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There’s a lot of buzz these days about viral loops, and how critical they can be to the success of certain startups.  It’s one thing to understand the concept in theory.  It’s quite another to see miniature case studies of successful user flows laid out in an easy to consume manner.

That’s exactly what the new and incredibly useful ProductPlanner does.  Consider Facebook’s Sign Up loop, for instance.  Once you’ve walked through the user flow in isolation, the elements that make the product so damn viral quickly become clear.

Put in terms of the finite state machine I mentioned, Facebook makes it a priority to locate all other existing users who might possibly be friends with the new user.  The app leverages Metcalfe’s Law to provide an immediate and exponential increase in value, hastening the transition from new user to casual or even power user.

But the real kicker, is even in a worst case scenario where the new user fails to find value in the service and immediately jumps to the dormant user state, he provides some value to Facebook since new users promote the service even as they sign up!

Nihaar over at Youlicit recently shared an insightful finite state machine that describes how users interact with a new product. It’s refreshing to see such a methodical approach, yet it’s not enough to have a mental model. I was curious to see what practical implications could be derived from this concept.

For ease of reference, I’ve taken the liberty of re-posting Nihaar’s work below:

Youlicit’s User Attraction Model

Youlicit’s User Retention Model

Obviously, an entrepreneur should be concerned about every stage in the FSM, but since the devs are probably already crushed just getting the core feature set implemented, most startups will need to tightly focus their efforts. But where to place this focus?There’s a lot of hype given to startups with rapidly growing user bases.  I lean toward the old school thinking that the only measure of success that matters is revenue and I think Nihaar’s model does a great job illustrating why home-run strategies of “grow users first, worry about revenue later” are simply inefficient.

Lets use Animoto as an example.  They offer a free version of their video creation service and do a great job upselling from there to the full paid version.  In terms of the FSM, the free version would map to the casual user, whereas the paid version maps to the power user.  I’m not privy to their conversion numbers, but lets assume an even number of new users become casual, power and dormant users.

Now imagine a hypothetical scenario where Animoto has chosen to focus on growing their user base (converting web surfers to new users) rather than working to convert free users to paid users.  The number of new users acquired will increase, but a lower percentage of those will convert to power users.  All those new users most go somewhere in the FSM, and if they’re not becoming power users, then they’re turning into casual or even worse, dormant users.

With enough new users, you can still convert the same number of power users as the first scenario, but you end up paying additional customer acquisition costs to gain what are effectively low value users.

The specific link in the model will differ depending on your revenue model, but in general I think that startups ought to focus on the link that maximizes ARPU, rather than simply user base.

Shortly before leaving Seattle, I stumbled across a new retailer at Bellevue Square Mall while doing some holiday shopping. At this point, I had already begun planning my travels in earnest, and being the gadget geek that I am, was constantly looking for versatile, effective gear.

Having lived in the Pacific Northwest for the past 5 years, I’ve become a bit spoiled when it comes to outdoor performance apparel. Yet even the highest quality trekking clothing doesn’t quite work for travel, as they tend to come in bright (dare I say garish?) colors and patterns. I needed something that would transition more easily between the jungles of Burma to the urban equivalent in Tel Aviv.

Enter Nau, a brilliant new startup based out of Portland. Started by one of the co-founders of Marmot and former execs from Patagonia and Nike, their clothing is developed with three fundamental design principles in mind: beauty, performance and sustainability. The net result is a buttery soft micro fleece made completely from recycled polyester and styled like a motorcycle racing jacket or a pair of trendy 100% organic cotton trousers that have been treated with DWR. None of their clothing feature logos of any sort, and its also worth mentioning that they donate 5% of every purchase to a non-profit of your choice!

Enthused about my new find, I quickly picked up a few select articles, knowing that these would be the only clothes I would carry with me for a year on the road. Thus far, I’ve been incredibly pleased with how the clothes have held up under the rigors of travel. I’ve lost count of how many travelers I’ve met who have marveled at how small my backpack is, and I’m convinced this due in part to the small, but efficient Nau wardrobe I’ve invested in.

