Perry Klebahn

Founder, Atlas Snowshoes

The last talk of the conference was Perry Klebahn’s account of his experience founding Atlas Snowshoes. Perry was a student in the Stanford Mechanical Engineering program in the early 90s, and for a final project he invented a much better snowshoe. It was a revolutionary improvement: lighter, more comfortable, easier to use, fully assembled and without need for service.

He decide to commercialize it after graduating… and then discovered that snowshoes were in fact a dead category. Outdoors stores didn’t sell them, no one was interested in buying them, and very few people ever snowshoed. Even though he had a brilliant product, Perry realized he would have to manufacture a trend! Although it was not obvious to him from the start, with hindsight he realized that he achieved success through three actions: enable, evangelize and legitimize.

To enable snowshoeing, he organized on-snow demos, but this wasn’t nearly effective enough, as only a few dozen people would try the new product over a day of efforts. What worked better was to associate himself with other interesting events and venues, for example a Ben and Jerry’s moonlight snowshoe walk.

As far as evangelizing the product went, Perry realized that you had to win the sales staff. In order to do this, he offered all salespeople incredibly good pro deal… but never free products. If someone pays for something, even just a symbolic sum, they are much more likely to recommend it because it involved an actual decision. Furthermore, he organized events with NOLs courses and Outward Bound.

Perry tried to legitimize the product through all possible channels. He first tried creating a snowshoe handbook, a guide wih instructions and trails. Unfortunately, no one knew about Atlas Snowshoes, and so the guides had little credibility. Magazines were a much better source; despite what might be the common opinion on the internet, the printed word still carries more credibility and popular magazines have extremely high circulation. He managed to organize a couple of events with Burton – while the events themselves were small, he could then use the Burton name on his brochures. He started a number of large scale winter fitness events and snowshoeing competitions. He expanded his product line with a mountaineering model, which although it had practically no sales reinforced the image of snowshoeing as something fun and intense to be doing.

His real breakthrough however was the opening of the McCoy SnowShoe Park in Vail in 1994. Vail was expanding quickly and wanted the reputation of accommodating all winter sports, even the most obscure. They created a beautiful set of trails at the top of the mountain that really demonstrated the pleasure of snowshoeing. But most importantly, they added an element of safety and security that Atals would have had a hard time creating on their own: if Vail endorsed the sport, it must be okay. An added bonus was that tickets were cheap (less than $10) and a new pair of snow shoes came with free passes.

All in all, Perry’s talk was extremely enjoyable. It demonstrated that sometimes a great product won’t be successful if the market isn’t ready for it, but also that low market recognition isn’t necessarily the end of it. Through perseverance and creative marketing, Perry managed to create a new and fun category of winter sport that is still growing fast!

Paul Moore

Director of Data Insights, Yahoo

The core message of Paul’s talk was to be DATA driven. In his mind, the key to a successful business was understanding the data of how users actually use your product. In order to do this well, you must use all tools available:

- logs

- availability and response time

-usability

-analytics

-mixed method research

-scaleable customer experience management solution

Yahoo generates roughly 10TB of data every day, and has 4 Petabytes of collected data!

Once you have the data, the trick is to be flexible enough as an organization to adapt to the insights gained. Interestingly, Paul suggested that you are better off overstaffing for flexibility. This way you are ready for growth and won’t be caught by surprise if you are successful. You should organize for capacity, resource allocation and decision making. I’m skeptical as to how applicable this is for a startup, as keeping costs low is a crucial priority and doesn’t mesh that well with overstaffing, but the need for flexibility is certainly real whether big or small.

Steve Jurvetson

Managing Director of Draper Fisher Jurvetson

Steve began his talk by pointing out that viral marketing is different from regular word of mouth in that it has an involuntary component. Ideally, you share it even if you hate it. As an example, he offered Hotmail viral strategy. Hotmail apparently began as a database company, and their mail client was supposed to be a proof of concept, a demo. They decided to add a footer to every email sent offering users to “Get your free private email at hotmail.com”.

The growth was exponential – at a certain point they were adding 250k new users per day. Students were the best vectors, since they had a need to communicate over long distances when they were away from home. After only 4 months, they were the largest email provider in Sweden without any advertising there whatsoever. There were 4 Hotmail accounts for every modem in India!

Two aspects of the Hotmail technique were particularly clever. First of all, the footer was an implied endorsement by a friend: the email must have been sent by someone who used the service. Second, it was a proof point for the new product category of free email: receiving the email actually meant that the service work, which reduced perceived risk.

The net result was a spread so quick that no other company could catch up for the next few years. The nature of exponentials meant that a company starting a few months later might grow at the same rate but still see the user gap increasingly widening – which is why Microsoft ended up buying them. There was simply no way to compete. Interestingly, you can see the same exact trends in other products: ICQ, Kazaa, and Skype.

Steve also spoke about the two laws that govern networks: Metcalfe’s Law (the value of a network is proportional to the number of connections in the network – think Hotmail, Skype) and the more powerful Reed’s Law (the value is proportional to the number of groups in a network – think MySpace, Flickr). In an attempt to model the effect of viral marketing, he proposed a simple formula of:

USERS = (1 + fanout) ^ time

which he then expanded into:

USERS = [(1+fanout*conversion)*retention]^(frequency*time)

Counteracting this effect are the decay effects of novelty loss and saturation, which slow the process. Of course these sorts of formulas are oversimplifications, but they can help us think of the different factors of a good viral marketing campaign.

In closing, Steve gave a number of recommendations for a product hoping to spread virally:

a) internationalize quickly so you can spread globally

b) ensure platform homogeneity, so users can participate regardless of their device

c) tie your product to social activities, preferably targetting weak social ties (acquaintances rather than friends)

d) lower the friction to adoption (for example by making the signup process easy… or even non-existent)

e) create retention hooks that make people want to come back

f) leave visible traces

g) add communication

h) focus on involved non-purchasers: the people who participate but not yet fully