The 80-19-1 Rule

Brad Feld writes:

Ive had plenty of experience observing this at Judys Book, working with several new content companies that Ive invested in, and closely following the discussion that made the rounds about the 1% rule as it applies to Digg (e.g. 1% of the Digg users generate most of the Diggs resulting in Jason Calacanis offering to pay these 1% of Digg users to bookmark for Netscape.)

[The 19%] is the golden segment. If you can figure out how to engage these folks, you win. If you dont, youll have a site driven merely by the 1%, which ultimately wont scale. While theoretically the law of large numbers should apply (e.g. as N (= number of users) gets big enough, life is good), I hypothesize that if you dont figure out how to engage this 19%, you wont drive growth in N that will get you big enough to have the law of large numbers effect deliver you to happiness. Theres a virtuous cycle here the 1% disproportionately seeds the activity of the site, the 80% consume content, and the 19% sit on the fence. If you can get the 19% to engage, this drives more vibrant content, which increases reach, which increases N, which means the activity driven by the 1% and 19% increases, which drives more content, etc.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.