How to fool VCs into thinking you have traction, Part 1

In the Web 2.0 world, people love to quote user numbers, whether they are 50k or 50 million. These numbers are incredibly valuable, as they drive press buzz and even venture capital valuations!

Web statistics are often meaningless
At Revenue Science, a company that taught me everything I know about advertising and much more, I helped strike a deal with Nielsen which got me a bunch of deep understanding about measurement on the web. The truth of it is, there are deep nuances in the way that people use and quote statistics on the web, particularly when it comes to issues like "unique users" and "pageviews" and "sessions," which are terms without standard definitions. I recently wrote about Alexa, which goes into some of these issues, which you can read: Are you misusing Alexa numbers? (probably)

Lies, damned lies, and web statistics
In the current Web 2.0 market, you can pretty much say the following:

User Traction = $$$

I guarantee that if you have 100k users, are showing some growth, you can raise venture money right now.  And in fact, your page stats will serve as the "comp" to value your company. Thus, it becomes very important to understand how to represent your site's statistics - failing to do so will cost you real money.

Future blogs on this topic
Just off of a quick brainstorm, I have a couple ideas for what I want to write about. They are included at the end of this blog. In analyzing each technique, I'll try to answer the following questions:

1. How does this technique help you bend the rules?
2. What should the stats really be?
3. How do you ask the right questions to see past the distortion?

I will write about the following techniques:

• Widget pageviews versus destination site pageviews
• Automatic page refreshing
• "Standards" and metrics like date ranges
• Counting hits versus pageviews versus ad impressions
• Search engine marketing
• SEO and page proliferation
• TechCrunch and other one-time traffic spikes

I'll write the first one before Monday.

Shoot me a note at voodoo [at] gmail [dot] com if you think I'm missing any interesting techniques, or if you have questions or comments.

Comments

[Yaacov]

Don't forget about comparing the number of registered users to the number of users that actually login on a daily/weekly/monthly basis.