Product Lessons from the Early Days at Friendster by Dan Olsen

Product Lessons from the Early Days at

Dan Olsen How to Build Great Products

April 12, 2013 Copyright © 2013 Olsen SoluFons

My Background n  EducaFon

n  BS, Electrical Engineering, Northwestern n  MS, Industrial Engineering, Virginia Tech n  MBA, Stanford n  Web development and UI design

n  20 years of Product Management Experience n  Managed submarine design for 5 years n  5 years at Intuit, led Quicken Product Management n  Led Product Management at Friendster n  CEO & Cofounder of YourVersion (personalized news) n  Product consultant: Box, YouSendIt, Epocrates, Chartboost

Will post slides to h[p://slideshare.net/dan_o

Copyright © 2013 Olsen SoluFons

5

Se_ng the Stage: Summer 2004

n 2002: Friendster launches n Mar 2003: Friendster opens to public n Aug 2003: MySpace launches n Oct 2003: Friendster raises $13M from Kleiner & Benchmark

n Feb 2004: Facebook launches n April 2004: Abrams replaced by interim CEO n  June 2004: New CEO hired


Wild West of Social Networking: Friendster’s CompeFFon in 2004


Wild West of Social Networking: Friendster’s CompeFFon in 2004

Tier 1 Tier 2 MySpace Facebook

Orkut Tickle

MulFply Ryze

Hi5 Classmates

Tribe Match

LinkedIn Xanga

Blogger Copyright © 2013 Olsen SoluFons

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Oct03

Nov03

Dec03

Jan04

Feb04

Mar04

Apr04

May04

Jun04

Jul04

Aug04

Sep04

Uni

que

Visi

tors

(000

s)

FriendsterMySpaceHi5Orkut

•  We are currently the global leader but everyone is growing •  Orkut was above us in August •  Hi5 is gaining ground internationally

Friendster

Orkut

MySpace

Hi5

Global Competition: Unique Visitors

U.S. Competition: Unique Visitors

US Unique Monthly Users (000)

0

500

1000

1500

2000

2500

Jun-0

3Ju

l-03

Aug-03

Sep-03

Oct-03

Nov-03

Dec-03

Jan-0

4

Feb-04

Mar-04

Apr-04

May-04

Jun-0

4Ju

l-04

Aug-04

1 MYSPACE.COM 2 FRIENDSTER.COM

10

•  Open vs. closed network Connected to Tom At most 2 degrees away

•  Profile personalizaFon •  Music •  Groups •  Chat (IM) •  Blogs

ObjecFves, PrioriFes, &

Resource AllocaFon


Business ObjecFves 1. Provide a Compelling Product Experience

1.a. Ensure good site upFme (availability> 99.5%) 1.b. Ensure fast site performance (page render Fme< 2 seconds) 1.c. Ensure good user saFsfacFon (>x%) 1.d. Ensure good ease of use (>y%) 1.d. Ensure strong product value proposiFon relaFve to compeFFon 1.e. Ensure good user info/content (current, accurate, detailed)

2. Grow US Ac>ve Users 2.a. Improve new user acquisiFon (> z new users/month) 2.a.1. Improve viral acquisiFon (e.g., avg # invites per user) 2.a.2. Improve non-‐viral acquisiFon (e.g., acquire users at CPA<$y)

2.b. Improve retenFon of exisFng users (retenFon rate > x%) 3. Grow Revenue

3.a. OpFmize exisFng business models (direct sell-‐through %, CPM) 3.a.1. Grow US adverFsing revenue 3.a.2. Grow internaFonal adverFsing revenue 3.b. Experiment with new business models

Copyright © 2013 Olsen SoluFons 15

Product ObjecFves & Engineering Resource AllocaFon

1 -‐ 2 3 -‐ 4 Months Months

30% 50% 1. Provide Compelling Product Experience -‐ Ensure good upFme and performance -‐ Improve Usability -‐ Enhance Value ProposiFon

60% 30% 2. Grow US AcFve Users -‐ Improve viral acquisiFon -‐ Improve yield of acquisiFon process -‐ Improve retenFon & frequency of use

10% 20% 3. Grow Revenue -‐ OpFmize exisFng ad placements -‐ Experiment with new ad vehicles -‐ Experiment with new business models


