once 'inside' our collaborative dealroom software they realize that they simply can't live without it for all of their everyday deals because it saves them so much time and money. The end result is that we end up getting both parties to these commercial transactions as long-term clients. And we often sign up other third-party professionals that were also involved in the transaction (legal, accounting, environment consultants, etc.) for other related services, as well.
As smart as it was, I have yet to find some software that adds tags to the messages that I don't hate. Mostly because the kind of software that does stuff like that isn't the kind of software I would want to use - but it is pushed on me anyway.
Even the mail stuff in my Ipod Touch does that by default (I turned it off, but but that isn't going to do much for the stuff I receive).
I'm surprised nobody here has mentioned it yet.
Livingston: You had a tagline in the body of the email encouraging email recipients to set up their own free Hotmail accounts. How did you come up with this?
Bhatia: It was actually Jack’s idea to do that. We ran it by our VCs just to make sure it was OK. When you alter somebody’s email, you’ve got to be very careful. You’re sending an email to a friend of yours, and we are kind of violating the sanctity of that email by putting in a tagline at the end of it that says “This message has been sent from Hotmail. Get your free email at hotmail.com.” So we asked Tim if it was OK that we did this. We said, “We don’t want to be perceived as the evil company by altering their email.” And he said, “Absolutely, you should do it.” And the next thing we know, he claims that this idea was his. He’s given a number of interviews literally claiming that he was the father of web-based email — without him it would not have happened. I can’t believe he’s just taken credit for everything — including the tagline (which later became known as the classic example of viral marketing). He blatantly claims this at conferences, which I don’t think is right.
Livingston: He claimed that web-based email was his idea?
Bhatia: That it was our idea, but without them, it would not have happened and that we would have done JavaSoft. Their version is that “we told them to do web-based email at that [first] meeting.” Why would they tell us to do web- based email?