For years, startups were measured by how many registered users they had. Â The company’s valuation was directly tied to this number, and in some cases this key stat was used to calculate a purchase price. Â It was amazing that acquirers or VCs did not pay attention to the active users, and startups were pretty coy in trying to hide the active number unless it was a good number.
In today’s world, getting registered users is so easy thanks to things like oAuth and Facebook Connect, that having a registered user count is almost pointless. Â The friction to register is so small, that any site can launch today and have a 100K users tomorrow. Â Yet, I still see press releases touting registered users in combination with the recent round of funding.
The press still talks about Skype’s registered users (over 600M) but ignored their active user number for years (25M concurrent, ~200M 30 day active). Â You know what, I can say that AIM has over 1B registered users, but I am not sure that number indicates how successful the product is.
I am always intrigued by two metrics when I talk with startups. Â First, of course, is active users over a 30 day period, if the startup will tell me. Â The second number, depending upon the product, is how many users are contributing data to the site. Â The first number will of course cut through the BS of registered users and get to the heart of how many users are really using your product. Â The second number flushes out how many users are just passive consumers versus how many actually participate in the site. Â So at the start you may have a company say they have 100K registered users, but their actives are 30K, and 3000 contribute.
To borrow a fake line from a fake movie and to make it my own, “100K registered users isn’t cool. Â You know what’s cool? 100K active users.”