> 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.

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.

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

Matt Levine wrote about this with more info: 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.

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.

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.

Thank you for this.

Matt Levine (as always) is documented, clear and adds a little touch of humour.

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.

>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.