When I read Fred Wilson’s post this morning about the tough times consumer companies are having raising money, his second point resonated with me most:
"distribution is much harder on mobile than web and we see a lot of mobile first startups getting stuck in the transition from successful product to large user base. strong product market fit is no longer enough to get to a large user base. you need to master the "download app, use app, keep using app, put it on your home screen" flow and that is a hard one to master."
This made me think of how frequently we attribute success on mobile to downloads instead of monthly active users. From the beginning, Facebook focused on monthly active users instead of hits, pageviews, and numbers of posts and photos. On mobile, the story is far different. Companies and the press often talk about downloads, flips, check-ins or even activity among active users. They avoid discussing monthly active users. Why? By far, the biggest problem facing mobile companies today is retaining the users that download their applications.
I returned to Fred’s post from July 2011 on user retention, noting that:
"I call this ratio 30/10/10 and so many services that we see exhibit it within a few percentage points here and there.
Here’s how it works: 30% of the registered users or number of downloads (if its a mobile app) will use the service each month
10% of the registered users or number of downloads (if its a mobile app) will use the service each day”
When I look at retention on mobile today, a 30% monthly active user rate is much higher than what publicly available data tells us:
Path: In December, Path had 250K monthly active users connected to Facebook. Almost one year later, they have about 780K monthly active users. While the 2.0 version of their app led to much initial growth, it seems that growth hasn’t affected churn.
Every company in mobile wishes they had the retention rate of Instagram - but very few even whisper the words “monthly active users” to the outside world. An app is only a long-press away from being dismissed to the second, third or fourth page of apps on a user’s device. How mobile companies aim to defeat the retention problem in a world of fickle social users will be their true test.