Ashley Madison owner says website still adding users after data hack

1 Sep 2015 | Author: | No comments yet »

87,596 women sign up at Ashley Madison since hack.

Ashley Madison, the embattled website catering to affair-seeking clients, today rejected predictions that it will soon be forced to shutter its operations, saying its troubles have been “greatly exaggerated.” The site’s parent company Avid Life Media said in a statement that — far from facing imminent demise after hackers released its members’ emails and account information — the company actually is growing.Despite a massive hack that exposed the personal information of millions of users, the Ashley Madison dating site for married people is growing, the company says. How is one supposed to imagine a future for it in the wake of a hack that led to the public shaming of many of the site’s members and the resignation of its parent company’s CEO? The firm said news site Gizmodo “made incorrect assumptions” about some of the leaked data, leading it to overstate damage that the scandal has inflicted on Ashley Madison — as well as underestimating the number of women who used the site. “This reporter concluded that the number of active female members on Ashley Madison could be calculated based on those assumptions.

The statement was dutifully picked up by the business press (including by us at Fortune), particularly since it included a wise-sounding caveat about pricing in London because Europeans were less squeamish about such things than Americans. Reporting its death is a perfectly reasonable trap, one that I fell into when writing about the site last week, as I described what its users “had” done, operating on the implicit assumption that they wouldn’t be doing it anymore. But it seems those IPO plans were a lot like those “millions” of female Ashley Madison members — not legitimate, but rather a giant self-actualization exercise. After Biderman refused to bend to the hackers’ demand to take Ashley Madison and another site offline, the perpetrators began to leak data stolen from the company’s networks.

At first, the data was only about Ashley Madison’s spouse-cheating customers, but last week, private emails from Biderman’s corporate account hit the web. In a press release issued Monday morning, Avid Life Media—which owns and operates Ashley Madison, along with other platforms such as Cougar Life—struck back against critics who claimed that the site’s best days were behind it. “Recent media reports predicting the imminent demise of Ashley Madison are greatly exaggerated,” the statement begins. We are steadfast in our commitment to our customer base.” The statement didn’t indicate the sudden reason for Biderman’s departure, but it comes days after revelations of Biderman’s alleged infidelities. However an analysis of the hacked database by the tech media site Gizmodo last week seemed to find that a high proportion of the female accounts were not being used by real people. Last week, Gizmodo’s Annalee Newitz analyzed data from the hack, and her results indicated that only 1,492 of its supposedly millions of female members had ever checked their messages on the site, suggesting an engagement rate of something like 0.03 percent.

Trustify advertises Ashley Madison reports at $199 for a “comprehensive review about what personal details had been made available” — all delivered to my in-box within 72 hours. If it couldn’t even raise debt — including, presumably, from lenders outside of North America — why would it have any confidence that it could raise $200 million in equity at a $1 billion valuation, or even find IPO underwriters? And if the company knew that a potential buyer was turned off by (recently resigned) CEO Noel Biderman’s “difficult and very demanding” personality, did it not think that similar issues might arise on a road show?

If those numbers turned you off, never fear: In its recent press release, Ashley Madison claims that 87,596 totally real women who are definitely real have signed up in the “past week alone.” In its specificity, this number is clearly meant to carry the weight of authority and truth. But despite encouraging other people to have affairs, Biderman, a married father with two young children, had long insisted that he had never cheated on his wife, nor did he want to. Tell everyone that public equity investors are willing to invest $200 million at a huge valuation, and maybe it shakes loose a new buyer who thinks it’s getting a bargain?

Given the amount of publicity the site has received, it’s entirely possible that some new users created accounts, whether out of curiosity, intent to troll, or even real desire. At the time of that interview, the leaked emails suggest he may have already been engaging in a three-year sexual relationship with a Toronto escort who may have been paid for her favors. Of course, if existing engagement ratios hold, only 26 of those definitely real women are ever going to take a gander at what other users write to them. Fusion recently used hacked data to calculate that Ashley Madison’s revenue growth hit around 30% between 2009 and 2010, but fell consistently through 2013 (when total revenue hit $76.7 million. Without naming Newitz, it suggests that her analysis was flawed, asserting that she based it on “incorrect assumptions about the meaning of fields contained in the leaked data.” Claiming that women sent “more than 2.8 million messages within our platform” in the last week, the site’s press office goes on to assert that the ratio of active male accounts to active female accounts—accounts which were, presumably, operated by entirely real “people,” though the press release isn’t clear on this point—was 1.2 to 1.

Moreover, there was a BBC story just one month later that suggested $150 million in revenue (one explanation for the discrepancy could be the inclusion/exclusion of Avid Life properties besides Ashley Madison, including Cougarlife.com and Established Men). My point here isn’t that you shouldn’t trust a company whose mission is to encourage and enable cheating, nor am I certain that Avid Life execs were fudging the revenue numbers (or even female member numbers, for that matter).

Instead, it is to say that we all must be a bit more circumspect when a company tells us that it is planning for a giant IPO, until there actually are some public documents or strong sourcing to support the claim. How many stories do we see about companies planning an IPO for “next year” or, even worse, “in the next couple of years.” Reporting aspirations is one thing, but that’s different from marking our collective calendars. I talked to him this morning and my sense of guilt made me imagine that he knows.” Biderman appears to have offered her a job with the company, writing her in October that “I will also have a good ‘signing bonus’ for you :).” The woman later declined the job, however. WIRED was unable to determine if the specific emails suggesting infidelity are legitimate, but they were released with other files that have been verified.

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