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A digital contagion has brought John Sculley to his knees. The former head of Apple Computer is kneeling at the side of Eyal Gever and watching the 28-year-old founder of an Israeli start-up called Zapa.com demonstrate his latest software. The product, dubbed Gizmoz, allows people to create electronic greeting cards, photo albums and other digital doodads with sound, animation and pictures. The special sauce: with the click of a button, the creations can be e-mailed to a friend, who can, in turn, make gizmos of his own. Sculley, whose investment company owns a stake in Zapa.com, can barely sit still, fetching Gever beverages, scrawling notes and whispering in people's ears. "Of the 23 companies we've invested in," he says, "this is by far the most exciting."
What's made Sculley so feverish is a form of computer virus. But this strain is friendly. Called "viral marketing," it's the trick of getting customers to propagate a product on behalf of the company that creates it. One of the cheapest and most effective Internet marketing schemes ever, viral marketing allows even the motliest start-ups to gain a worldwide audience. This week, in what Zapa hopes will be a highly infectious digital sneeze, the company plans to unleash its Gizmoz publishing service with dreams of having it spread faster on the Internet than the Melissa virus or Monica jokes.
Suddenly it seems that all sorts of Net companies have gone viral, from software developers and game makers to e-mail firms. When they play the word-of-mouse game right, they can experience exponential growth. Hotmail, a free e-mail service, affixed a little advertisement to every missive its users sent, thereby making every user a salesperson. Within a year, Hotmail had a whopping 5 million subscribers. The company reportedly spent only $500,000 on marketing compared with the $16 million a rival shelled out for only 6.8 million users. Now Hotmail has 35 million users and has been sold to Microsoft for more than $400 million. Hasbro Interactive lets users download games like Scrabble and forward them, along with their move, to any user with an e-mail address. Recipients can play for free--but to start a new game, they must purchase the software online. Catchy.
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The most potent marketing viruses are forming in Israel. Topping the list is a service called ICQ ("I seek you"), a little piece of software by a company called Mirabilis that lets users see when their friends are logged on and initiate real-time chat sessions. If Grandma doesn't have the program, click on a little button, fill out her e-mail address, and a link to download the software will land right in her mailbox. Today, 90,000 people sign up for the ICQ service each day, and the chat software boasts a colossal audience of 32 million users.
Had the software been conventionally marketed, it might not have made it off store shelves. "We never spent a penny on conventional marketing," says Yossi Vardi, one of the driving forces behind Mirabilis and viral marketing. "We never made one either." No matter. Seeing money in the size of the ICQ audience, AOL bought the company for $400 million last year. Now AOL is shepherding ICQ gingerly so as not to disrupt the service's grass-roots swell. "The less you do, the more it grows," says AOL's Ted Leonsis. "This is a phenomenon like we've never seen."
The growth has been driven by users like Jeneen Rothstein, a 62-year-old secretary in Moses Lake, Wash. Three years ago she and other Yorkshire terrier owners she had met on the Web communicated via e-mail, but that was awkward and slow. Then she heard about ICQ from a friend and downloaded a copy. She liked it and suggested her friends try it. Suddenly, a little network of chatty Yorkie masters was born.
Now Gever is trying to replicate the success of ICQ, which was developed by a group of his former employees. His idea for Gizmoz was born out of an intersection of experiences with the Israeli Army and Pottery Barn. While in the military, he wrote software simulations for battle training, getting a good background in 3-D graphics. At 23, Gever started Zapa.com and developed 3-D photorealistic technology that caught the attention of several blue-chip tech companies. Last year, during a visit to New York, he dropped into a Pottery Barn to pick up picture frames for snapshots of his newborn. "It hit me," he says. Browsing the store, he conceived of developing a huge collection of digital designs that would help people furnish their home pages and text messages, their chat communications and greeting cards.
Easy publishing services already abound on the Internet. But Zapa.com will take Gizmoz much further. Supplementing its trove of animation, sound and templates, the company will soon allow users to paste Gizmoz anywhere: online guest books, home pages, message boards. Soon, the company plans to spruce up Gizmoz so that when the author makes a change, all the copies of the Gizmo--no matter where they are on the Net--will change with it. Eventually, people will be able to pump music and video through their Gizmoz and "become a DJ of their own Gizmo network," says Gever.
So how will they make money? Like Mirabilis, by building an audience so advertisers will come. Each Gizmo has space for an ad, and Zapa.com can give advertisers detailed demographic information to allow them to better target their pitches. If Gizmo viewers actually click and buy something, Zapa.com can get a cut of the transaction. To build the audience, Zapa.com has hired a band of evangelists-people of every stripe with specific interests--who are expanding their spheres of online friends in chat rooms, on message boards and other Web neighborhoods. Think of them as carriers--albeit friendly ones--among us.
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