One of the benefits of being a tenured academic is the sabbatical. This is time when you get to do what you like, and get paid for it. Most academics take the time to think and write, retool for new research projects or teach at other universities. In 2000, I took my sabbatical at XDrive.
You might not remember XDrive, but it was a quintessential fast growing internet company that provided FTP services so you could store your personal computer data on their servers. This was a big deal back then. XDrive wasn’t the only company providing this service, but it was a high flyer with a lot of venture capital behind it. As I recall, they had about $120M invested by the time I arrived. One other thing about XDrive, it was free (“The Free Hard Drive”). They made a splash by giving away condoms and getting mentioned on Howard Stern’s show.
I went to XDrive because 3 of my students who were working with the CEO there asked me join them. One of these students, Chris DeWolf, went on to found MySpace. It was an exciting time, fueled in part because the user adoption rate at XDrive was so fast. 30M users scrolled across a colored ticker tape display when I arrived and increased as each new user signed up. It was easy to get caught up in the excitement.
It wasn’t until the end of my sabbatical that I attended a major meeting with the CEO and all those in the upper management. Aside from learning that XDrive was losing money faster than was previously known, I also learned that while more than 30M users had signed up, only a small percentage of people actually used the service. Most of these were pornographers who stored large images which cost dearly in bandwidth charges.
That people would sign up and then not use a service is a well know fact that academics have long studied. We just separate adoption from usage. Research has shown that these are very different things, and you can have high adoption with low usage (Customer Relationship Management software was plagued by this). Essentially, usage can mean many things …. used a lot, used a little, used sporadically, used a lot a long time ago but not now, etc..
What does this mean today? Think about all the stories going around about the signup rates for high flying social media sites (to take a current example). While I don’t question the usage rate, I tend to be skeptical of the usage rate. So, last week when I heard, for example, that Twitter was used by 11% of adults, I tend to ask “what does usage mean here”.
Call me a skeptic, but I think marketers need to be objective and not be quickly taken in by the latest hype. I suggest always asking “what do they mean by that” when they hear words that convey extremely fast growth. For me, I just think about XDrive and it gives me good reason to pause.
Right on!
Remember the inflated statistics about the number of bloggers? Gadzillions signed up — and these gadzillions were always referenced as representing the vast breadth of the blogosphere.
Except that an enormous percentage of these gadzillions opened accounts, posted once or twice, then vanished into the ether…
Yes, we need to look at real usage. Any thoughts about where we can find good numbers?
My sense is you won’t find good numbers. There is no incentive to reveal those numbers. There seems to be a group-think mentality that fuels this along and then it crumbles at some point. At least, that was part of what I learned at XDrive.
“No incentive to reveal those numbers.” Sadly, all too true.
As a kind of acid test, I talk to people who either cut checks to me or could, some day, cut checks to me. I like to find out what they do (or don’t) online. These conversations are often very revealing…
Monitizing Twitter is a real problem no matter what the investors say. The only possibility today is by charging for API access. For brands it is very difficult to data mine what is happening in real time and filtering what you need. One has to ask is this a FAD because who has time to twitter all day?
As my professor used to say – until we marketers don’t make standard language as doctors do (what is a skalpel), we ain’t gonna be taken seriously.
A very interesting post. And I completely agree with you. if only there was one tool that could measure statistically what will be acutal percentage of die hard users from the ones who have signed up. It is interesting you talk of X-Drive. I am sure there are numerous companies out there facing the same. How many have heard of Twitter, Friendfeed and numerous other stuff that is gaining attention forget the fact that people use them to do something meaningful. I am fairly confident that not even 1% of the internet population in India would have heard of Twitter
We have a similar problem with the ‘open rate’ in email marketing: it really doesn’t matter how many people have opened your email because that doesn’t mean all (or any) of them have actually read and absorbed your message. What really counts is a click-through to a landing page or email address because that’s a clear sign of user interaction and can be qualified as a lead.
I think your example, Allen relates to a wider tendency of some marketers to exaggerate and go with the higher figure all the time, whether or not it’s strictly meaningful or even true!
N.B. There’s been some discussion about introducing new industry standard metrics for email marketing with the ‘Render Rate’ over at the Email Experience Council’s blog, which I recommend to those who are interested.