One day, in 2009, Noah Kagan lost $135,000 overnight.
No slots, no blackjack, no taco binge. Just Facebook.
Noah Kagan is the founder of SumoMe, founder of AppSumo, former head of marketing at Mint.com, and Facebook employee #30, and in 2009 he had just started Kickflip, which grew to become the No. 1 app developer on Facebook. This eventually morphed into Gambit, serving other developers with a quick, easy, and reliable payments system on Facebook. The clients were big names--Zynga, Gaia Online, Tagged, and Disney were all happy to work with Gambit.
Facebook had always been a hassle for both Kickflip and Gambit, and pretty much every other developer. The site was always fooling around with their APIs, which meant that Gambit always had to change up their apps and games. A hassle for Gambit, but not the worst thing in the world...
...the worst thing was when they got banned.
One day they were pulling in $150k a day. The next day $15k.
$135,000, 90 per cent of daily revenue, wiped out overnight. Ouch.
Noah bounced back--bloody, but unbowed--and the debacle taught him a valuable lesson:
Don't play by somebody else's rules.
Why you should control your own destiny
Reading through Noah's story on his blog made me think about how at the mercy of this big companies we all are. Gambit wasn't the first and won't be the last to be hurt by the platforms that are supposed to help them succeed.
In 2011, Overstock.com lost $40 million in revenue through a loss of its Google rankings, and in 2014 Expedia.com saw its shares fall by 4.5 per cent when it saw its search visibility plummet by 25%. Also in 2011, Google demoted BeatThatQuote.com, a UK-based comparison website, from its front pages, saying it violated the terms of the site. The previous day the company had been acquired by none other than... Google. At least they also shoot themselves in the foot...
Jack Welch, the legendary CEO of General Electric, once said "Control your own destiny, or someone else will." Noah echoes this sentiment have learned the hard way from his dealings with these channels.
If you are using Facebook, or Google, or Twitter, or whatever as the channel to your customers and audience then you are always playing an away game. You are forced to play by their rules and they will govern how you interact with your customers.
Let's just say that one more time: they will tell you how to talk to your customers.
That is not cool.
When you are too dependent on another platform/stream/channel they can screw you in a heartbeat, just as they did Noah.
Think about it: What happens to you tomorrow if one of these companies changes up?
Let's say Google changes its search algorithms and you go from page one to page two. Well, 71 per cent of people click only on the first page of results on Google. That number plummets to less than six per cent for page two. From downtown to out in the 'burbs, just because a computer said so.
As they did to Gambit, Facebook can happily throw you off their site if they decide to. It's their world, their ecosystem, and they can do whatever the hell they like. Facebook actively limits exposure to your fans, wanting you to pay more and more for a little piece of their pie.
And the same is true of Twitter. They regularly block certain URLs, meaning that your customers can't click through to your site from your feed.
Don't get me wrong, I am not blaming these companies--they have a bottom line just like you and me. But don't think you have to do them a favor, bringing your brand and audience to their platform and only using their services to serve your customers.
When you are on one of these big channels you are always just renting space--they may not be charging you, but they still only allow you to be there if, and only if, they can make money from you. If you are part of a networks like these, then it can be a great way to connect with people, but just remember that it is their world, and you don't control it.
This whole issue was one of the things that led to Noah setting up AppSumo, and growing it into a seven-figure company. He never wanted to be beholden to these big guns again. Wanting to have direct access to his customers, he focused his company on email marketing where he could have direct access to all of his customers.
Beyond business: the big lesson for life
This concept of controlling your own destiny obviously goes well beyond getting screwed by Facebook. If you find yourself in the fell clutch of circumstance then it can feel like there isn't much you can do.
But there is. And it all starts with working out where is your locus of control.
Answer this simple question: Do you believe that your destiny is controlled by yourself or by external forces?
Those external forces might be god, fate, or even Facebook.
The concept of locus of control was developed by psychologist Julian Rotter in the 1950s. If you think someone else is guiding you towards your destiny, no matter who that is, then you have an external locus of control. If you believe you are the master of your domain, then you have an internal locus of control.
No prizes for guessing which is better. People with an internal locus are generally thought of as being more psychologically healthy than those that think they have no influence over their own lives. They are more likely to be leaders, deal with responsibility better, less likely to submit to authority and can handle stress better.
If you do think god or Facebook are behind all your ills, then you can still shift, just as Noah Kagan did. Reframing your adversities as challenges and opportunities is a great way to get control over your life, and control over your destiny.
When in Robbin Island, Nelson Mandela carried the words to the poem Invictus by William Henley, reciting them to himself and the other inmates as a lesson that life's greatest opportunities can often be hidden in the greatest adversity:
I am the master of my fate,
I am the captain of my soul.
This internal desire to continue unabated is what drove Mandela when in prison. Don't be scared of this internal battle for your soul. It is easy to blame others, and can feel good, but not as good as when you personally overcome the challenges in your life and succeed.