Galen Ward Blog

May 15

Downloads Are the New Hits

In the 1990s and even into the early 2000s, the time before we could make up or down of the internet, hits were the huckster’s metric of choice. In order to dramatically inflate users and / or visitors, a company would report hits:

“We have 100,000,000 hits a month,”

which was technically interpreted as hits to their servers. This was a great way to make a small number look big: every asset (every picture, icon, css file, etc.) is a hit, allowing a site owner to easily add at least 1 zero to their number of visitors and to look big.

Hits isn’t a valid metric anymore.

In the age of the app wars, a download is the new hit. Downloads as a metric is just as bogus (it’s the ultimate vanity metric).

Why?

There are very few apps you have downloaded once: Whenever you download a bug fix, a product improvement or any update to an app on your phone, it’s counted as one more download. My personal stats: I downloaded 15 apps in the last 3 days. I’ll probably download another 5 tomorrow.

Public stats:

HBO Go has 6 million downloads
Flipboard: 3.5 million downloads (an “impressive” 10% of the ipads out there at the time)

So let’s be honest with ourselves: downloads are meaningless. A decent app with 50,000 downloads could register as having 50,000 downloads or 500,000 if it’s updated every two weeks for 5 months. This is an easy metric to scam (2x the number of releases gets you 2x the downloads) - so easy that companies are releasing apps frequently to be able to claim “most downloaded app for X.”

What metrics do matter?

Installs. This is kind of like unique visitors on a website - meaningful in terms of how many people were initially interested, but it doesn’t actually say anything about how many people use it. Installs is only marginally more useful than downloads.
Daily / Monthly Uniques. Now this is a meaningful metric for an app that’s useful. If a lot of people come back to an app over and over, it’s providing real value. Bonus: percentage of installs that become monthly uniques. If most installs get used month-in, month-out, it’s an app with lasting power.
Time on App. This metric is a good rule-of-thumb for time-wasting apps (think Instagram) and games, but less useful for utilities (weather apps, calendars and calculators).

Next time you see this kind of bogus reporting (or hear a VC brag about downloads), set the record straight. We need media outlets to buck up and stop reporting on BS companies unless they share meaningful statistics for mobile apps.

Feb 9

“Customers are very good at giving you certain kinds of information and very bad at other kinds. For example, users are great at telling you about their problems. They can very easily tell you when something isn’t working or interesting or fun to use. What they suck at is telling you how to fix it.” Why Your Customer Feedback is Useless by Laura Klein

Jan 31

Unmanned Real Estate Photos grounded

From the California Association of Realtors:

Los Angeles authorities have asked C.A.R. to communicate this warning to REALTORS® who hire unmanned aircraft operators to take aerial photographs for marketing high-end properties. Using these devices (also known as drones) for flight in the air with no onboard pilot may violate, among other things, the Federal Aviation Administration’s (FAA) policy on unmanned aircrafts, and Los Angeles’s local ordinance requiring permits for filming commercial motion pictures and still photographs.

The Los Angeles Police Department’s (LAPD) investigation has apparently revealed that aerial photos where unmanned aircraft were observed have appeared on certain real estate sales websites. According to FilmL.A., the LAPD Air Division has issued this warning as it intends to prosecute violators in the near future. FilmL.A. is a public benefit company created by the City and County of Los Angeles to manage film permit activity and related issues.

Manned helicopters are still okay - monied New Yorkers can still fill their listings with aerial photos. And Chappaqua, Westchester County, NY home sellers breathe a collective sigh of relief here, here, here and here.

Amazon Feels The Profit Squeeze

rafer:

parislemon:

Just to follow up, Amazon has released their numbers. As expected, net income doesn’t look great — $177 million, down 58 percent year over year. But at least it’s not a loss (which Amazon had warned it might be).

That $177 million is on sales of $17.4 billion. Crazy. That’s what low margins — and selling hardware at a loss — will do to you.

