Platform Dependency Dangers
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A cautionary tale about building businesses dependent on social media platforms, particularly illustrated through the story of LittleThings.com, which went from a $100M revenue company to shutdown in just 6 months due to Facebook policy changes.
Key Points:
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Rise and Fall of LittleThings.com:
- Built to 250M unique monthly visitors
- Scaled to $90M revenue in 4 years
- Became the most shared website on Facebook
- Had 150 employees at peak
- Was 3 weeks away from selling for hundreds of millions
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The Fatal Weakness:
- Built entire business model on Facebook traffic
- When Facebook changed their algorithm/policy
- Traffic and revenue disappeared within months
- Had to lay off everyone and shut down
- Lost potential $50M personal exit opportunity
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Similar Pattern with Other Companies:
- Viral Nova, Upworthy, and similar sites
- All heavily dependent on Facebook
- All saw massive decline when policies changed
- Predicted by industry veterans like Ricky Van Veen
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Business Lessons:
- Platform dependency creates existential risk
- Success metrics can be misleading if built on someone else's platform
- Need diversified traffic/revenue sources
- "Zuck does what Zuck wants" - highlighting the risk of building on platforms you don't control
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Historical Context:
- Pattern repeats across different platforms
- Similar stories with other platform-dependent businesses
- Demonstrates importance of owning your distribution
Sam Parr
Host of MFM and fitness influencer
Sam Parr is a serial entrepreneur and business media pioneer.
In 2016, he founded The Hustle, a business news media company that started in his kitchen with just $12 and grew to eight figures in revenue.
Sam led the charge in making newsletters popular when few believed in their potential.
After four successful years, he sold The Hustle to HubSpot, a publicly traded company. Now operating as HubSpot Media, The Hustle reaches 3 million readers daily, employs a team of nearly 100, and has been the launchpad for dozens of its staff to found their own media companies and newsletters.
Sam remains the host of the popular business podcast, My First Million, and continues to start and sell companies. He also co-founded Hampton, a highly vetted community for entrepreneurs, founders, and CEOs, and teaches people to write better through his platform, Copy That.