CNN Money: "If you make the product cool and people love it, it will spread like crazy and you can monetize it later." Talk like that is often ridiculed, especially by those shaken when the dotcom bubble burst. But if a company really understands its customers, it's hard to beat such a formula. Google (Research) comes to mind, or Hotmail, or Amazon (Research). Or Xfire. The speaker in this instance was that company's CEO, Mike Cassidy.
If you're a male online gamer aged 18-34, chances are you've already heard of Xfire. Otherwise, you probably haven't. But this tiny San Francisco company could be the next MySpace, or more relevantly, IGN, the online gaming site bought by News Corp. (Research) last year for $650 million.
Xfire's main purpose is to make it easy to play games online with your friends. "We're a combination of a social networking and community site with a media and ad buying site, all designed around gaming," says Cassidy. One of its great virtues as a business is that it has little value for someone unless their friends also use it. The average user convinces five friends to join the first month. That's what we call a viral business model. It's free. As Cassidy says, the whole thing is "monetized" with advertising.
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