Speaking of 177, that’s also the percentage that Amazon says Kindle sales increased during the holiday period when compared to the previous year — which means basically nothing since Amazon refused to release actual numbers last year. And they still refuse to this year.

Looking forward, Amazon expects profit to be anywhere from $100 million — to a $200 million loss next quarter. Ouch.

To be fair, unlike my earlier statement, Amazon did make more money in the entire quarter than Apple did in one day last quarter, but just barely: $177 million versus around $145 million.

But that’s an average. I’m sure during some of the busy shopping days, Apple actually did make more money in one day than Amazon did for the entire quarter.

Amazon’s profit for all of 2011 was $631 million. As a reminder, Apple made $13.06 billion in profit last quarter. Perhaps not a fair apples-to-apples comparison, but not exactly apples-to-oranges either.

Rafer sez:
It’s rather exactly apples-to-oranges.

Both companies are strategic giants, and certainly Apple is more valuable by just about every financial indicator one cares to mention. And the two companies are now the top two tablet brands on the planet, with Apple being at least 4x Amazon’s size. Amazon did earn the #2 spot within two weeks of shipping for what it’s worth.

Let’s also look at the differences. Tablets are driving e-commerce at stunning levels. Which company do you think will clear more margin and gain more customer knowledge on tablet commerce a year from now? One sells mobile devices, media, and apps; the other sells everything.

Apple is beating the world by inventing new product categories and executing. Pardon my morbidity, but do they really have the ability to create any more categories after Jobs’ AppleTV vision is rolled out? If not, they’ll need to start messing with Amazon on it’s own turf — execution alone.

Finally, let’s look very hard at what it means to be a high margin business like Apple (and Facebook and Google). The stock market simply won’t let you massive low margin grabs for market share like Amazon is very successfully doing with Fire and — just as importantly — with AWS. AWS crushed Google App Engine without breaking a sweat. Bezos’ income statement improves with a (I’m guessing here) 12% gross margin IT hosting business at scale. Google can’t afford for such a business to succeed. Their stock would do much, much worse than its current lackluster dogpaddling.

Google can afford — a la Android — to give consumer software away, but only if they control the media on it. Amazon is the strongest of many companies liberating Android (somebody give me a Roy Batty joke quick) from Google by owning the whole stack right up to my credit card. Check out the stock chart below for what that all means.

I’m long the stock of both companies, Apple for 9 years this month (58x my money, huzzah!) and Amazon for about 4 years. I bet that I’ll own each of them for about 12 years from the time I bought them. Apple’s got the sex, but Amazon’s got the legs.

Google really did slow down their crawlers on the SOPA protest day. This is a chart of the number of pages Google crawled on Estately per day.

Dec 22

“Seeing who still has domains to transfer away from Go Daddy is the internet’s walk of shame.” Kottke

Dec 15

“Unless you’re doing work that doesn’t require much thought, you are trading time awake at the expense of performance.”

How Little Sleep Can You Get Away With?

Dec 8

“When I worked for someone else, I sometimes wished the days were shorter. As an entrepreneur, I always wish they were longer.”

Evan Jacobs

Dec 7

You've Probably Read Enough

Mass Extinction of Vendors

Mass Extinction of Vendors – Real Estate is a business that generates a lot of money and has tons of practitioners. There have always been, and will continue to be people who sell stuff to that large market. We wouldn’t have fewer vendors, we would have different vendors. I would expound on that, but it seems to obvious to me to need explanation.

- Chicken Little and the Extinction Event Horizon by Bill Lubin

Huge number of vendors to the real estate world are going to go extinct regardless of macro shifts in the industry. The industry experienced a cambrian explosion of CRMs, search products, and more in the 2005-2009 time frame, but as the existing products get better, the weak companies will go extinct as the barriers to entry will grow higher.

There is nothing natural about hundreds of companies providing similar services. Technological change just let it happen for a few years.