A Million Users? Pshaw. What’s a Hit in Today’s Metrics?
This week Rovio said its Angry Birds games have been downloaded more than a billion times. That’s a serious milestone, and beyond that there’s no doubt about the cultural effect of the franchise’s stuffed animals, movie tie-ins and repeat success with new titles. So I think it’s fair to call Angry Birds a smashing success.
But on a daily basis, we get pitched by start-ups who want to talk about how they have a thousandth of that many users. Really, a million registered users? Does that even matter anymore?
Well, yes — maybe for a paid subscription service or a marketplace. It’s not quite as impressive for a social game or a photo- or video-sharing service.
How do you know when something hits the big time, between numbers of downloads, users, visitors, page views, subscriptions, customers, monthly actives and daily actives, engagement, growth curves, millions and billions? It all starts to run together.
And very often, these metric milestones are massaged and selectively disclosed.
While it’s been well established that the number of people who actively use an app is more interesting than the number of people who have registered for it or downloaded it since it was released, many companies still tout those all-time user counts.
In response to criticism of it referring to registered user numbers, Google now counts people who have Google+ accounts and also use any Google product within a certain time period as “active” users of Google+. It’s a puzzling substitute for real engagement stats.
But numbers do tell a story. Take Instagram’s growth: 1 million registered users in December 2010, 15 million in December 2011, 30 million in the beginning of April, an estimated 50 million by the end of that month, after it launched on Android and was bought by Facebook.
Or look at mobile gaming, where the records are eclipsed almost as soon as they are set. In the month of April, Draw Something reached 50 million downloads, 50 days after it launched – while Angry Birds Space took only 35 days.
I asked some metrics providers and investors what’s enough to turn their heads.
One public place to find up-and-coming mobile products is the top app charts that are published by Apple and Google. An iPhone app that is consistently in the top 10 of the U.S. popular app charts gets 1.5 to 2 million downloads per month, according to Oliver Lo of App Annie.
Meanwhile, Peter Farago of mobile analytics provider Flurry told me, “What makes a hit, in our view, is 1 million daily active users per platform (e.g., 1 million on iOS and 1 million on Android).”
Jack Abraham, who founded Milo and now leads local at eBay, was one of the earliest investors in Pinterest a few years ago. What got him to notice that company when so many other people couldn’t tell it was about to become a juggernaut? It was the growth chart, he recently told me.
“What I look for is 1 to 3 percent sustained growth in users per day,” Abraham said. “It could be as small as 5,000 or 10,000 users if it has that growth.”
Suhail Doshi, CEO of the widely used analytics start-up Mixpanel, said that even active user counts can hide a larger story.
“You should pay attention to what their definition of ‘active’ even means,” he said. For instance, the number of users who are active on a service within a month could be swayed by a single day’s big spike in usage. “An average rolling daily active is far more indicative,” he said.
By far the most important metric for a consumer app, Doshi argued, is retention — which is to say, the percent of users who come back the very next day after they first sign up. (Of course, measuring retention is Mixpanel’s specialty.)
“Any VC worth their salt is asking for retention numbers,” Doshi said. “You’re nothing without it.”
A reasonable retention rate is 20 to 30 percent, Doshi said. Really great retention is 50 to 60 percent.
However, it’s fair to expect lower retention rates for transactional services like TaskRabbit or Airbnb, where users might not return every day but often spend money when they do, Doshi said.