Manas Kumar, Thinking out Loud

my thoughts & visions for technology

Wisdom of the crowd – democracy of social networks

with 8 comments

Google Rocks!

I know the title of this post is a mouthful, but I was struggling to actually come up with a title that justly headlines the content of this post. I need to warn you that this is by far the most technical post I’ve ever made on my blog. I must admit, I have my reservations about this particular post. I don’t expect this to be the bumper hit like my Tips for Social Networking post last month that attracted 17,000 views within 3 hours of posting. Anyway, it’s worth a try – don’t you reckon?

Well! This post is about introducing you to a mathematical beauty that has been known to science pretty much since the days of binary. I’ll spare you the jargonificaiton – what I’m trying to get at is the mathematical explaination behind the growth of companies like Facebook, MySpace, Twitter, You Tube and LinkedIn.

It’s called the Viral Expansion Loop, something I remember studying in my Math majoring days but only recently the concept was reignited by a business contact Dave Wild, from Smith & Wild who passed me a couple of articles on Forbes and Fast Company. Dave, this post is because of you – You’ve reignited my passion in this area even though it has been inside my head all this while, albeit dormant.

Now the Viral Expansion Loop (VEL) is not the same as Viral Marketing – quite different actually, both in concept and delivery. Viral Expantion Loop is what explains how a variant of the flu virus turns from an “interesting mutation” to an epidemic and then progresses along to become a pandemic.

It’s the fundamental mathematical equation that explains how human life is formed (The X and Y chromosomes concept), how head lice breeds among kids in school, how algea becomes destructive to its hydro environment – without the VEL equation, many concepts and theories of physics and the Universe will remain unexplained – and you know what’s funny? No one actually knows how a Viral Expansion Loop works or why it is the way it is – it just is. In math I learned about Viral Expantion Loops, the fundamentals, the characteristics, how to spot one and watch it – how to create one. But back in college, I couldnt care less about boring equations – back then it was all about the recess hour when 13 of us friends would gather outside to share one Benson & Hedges ciggi. Shocking, I know.

In it’s simplest form this is how a Viral Expansion Loop works. By the very definition, anything that demonstrates unexplainable, exponential growth happens to be growing that way because the very existence of “it” demands that “it” must multiply. For example, the fact that you have a Facebook account means nothing if you don’t have any friends in your network. So what do you do? you invite your friends to join you on your Facebook network. But before your friends can actually join your network, they must have a Facebook account too. It’s so darn simple but guess what – this is an expansion loop at its best.

Here’s another thought. Got this while reading The Long Tail by Chris Anderson of the Wired Magazine fame. While The Long Tail has no mention of the Viral Expansion Loop, Chris Anderson does provide a vital pathway to creating an expansion loop. It’s through a combination of the following three (the first 2 I’ve read about in The Long Tail, the third is my own idea) that you can generate an expansion loop that produces growth that is unimaginable for most of us.

1. Democratize production

What if production was no longer a concept of getting a select group of minds together to do R&D, develop a product and produce it via the conventional means. What if production was given back to the “CROWD”

2. Democratize Distribution

What if distribution was simplified to the point where the CROWD becomes the “carrier” of the virus. The virus in this case being your product. What if there was a way to adopt the nature of swine flu – how it mutates, how it disguises itself in the form of a common flu and attacks the body just like a normal flu would but only a million times worse. What if the very people who “buy into” your products become the distribution channel for it.

3. Tap into the Wisdom of the Crowd

The crowd is extremly powerful these days. The crowd is the “force” behind phonemenons like Facebook and Twitter both of which, without having a provable and sustainable revenue stream are worth hundreds of millions of dollars. Investors putting their monies into companies like Facebook are not crazy (ok maybe a little). What makes facebook worth a few billion is the CROWD – the number of eyeballs working through information – sorting it, defining it, expanding it, re organising it, recommending it and most importantly, SHAPING IT. The crowd is HUGE. The crowd is powerful. The crowd is a democracy of it’s own.

So what does this mean for your business – Well the short answer is “I don’t know” – However, what I do know is that if your business involves dealing with the CROWD then you ought to be looking at learning more about the Viral Expansion Loop and how it can ultimately provide you with the ability to do business across a longer long tail.

Over the next few posts I will discuss the Viral Expansion Loop and the Power Law Curve (The math behind the long tail) that will help you understand more about the mathematical phenomena that if applied in business can create an exponential growth pattern.

PS: Having said that, I am yet to figure out how to apply this in the context of our business.

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8 Responses

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  1. Interesting article Manas. Crowds can also be manipulated. Tom Wolfe wrote an excellent book ‘The Painted Word’ the premise of which was the ability by a respected art critic to change the public and art world’s perception of a single artist by inventing a radical new theory in painting to describe that artists work. The Crowd reacted by embracing this theory. They didn’t want to feel left out, or more importantly, appear not to understand the concept. The Crowd is powerful, yes. Are they wise? Not always. Sometimes the instinct to ‘belong’ is more powerful than the reason.
    Looking forward to the next post.

