Joe Speiser has earned hundreds of millions of dollars through blogs. But what happened when Facebook changed its algorithm?
15 Minute Read
Joe Speiser started his first business when he was still in middle school. The New York-based entrepreneur has had his hands in many industries, from DVD review sites to an ad network that brought in $200m in annual revenue. And that was just in his 20s.
Over the past two decades, he has become one of the country’s most successful content marketers. Among his hits:
- He started an e-commerce brand called PetFlow, selling pet food on a recurring basis. A pet blog he created helped bolster the business. The company quickly scaled to $65m in revenue.
- He spun off the pet blog into its own business, called LittleThings. Within months, LittleThings became one of the most popular sites on the web, growing to $5m in monthly revenue.
But like any content marketer, Speiser has had to contend with the fickle Facebook algorithm. Last year, a change in Facebook’s algorithm caused LittleThing’s business to dry up, forcing Speiser to branch out into new industries.
In this interview, we ask Speiser about the ups and downs of starting a company and what he looks for in new opportunities.
- Speiser’s first company did $200m in revenue by the time he was 25.
- His next company, a pet food ecommerce brand, grew to $65m in revenue.
- Most recently, Joe founded LittleThings. At one point, it was the most shared site on Facebook.
Starting a company as a teenager
Why did you become a founder?
Founders are a weird kind of people. They don’t really fit into the traditional mold. At least for me, it was following a hobby.
I was always into computers at a young age and I was running bulletin board systems before the internet was even around, which makes me sound really old, but I’m not that old. I just started very young. One thing leads to another and your passion slowly becomes something you make money off of. That’s what happened a few times for me.
Did you start your first company at Columbia?
Way before. I started my first company when I was 12. I was getting cash in the mail in envelopes from paying subscribers. I had a software bulletin board system where people would dial into my house. I had four lines coming into a crappy Mac computer.
They would exchange ideas; it was a community. Then the internet started and I launched a site because I was a big Apple fanboy. At the time, Apple was the underdog. People had a lot of passion for the brand because it was struggling. It had 3% of the market or something ridiculously low, a single-digit number.
So, I started a site. It was really just a blog back then in ‘96, ‘97, ‘98. It was all about Mac computers.
Once I figured out I had a ton of people reading these articles about Mac computers, I thought “How do I monetize them?”
And I was getting into college at that point, so I just put some affiliate links to Mac Mall and PC Mall and those ecommerce sites and started earning referral dollars.
It helped pay for tuition and books and whatnot. That slowly morphed into, “OK, it works well with computers. What’s the next thing it could it work on?” And DVDs had just come out, so I said, “Let’s start a site, a blog, about DVDs where I review the DVDs and talk about the latest DVDs coming out.”
DVDs were a cool new medium. So, I did the same thing. I started earning a lot of referral dollars. But then DVDs hit a saturation point. “A lot of people thought I was a drug dealer. My parents didn’t really understand what I was doing, and my friends definitely didn’t.
This was 1999, so I said, “What’s the next thing?”
And that brought me to deals. And this is right during the dot-com craze so every ecommerce company is giving away huge referral chunks.
That turned into a pretty decent business, and that paid for four years of college, money to go out, and just about everything. I had a ton of cash coming in. A lot of people thought I was a drug dealer. My parents didn’t really understand what I was doing, and my friends definitely didn’t.
I’m in the dorm room and I’m locked on my computer 24/7, when I wasn’t doing schoolwork, because it was a passion of mine.
Then I met this guy up in Toronto who was running a competing site. We were fighting over traffic. We decided to combine forces and start an affiliate network. This was in 2000, 2001. So it was one of the first affiliate networks.
On growing a company to $200M in revenue in his early 20’s
And this is Epic?
This is before Epic. This was called Ezoogle at the time.
And right when the whole dot-com crash was happening, all the advertisers were paying for eyeballs. We came along and said, “Hey, don’t pay us for eyeballs, pay us for actual sales. Pay us when someone completes an action — some sort of sale on your site.”
It was no risk for them. They had no problem signing up with us. We signed up a ton of advertisers — thousands. And we had a lot of publishers because we knew all the coupon sites at the time. We kind of brought those two together, and sat in between, acted as a platform and took a commission.
That business got big rather quickly. By 2005, we brought on private equity and sold the majority of the business. It was a really nice exit. We stuck around for five years after that. My partner and I left in 2010. At that time, the company was doing $200m in revenue with double-digit EBITDA. It was a beast.
