Privacy matters

January 5, 2012
by Thanasis Delistathis

Mark Zuckerburg, founder of facebook, famously declared in one public appearance in 2010 that the age of privacy is over. As we all share more information over the internet, the world is becoming more transparent. So do people care about privacy, and does it matter?

I saw some data recently from the work of one of our portfolio companies that surprised me on this subject. The company is called Koofers and it offers services exclusively to college students. I, maybe like you, thought that students don’t care about privacy. They grew up with facebook, accustomed to putting everything online. Who cares what the world sees? Right? Wrong.

Koofers did an A/B test on their new user registration page, where under A: users only had the option of signing up using their facebook credential, and under B: they had the option of either using their facebook credentials or joining directly on Koofers and entering their data afresh. What they found is that under B, they get a 46% lift on new user registrations. Although it decreased the total number of new users choosing to login with facebook by 17%, it increased the overall number of new registrants significantly. Students were surprisingly conscious about allowing a third party app to access the trove of information on their facobook account. {Note to entrepreneurs: this is significant and speaks to tactics around user acquisition}.

In a further test of the sensitivity to privacy, Koofers tested whether there was a difference in new registrations in response to different privacy settings within the group that had facebook only as an option. When a third party app asks a user to log in using facebook, they have choices as to what permissions to request from the user. Koofers found a 3.5% dropoff in registrations when they included the right to post on the user’s wall among other permissions, which means a number of users are really paying attention to the permissions requested.

They are right to be concerned. A couple of months ago we were pitched by a startup that could use facebook permissions in conjunction with publicly available data to create data sets with surprising information. I immediately went to my facebook account and checked all my settings. Clearly privacy is still very important. And implementing new online services needs to carefully consider it.

Originally published at navfund.com.