    Ross

    November 13, 2009 at 1:27 am

    • Well said Ross… Can you share a bit more of your insight on “how the crowd can be manipulated in the context of today’s digital economy?” – I have always believed that artists have an enormous control over human emotion – especially with the “power of suggestion” being so prevalent across the works of many artists – not just fine art but also music. Your thoughts are valuable, so please feel free to share.

      manaskumar

      November 15, 2009 at 8:08 pm

  2. Manas, just read this first thing Monday and the head is spinning with “what if’s” and “how’s” – thanks for stimulating the start of my week! Loren

    Loren Astridge

    November 15, 2009 at 7:48 pm

  3. Agree, emotive connections are probably much more easily manipulated. The Crowd has an open willingness to share, e.g. reviews of software, products etc. Maybe it’s the cynic in me but I sometimes wonder at the authenticity of some information. It may only take one negative comment to start a landslide, which is why large corporates monitor the Crowd. Do you think it would be that hard to orchestrate public opinion of a brand through these networks? Shovel enough dirt and it will probably stick. With previous media channels it was much easier to validate the source. Sounds like an idea for a new undercover business! Instead of brand creation it would be brand destruction – the new Agency. On a less flippant note: Production by the crowd? Then the question is – who owns it? Who should reap the rewards for it’s creation? I regularly use software that has been developed and shared quite openly. Following the development you notice how the community demands more and more from the developers, but shun them should they request money to help develop it further. If you give it to the Crowd you take away the profit motive. Does that in turn take away the motivation to create? Interestingly enough sales of Atlas Shrugged by Ayn Rand have sharply increased since the recession.

    Hope you don’t think my viewpoint is too negative, just thought I’d throw it into the mix and see if anyone responds through the social network!

    Positive side: here is an example of the Crowd taking exception to one business trying to stamp out another. This went global very, very quickly.

    Google: kookychoo vs jimmy choo

    Ross

    November 16, 2009 at 2:58 am

  4. Interesting Manas, thanks for sharing that. NZ’s most successful business as far as export dollars go is Fonterra by a country mile, and behind that is F&P Health Care… hardly producing stuff that the consumer buys and promotes it’s value to the cool factor. But they excell at what they do and have the world market. When you break down the turn-over of Fonterra and divide by the number of employees though it works out around $140,000 per year each. Something like Apple though equates to millions – now they make cool gadgets that the CROWD demands. NZ is good at making cool things that the crowd might demand but we’re also good at then selling off that idea and moving to the next one. How is NZ going to catch up to Australia’s GDP let alone Iceland…? We are at the bottom of the heap. I think we can learn a lot about making stuff the crowd demands and then holding onto it!! Look at the Swedish and teh cool stuff they make… Nokia cell phones and Saab fighter jets! Anyway for what it’s worth, that is what’s on my mind at the moment.

    From someone who has purposely stayed away from having a Facebook account or twittering šŸ™‚

    Bruce

    November 18, 2009 at 8:54 pm

    • Hi Bruce…Thanks for your comments. There’s a lot of truth in what you say. One thing that we need to give these Americans is that they know how to commercialise an idea and take it to the CROWD. NZ is a pretty innovative country and some really cool stuff is coming out of the budding minds of this nation. What we need is an educational system that stimulates “out of the box” thinking and some governmental support mechanisms to promote entrepreneurism (did I spell that right?). How do you think can NZ as a nation do more in terms of commercialising its innovations?

      manaskumar

      November 19, 2009 at 8:31 am

      • I think Manas that we need to by-pass any hopes of governmental interventions and go it alone! History shows that government red-tape gets in the way.

        Bruce

        November 20, 2009 at 5:29 am

  5. Hi Bruce, being an avid user myself of Apple products, what always strikes me is how much they are innovators. Do you think they create products that are what the CROWD demands, or do they look at the market and create products that the CROWD needs? I think there is a huge difference. What I do like about the basis of this post is how the CROWD can make a difference and move concepts forward. Manas, your point about commercialising an idea and taking it to the CROWD. I have recently started using software that within a short space of time has established a huge community behind it. This software is designed to allow 3rd party developers to create additional plugins that allow the product to expand – based on the needs of the community. The software itself is ridiculously cheap to purchase given its potential as a business tool, and this seems to have inspired the community (CROWD) to develop these additional plugins, which are then either freely distributed or with a nominal charge. What impresses me is the speed with which this software is developing. It will become a contender to existing products that dominate the market, and that charge accordingly for their position.
    I believe that may be an example to your first point about democratizing production – it allows an innovator to create a core product, attract investment to fund the initial development, but allows the CROWD to speed up the process and spread the word.

    Ross

    November 19, 2009 at 10:12 pm


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