How A Startup Founder Lost His Company And $100 Million By Relying On Facebook

Minor changes in how social media giants like Meta’s Facebook and Instagram operate can dent the profits of an emerging company. A startup founder’s story is testimony to the same, for he claims that his startup lost $100 million by relying on Facebook.

How my Dependence on Facebook cost me my startup, $100M, and 110 jobs

It's the first time I've publicly spoke about this in 4 years.

A 🧵…
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

In a Twitter thread, Joe Spieser, the founder of LittleThings.com explained how an algorithm tweak by Facebook led to a $100 million loss and eventual shutdown. The website is a women-centric site devoted to uplifting content like recipes, positive stories, and animal videos.

In early 2018 LittleThings, a female focused feel good entertainment company was pushing $75m+ a year in revenue, had 110 amazingly creative employees, and a fledgling OTT streaming channel. pic.twitter.com/jqWgFkQezt
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

How the website died because of Facebook
With Facebook’s help, the website built a user base of 20 million social media followers. When Facebook tweaked its algorithms in 2018 to deliver customised content to people’s feeds, the company lost 90% organic traffic on Facebook. “[Zuckerberg] didn’t like the fluffy content we were producing and he wanted to be taken more seriously.”

We built the business on the backs of Facebook, drinking from their firehose of eyeballs. Our growth was outstanding, and our traffic and video views skyrocketed beyond Buzzfeed, ABC, CNN, HuffPo, and Fox.
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

We became masters at harnessing Facebook’s newsfeed with feel-good articles, videos, and stories.

At our peek we hit:

20MM social media followers
40MM Comscore monthly uniques
15M live programming views per month
900M/video views per month
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

Owing to this, LittleThings founder had to fire over 100 staff members on top of losing $100 million. “It was a death sentence,” he wrote on Twitter. According to Speiser, there’s a lesson to be learned for all business starters here. “Can you ever truly sleep well at night knowing at any time it can all be taken away with just a simple algorithm change?,” he wrote.

Our live shows included 4+ hours a day of original unique programming. pic.twitter.com/51LQfL2JoR
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

Facebook constantly hosted us at their HQ, even profiled LittleThings at their F8 conference on how to build a media company. Things couldn’t have been going any better.
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

Then, in Feb of 2018 the algorithm had a major shift. Now, we had been through tons of algo changes before, so this didn’t worry us at first, but something was different. Very different. pic.twitter.com/Rc2y3zhCYZ
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

Our high-level contacts at FB said Zuck didn’t like the fluffy content we were producing and he wanted to be taken more seriously.

He wanted the country to respect Facebook and get their actual news there (previously it was family/friends updates, feel-good viral content).
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

In 2018, LittleThings had no choice but to shut down. Speiser believes startups should be wary of starting businesses that rely too heavily on Facebook or any other social media platform.

I watched helplessly as 90% of our organic traffic from Facebook dried up.

Their only feedback to us was that this is the new focus FB wants, hard hitting news, and opinion pieces, and if we wanted more traffic we would have to pay for it through sponsored ads.
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

Years later, as an angel-investor I watch countless startups build their businesses on Shopify apps, Amazon, Instagram, TikTok, Google apps, etc.

Sends chills down my spine.

It’s a very sharp double edged sword.
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

Choose your platforms wisely, and always remember if they can give it, they can take it…

If you like this thread follow me at @jspeiser for more startup stories, real estate, and investing…
— Joe Speiser ⚡️ (@jspeiser) February 22, 2022

After Facebook changed its algorithm, it has been at the centre of controversy. Users were reportedly fed more sensationalist content for better engagement and click rates. Internal leaks from Facebook showed that even company employees thought dangerous content would be amplified by Facebook as a result.

Source: Indiatimes.com

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