Many industries have hit-making down to a science. Hollywood is a good example - from the script to the the cast to the production to the testing to the release to the marketing to the distribution - every step of the way, calculated decisions are made that are designed to maximize a movies success. Same can be said for cheeseburgers, toothpaste, autos, etc. They know what it takes to make a hit and they pursue it. They might not always get it right, but there is some research and science to the choices that are made.
Offhand, I can think of some online equivalents. The gaming industry is a hit-driven business. A game starts with a concept, whether it's Tiger Woods Golf, Lego Star Wars, or some MMORPG Dungeons & Dragons descendant. Get a physics engine, voice actors, motion capture, all that expensive stuff that goes into the multi-million dollar gaming budgets these days. Get it out by July so it it can on the shelves for Xmas. Make sure your distribution agreements are in place so your focus-group tested dodecahedral boxes will be arranged in the proper stacks on the end caps at Fry's. There's a lot of details to get right to drive a gaming hit.
Another: the mini blog empires built by Jason Calacanis and Nick Denton. The model is -- think of a concept for a blog, get a fresh design and a great name, and hire a contract blogger. The pay is $2k/month, you're 1099, not an employee, bring your own laptop, work from home, and if you don't increase traffic 10% month-to-month you're fired and someone else will try... After two or three bloggers have tried, if the site is still not working it gets shut down. Have competent centralized ad sales, launch PR, and a great serving platform. Repeat and scale.
But Mike then talks about distribution strategies:
As far as I can tell there are only three real online hitmaking "strategies": SEM/SEO, viral and syphoning (taking your existing traffic and using promotion on your site to "syphon" it off to a new product.)
I don't think of those as hitmaker strategies, they're only a piece of the puzzle. Those are tactical distribution methods. I'd add pure word-of-mouth as the holy grail here, separate from viral:
- SEM - purchase traffic profitably via some kind of arbitrage. ex: Shopping.com, NexTag, Monster.com.
- SEO - rank organically for free search traffic. ex: About.com, Autobytel, Yelp.
- Viral - product contains a built-in spam-your-friends mechanism. ex: Hotmail (the original!), Friendster, Youtube.
- Syphoning - brand extension and traffic promotion from a winning business to promote a new product. ex: Gmail. I'm having a hard time with examples here because this strategy basically doesn't work. Zshops, MSN, Live, Endless.com, Alexa, A9, Yahoo 360...?
- Word of mouth - something so compelling people refer their friends even without a built-in spam mechanism. ex: Google.
Viral and word of mouth often work together -- a spam-your-friends mechanism will only be used if someone likes the service enough to use it themselves, and to recommend it to others. It just lowers the activation threshold.
For most people in our industry this is old hat. Yet still there are routinely sites launched by startups and big companies alike that don't have any of these mechanisms. It's hard to predict success but you can often spot failure in the works when a site launches with zero SEO, no way to sustainably buy traffic, no viral aspect, a ho-hum product, and a billboard on the hill in South San Francisco begging visitors to come. These happen all the time and you wonder what the VCs and founders were thinking. Can web distribution 101 really be unknown to them at this point?
The thing is, the entire startup environment in Silicon Valley and the rest of the net-connected entrepreneurial world is the hitmaker factory. The VCs are the formal, but not exclusive drivers of this show. VCs are the hitmakers. They have time-honed playbooks for how to churn out hits from entrepreneurial ventures in fast-changing markets. Even their apparently-trite maxims actually code for a wealth of wisdom.
Movies and games burn out after a while so the engine needs to keep making fresh ones. For programming problems and online brands, though, once you have a winner you're basically done unless the winner screws it up at some point (e.g. AltaVista -> Google) or the market or technology base moves again.
So once you have Google you don't really need more people trying to make a great search engine; Silicon Valley made a really good one, everyone in the world can use it for free, and they're doing a great job keeping their product in good shape.
That happens all the time. We don't need big dialup ISPs anymore, so UUnet and AOL are in the past. We don't need PC or OS startups anymore so they're in the past. We don't need browser startups anymore since we've all got several browsers that work just fine. Mosaic/Netscape and Spyglass are over. We don't need someone to start retailing shoes or books or X online anymore since you can buy anything you want with a few mouse clicks and have it tomorrow FedEx. Fortunes were made filling all of those needs, but the needs are filled now. Fortunes were also made delivering nutmeg and sugar and fresh lettuce to our kitchens too. But they're done. You have to find a new need to make a new fortune, not solve an already-solved problem.