If you’re like me, you’ve had enough of the Facebook IPO story. For tech entrepreneurs struggling to build stuff, the cacophony of recent press is just more noise. That’s why when my friend Andrew Chen posted an insightful analysis of Facebook user data, I was happy to get back to learning from what the company did right instead of debating what its bankers did wrong.
Chen calculated Facebook’s historical ratio of daily active users (DAU) to monthly active users (MAU) and the stats are startling. Since March 2009, when the earliest data is available, approximately 50% of Facebook users logged in daily.
As other technology companies struggle to maintain DAU to MAU ratios of 5% or less, Facebook’s numbers appear stratospherically high in comparison. But what is equally surprising is the consistency of that ratio over time. Despite periodic user revolts in reaction to changes in the site, the ratio remained strangely stable. In fact, the number has risen over the past year and is now hovering at 58% as of March of this year.
It’s as if Zuckerberg has steered the company by this golden ratio. Which raises the question: is there some wisdom here regarding this ratio as a predictor of Internet success? Obviously, there are no guarantees and starting cutting edge tech companies will always be risky business. But, assuming you have a solid business model, there are good reasons to believe that if there is one metric to focus on while building your business, it’s the percentage of users who come back daily as expressed by this ratio.
Today Facebook will sell shares in one of the biggest tech IPOs in history. New investors will gobble up the stock to get a piece of the global phenomenon famously started in Mark Zuckerberg’s dorm room in 2004. But while owning the stock will have quantifiable value when it trades on the open market, few buyers will be able to say truthfully that they understood the value of the company just a few years ago.
Ask yourself candidly, what did you think of Facebook the first time you landed on its homepage? Were you blown away? Could you see how it would fill a gaping need in the lives of nearly a billion people? If you’re honest with yourself, and you’re not Peter Thiel, your answer is probably, “No, not really.”
Don’t feel bad. Like many of the astoundingly successful web companies of the last decade, it was hard to appreciate the value of Facebook at first glance. But one person who “got Facebook” early on was Noah Kagan, who in October of 2005 joined the company as one of its first product managers. In 2006, Noah was the source for an analysis of Facebook written by Nisan Gabbay. The essay identified one of the most important reasons for the company’s ascent to Internet glory and offers a prescient description of opportunities still to come:
“The Facebook success story is most interesting to me because of how daily offline social behavior drove usage of the site. There are plenty of activities in our daily life that could benefit from a complementary online product … Facebook demonstrates you have a great Internet service if offline behaviors can drive nearly daily usage online.”
My wife put our daughter to bed, brushed her teeth, and freshened up before bed. Slipping under the covers, we exchanged glances and knew it was time to do what comes naturally for a couple on a warm night in Silicon Valley. We began to lovingly caress–but not each other, of course. She began to fondle her cell phone, while I tenderly stroked the screen of my iPad. Ooh, it felt so good.
If our nightly habits were any indication, we were having a love affair with our gadgets instead of each other. Apparently, we weren’t the only ones substituting foreplay for Facebook. According to a recent study, fully one-third of Americans would rather give up sex than lose their cell phones.
Fortunately for my wife and I, we learned how to end our liaisons with gizmos and successfully reclaim our lovelife. However, technology continues to change many of our most intimate behaviors and the story of how we broke our technophilia illustrates a method to break any number of habits we’d be better off without.
CUCKOLD BY THE INTERNET
First, we took a look at the problem and realized it was bigger than our sex lives. As technology becomes more pervasive, it is also becoming more persuasive. The result is products so seductive that they are increasingly difficult to resist. We are forming habits with unintended consequences and new bedroom practices are symptomatic of technology evolving faster than we are. The confluence of increased access, greater sharing of personal information, and at higher transmission speeds, has created the perfect storm of addictive technology.