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I'm naive to this space, but would this perhaps have just been legit business if they had done it in reverse order? 1. First buy data from ASL. Instead of 4.5M

by extr 4y ago

I'm naive to this space, but would this perhaps have just been legit business if they had done it in reverse order? 1. First buy data from ASL. Instead of 4.5M, buy as many as you can, like 40M, the entire 15-24 population if they got it. Apparently at ~$100K/~5M, this is only like $1M. 2. Do your own aggressive email/marketing outreach to these people. 3. If you can get 10% response rate, that's 4M customers right there. 4. Sell to JPM for $175M. I need to get into the lead generation business.

jonathankoren 4y ago
Yeah, that would work, but the problem is they told JP Morgan they already had the list, and had nowhere near enough time to legitimately grow to the number of customers they said they had
PragmaticPulp 4y ago
> 3. If you can get 10% response rate, You can't get anywhere near a 10% click rate with random leads like that. The reason companies like this are sought after is the idea that their users are warm leads with an existing relationship with the brand. People who have (supposedly) gone out of their way to sign up for something are several orders of magnitude more likely to engage with e-mails compared to e-mailing them randomly from an unknown brand.
- extr 4y ago
  That makes sense. It's just funny to think of this entire company essentially existing as a glorified landing page/warm transfer to a huge bank.
TheDong 4y ago
Matt Levine wrote about this with more info: https://archive.md/FTJUq https://archive.md/FTJUq To quote the relevant bit: > JPMC reached out via email to a random sample of the list Frank provided – approximately 400,000 purported customers of Frank – with offers to open Chase checking or savings accounts. Of those 400,000, only 103 even clicked through to Frank’s website. So a clickthrough rate of 0.026%. Good luck getting anything close to 10% when you're starting with a cold, and possibly partially trash, dataset.
- extr 4y ago
  Of course, that makes sense. I liked how Levine highlighted that using the figures here for the acquisition cost we can ballpark the warm leads as ~1000x more valuable than the trash leads.
  - TheDong 4y ago
    That back of the napkin math is interesting, but I'd argue it's also not right. JPMC wasn't just attempting to buy a large email list. Notably, they were also attempting to buy _future expected email list subscribers_. In theory, if JPMC buys the entire company and then lets the company keep running, they'd expect the list to keep growing over time at a rate similar to whatever Frank's user growth graphs indicated. They also, I assume, believed they were acquiring a group of people with expertise in marketing to this segment since, well, if you have a warm list of 4M people, that means you also have the abilities to build such a list, which is valuable as well. I'm not going to try and estimate what percentage of the price was what, but I'll point out there's more to it than just the raw size of the email list at the time of the deal since JPMC didn't _just_ buy an email list and nothing else.
- jaclaz 4y ago
  Thank you for this. Matt Levine (as always) is documented, clear and adds a little touch of humour.
HWR_14 4y ago
If you can get a 10% response rate on cold leads like that, you're not selling the company based on those leads to JPM for $175MM. You're selling your services at crafting email campaigns to everyone.
citizenpaul 4y ago
>10% response Reminded me some quote I read about how some many "scale" business are in the junkyard because the creator thought even if only 1% succeed, forgot that there is a success rate below 1%. ZERO.

by extr 4y ago

jonathankoren 4y ago

Yeah, that would work, but the problem is they told JP Morgan they already had the list, and had nowhere near enough time to legitimately grow to the number of customers they said they had

PragmaticPulp 4y ago

> 3. If you can get 10% response rate, You can't get anywhere near a 10% click rate with random leads like that. The reason companies like this are sought after is the idea that their users are warm leads with an existing relationship with the brand. People who have (supposedly) gone out of their way to sign up for something are several orders of magnitude more likely to engage with e-mails compared to e-mailing them randomly from an unknown brand.

extr 4y ago
That makes sense. It's just funny to think of this entire company essentially existing as a glorified landing page/warm transfer to a huge bank.

TheDong 4y ago

Matt Levine wrote about this with more info: https://archive.md/FTJUq https://archive.md/FTJUq To quote the relevant bit: > JPMC reached out via email to a random sample of the list Frank provided – approximately 400,000 purported customers of Frank – with offers to open Chase checking or savings accounts. Of those 400,000, only 103 even clicked through to Frank’s website. So a clickthrough rate of 0.026%. Good luck getting anything close to 10% when you're starting with a cold, and possibly partially trash, dataset.

extr 4y ago
Of course, that makes sense. I liked how Levine highlighted that using the figures here for the acquisition cost we can ballpark the warm leads as ~1000x more valuable than the trash leads.
- TheDong 4y ago
  That back of the napkin math is interesting, but I'd argue it's also not right. JPMC wasn't just attempting to buy a large email list. Notably, they were also attempting to buy _future expected email list subscribers_. In theory, if JPMC buys the entire company and then lets the company keep running, they'd expect the list to keep growing over time at a rate similar to whatever Frank's user growth graphs indicated. They also, I assume, believed they were acquiring a group of people with expertise in marketing to this segment since, well, if you have a warm list of 4M people, that means you also have the abilities to build such a list, which is valuable as well. I'm not going to try and estimate what percentage of the price was what, but I'll point out there's more to it than just the raw size of the email list at the time of the deal since JPMC didn't _just_ buy an email list and nothing else.
jaclaz 4y ago
Thank you for this. Matt Levine (as always) is documented, clear and adds a little touch of humour.

HWR_14 4y ago

If you can get a 10% response rate on cold leads like that, you're not selling the company based on those leads to JPM for $175MM. You're selling your services at crafting email campaigns to everyone.

citizenpaul 4y ago

>10% response Reminded me some quote I read about how some many "scale" business are in the junkyard because the creator thought even if only 1% succeed, forgot that there is a success rate below 1%. ZERO.