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Abuse Of Freemium
 

Abuse Of Freemium

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The abuse that comes with freemium can change your company dramatically. Here's how MailChimp prepared for our transition to freemium.

The abuse that comes with freemium can change your company dramatically. Here's how MailChimp prepared for our transition to freemium.

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  • Hi Ben, thanks a lot for sharing this! I will quote it properly on my bachelor´s thesis it has been very helpful!
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    Abuse Of Freemium Abuse Of Freemium Presentation Transcript

    • Sunday, March 28, 2010 MailChimp’s an email marketing service that’s been around almost 10 years. 7 months ago, we decided to go freemium. This presentation is about the abuse that came with freemium.
    • Founded in April 2000 Web 1.0 dot-com IPOs skip intro era “application service providers” Web 2.0 the ERA Sunday, March 28, 2010 We weren’t always freemium. We started as the complete OPPOSITE of freemium. Mostly because we started our company right at the dot-com crash. We bootstrapped and grew to a profitable company very organically.
    • Late 2008 Sunday, March 28, 2010 We watch our numbers closely. In late 2008, we noticed “the cloud” was dropping a lot of our hosting and computing expenses. We budgeted to spend all that money anyway, so we figured we could pass that on to our customers by “going free.”
    • Sunday, March 28, 2010 It took us a year to prepare. On September 1st, 2009, we went free with our “Power to the People” campaign.
    • 240% User growth in 7 months from Sunday, March 28, 2010 85k to 290k It worked. Our userbase grew fast. Observation: it took 9 yrs to organically get to 85k users. Then only 7 months to go to 290,000 users.
    • 225% Increase in monthly email delivery volume from 200 per month million emails 450 to Sunday, March 28, 2010 Our email delivery per month grew too. BTW, this increased our server costs again. D’oh.
    • 200% projected revenue growth over last year Sunday, March 28, 2010 This is good too.
    • 354% ABUSE RELATED ISSUES PER MONTH Sunday, March 28, 2010 But we’re talking about the bad stuff, so here. Abuse related incidents per month more than tripled.
    • 200% abuse staff headcount * which is better than 800% Sunday, March 28, 2010 Our abuse desk staff is projected to grow 200% this year. Coulda been worse, had it not been for some technology we’ll discuss soon.
    • 245% ANNUAL LEGAL COSTS (projected) Sunday, March 28, 2010 Legal costs are also expected to rise dramatically, all because of abuse. (that’s Rob. He’s our lawyer. He likes MailChimp right now.)
    • 245% ANNUAL LEGAL COSTS (projected) Sunday, March 28, 2010 Legal costs are also expected to rise dramatically, all because of abuse. (that’s Rob. He’s our lawyer. He likes MailChimp right now.)
    • Abuse? We’ll cross that bridge when we get there. Sunday, March 28, 2010 The point I want to make today is, we all say the same thing about abuse whenever we’re building our startups. “We’ll cross that bridge when we get there.” I think that’s the right mentality, but...
    • (actually, this is the bridge.) Sunday, March 28, 2010 the bridge looks more like this.
    • Sunday, March 28, 2010 on the other side of this bridge, you’ll be dealing with a lot of abusers.
    • penny-stock traders affiliate marketers Sunday, March 28, 2010 on the other side of this bridge, you’ll be dealing with a lot of abusers.
    • (their lawyers) Sunday, March 28, 2010 and their lawyers.
    • inevitable. Sunday, March 28, 2010 and so i just want to help you avoid this.
    • (I’m like your asian shorty) Sunday, March 28, 2010 in a weird way, i’m like your little asian guide, protecting you from danger
    • Sunday, March 28, 2010 Abuse is inevitable. Every popular, successful website has to deal with it.
    • Sunday, March 28, 2010 Even the WSJ!?
    • ALL UR GOATSE ALL UR GOATSE ARE BELONG TO ARE BELONG TO MORTIMER! MORTIMER! LOLZ I TOTALLY CLICKED THAT RANDOLPH! Sunday, March 28, 2010 Yes, even old fat cats are out there trolling around in the commments
    • Types of Abu... • • • • • Sunday, March 28, 2010 I was going to do this detailed list of abuse types, but...
    • help.twitter.com “report abuse” Sunday, March 28, 2010 ...just go to twitter. They’ve got ‘em all spelled out for you. I’ve had to pay our lawyer to help with almost every one of these abuse types.
    • help.twitter.com “report abuse” Sunday, March 28, 2010 ...just go to twitter. They’ve got ‘em all spelled out for you. I’ve had to pay our lawyer to help with almost every one of these abuse types.
    • Fuzzy Spam (as opposed to spammy spam) Sunday, March 28, 2010 One type of abuse not listed there is Fuzzy Spam. This, IMHO, is the worst type of abuse for the email marketing industry. It’s not like spammy spam (Nigerian 419 scams, appendage enhancers, etc). Fuzzy spam is business email sent without permission. It’s a gray area that’s hard to detect, but can ruin our servers’ sending reputation and get us blacklisted.
    • USER GROWTH Sunday, March 28, 2010 So go back in time. In 2008, at the red arrow, we had the idea to go freemium. We had no idea how crazy things would get when we launched (the green arrow, a year later). But we knew we couldn’t train enough abuse desk staff in time.
    • PROJECT OMNIVORE • Genetic optimization algorithm • nVidia Tesla Supercomputer • Amazon EC2 cluster ran for 20 days • 61 trillion data points compared Sunday, March 28, 2010 So we built Omnivore, which is an automated, self-learning abuse prevention system that runs 24/7 and stops abuse before it happens. Involved scanning 10 yrs of email history on our system for common traits among bad emails. It crashed our own computers after running for 6 days straight. Needed an nVidia Tesla to run the algorithm, then passed it on to EC2 to process all our data.
    • OMNIVORE STATS • 35,539 Warnings • 4,233 Account suspensions • 1,193 Shut-downs Sunday, March 28, 2010 In 7 months, it’s done the work of about 30 humans. What if we launched freemium without Omnivore? Assuming we could detect the abuse, adding 30+ humans in 7 months is no small task for a small, 38-person team like us. Wouldn’t have killed us, but probably would’ve changed the culture dramatically to have our largest dept. in charge of shutting down customers.
    • Sunday, March 28, 2010 But our fascination with abuse has led to interesting byproducts. Omnivore can predict the GOOD outcome of a campaign, too! In this report, Omnivore is predicting my open and click rate for a campaign I sent last week. After I sent, the actual results are in parentheses. Astoundingly close. This is, at the very least, a very cool new feature we can launch.
    • Sunday, March 28, 2010 Or, maybe a whole new startup? And if you think about it, Omnivore, if it fell into the wrong hands, could itself be abused. Which is scary.
    • Sunday, March 28, 2010 But it’s early. We’ll cross that bridge when we get there.
    • @benchestnut mailchimp.com/blog [Rob] internetlegal.com Sunday, March 28, 2010 The end. Contact Rob if you need an internet law expert.
    • @benchestnut mailchimp.com/blog [Rob] internetlegal.com Sunday, March 28, 2010 The end. Contact Rob if you need an internet law expert.