Niche Twins - Consider yourself warned.

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"I just lost everything.

I lost seven years of work and over 10,000 customers.

It's a multimillion-dollar loss.

Let alone the impact on all of our customers that rely on our software."

Earlier this week Daniel Burge, creator of PostMyParty, learned the hard away about platform risk.

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Platform risk comes in a few flavors.

If you're a blogger/SEO/person who tries to rank things on Google then you're probably already intimately familiar with Marketplace risk.

Marketplace risk is when most, or all of your "customers" come from a single source.

For instance, you have an app that gets all its downloads from the App Store.

Or you have a blog that gets 95%+ of its traffic from Google.

Then one day Apple kicks you out of the app store, or Google decides to only rank Reddit content, and just like that all your customers/traffic disappear overnight.

Then there's Infrastructure/Architecture platform risk.

This is when you build your product on top of someone else's product or API, without any real suitable replacement.

For instance, if you're an app/client that's built on top of Twitter, and then one day Twitter goes out of business, well guess who's also going out of business?

But it doesn't even have to be that extreme.

Twitter could simply deprecate a single API that your product depends on, or change their Terms of Service, banning the creation of all third-party clients (this actually happened btw).

So what's this all mean for you and I?

Building a business is a lot like investing - you should KNOW THE RISKS.

Go in eyes-wide-open.

You should never be surprised by platform risk - you should be aware of it before you ever start building/creating.

And then you can decide whether or not the risk is worth it.

Maybe there's an opportunity that has a ton of platform risk, but the upside is there.

Make a lot of money now, knowing some day the business will likely get killed.

That might be a reasonable risk to take!

But never put yourself in a position where you're surprised by platform risk.

Below I share the story of Daniel from PostMyParty, and 6 others just like his.

Read these stories.

Try to really imagine yourself in the owner's shoes.

How it must have felt to wake up one morning and realize it's all gone.

Years of hard work. Gone.

Your business. Gone.

And there's not a single thing you can do about it. It's all out of your control.

Let these stories serve as a reminder that PLATFORM RISK IS VERY REAL.

Post My Party

This 7 year old tool was used by over 10,000 paying customers. It helped micro-businesses and social sellers schedule and automate online parties inside Facebook Groups. For example, Susan has a small makeup and beauty product business. One selling tactic she uses are "watch parties" inside Facebook Groups where Susan can invite a bunch of friends and potential customers to come watch her try on makeup, and hopefully buy some at the end. Post My Party helped automate that process of scheduling parties, sending follow-ups and reminders, etc. Well in January this year Facebook decided to sunset its Facebook Groups API, which Post My Party relied on. Over night the business went to zero - a multimillion-dollar loss.

LittleThings

Started in 2014, this 4 year old site built its audience by sharing feel-good stories and trendy videos on Facebook. They covered everything from cooking lessons with famous chefs, to interviews with the Real Housewives. And their content went viral on the platform - a lot. At its peak the site had over 100 employees, was doing more than 50 million unique visitors a month and did over 50 million in annual revenue. Then Facebook decided to change their news feed algorithm - they would decisively favor user content and effectively deprioritize publishers’ content. LittleThings lost over 75% of their traffic overnight. And to make matters worse? LittleThings was in the final days of selling the company for 100 Million dollars. The deal fell through after the Facebook algo change and LittleThings was out of business a few months later. OUCH.

Midnight Tokar Vintage

After getting laid off during the pandemic, Kaitlin Tokar decided to start selling some of her vintage furniture and housewares collection on Instagram. The account blew up and Kaitlin was able to quickly generate a full time income from it! Things were going great, but then about a year or so later, her Instagram posts just stopped getting impressions. She started having trouble getting seen on the platform. Her reach was diminished. It turned out Instagram had changed their algorithm to better compete with TikTok. That meant ramping up "recommended posts" in users’ feeds, resulting in Kaitlin's followers seeing a lot less of her. And just like that, seemingly overnight her business was gone.

Checkout X

For years, Shopify had a checkout flow that was pretty damn bad. You were always able to customize your storefront UX, but once you clicked "checkout" you were locked into a multi-step checkout screen that sucked for buyers, and sellers had zero control over it. Sellers wanted flexibility - they wanted to be able to customize this checkout screen. But more importantly, they wanted simplicity. Along comes "Checkout X" - a product that allowed Shopify sellers to do just that. It offered a one-page, simple and customizable checkout screen. It was a major hit and solved a real problem. It grew to over 6,000 active merchants and $600,000 in monthly revenue! Then one day Shopify introduced their own version of "one-page" checkout screens. But customers were still using Checkout X. So Shopify changed their Terms of Service - building public checkout apps was now forbidden. Overnight Checkout X was out of business. From 600k a month to 0.

Apollo App

Started in January of 2015, this 8 year old app had ~1.5 MILLION active users just before it shut down. The concept was simple - build a better Reddit app. One that had a premium design, and was far more customizable than Reddit itself. And it worked. Until it didn't. In June 2023 Reddit announced that it would start charging for API calls, which were previously free. That move came shorty after AI took the tech world by storm, and it was intended to stop tech companies from scraping Reddit’s data to train their own AI language models. Well the Apollo app made 7 BILLION API requests in 2022. That would have cost the founder 20 MILLION dollars in API calls alone that year under these new changes! After a few weeks of unsuccessful conversations with the Reddit team, it was clear the Apollo app was going to have to shut down.

Twitterrific

What the Apollo App was to Reddit, Twitterrific was to Twitter. Started in 2007, it was an incredibly popular app, and even won several Apple Design Awards. Twitterrific was the first to have a blue bird as its logo, which Twitter themselves eventually adopted. But then, 16 years later in 2023, Elon Must bought Twitter and announced a change to it's developer agreement documentation - the creation of third-party clients would be permanently banned going forward. This amendment killed hundreds of Twitter apps, including Twitterrific.

Webflow

Webflow is a SaaS website building and hosting tool. It makes building a website easier, and a lot less technical. In late 2023 Webflow sent its users a new pricing model based on something called "CMS records". A blog post, for example, would count as 1 CMS record. If you used 10,000 CMS records or less, you pay $45 / month, but if you used 10,001 CMS records or more you were now considered an Enterprise customer and you would be forced pay $65,000 DOLLARS a year. Yes, you read that right. So anyone out there that built their websites with Webflow and had 10,001+ CMS records immediately had a major problem on their hands. This is why I always recommend WordPress btw 😉. Long live open-source software.
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