IT-A case study: The danger of "freemium"-Znet Video

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Video Script: A case study: The danger of 'freemium'




In late 2009 on September 1st we launched our Power to the People campaign and that's when MailChimp went freemium. You basically send up to 3000 emails a month for free using our system and it worked pretty well for us. Our user base grew 240% in seven months and the stupendous thing to me, I didn't really realize until I made this slide, was it took us nine years to get to 85,000 users organically and then seven months to get to 290,000 users with freemium. So it's a testament to freemium, I think, but also to having sort of an installed base of loyal users giving you a little bit of momentum, you know, freemium is sort of sprinkling it on the top. Emails that we delivered per month use to be around 200 -- 250 million emails per month. After going freemium, we're now at just under half a billion emails per month. Which raised our server costs again. Projected revenues going to be 200% this year. So freemium has helped us quite a bit, but I'm here to talk about the bad stuff, right, so...abuse related issues that we deal with every month has more than tripled now. The abuse desk staff that handles all of that abuse is going to grow 200% and if you look down in the footer here, it would've been 800% had we not implemented some of the technology that I'm going to talk to you about. Our legal costs are going to grow 245% this year.
This is just dealing with abusers and all of the stupid ways they use our system to gain it basically. That's my lawyer. He really likes MailChimp right now, he's a great guy if any of you need a lawyer that specializes in internet law, he's the guy. So abuse is this thing that everyone sort of says, no one really thinks about it that much, it's this hassle, we'll cross that bridge when we get there and that's fine I'm not here to really change that attitude. If you worry about abuse too much, you'll never get off the ground. But I do want to tell you that the bridge actually looks more like this whenever you get there, there're really nasty, nasty people on the other side of that bridge waiting for you and they all have lawyers as well and they're really hard on... This is actually inevitable, you are going to have a really horrible abuse related event if you're successful, its just going to happen. Everyone's going to have you're Google China. It might not be that big, but you're going to have something really embarrassing and traumatizing.
It happened to us just a few months into our business and it can really scar you so I just want to prep you for it that's all. I'm basically your shorty for the day. I'm glad you guys actually remembered this movie, I was kind of worried. So abuse, it's really everywhere if you look close enough. Which is this weird hobby that I have, if there's a popular website, I drill down and try to find out how they deal with abuse to see how far they've come. Everyone has to deal with it. If you look close enough, you'll find this dark, seedy, underbelly of every site where some members of their staff have to deal with this in some way and my favorite one out of all of these is right next to PUDD phonetic, the creator of FUT phonetic Company, Andy Blippi phonetic, my hero, right next to him is the Wall Street Journal. You know the Wall Street Journal has to deal with abuse so abuse is really everywhere, everyone, even old fat cats are out there comment trolling on people. So, I was going to give you this long list of all the different types of abuse that we've dealt with at MailChimp and all the different types of abuse you might face, but I found out that Twitter really has that list already done, so if just go to help.twitter and search for "how can I report someone for abuse", they've got every conceivable type of abuse you can think of and it's translated to like five languages, just to give you a sense.
You know how big they are, they really have abuse down and I can confirm that. I have paid Rob, our lawyer, to handle just about every single one of these types of abuse. I love Rob. One type of abuse that they don't talk about on Twitter is fuzzy spam and in my opinion fuzzy spam is the worse type of abuse for my industry, the email marketing industry. Fuzzy spam is a little different than spammy spam. Spammy spam is the stuff that you probably know about where it's the get rich quick schemes, the -- you know -- penis enlargement -- the Nigerian scams, all that stuff is spammy spam, alright, and it's kind of easy to tackle that. You would think that an email company like us would have a big problem with that, but you can just install cloud marker spam assessment to scan outgoing mail and block that pretty effectively. But fuzzy spam is different, fuzzy spam is hard to detect. It would be like if after this session we exchanged business cards and then two months from now you started receiving email marketing from my company. That's not cool, that's fuzzy spam. You didn't give me permission to put you on a marketing list.
Maybe you thought I could send you one personal email or call you or something, but to put you on a list is fuzzy spam. You're going to report that as spam and that's going to get our servers blacklisted basically. It damages our reputation. So fuzzy spam is something that typically humans are best at detecting. At our abuse desk, we take a while to train them to get up to speed to really detect, sort of really read between the lines of emails. If they see an email that goes out that says "Hello, I'm Ben, let me introduce myself to you...," obviously there's a lack of relationship here, right? That's fuzzy spam. Really hard to read and we knew that fuzzy spam would be a huge issue for us. So here's our user growth chart and in late 2008 we had the idea to go freemium. We had no idea what was going to happen after going freemium, that's where the green arrow is, but we knew that fuzzy spam would be an issue and however successful freemium was going to be, we would never be able to hire enough people to really ramp up, train them in time to deal the fuzzy spam problem. So our way of dealing with abuse was to start Project Omnivore and it was this project where we took every single email ever sent from out servers for the last ten years and we found the bad ones. The ones that had been reported for abuse or maybe they got too many unsubscribes or too many hard pounces which would indicate an old list.
And we said, okay, those are the bad ones, let's start looking at their common traits and we used genetic pairing to find which traits would be predictive of abuse and we ran them on our internal servers in our office and they would churn for six days and then just crash and it was infuriating for us so I finally just went out and got an NVIDIA Tesla for the nerds and it's this multi-core teraflop $8000 box. They plugged it in and it was done in two hours so now they're using it for games, they don't need it anymore. It's done. So after they prove the algorithm on the Tesla, they moved it up to EC2 and it ran on a cluster of servers, I want to say it was either seven or seventeen, I get my numbers mixed up, but it ran on a cluster of servers for 20 days straight and did 61 trillion data comparisons and now we have this system on MailChimp that's constantly running 24/7. I just really infuriated a customer in Greece on a Sunday at 3 AM. Omnivore shut him down. It detected a list that he had for ten years or so and he started a new company and was going to send email using that old list and Omnivore detected the old list and blocked him and that was while I was sleeping and that was the whole point of this.
In the last seven months after going freemium, Omnivore has sent 35,000 warnings to people, 4200 accounts have been suspended and it's shutdown almost 1200 people automatically. And this is the key slide here about, you know, just think about abuse. Because if we hadn't done Omnivore, if we just went freemium without thinking about this, to send this many warnings and deal with 1200 account shutdowns 24/7, I know we would've taken at least 30 human beings to do this. We're a 38 person company. If we had to add 30 people in seven months to deal with this, it would have changed the culture way too fast. I mean, the biggest department in our company would be in charge of shutting people down and that's not a good business.