Startup Founder Says He Lost $100 Million And His Company By Relying On Facebook

Speiser shared that his then-thriving website lost over 90% of its organic traffic on Facebook due to the algorithm change. The readership loss caused Speiser to discharge over 100 employees, and said he lost $100 million.

In 2010, Joe Speiser and Alex Zhardanovsky commenced a web-based business named Petflow, that sold pet food, supplies, and treats.

Speiser says that the Facebook page of Petflow was developed in 2011 with the objective to draw in clients who are interested in purchasing pet food while sharing a large number of pet-related images on the page to drive client interest.

“Our audience had grown a lot between the period of 2010 to 2014, that had the potential of buying our pet food,” he said.

“By 2014, we identified that we actually had more fun producing digital media content even though the internet business was sailing smoothly,” Speiser said. “The content suited our audience, which mainly had females over 35 years old, who simply cherished anything uplifting and inspiring. Animals, pet-related, and other inspiring blogs were the prime pools of their interest.”

Speiser and his team began making more content for Petflow’s article, and the traffic “skyrocketed,” said Speiser.

“From the beginning of 2014, we understood that what we delivered was more of an epic story than simply the media side of Petflow’s business. We really had a media company, an entire publishing unit,” Speiser added.

In September 2014, Speiser and Zhardanovsky made the decision to leverage their following for Petflow, build a business, and thus began delivering a huge load of content for their new avenue, called Little Things. The site generally posted adorable video clips of animals and different sorts of feel-better, inspiring content: stories and videos of cops doing something good for their residents, underdog tales, and kitchen hacks.

Little Things’ growth had surged at a great pace since its commencement one year prior. The organization had one worker in January 2015. It had 50 employees just after eight months, and the media organization was developing a video studio to create better content for its audience. Speiser was glad that Little Things was productive and profitable since the first day of its inception.

When Little Things had started off, its website visitors were a lot less compared to its contemporaries i.e. Elite Daily, ViralNova, and Upworthy. But gradually, the Facebook page of Little Things’ gained nearly 7 million followers. Also, its website had between 35-45 million new visitors on a month-to-month basis.

Things were going great before an algorithm change, with 20 million online media followers mainly developed from Facebook’s enormous user base, he tweeted. Speiser said Facebook even used the example of LittleThings as an illustration of how to develop a thriving media organization at one of its meetings.

However, traffic to the Little Things’ pages was choked when Facebook changed its algorithm to boost posts that would be potentially engaging and in which individuals would engage with the most, similar to posts from loved ones. The algorithm’s aim was to engage users and keep them for a longer duration on the platform. But in turn, it started to boost content that was fake, violent, and destructive.

Speiser tweeted that Mark Zuckerberg “didn’t appreciate the invaluable content we were creating, and he wished to be taken more seriously.”

Speiser shared that his then-thriving website lost over 90% of its organic traffic on Facebook due to the algorithm change. The readership loss caused Speiser to discharge over 100 employees, and said he lost $100 million.

“It was nothing but a death sentence,” he said.

The now-investors cautioned other startup founders that despite the fact that developing businesses on applications like Google, Amazon, TikTok, Spotify, and Facebook can get you a large number of eyeballs and quick growth, “would you be truly able to sleep soundly at night knowing any such success can collapse with a mere algorithm change?”

LittleThings closed its doors in 2018. One source said that “Facebook is the annihilator of worlds.” Even Speiser denied an explicit interview for this incident.

This algorithm change has been the focus of a debate on Facebook’s impact on news production. Publishers had to rebuild their business models to reach more readers, as people now clicked on and engaged with dramatic and troublesome content over other types of content. The ‘Clickbait content’ has become more common since then. The alleged Facebook Papers that were leaked lately also mentioned this change. A plethora of insider documents depicted that even Facebook’s own staff members were worried that the algorithm will have unfavorable consequences, such as the promotion of destructive content.

Meta, Facebook’s parent company, has stood up against these reports, saying they don’t signify the company’s initiatives to battle hurtful activities on its platforms.

Subtle changes in web-based media mammoths like Meta’s Facebook and Instagram can deteriorate the profits of a rising business. A startup founder’s story is proof to the equivalent, for he claims that his startup lost $100 million by depending on Facebook.