There is a great article in the new Fast Company Magazine all about the do it yourself social network “”Ning”.

The article begins by letting us in on a little secret:

Here’s something you probably don’t know about the Internet: Simply by designing your product the right way, you can build a billion-dollar business from scratch. No advertising or marketing budget, no need for a sales force, and venture capitalists will kill for the chance to throw money at you.

The secret is what’s called a “viral expansion loop,” a concept little known outside of Silicon Valley (go ahead, Google it — you won’t find much). It’s a type of engineering alchemy that, done right, almost guarantees a self-replicating, borglike growth: One user becomes two, then four, eight, to a million and beyond. It’s not unlike taking a penny and doubling it daily for 30 days. By the end of a week, you’d have 64 cents; within two weeks, $81.92; by day 30, about $5.4 million.

Yeah we all remember that little game, “I’ll give you $1 Million today or one single penny and double everyday for a month, which would you rather have?

Me? I’ll take the “Viral expansion loop” – but I want to call it the “Viral Spiral”.

This article goes on to explain how the viral loops (spirals) work as an accelerant for internet businesses – take Google, PayPal, YouTube, eBay, Facebook, MySpace, Digg, LinkedIn, Twitter, and Flickr as good examples.

So where does Ning fit in?

Well they use this concept on steroids! What they’ve got going is a “double viral loop”.

Only Ning, Andreessen declares, benefits from a “double viral loop,” which spreads two ways, because every network creator is a user and any user can become a network creator. Say someone sets up an Angelina Jolie net with 10 members, which grows as each person draws in others. Then an adoption site breaks off, a Jon Voight hate group rises up, and a Brad Pitt love club forms. Meanwhile, a Lara Croft nostalgia net launches, spawning a legion of soft-core cyberporn spin-offs. Soon you have 2, 3, 10 networks — all expanding simultaneously. Meanwhile, the original group is attracting even more users. Ning swells like a river fed from an ever-growing number of tributaries.

You can read the rest of the article here