A Long Interview with Path CEO Dave Morin
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830,000 monthly active users and 200,000 daily active users. What do your daily active users and monthly active users need to be for you guys to have a convincing story? I know you’ve talked about how this isn’t a fast company, this is a slow company.
DM: We just hit five million registered people. Our last public number was three million; we just hit five million last Friday.
DM: Yeah, it’s super awesome. I don’t know what App Annie says, but all the stuff based on Facebook Connect is off by a factor of four, because we actually have a very small number as a percentage of our user base that is connected to Facebook. It is about a quarter. It’s kind of a bummer. There is this amazing company called Onavo that does data compression—it’s an app you put on your phone, and they squish the data down so it doesn’t use all of your data plan when you’re abroad. I don’t think they’ve done it publicly but they have this product that’s like Quantcast for mobile, which I am excited about because finally people will stop looking at Facebook for data on mobile apps. Because it’s totally off.
So, of our monthly active users, 50 percent are weekly active. And of our weekly actives, 50 percent are daily active. So we have a very high number of engaged users. It’s pretty amazing actually. Our engagement is very high.
So to answer your question, we are not an advertising business. So the number of users we have doesn’t make as big of an impact on our business as, say, some of the other people in the social networking realm. The necessity of their business being driven by advertising is that they must be at the largest scale possible. So, for us, our business is based on two things right now. One, virtual goods—we actually sell lenses and filters, effectively. We are going to be rolling out more of that stuff next year. We’re also, I’ve talked about this publicly a lot, but we are working on a premium services offering. We want to be much more on the Evernote, Dropbox, consumer premium services side of the game than we do on the advertising side. We approach our entire business through that lens. Spotify, Evernote, Hulu—there are a bunch of businesses that are building a premium brand in addition to their core offering.
X: If you were advertising-driven, you’d have to be either growing faster or having even higher daily active users, right? The only way to get permission from your venture backers to stay free forever is to grow much faster.
DM: Absolutely. If you are in the advertising business, your job is to get as much audience as possible and as much attention as possible. We don’t want to be in that incentive game. For us, our mission is to bring people closer together. So we want to always be doing things to add value to your life. We want to be building utilities which bring you closer and make you happier. We focus on the success of the product in that realm. We don’t look at the number of minutes that you spend inside the application. We don’t want to take all of your attention. We want to add the most value to your life. That is how we define success. That matters much more to us than your standard advertising-based-business numbers.
And those things—it’s actually, I would say, back to your very first question, one of the core principles at the founding of Path was that we want to be in business with the customer first, and principally. We want to be in business with you, and no one else. We don’t want to say we’re in business with you but actually be in business with advertisers. We actually want to be in business with you. If I can’t figure out how to say “Wade, something we have made is worth your dollar, we haven’t done our job.” That is what we are shooting for. And look, we are still a baby company, we have barely started walking. So we’ve got a lot of work to do, but that’s our dream.
X: You mentioned a couple of companies that I definitely admire, like Evernote and Spotify. Those are companies where the model is to convert a certain small percentage of their free users over to a premium product. At Evernote it’s down in the one to three percent range, but that’s enough for them to have a very sweet business. So, you probably can’t talk about the details yet, but what kinds of experiences could you offer that would be of value to convert people to a paying plan?
DM: The user that I described to you, the premium Internet user, those are the same kinds of users who have converted over entirely to Path as their social network. They’ve got a lot of friends on Path, they’ve posted a lot of content, they’re using all of our filters. Their thirst or desire for Path-related content and services is very high. We have a lot of conversations with those users. We have done a ton of research. The user that is utilizing the Path network to a very intense degree would really like to have certain features.
If you look at premium services in general, those are kind of the things that you focus on. Like you go to that one to two to in some cases 10 percnet of your user base that is really intense utilizers of your product and you say what is it you want the most and what can we provide that a new user wouldn’t want, but if you are a sophisticated user of the product, you definitely would want. That is the realm we look in. So we have done a bunch of research there and we are still finalizing a lot of the details but it’s something that we are pretty excited about.
X: I’ll look forward to that. I pay $45 a year for Evernote. It’s a no-brainer for me. I am already using Path so much that if you gave me some incentive to go to a higher level in exchange for some cash, for me it would be a pretty low barrier.
DM: What we want is to give you this great place to put your life, right, and then to have the most important people in your life, and to have services that make all of that better. I think what we’re going to do is going to be exciting.
X: I wanted to ask you to talk about the ups and downs of Path. For better or worse, there’s been a spotlight on you from the very beginning because of your Facebook connection. So, I imagine that’s made things a little more difficult. I wanted to ask you whether you feel like some of the mistakes you guys made were really good mistakes in a way. With the whole address book controversy, for example, you guys got singled out for a practice that probably a lot of mobile companies were engaging in, of sucking up data from people’s contact lists. That attention may not have been fair, but it did highlight an interesting issue for a lot of people. So what do you feel like you’ve learned from being in the spotlight.
DM: That’s an interesting question. Look, I think that whether it was my background, Shawn Fanning’s background with Napster, we had a lot of intense spotlight. I think that with that comes some responsibility. You can do two things with that. You can either go try to do something again and try to make something new in the world. Or you can stay focused on the past and not move forward.
The last day that I worked at Apple, Steve Jobs was doing this town hall meeting, and he repeated a quote that he had said in some interview, and they’ve actually got it on the wall at Apple now, which I love. They put it up after he died. But this quote has stuck with me since … Next Page »