No need to worry about the growth of ADN (yet)

Monday, December 03, 2012 – 183 views

— by nhk

tl;dr: The number of data points is far too small to say anything about the future growth and even more importantly the sustainability of ADN. In addition branding would hurt it.

I just read The world's worst kept secret is out! and it seems the mentioned numbers are worrying some. Here are the numbers again:

If I remember correctly the peek month October had several events: a reduction in the price of yearly subscriptions, a monthly feel and Netbot. December might become a small peek month as well (already 110 subscriptions in three days) because invites just got introduced.

First and foremost: After four months you cannot really say anything about a company imho. I wouldn't dare to do a regression analysis on only four months of growth data, especially when those four months include at least one outlier month, probably two (October and August). All in all we might have only two months of normal data. But even that we do not know because four data points or maybe a mere two is ehm…nothing.

In comparison to other social media sites ADN cannot thrive upon the "Power of Free" (read for example this short blog post from Dan Ariely how people get even tattoos, they usually wouldn't when they are free). ADN cannot work upon the power of free and therefore it will grow far slower than your normal for-free-social media site. And actually it has to grow slowly. From the money it makes it has to pay for server costs and employees (maybe also office space). If ADN grows too fast, they could come into a situation where they would actually have to borrow money to scale their servers faster than user growth scales. The same for employees and office space (because maintenance gets more complex and more people would mean more necessary office space). I guess that they do not have to do that at their current growth rate (I heard once the magical number is something like more than 30% growth per year that you need borrowed capital but that was for material goods; I have no idea what it might be for immaterial ones).

By the way, we do not know what the running costs of ADN are. This means we do not know what they pay for hosting and bandwidth and what the salaries are the founders pay to themself and their employees. The really interesting point of time will be when the first renewal comes: How many people will stay with ADN and how many won't extend their membership. Before that it is hard to tell what happens. I guess a more interesting number than new users would be something like the growth of (posts per months/number of users). To be fair: We do now know either if they borrowed any money and at which rates yet, either which would imply that they need a stronger growth than without borrowed money.

Spacekatgal mentioned also that ADN has to brand itself. I know that a lot came for an alternative as Twitter, as did I. I see that differently after seeing stuff like longposts, Quick Communities, Patter etc and most importantly after listening to Dalton Caldwell several times.

The idea is to create a platform, if I understoot him correctly. Therefore other parties should build onto ADN and use it as a basis for their own products and brand those. Seen from that perspective the general terms ADN is using are far better suited in my opinion. If ADN would create a strong brand third parties would have a harder time to build upon it.

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