Talk I gave at Greylock Partners' & Samsung's event "How to Build Great Products" on product lessons learned from the early days at Friendster.

1. Product
Lessons
from
the
Early
Days
at
Dan
Olsen
How
to
Build
Great
Products
April
12,
2013
Copyright
©
2013
Olsen
SoluFons

2. 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. 5

6. 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
Copyright
©
2013
Olsen
SoluFons

7. Wild
West
of
Social
Networking:
Friendster’s
CompeFFon
in
2004
Copyright
©
2013
Olsen
SoluFons

8. 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

9. Global Competition: Unique Visitors
• We are currently the global leader but everyone is growing
• Orkut was above us in August
• Hi5 is gaining ground internationally
7,000
6,000 Friendster
Unique Visitors (000s)
5,000
Orkut
Friendster
4,000
MySpace
MySpace
Hi5
3,000
Orkut
Hi5
2,000
1,000
0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
03 03 03 04 04 04 04 04 04 04 04 04

10. U.S. Competition: Unique Visitors
US Unique Monthly Users (000)
2500
2000
1500
1000
500
0
N 3
M 4
Se 3
O 3
04
D 3
Ja 3
03
Fe 4
04
Au 3
Au 4
Ju 4
M 4
Ap 4
-0
r-0
0
0
-0
-0
0
l-0
l-0
-0
-0
0
g-
p-
g-
n-
n-
n-
b-
ct
ov
ec
ay
ar
Ju
Ju
Ju
1 MYSPACE.COM 2 FRIENDSTER.COM
10

12. • Open
vs.
closed
network
Connected
to
Tom
At
most
2
degrees
away
• Profile
personalizaFon
• Music
• Groups
• Chat
(IM)
• Blogs

13. ObjecFves,
PrioriFes,
&
Resource
AllocaFon
Copyright
©
2013
Olsen
SoluFons

14. 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
15 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
Copyright
©
2013
Olsen
SoluFons

16. Grow
US
AcFve
Users
Copyright
©
2013
Olsen
SoluFons

17. Copyright
©
2013
Olsen
SoluFons
Copyright
©
2013
Olsen
SoluFons

18. Product MarCom Metrics/Research
Acquire
Reactivate
Retain
Copyright © 2013 Olsen Solutions

19. Product MarCom Metrics/Research
VH Address Book Scraper
• US mthly active uniques data
VH Improve Registration
• Friendster monthly signups
H Invitation Reminder Email • # of visitors to Friendster.com
• Registration Data
Acquire H Prospect Tour
• Friends Invite Data
H Improve Invite & Find Friend Features
M Invitation Email Optimization
M Extending site access to non-registered members
• US Orphans Data
VH Recurring newsletters
Reactivate
Orphan Strategy
VH New Product Features
• Cancellations
• Emails Data
Retain • Add a Friend Data
Tutorials
• Lapsed User Survey
Copyright © 2013 Olsen Solutions
20

20. OpFmizing
Viral
AcquisiFon
Copyright
©
2013
Olsen
SoluFons

21. Friendster’s
Viral
Loop
% of users
sending = 15% Invites per Invite
invites sender = 2.3 click-through rate
Active Invite Prospective Click Registration Fail
Users Users Process
% of users
who are Succeed
Don’t
active Click Conversion
= 85%
Users rate
•
MulFplied
together,
these
metrics
determine
your
viral
raFo
•
Which
metric
has
highest
ROI
opportunity?
Copyright
©
2013
Olsen
SoluFons

22. The
Upside
PotenFal
of
a
Metric
?
100%
100%
85%
15%
2.3
0
0
0
RegistraFon
%
of
users
sending
Avg
#
of
invites
Process
Yield
invitaFons
sent
per
sender
Max
possible
0.15
/
0.85
=
18%
0.85
/
0.15
=
570%
?
/
2.3
=
?%
improvement
Copyright
©
2013
Olsen
SoluFons

23. 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
Copyright
©
2013
Olsen
SoluFons

24. Aver
Launching
Address
Book
Importer…
25 Copyright
©
2013
Olsen
SoluFons

25. Aver
Launching
Address
Book
Importer…
25 Copyright
©
2013
Olsen
SoluFons

26. Aver
Launching
Address
Book
Importer…
25 Copyright
©
2013
Olsen
SoluFons

27. ReacFvaFng
InacFve
Users
Copyright
©
2013
Olsen
SoluFons

29. 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)
Copyright
©
2013
Olsen
SoluFons

30. Personalized
Emails
More
than
Doubled
ReacFvated
Users

31. Retaining
AcFve
Users
30 Copyright
©
2013
Olsen
SoluFons

32. Olsen’s
Hierarchy
of
Web
User
Needs
(adapted
from
Maslow)
Customer’s Perspective What does it mean to us?
How easy to use is it? Usability & Design
Satisfaction
Increasing
Does the functionality
Feature Set
meet my needs?
Does the functionality work?
Absence of Bugs
Dissatisfaction
Decreasing
Is the site fast enough?
Page Load Time
Is the site up when I want to use it?
Uptime
Copyright
©
2013
Olsen
SoluFons

33. Friendster Q4 Product Roadmap
Add to existing
messages
1. New Features
1-to-many:
Enable Members Ability to select Discussion Groups
to Better multiple friends Boards
Communicate & -Public
-Public -Private
Interact
Ability to define -Private
subsets of friends
Instant Messaging
2. Improve UI
& Usability CSS cleanup
Header & Global Messaging Gallery UI Profile cleanup
Nav cleanup UI cleanup cleanup & extensibility
3. Better & More Photos: More & bigger
Dynamic
Content Blogs/ Link to Links to my Links to most
Blogs
RSS: mine favorites popular
4. Improve
Prospects Tour on Exposing parts of the Friendster
New User
Friendster.com site to non-registered users
Acquisition

34. So,
What
Happened?
Copyright © 2013 Olsen Solutions

35. “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
N
N2
2N
proporFonal
to
(linear)
(squared)
(exponenFal)
Copyright
©
2013
Olsen
SoluFons

36. For
Social
Networks,
Number
of
Users
Is
A
Very
Important
“Feature”
Reed’s Law
~2N Network
Users
Value
~N2 2x
4x
~N 3x
8x
4x
16x
Details:
h[p://www.reed.com/dpr/locus/gfn/reedslaw.html
5x
32x
35 Copyright
©
2013
Olsen
SoluFons

37. 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
Copyright
©
2013
Olsen
SoluFons

38. QuesFons?
@danolsen
h[p://linkedin.com/in/danolsen98
h[p://slideshare.net/dan_o
h[p://olsensoluFons.com
Copyright
©
2013
Olsen
SoluFons