Vikrama Dhiman's Blog

Recently, I interviewed the Chief Products Officer, Make My Trip, Amit Somani at the Scrum-India NCR Meetup. The meetup was held at Xebia India Labs, Gurgaon (great hosts as always).

The talk was on the theme "Product Manager 2.0 : Beyond Product Ownership". It was a rich talk and touched on a variety of aspects of Product Management - right from hiring to culture to growth to metrics. The talk video is available below. It goes roughly like this:

1. First 3 minutes : Journey of Amit Somani to CPO, MakeMyTrip.com
2. Next 6 minutes (up to about 9 minutes): What does it take to crack a Product Manager Interview at Make My Trip
3. Next 4 minutes (up to about 13 minutes) : Where should Product Managers be recruited from
4. Next 7 minutes (up to about 20 minutes) : Product Management at Google
5. Next 6 minutes (up to about 26 minutes) : Why is the culture of building and excellence so less in India?
6. Next 4 minutes (up to about 30 minutes) : Role of Product Manager in an Agile and Scrum world
7. Next 6 minutes (up to about 36 minutes): Integration of Product and Services side in B2C portals like MakeMyTrip, and the role of Product Managers
8. Next 2 minutes (up to about 38 minutes) : What's the conversion rate for users to customers at MakeMyTrip, and is this a Product Manager metric
9. Next 3 minutes (up to about 41 minutes) : What is the role of Research in Product Management, and what role do Product Managers play in Positioning
10. Next 2 minutes (up to about 44 minutes) : Why is it hard for companies to be customer focused unlike say Google
11. Next 6 minutes (up to about 50 minutes) : Does Indian culture comes in the way of Innovation or following your passion
12. Next 3 minutes (up to about 53 minutes) : Does Domain Knowledge matter for Product Managers?
13. Next 4 minutes (up to about 57 minutes) : Who makes the best Product Manager?
14. Next 3 minutes (up to about 60 minutes) : How do you decide if a product has reached its shelf life?
15. Next 4 minutes (up to about 64 minutes) : When should a startup look to hire a Product Manager?
16. Next 4 minutes (up to about 64 minutes) : How would you respond to Product Managers, who say that "They did not have the authority to get things done"
17. Last few minutes : Book recommendations

I bought 'The Viral Loop' by Adam L Penenberg about 14 months back and started reading it around January 2011.

I read the first chapter but did not manage to continue. I managed to read quite a few books (find out the best book I read in 2011) until I started reading the book again in December 2011.

This time, despite being incredibly busy in multiple ventures, I managed to finish the book in 3 weeks.

Unlike what I originally thought, the book is not a series of essays on how to engineer 'The Viral Loop'. Rather, it is a collection of stories of companies that used 'The Viral Loop' successfully. With so many companies [Tupperware, Mosaic, Netscape, Bebo, Youtube, Flickr, MySpace, Facebook, Ning, eBay, Paypal and others] profiled in less than 250 pages, most stories haven't been etched out completely. However, the following 3 stories did manage to stick:

