The “Real” Behind Online Analytics (Entrepreneur’s Therapy Session)

Posted on December 7, 2009. Filed under: startups, Uncategorized, venture capital | Tags: , , , |

Being an entrepreneur or an investor in consumer internet land, it is very easy to become jaded by big numbers.  The metrics we use to track engagement with an online product or content are dehumanizing.  People who interact with an online site are immediately transformed into statistics like “active users,” “clicks” and “page views,” and somehow they become less real.  Mark Zuckerberg announces that Facebook has surpassed 350 Million “Users” and I am conditioned not to internalize just how many people are engaging in the action of Facebooking.  I guess when I hear a number like that, I try to benchmark it against big numbers I am already familiar with, to get a sense of scale.  I’ll say, “350 million people is 5% of the World’s population,” that is amazing market penetration.  But still, that number may as well be written in cotton candy, hanging from a tree in The Cat and the Hat, puffing out plumes of saffron colored smoke into a balloon shaped like the letter R.  That’s how far my perception of “350 million users” is from the reality of 350 million people performing one single and common action.

This only really dawned on me yesterday, when I stumbled into Madison Square Garden, sat down in the 8th row, and looked up into an endless sea of Knicks fans.  I thought to myself, “there are a ton of fucking people, packed into this arena, all concentrating their attention on the same thing.”  I leaned over to my friend, Phin (who has been kind enough to bring me to these games for the last 15 years), and for the first time I asked him “How many people does MSG hold?”  Phin answered 19,763, and I was paralyzed.  I thought to myself, “on any given day, I can write a blog post that reaches half of this arena, and it would be equivalent to calling a time out, handing out a piece of paper to the entire left side of the Garden, and having them read it in silence for 30 seconds, before the game resumes.”

Something is lost in the translation from a physical crowd to an online crowd.  As I try to identify what it is about that arena that I find so impressive, despite the relative size of its audience compared to online crowds, I am drawn toward a few concepts: 1) concurrency, 2) time, and 3) friction.

1) Concurrency: I guess I have a newfound respect for a product that captures a high volume of concurrent users.  The trend toward On Demand information consumption has removed a key constraint in attaining a volume of consumers.  Live (in person) entertainment is one of the last frontiers where the concept of On Demand consumption is impossible.  An event is only consumable in person during a specific window.  Therefore, 19,763 represents a much larger market share (of attention) than does the same number in the online sphere.  The potential volume of attention during the hours of 12:00-2:30PM is 1/12 the addressable attention of a piece of online/on demand content.  Think about how asynchronous consumption has expanded the addressable audience of a television show.  Between DVR, DVD, Hulu, and Cable On Demand, an episode of television has a near infinite number of opportunities to reach a consumer, as opposed to 10 years ago when an episode of Seinfeld could only reach the number of people sitting in their living room from the hours of 8:00-10:00 on Thursday nights.  Madison Square Garden is still living within the constraints of concurrent consumption.

2) Time: this is a metric that actually translates well between the physical and online realms.  A minute of someone’s time is a minute of someone’s time independent of whether it is spent consuming a product in the physical or online realms.  The product of a live basketball game is significantly better than the product of a blog post, which is why the Knicks are able to capture a full 2.5 hours of 19,763 people’s time.  I would have a very hard time convincing a reader to spend 2.5 hours reading this blog.  Time on site is actually a great metric to bridge the disconnect between the online and physical worlds.

3) Friction: by far the most amazing thing about filling an arena with 19,763 people is the amount of friction the Knicks are able to overcome in order to reach their audience.  Getting a consumer to move his physical location is probably 10,000 times harder than getting a consumer to move his online location (from one site to the next).  Consumers drop off from any product when they encounter friction of experience.  The amount of value on the other end of that friction determines how much friction a consumer is willing to endure before giving up and reallocating their attention/effort to an alternative.  When you load a webpage and it doesn’t render properly, you will hit refresh.  If you try again, and it fails, you might hit refresh.  Try a third time and almost everyone will give up on that piece of content.  If it was raining yesterday, I still would have gone to the game.  If the subways weren’t running, I would have taken a cab.  If there was a riot outside MSG, I probably would have passed.  The fact that the Knicks are able to mobilize this volume of people to stand, clothe, travel, and congregate is a testament to the quality of their product relative to alternatives (Sunday afternoon football on TV, shopping at the Apple Store, etc..)

All that being said, Facebook destroys the Knicks with the time lever alone.  It is a far superior product.  The aggregate volume of human time that their 350 million people devote to a single experience is breathtaking (with or without the crutches of a low-friction environment and asynchronous product consumption).  To all the web entrepreneurs out there, living in the analytics behind your product (especially if you haven’t broken out from 50,000 users to 350 Million): start visualizing your audience in the physical world.  Size up a crowd in the most densely populated area in which you find yourself, and then remember that it is likely a fraction of the number of people you reach on a daily basis.  It will make you feel good.

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    I’m a NYC based investor and entrepreneur. I've started a few companies and a venture capital firm. You can email me at (p.s. i don’t use spell check…deal with it)


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