Getting off a startup‘s contact list is easy enough. Thanks to the CAN-SPAM act that was signed into law in 2003, companies have to give you a link to unsubscribe from their email list in each email. But have you ever tried to get out of a company’s database? It’s almost impossible and most likely, that’s on purpose. There’s a dirty little secret in the startup world: if you are still in a company’s database, they can continue to make revenue off of you, even if you are not an active user.
Take for example Facebook. A few of my friends revolted last year over a privacy settings scare, and vowed to delete their Facebook accounts forever. I knew that they would be back, and they were after realizing that they missed seeing their friends’ updates in the News Feed. The social network never deleted their accounts, and all they had to do was reactivate their accounts to get back their profile’s data as if they had never left. It’s sold to us as users as a “convenience” in case we ever want to come back to the site. Even though Facebook promises to remove any trace of you from the site, you are still there in the database.
Facebook’s user account information states: “When you deactivate your account, your profile (timeline) and all information associated with it disappears from the Facebook service immediately. People on Facebook will not be able to search for you or view any of your information.”
Facebook continues to count deactivated users as part of its demographic information for advertiser use. According to the company, “Your profile (timeline) will be restored in its entirety (friends, photos, interests, etc.).” You can choose to permanently delete your Facebook account, but the company makes the process complicated, and finding the directions to do so are is even more so.
Like Facebook, most startups do not want users to delete their accounts permanently even if they deactivate them. Every account in in the database, whether it is active of not, counts toward the asinine metric known as “registered users.” This is what we call in the industry a vanity metric, which means that it is a PR friendly number that makes everyone feel good. It’s great to feed the press when you hit a milestone like 1 million users, but that announcement should always come with a footnote.
The number of “registered users”doesn’t reflect a startup’s real user base. Anyone who signs up for an account ever, even if they use the product for one minute, becomes a part of this number. The metric that accurately depicts a startup’s growth is “active daily users” or sometimes “active monthly users,” but you don’t see many early-stage startups blasting those numbers to the press. That’s because a the number of a startup’s “active daily users” is always lower than the number of “registered users.” But accuracy gives way to vanity metrics, when startups are looking to impress investors and nab some good press.
And some startups go out of their way to inflate their favorite metric. There are a lot of sneaky things that startups do to get registered users in their databases, including paying for signups through mobile game ad placements that require a gamer to sign up for an app in exchange for five gold coins in the game. They use your data as an asset to sell to third-parties, or to entice advertisers looking to appeal to a specific demographic. The likelihood that these new users will leave the game to sign into a social app and delete their account is slim.
Active users who want to leave a product for good with all of their information are in for a suprise. Most likely, it’s not going to happen. Facebook allows you to download an archive of all of your personal data, but many social apps don’t. The reason for the lack of data extraction in many social apps is that the app economy is a collection of data connected via APIs. As APIs become a more prominent asset to a startup, data can be easily exchanged from app to app, but cannot be extracted and usable to the average person. The exchange of data via APIs is extremely valuable. The extraction of data by a user and the deletion of an account isn’t valuable at all.
Startups need to change the attitude and behavior around data. Users are becoming more privacy savvy thanks to the high profile discussions around Facebook privacy. The company has responded to some of the backlash by offering users tighter controls on their data, but that’s not enough. Users don’t want it locked down. They want the ability to extract it. The hottest industries in consumer technology right now are all very reliant on privacy settings: healthtech, geo-location, and edtech. The companies that offer the best service to users who want to pull their data from the system will garner more trust from people who are on the outside of the startup community. It only takes one major privacy breach to lose trust from the public, which could kill your startup early in the game.
Image provided by pond5 – the world’s stock media marketplace.