App.net, or why having a good product is not enough

On April 14, 2014, App.net initial backers will have to decide whether to renew their accounts for $36 a year or downgrade to the limited free version.

For background, App.net is an ad-free online social network that appeared as a reaction to Twitter's policies changes in 2012. Created by Dalton Caldwell and promoted inside a technically-oriented community, App.net was crowd-funded as a Kickstarter project, raising over $800.000 and 11.000 backers.

App.net business model is simple: they are not a free service. Their main income comes from subscription fees. While they offer a free account, it's pretty limited and more intended as a trial of the service. In Caldwell's words,

I believe so deeply in the importance of having a financially sustainable realtime feed API and service that I am going to refocus App.net to become exactly that. (...) This isn't vaporware.1

But having a great product and a solid financial model is not enough. You need growth. There are some crucial metrics in social networks' business models, like the number of active users, and user growth rate.

Despite its efforts, App.net current user numbers don't look good2. After reducing its fee from $50/year to $36/year, and launcing free accounts on February 25, 2013, in May 2013 App.net reached 100.000 users3. App.net also advertises itself as a great API for application developers. You can't see a huge following there, either.

Despite its technically superiority and the openness of its design --and having raised $2.5M from Andreessen Horowitz on August 2013 doesn't hurt--, App.net still faces the challenge growing past being a plaything for developers, and amassing a critical mass of users.

2. cfr Wired, August 2013. ↩

3. This post by Om Malik, which I have referenced before, can give you some insights into social networks active users and growth. ↩

4. According to The Next Web. ↩