Grow US AcFve Users


Copyright © 2013 Olsen SoluFons Copyright © 2013 Olsen SoluFons

Copyright © 2013 Olsen Solutions

Product MarCom Metrics/Research

Acquire

Reactivate

Retain


• US mthly active uniques data • Friendster monthly signups • # of visitors to Friendster.com • Registration Data • Friends Invite Data

• US Orphans Data

• Cancellations • Emails Data • Add a Friend Data • Lapsed User Survey

Product MarCom Metrics/Research

Acquire

Reactivate

Retain

H Improve Invite & Find Friend Features

H Invitation Reminder Email

M Invitation Email Optimization

Orphan Strategy

VH Recurring newsletters

VH New Product Features

Tutorials

VH Address Book Scraper VH Improve Registration

M Extending site access to non-registered members

H Prospect Tour

20

OpFmizing Viral AcquisiFon


•  Which metric has highest ROI opportunity?

Friendster’s Viral Loop

Active Users

Prospective Users

Invite Click

Succeed

Invite click-through rate

Conversion rate

Don’t Click

Fail

Invites per sender

% of users sending invites

•  MulFplied together, these metrics determine your viral raFo

Users

% of users who are active

= 15% = 2.3

= 85%

Registration Process


The Upside PotenFal of a Metric

0

100%

0

100%

0

?

RegistraFon Process Yield

% of users sending invitaFons

Avg # of invites sent per sender

2.3

85%

15%

Max possible improvement

0.15 / 0.85 = 18% 0.85 / 0.15 = 570% ? / 2.3 = ?%


Okay, so how can we improve the metric?

n  How do we increase the average number of invites being sent out per sender?

n  For each idea: n What’s the expected benefit? (how much will it improve the metric?)

n What’s the expected cost? (how many engineer-‐hours will it take?)

n  You want to idenFfy highest ROI idea


Aver Launching Address Book Importer…






ReacFvaFng InacFve Users


Personalized Emails Had Amazing User Engagement

n  627,204 sent n  615,402 delivered 98.1% delivery rate n  248,627 opened 40.4% open rate n  120,343 clicked 48.4% click rate (opened)

19.6% click rate (delivered)


Personalized Emails More than Doubled ReacFvated Users

Retaining AcFve Users


Is the site up when I want to use it?

Is the site fast enough?

Does the functionality work?

Does the functionality meet my needs?

Olsen’s Hierarchy of Web User Needs (adapted from Maslow)

Customer’s Perspective What does it mean to us?

Uptime

Page Load Time

Absence of Bugs

Feature Set

Usability & Design

Decreasing

Dissatisfaction

Increasing S

atisfaction

How easy to use is it?


1. New Features Enable Members to Better Communicate & Interact

2. Improve UI & Usability

3. Better & More Dynamic Content

4. Improve New User Acquisition

1-to-many: Ability to select multiple friends

Ability to define subsets of friends

Add to existing messages

Discussion Boards

-Public -Private

Groups

-Public -Private

Instant Messaging

CSS cleanup

Header & Global Nav cleanup

Gallery UI cleanup

Profile cleanup & extensibility

Messaging UI cleanup

Photos:

Blogs/ RSS:

Prospects Tour on Friendster.com

Exposing parts of the Friendster site to non-registered users

Link to mine

Links to my favorites

More & bigger

Links to most popular Blogs

Friendster Q4 Product Roadmap

So, What Happened?


“Network Effects”: Not all Networks are Created Equal


Network Type Broadcast CommunicaFon Social

Law Sarnoff Metcalfe Reed

Example Cable TV Fax machines Social network

Network value proporFonal to

N (linear)

N2

(squared) 2N

(exponenFal)

For Social Networks, Number of Users Is A Very Important “Feature”

~2N

~N2

~N


Details: h[p://www.reed.com/dpr/locus/gfn/reedslaw.html

Reed’s Law

Users Network Value

2x 4x

3x 8x

4x 16x

5x 32x

35

Lessons Learned n When you have contenFon for resources:

n Define objecFves and prioriFes and get buy-‐in n  Explicitly allocate resources

n  Improving your product n High ROI opportuniFes usually exist n Define causality, track metrics, and iterate

n  If problems arise, focus on lowest level first n  Live site issues trump new features n  Say “no” to other things unFl bleeding stops

n  For social products, size of user base ma[ers


QuesFons?

@danolsen h[p://linkedin.com/in/danolsen98 h[p://slideshare.net/dan_o h[p://olsensoluFons.com


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