1. Hot or Not : A fabulous story of James Hong and Jim Young starts the book. A chance remark by Jim about a girl he saw at a party sets James thinking. Together they decide to build a simple website just for fun. Thus was launched Hot or Not on October 9, 2000. Hong emailed 42 friends about it (42 is the answer to life, the universe and everything in the cult sci-fi classic The Hitchhikders Guide to the Galaxy). On Day 2, more than 100,000 visitors visited the website. Remember this was in 2000. With zero marketing, they grew at an astonishing rate. And, they would continue to do so. Scalability (rewriting the code, hosting images somewhere else), monetization (ads and meet like minded people) and tackling porn (from Hong's parents to community policing) are discussed next. It is a fascinating story. The key takeaway -> Load the next photo (next bait) after a user has clicked and rated one photo. This sucks him / her into a viral loop of rating more photos. Just like old Lay's potato chip ad : "Betcha, can't eat just one."
2. Mosaic and Netscape : I knew that Netscape was among the first Internet companies and is largely responsible for the browsing habits we are used to. I had never read the insider story though. Tim Berners-Lee had designed the World Wide Web for elite (academics, scientists, researchers etc.). If he had his way, I would probably not be writing this post. Lucikly, Marc Andressen, a 21 year old computer science student at University of Illinois had different ideas. Finding the existing way of navigating the web difficult, he designed his own browser combining FTP, Gopher and Telnet with the help of Eric Bina, a programmer at NCSA. In 6 weeks flat, using the C language, they built Mosaic. On the morning of January 23, 1993, Marc posted a message to several online bulletin boards, which read, in part : "By the power vested in me by nobody in particular, alpha/ beta version of 0.5 of NCSA's Motif-based information systems and World Wide Web browser, X Mosaic, is hereby released." Like "The" from "The Facebook", they later dropped "X" from "X Mosaic". The word of mouth was brilliant. However, NCSA behaving like a government agency struck a deal for the browser and moved Marc out of it. Marc left without collecting his Diploma and showed up in Silicon Valley. Here, he teamed up with James H. Clark, ex-Chairman of Silicon Graphics to build a Mosaic killer, after considering other ideas. Their browser was ten times faster. Late on October 13, 1994 they posted the beta version online. Someone from Japan download it. NCSA sued them for using their copyrighted material. They setllted the case for $3 million. And, two months later, newly named Netscape Corporation officially released Version 1.0 of the Navigator browser. By 1995, Mosaic's share had fallen to 5%, while Navigator continued to surge ahead. The key takeaway -> Not charging for the browser led to its viral growth. The applications built on top of it made the money. It is difficult for something that users have to pay for to grow viral.
3. Hotmail : Did you know the originally proposed tagline at the end of each Hotmail message was "P.S. I Love You. Get Your Free Email at Hotmail"? After signing up the initial $300,000 seed investment from Draper and Juvertson. After showing the prototype, the discussion went like this:

Draper asked, “How are you going to get the word out there?”

“We’ll put it up on billboards,” Bhatia said. He also mentioned radio advertising.

“God,” Draper replied, ” that’s expensive marketing and we’re giving this away?” He thought for a moment. “Can’t you just give it out to all those guys on the web?”

That would be spamming, Smith replied.

I guess spamming is bad, Draper thought. He hadn’t heard the term before. Then he flashed back to Harvard Business School, where he had received his MBA—a case study his professor had covered in class: women holding parties for their friends then selling to each other. A certain percentage of the women at each party became salespeople by referring more business. Tupperware, that was it. He also recalled MCI’s “Friends & Family Plan,” which harnessed the power of social interactions to spread the product. He wondered if they could do something like that with webmail.

“Jack,” Draper asked, “could you put a message at the bottom of everybody’s screen.”

“Oh come on, we don’t want to do that!” Bhatia blurted out.

“But can you technically do it?” Draper asked.

“Of course we can technically do it,” Smith said.

“Oh, great,” Draper said. “And it can persist, right? You can put it on one message and if he sends an email to somebody else you can put it on that one, too, right?”

“Yeah, yeah,” Smith said, not convinced.

“So put ‘PS: I love you. Get your free e-mail at Hotmail’ at the bottom.”

Bhatia and Smith communicated through pained expressions. “Oh, no,” they seemed to be saying. Draper had seen that look before. Of all the investors in the world, why did we end up with this idiot? Frankly, he didn’t care what they thought. This just felt right.

“Wait a second guys, don’t you get it?” Draper asked. A tag line at the bottom of each message would act as free advertising. “I can send you an e-mail and you can send it to all your friends and they get it and they can sign up and send it to their friends and pretty soon it takes off.”

Smith said, “I don’t think…”

Bhatia interrupted. “Let’s move on to other business.”

Draper agreed to table the discussion for now, but had no intention of letting it go. He vowed he would keep pounding until they listened.

They launched HoTMaiL on Independence Day 1996. Not only did they like the symbolism—they viewed webmail as a populist tool because any user could log in from anywhere in the world—Smith had long promised the service would be ready by then. After turning on the registration function and hitting the switch in the early afternoon, Smith accompanied his tiny technical staff to Chili’s Grill & Bar in San Jose to celebrate. To keep track of signups he brought along a laptop with an attached radio modem receiver on the back, the antennae sticking up like a divining rod. Over quesadillas Smith counted 100 registrations in the first hour. After lunch they went to the movies, and by the time the summer blockbuster “Independence Day” began to roll he tallied 200 signups. Upon exiting the cinema, Smith logged in again to find that fifty more joined HoTMaiL. They were finding the site via word of mouth and word of mouse. People were talking about it, and letting their friends and family in on the deal via email, using the Hotmail message as a proof of concept: Eighty-percent of those who signed up said that they learned about it from a friend.

