250 MILLION Dollars – Retention is king, Viral coefficient is queen

eToro

It was amazing to hear the story behind draw something, to whoever hasn’t heard :
New mobile app, connect with facebook, choose a friend, then word to draw, he needs to guess what you drew, then you need to guess etc’ , very addictive .
30M users in 6 weeks !
12M daily active users in 6 week !
100-200K a day from mobile ads (who said mobile advertising doesn’t work ?)

18 month ago I met Dan Porter, CEO of OMGPop, he told me about social gaming and how they are developing cool games for facebook, i tried convincing him to build with eToro a cool social trading app for facebook, he said they prefer focusing on social games on facebook, and WOW, the rest is history, launched Draw Something, became the fastest growing app in history, and rumored to get a $250M offer from Zynga .

If its 100K a day now, then it could probably reach a million a day, simply add context to drawings, and adapt ads to context or let brands sponsor their Logo as a word (that’s AWESOME) – call it sponsored word, and people start drawing your brand – the bigger the brand more people click it and then each get ad from the brand it self.

Read The future of mobile for more mind boggling insights (and then combine : mobile social trading).

I wanted to start the blog by talking about how retention is so important, they get to daily retention rates, which is amazing, they expect people to come back almost every day. If they have 30M users, and 9M are active daily, that means each user on average is on it at least every 3 days, that’s amazing. Creating such traction, and keeping it is amazing, it means they have 30-40M DAILY IMPRESSIONS of ads.

But that amazing retention rate is no good without its queen, for every day when a user is active he has a viral coefficient, maybe of 0.2 a day, so every 5th time a user logs in, he invites a new friend (through his sharing, actual inviting or word of mouth), for example viral growth model . The trick is very simple, get to viral coeff + retention rate > 1 and you grow every day by that (could be used in Monthly too, would be irrelevant for such growth though) .

Bottom line is simple if every user you have will bring at least one user over the course of his life time, than the company will always GROW without any other source of leads but its viral effect, that’s how the magic is done in the internet, happy users stay and bring their friends. BOOM.

That spreadsheet took me a while, I think it is a good base to model viral growth, you are welcome to comment if you think I need to update it.

About Yoni Assia

Founder and CEO of Etoro.com