(1)    Viral Coefficient of 0.5 – If a community has 100 members and a viral coefficient of 0.5, then those 100 members will bring 50 new members to the site.  Those 50 members will bring 25 members, and so on, and the community will ultimately plateau at about 200 members (after 10 periods of time). A social network with a viral coefficient less than 1 will stop growing on its own.

(2)   Viral Coefficient of 1 – If a community has 100 members and a viral coefficient of 1, then those 100 members will bring 100 new members to the site, and those members will bring another 100 members to the site.  This will result in linear growth from 100 to 200 to 300 until the community has reached 1,000 members in the same 10 periods of time as the first example.

(3)   Viral Coefficient of 2 – If a community has 100 members and a viral coefficient of 2, then those 100 members will bring 200 members, who will bring 400 members, who will bring 800 members, etc.  By the 10^th period of time, this social network will have 51,200 members.  Having a viral coefficient is like compound interest for social networking.

Fast-growing social media sites, such as Twitter, sometimes forgo advertising during their growth stage in order to maximize their viral coefficient and accelerate their exponential growth. Here are a couple of core principles to improve and maintain strong viral coefficients:

(1)    Create something useful that people want to share with others: The viral coefficient will improve if sharing the information will make the sharer look better or improve their relationships with friends.  Also, if the product is simple, easy-to-understand, free and web-based the “barrier of entry” and “friction” will be reduced and the viral coefficient will generally increase.

(2)   Create a reason for people to share the message with others:  FamilyLink.com members want to invite more family members so that they can know about important happenings in the lives of these people.  Fans of a charity may be motivated to solicit their friends to donate to a charity about which they are passionate.

(3)   Make it easy for people to share the message with others. Viajamos.com.br allows members to easily invite friends from their email or easily post a cool piece of content to Twitter.  FamilyLink.com makes it easy to invite family members on Facebook, and also suggests other members to whom members may be related.

Here’s an article explaining how to calculate viral coefficients.

“Approximately once a decade, a radical new technology emerges that fundamentally changes the business landscape.  In every case, regardless of prior competitive dynamics, businesses that understand and appropriately adopt the technology win, while those that fail to do so lose.  In the 1970s, this was mainframe computing.  IN the 1980s, it was the PC. In the 1990s, it was the Internet.  And today it is the online social graph.” (Clara Shih in The Facebook Era)

The social graph is the world wide web of people.  It is the map of everyone on the Internet and how they are interconnected.  The social graph is for people what the Internet is for interconnected webpages.  Social networks like Facebook, LinkedIn and MySpace are helping to construct this social graph.

Each of these radical technology evolutions has been punctuated by a cycle of innovation, commercialization, emergence of new applications, and then large-scale impact on business.  The online social graph is following this cycle, and is facilitating a “new, more nimble, and more efficient class of businesses that outcompetes those using technology from the previous era.” (Clara Shih)

I started working with the Internet and online communities almost 13 years ago in 1996.  I created Adoption.com, which became the world’s largest adoption service of which I’m aware (measured by the number of people using its services each month).

As my first consulting project I created the initial vision and directed the creation of the first website for Law.com, which I have been told sold for about $20 million within approximately 2 years of launch (unfortunately, I didn’t get any equity in the project).  I also built the Families.com online community and sold it in 2007.

During the last two years I have been doing consulting work for next-generation digital media properties, such as a large iPhone application and the 4th largest Facebook application, with 54 million registered members.

I have also built niche social networks (such as GenealogyWise.com) to leverage the social graph within niche industries.  These niche social networks provide tools that enable members to connect and share content with others who share similar interests.  GenealogyWise is just a few months old, but it already has 13,000+ members, 3,000+ sub-groups on genealogy-related topics, 700+ blog entries, 350+ videos, etc.

How could a social network help your business to seize your opportunity within the social graph?  If you are an accountant or attorney who practices a specific type of law, you could build a social network for people interested in your areas of practice.  If you own an emergency preparedness company or a manufacturing company, you could build a niche social network of your potential clients.   If you are part of a membership organization or are planning an event, a niche social network can help you recruit and develop stronger relationships with members and attendees.  If you are a politician, the social graph is an essential element of your campaign. President Obama’s social media strategy was given a large portion of the credit for his election victories.  If you are interested in sewing or if your child has a health condition, you can build a social network of people who have similar interests.

Then, once you have developed a successful social network, you can generate revenue in a variety of ways, such as selling advertising, directory listings,virtual goods, classified ads, e-commerce and subscription sales.

I have expertise in creating niche social networks, developing social media strategies for businesses, and helping organizations to better monetize their digital media properties. If your business could benefit from qualified, seasoned consulting to better seize the opportunities within the social graph, I would love to help.