I recently read an article (by Nir Eyal) that really resonates, starting with his desire “to get back to learning from what the company did right instead of debating what its bankers did wrong”
The article was inspired by Facebook user research by Andrew Chen (see here), which reveals half of Facebook’s huge user base actually hit the site every day.
According to Nir:
a mastery of the mechanics of habit design is increasingly deciding startup winners and losers. Not only because habits cement user behavior in an increasingly cluttered digital world, but because a high-engagement product is also a high-growth product. The two are one and the same. A high DAU to MAU ratio is a great indicator of the strength of user habits and, ceteris paribus, I’d bet on a business with the higher ratio over a competitor every time.
Plenty of insight there; it’s hard to deny that a site that users crave to visit will be a site that grows, and ultimately facilitates revenue channels for its operator.
However, I’m not sure I’m sold on his point about the ‘Viral Cycle Time’, which is “the amount of time it takes to complete a viral loop” (cited from David Skoak). He posits that focus on growth OR engagement individually is insufficient; you must do both to be successful. He explains very coherently why growth without engagement is typically only a short term opportunity, but fails to define why the inverse is true.
I understand that to a degree this misses Nir’s main point, which is that high engagement is hard, and requires significant study and investment. I fully agree with this point. But for those of us pursuing software product opportunities in the enterprise space, I believe growth is a byproduct of engagement; it doesn’t happen for free, but building a highly engaging product for the enterprise market will be the progenitor of growth. I’ll take slower but steady growth from a loyal & engaged customer base over an Instagram curve (see basecamp, box, Jira, slideshare, et al. as dominant and clear examples of the species). But that’s just me.
Even so, that’s a minor quibble on fine article. Definitely worth a read.