Abuse Of Freemium

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


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


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.”


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
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


Our email delivery per month grew too. BTW, this increased our server costs again. D’oh.

200%
projected revenue growth over last year


This is good too.

354%
ABUSE RELATED ISSUES PER MONTH


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%

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)


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.


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.)


the bridge looks more like this.


on the other side of this bridge, you’ll be dealing with a lot of abusers.

penny-stock traders

afﬁliate marketers

on the other side of this bridge, you’ll be dealing with a lot of abusers.

(their lawyers)

and their lawyers.

inevitable.


and so i just want to help you avoid this.

(I’m like your asian shorty)

in a weird way, i’m like your little asian guide, protecting you from danger


Abuse is inevitable. Every popular, successful website has to deal with it.


Even the WSJ!?

ALL UR GOATSE
ALL UR GOATSE
ARE BELONG TO
ARE BELONG TO
MORTIMER!
MORTIMER!

LOLZ
I TOTALLY CLICKED
THAT RANDOLPH!


Yes, even old fat cats are out there trolling around in the commments

Types of Abu...

•
•
•
•
•


I was going to do this detailed list of abuse types, but...

help.twitter.com
“report abuse”

...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)


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


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


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


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.


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.


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.


But it’s early. We’ll cross that bridge when we get there.

@benchestnut
mailchimp.com/blog

[Rob] internetlegal.com


The end. Contact Rob if you need an internet law expert.

Abuse Of Freemium

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