Here are some thoughts on what I’ve been wearing for the past 4 months:

Profile Fleece
As mentioned above, its styled like a motorcycle jacket, with micro fleece on the interior and a smooth exterior that enables it to easily layer under a hard shell. Relatively thin for the warmth it provides, it rolls up tight and takes up much less space in a pack than a “traditional” fleece. It’s been an essential insulating layer for me both in the frigid winters of northern China and Tibet, as well as the occasional Thai bus that has set its air conditioning for arctic freeze. I also appreciate the hidden chest pocket which I constantly used to safely stash my passport.

Asylum Jacket
The hood of this storm shell blends seamlessly into a high wrap-around collar, which provides that little bit of extra protection from the elements. The hood was designed to be helmet compatible, so it layers well over a wool cap, but its light enough to be worn without insulation underneath in tropical downpours. Hmm… The matte finish on the jacket doesn’t resist the grime of travel all that well. Over the past few months, daily wear has caused it to develop a permanent dark mystery layer in a few places.

Base 2 Wool Shirt
Made from finely spun merino, this shirt has made me a true believer in the wonders of wool. It somehow regulates body temperatures, so that it provides a surprising amount of warmth for its weight in colder climes, yet is breezier than cotton in heat. It naturally wicks sweat and tends to resist odor. This shirt comes with a small side pocket that blends into the seams - useful for room keys, for instance. Since it dries much more quickly than my other shirts, its been my daily wear ever since Thingyan has started. Hmm… The seam in one particular area is starting to come loose, though it hasn’t gotten any worse in the past 2 months.

Cargo Pants
I wanted a basic pair of cotton khaki trousers, but even here Nau has exceeded my expectations with little extras. They mixed just a touch of spandex into the fabric, so that the pants stretch nicely for more athletic endeavors. I’ve hiked up steep trails in the Tiger Leaping Gorge and played pick-up soccer in Laos in these these trousers and never once did they impede my movement. The cargo pockets have been sewn into the seams so they blend into the profile of the pants, which is appreciated since nothing screams BACKPACKER! like jarring, slapped-on cargo pockets. Hmm… I doubt there’s anything that Nau could do to solve this problem, but these pants are now sporting multiple stains from eating greasy street food that just will not come out.

Nau also interacts with their constituents by holding regular contests where people can send in pictures of themselves sporting Nau clothing.

Guess which satisfied customer won a merino polo this month?

I’ve recently become acquainted with a Canadian radio host working in China who shared with me an incredible insider’s perspective on how the PRC maintains an iron grip on the media.  Consider that:

• Major broadcast centers must be based in Beijing, so that the political elite can keep the media close at hand.
• Security is taken very seriously - the aforementioned broadcast centers all have guards armed with assault rifles deployed in their lobbies. 
• DJs are all issued lengthy lists of forbidden topics each week, which include unfavorable news stories and certain personalities. 
• All programming is carefully scripted and pre-recorded.  These recordings undergo scrutiny from at least 4 officials before being played over the air.
• Senior leadership and even middle management is composed entirely of party members. 
• Taiwan can’t even be mentioned in the same context as other independent nations, such as Korea or Japan.  Instead, it must be listed along with the rest of China’s provinces.
• Many Taiwanese artists that refer to Taiwan as independent are banned.  Yet Western songs with curse words can be freely played.

Its absolutely astounded by just how deep this censorship rabbit hole goes.

While hanging out in the small village of Wutunsi, I happened to meet an artist.  He was the resident thangka instructor at one of the two monasteries for which Wutunsi is known for, and had been studying the Tibetan Buddhist painting style for the past 25 years.  As you might imagine, his thangkas are incredibly intricate and undeniably mesmerizing. 

Like all artists, he is looking to build a global following for his work.  Unfortunately, he has two strikes against him - he is Tibetan, and his art is religious in nature.  Every attempt at putting his work online has been ruthlessly censored by the PRC.  I’ve had my own minor issues with censorship in China, but they don’t begin to compare to the frustration felt by an artist unable to freely express himself.

While I have mixed opinions about many of China’s other policies, I believe strongly in the freedom of information.  So for what it’s worth, here’s my small contribution to the cause:

His name is Lo San Long Da.  If you’re interested in contacting him about his fantastic collection, send mail to the Wutong Up Monastery near Tongren in the Qinghai province of the People’s Republic of China.