Web sites are spending more than a quarter of their time fighting bad guys
Consumer Internet companies are spending more and more mindshare from the engineering and the executive teams to thwart bad guys, rather than actually improving their product. This is a really big problem. The Black Hat Tax is costing consumer Internet companies billions. And the cost of this tax, as a percentage, is much worse than what offline brick-and-mortar shops pay to invest in security and anti-fraud measures.
In May 2006, I made mention of the Black Hat Tax, in which most consumer Internet sites have an inherent time, resource, and mindshare tax of roughly 25% due to scamming, phishing, hacking, and government requests. And this drainage has gotten worse two years later which is extremely troubling.
A great example is PayPal. As PayPal matured, they fought an intense battle against fraudsters, one of the most consuming issues within the company. Now with PayPal being a legitimate financial institution, you expect lots of attempted fraud. But this is now the norm for most sites.
Companies in the dating or social networks space are increasingly spending their time thwarting bad guys. Dating sites, for instance, face an exorbitant number of scammers. The classic "my husband is beating me here in Moscow, please send $2000 so I can buy a plane ticket and escape" still ensnares many unsuspecting men. There are scam factories in the Philippines and other places that have thousands of people, paid on commission, working to rip-off unsuspecting dupes in this way. And while buyer beware should reign, caveat emptor is not in the lexicon of the barrage of customer service emails.
Spam is becoming increasingly common on social networks. I've received more MySpace friend requests from strippers and pornographers than real requests. In fact, MySpace just sued and won a $230 million judgment against some of the world’s biggest spammers. This is in addition to people actually hacking into your site (but that is a whole other cat-and-mouse game). Facebook, Twitter, and blog comments are also prime attractions for spammers.
All these little, annoying things consume time … and not just the time of customer service people, but time of the company's executives and engineers as well. The Black Hat Tax exceeds 25% for most consumer Internet companies right now, with some approaching 40%. That means that 25% of your engineering and management time is about preventing fraud or dealing with these annoyances. That is one onerous tax!
In the side conversations at the Founders Brunches, it seems that all the attendants talk about is the black hat tax. One key item of note is invite/email deliverability. Many B2C companies go viral by convincing current users to upload their address books and email their friends. You can do all the viral tuning you want, but if your emails are getting blocked by someone's spam filter, they are not going to see your genius. As a result, social network execs spend an inordinate amount of time on email deliverability.
Review sites like Yelp, Digg, and TripAdvisor have thousands of people trying to game the system. Better reviews on TripAdvisor can equate to hundreds of thousands of dollars in additional annual income. Getting your article Digg’ed could mean a huge spike in readership and pageviews. And what’s interesting is that it’s been estimated that almost half the reviews on some of these sites are fake.
Another strain on time are government or federal requests. An IT person at a social network can be consumed for three days with a government request for information on someone promoting pedophilia.
While it’s troubling to note that the nefarious characters are getting more sophisticated, thousands of sites are working feverishly to implement best security practices. But all that the bad guys need is to find just one hole.
(special thanks to James Currier for pointing out the Black Hat Tax to me two years ago)
This is an interesting study we did last month about where people's friend data comes from and how it relates to gender.
Men tend to be more transactional and less relationship building
when it comes to their friends on social networks. Women tend to have
slightly more friends on average.
In the largest social networking study ever done, Rapleaf sampled over 30 million people looking at social graph information across various social networks including Bebo, Facebook, Friendster, Hi5, LiveJournal, Myspace, Flickr, and others. We looked at the number of friends that women have vs. men across these social networks. The following are highlights of the information we extracted:
- Rapleaf sampled 30.74 million people with at least 1 friend
- Of the people with at least 1 friend, 53.57% are female and 46.43% are male
- Social Networkers (1-100 friends):
- Connectors (100-1000 friends):
- Super Connectors (1000-10000 friends):
- Uber Connectors (10000+ friends)
As per Rapleaf's original study [link], women spend more time on social networks. While the full data below demonstrates that women do have slightly more friends than men on social networks, the difference isn't substantial.
While we theorize that women spend more time on social networks,
building and nurturing relationships, we also theorize that men are
less likely to spend as much time nurturing relationships as they are
acquiring relationships from a transactional standpoint. Spending less
time on a social network but transacting more equates to having roughly
the same number of friends as women, who spend more time on social
networks, but are busier sustaining relationships.
Full in-depth report:
|1-100 friends (Social Networkers)||13,020,148||79.07%||62||11,520,625||80.72%||57|
|101-1,000 friends (Connectors)||3,336,626||20.26%||185||2,655,297||18.60%||172|
|1,001-10,000 friends (Super Connectors)||107,062||0.65%||1,837||93,676||0.66%||1,944|
|10,000+ friends (Uber Connectors)||1,989||0.01%||24,077||2,371||0.02%||24,584|
|At least 1 friend||16,465,825||100.00%||81||14,271,969||100.00%||78|
some of the places that wrote about this report include:
OK, you might see a trend in some of the books i have been reading recently. Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist by Tyler Cowan is another great book (like Predictably Irrational). i highly recommend it. i can't get enough of these psychology economics tomes.
Jeremy Philips sent me this book last month and downed it in one long plane ride. This is a fantastic book and one definitely worth reading. (and if you want me to send you my copy, free book to the first friend of mine that replies).
Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely is a great book by a revealing and insightful economist and social scientist. if you liked freakonomics, you'll love this book. in fact, if you don't love this book, you're probably not very interesting. really. it is that good.
more information available at Ariely's web site:
What would happen if we were to rigorously enforce turn signals while driving? My guess is that it would make people get into the habit of signaling which would cut down accidents and decrease gridlock within cities.
A standard 12-ounce can of coke, according to the can, has 140 calories.
but the 8-ounce bite size cans say they have just 100 calories.
one of the cans has to be wrong. either the 12-ounce actually has 150 calories or the 8-ounce has wee bit more than 93 calories.
all this SAT math failures hasn't affected Coke's stock price which has skyrocketed in the last year ... making Mr. Buffet still a happy man.