WittyFeed: The Rise and Fall of a $40 Million Startup
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Chapter 1: WittyFeed's Unbelievable Journey
You may not be familiar with the story of WittyFeed. Allow me to share a tale that may astonish you, as it did me.
Founded in 2014, WittyFeed was a content creation enterprise based in the relatively obscure city of Indore, India. Their business model revolved around producing and curating viral content designed for social media sharing. This unconventional approach soon led them to become the second-largest content creation entity globally, following BuzzFeed.
At its zenith, WittyFeed attracted a staggering 120 million monthly users from around the world, with nearly half of that traffic originating from the United States. They expanded rapidly, establishing offices in major cities such as Delhi, Mumbai, Bangalore, Singapore, and New York. Their revenue soared alongside their user base.
On November 25, 2018, the founders celebrated reaching a remarkable milestone: their highest monthly revenue of $1 million. Spirits were high as they strategized for further growth. However, just a day later, the company vanished without a trace.
What Went Wrong?
The roots of WittyFeed's downfall can be traced back to events that began around 2010. This was when the personal data of millions of Facebook users was exploited by Cambridge Analytica for political advertising. The scandal led to Facebook being slapped with a $5 billion fine by the Federal Trade Commission for privacy violations.
In response to this incident, Facebook overhauled its traffic algorithms. By the end of 2018, WittyFeed was unexpectedly de-platformed, with their domain blocked. Facebook's rationale was clear: "Non-American companies should not be allowed to influence American voters using our platform." Consequently, WittyFeed's traffic plummeted from millions to a mere few thousand, and their revenue dropped to zero, forcing them to cease operations within three months.
What Happened Next?
Despite facing financial ruin, the founders of WittyFeed refused to give up. They chose not to lay off their employees and continued to pay them 25% of their salaries as long as possible. Unfortunately, by February 2019, the company's funds were depleted.
A town hall meeting was called for the remaining employees, where the founders asked for six months to turn things around. To compensate for the unpaid 75% of salaries, they proposed offering equity in the company, equating to twice the amount owed. In essence, they sought to convert their employees into angel investors.
To their astonishment, many employees who believed in the founders agreed to this plan, with some even offering their life savings to support the company’s new vision.
Over the next twelve months, the team worked tirelessly and developed Stage, an OTT platform dedicated to producing movies and TV shows in local Indian dialects. Stage has since flourished, currently valued at approximately $40 million. Remarkably, the founders were able to return 2.5 times the investment their employees had made.
Lessons Learned
WittyFeed's journey exemplifies incredible resilience and faith in one another. It illustrates how a cohesive team can support each other during challenging times and create significant value from scratch.
However, this story imparts another important lesson: building your foundation on unstable ground is perilous. If you do not own your platform, you do not truly own your assets, even if you believe otherwise. This applies to all forms of content creation on social media, startups reliant on APIs, and employees aiming to ascend corporate hierarchies.
It's akin to flying an airplane with only one wing; a sudden gust of wind can bring everything crashing down. I experienced something similar when LinkedIn inexplicably banned me, though I managed to recover my account. Nevertheless, this incident serves as a constant reminder to tread carefully.
Fortunately, I learned this lesson without suffering the same fate as WittyFeed. I share this story with you so that you can glean insights without facing the hardships they endured.
"Do Not Build Castles On Borrowed Land"
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