Growth was robust but not staggering for the week. At the next meeting at DFJ Tim Draper once again pushed the two young entrepreneurs to insert a tagline into each message. Bhatia and Smith were adamant about not adulterating email. It just wasn’t done. They would feel like they were polluting emails with advertising, and what about privacy issues? If someone is adding a tagline what else were they doing? A user would wonder what else they had access to and they were also fairly certain it was unethical. But Draper wouldn’t let it go. The benefits, he contended, far outweighed the risks. If they were predicating their entire business on the size of their user base, they should be doing everything in their power to increase it as fast as possible. “P.S. I love you. Get your free email at HoTMaiL.” The more he said it, the more he liked it.

The next day Bhatia phoned Draper with the news that they agreed to do it, but without the “P.S. I Love You” part. The impact was almost instantaneous. Within hours Hotmail’s growth took on the shape of a classic hockey stick curve. They started averaging 3,000 users a day, compounded daily. By Labor Day they registered 750,000 users and within six months they were up to 1 million. Five weeks after that they hit the 2 million user mark, adding more than 20,000 signups a day, with Smith desperately trying to keep the servers up and running. At times, the site became sluggish and suffered major outages. But through it all Smith, using little more than virtual spit and glue, kept Hotmail—they had dropped the awkward capitalization by this point—afloat.

The tagline with the clickable URL that Draper insisted that Bhatia and Smith insert into every outbound message served as a promotional pitch for the company. Simply by using the product every customer became an involuntary salesperson. This implied endorsement from a friend or peer made it more powerful—and more far-reaching—than traditional advertising. The receiver of a Hotmail messages could see a.) his friend is a user, b.) it works, and c.) it’s free. Successful consumer branding is often based on user affiliation. (The cool kids wear low cut jeans, so I will, too.) This plays to our tribal instinct. It also resulted in clusters of users. Bhatia sent a message to a friend in India and within 3 weeks Hotmail registered 100,000 users there. It also became the largest email provider in Sweden without spending a nickel on advertising there. In contrast, Juno blew through $20 million in marketing and advertising yet Hotmail gained three times as many users in half the time.

Bonus story:

And, bonus story from the book apart from the three stories mentioned above is the "eBay-Paypal war before merger" story. One thing that stuck from the story was how Paypal kept adapting till they identified that eBay users will be where they will be bank their growth. Narrowing down to one user segment helped Paypal grow. Of course, the incentive of a $10 (and later $5) sign up fee helped too. I think I'll be able to articulate it better after reading the Paypal Mafia book.

Here is the book page from the author's website : http://www.penenberg.com/book_viralloop.html

If you are looking to start something, you don't actually need a million plus users (who pay you nothing) but a few hundred paying customers. Here is why:

• If you had 400 paying customers, paying you $10 a month, you would make $48,000 a year. In market terms, this could get you a valuation of a million easily. Isn't that just great for a startup?
• Sooner or later, you will need to demonstrate value to people who will be paying you. Why not do it sooner than later?
• If you are only focused on getting paid customers [and not the free ones], you'd be focused on one thing and your chances of doing it correctly increase significantly. Won't you want the lesser risk strategy?
• If you are making money, you won't probably need VC funding. How cool is that?
• Focusing on getting paying customers, helps you focus on entire value chain -> marketing, branding, sales, strategy, development and not just development. Why would you want local optimization when you can optimize for the whole from the start?

While this approach may not work in all scenarios, it is definitely an approach you want to consider while deciding your product strategy. It is not really revolutionary, per se - just ignored and not considered often enough, in this age of The Free Plan. Why?

• Perhaps, it is a bit too upfront about putting the money at the center of it.
• Perhaps, it is not as sexy as "we are building a platform for the future".
• Perhaps, it is the harder problem to solve and the human brain delays solving this problem for later.