So what was your strategy? How did you get those first customers?
It was all because we were writing content. It was content marketing before we knew what that was.
I was just writing things that were interesting to me. That carved out a niche and people were reading it. “Every time we sent an email, we’d make about $100k.
And that created the audience. From there we did a lot of email marketing, and this was pre-2000. Email was 100% inbox. Now it’s harder to get a lot of people to look at email, but back then it was huge.
Every time we sent an email, we’d make about $100k, which was just awesome.
I mean, that was always fun. You’re 21-years-old and you send an email and you make $100,000. It’s not normal, right? That’s why no one believed what I was doing. They didn’t understand it.
That’s crazy, and it just seems like there wasn’t that much competition. Is that why the margins were so high?
There was competition, but it wasn’t optimized, it wasn’t efficient, and it wasn’t formal.
There were ragtag teams all over, and we were no different. We were ragtag too. Then we grew up. The whole craziness behind Ezoogle turned into Epic, and when we sold it to private equity we were told, “Hey, you guys are young 20-somethings. You don’t know how to scale a business. Bring in the gray-hair CEO team and we’ll really take it to the next level.”
I thought “What do I know?” So we handed it off and we watched them go from $200m right down to almost zero. They killed it, unfortunately. But you live and learn, right?
On finding the perfect partner
In the beginning, you started companies alone. What was it like bringing on a business partner?
Critical. You need someone to talk to on a daily basis to discuss all sorts of things. There’s always something happening in the business. Whether you’re putting out a fire, talking about growth, or having HR issues. Whatever it is, you need someone.
So either you have a mentor that you can bug like crazy, or you have a co-founder.
Something that’s difficult for entrepreneurs is that they can feel alone, like they have no one to talk to. Having a co-founder that you get along with is critical.
People refer to it as a marriage.
It’s deeper than a marriage because I think divorce is not impossible, but much more difficult.
What sort of challenges did you face and overcome?
Oh goodness. You don’t know what you don’t know, especially when you’re young. You don’t have the experience, so you’re kind of making best guesses with the information you have.
And you’re going to make mistakes. Luckily for us, we have the EBITDA to absorb mistakes. We could afford to test different ideas, models, and structures. If you’re burning VC cash, you can’t afford to do three, four different projects and see what sticks.
So, I guess it really depends on that type of flexibility. If you have the cushion to play with, then you can afford to take more risks.
Right, you have room for experimentation.
Yes, which you have to constantly do, otherwise you get left behind.
On starting and growing an e-commerce site to $60m in revenue
You were early in content marketing and affiliates. So how did you choose to work on PetFlow next?
This is the mistake I made. I love animals and everything, but I wasn’t passionate about pet food. I did it because I liked the model.
And what I mean by the model is after being at Epic and Ezoogle for so long, I saw thousands of advertisers. I understood customer acquisition better than most.
So I said, “Which industry hasn’t been disrupted yet?” And it was pet food. Pet supplies and pet food hadn’t been touched since Pets.com blew up and lost how much? $100m or whatnot.
But how can we do it different? My partner and I said, “What if we did it on a recurring basis?” Because the model for recurring is just so valuable. Every month, even before you open your doors for sales, you’ve already booked a certain amount of revenue.
We said, “Let’s sell all food on a recurring basis and upsell the treats and toys to get the extra margin.” We thought we could make that model work and we did, to an extent. The business was successful. We’d break even most years. We didn’t lose a ton of money, we didn’t make a ton of money. We grew quickly from zero to about $65m in revenue per year.
There was another company called Chewy that took a very different strategy and approach to selling pet food online.
What they did is say, We don’t need to break even or make a little or lose a little each year. We’re going to lose a shit-ton. We’re going to raise as much money as possible. We’re going to run as fast as we can into a brick wall. We’re going to sell our products for below cost. We’re going to buy every keyword in Google. We’re going to own the market in 5 years or less.
And they burned $200m+.
We only raised $20m, so they raised 10x as much. Lost it all, but it didn’t matter. They owned so much of the market that they scared the crap out of the big guys. PetSmart had no choice. They bought them for $3B.
So we sold the business, but not for nearly as much as I thought it was worth. I wasn’t looking to raise hundreds of millions of dollars to compete against that model. I honestly thought they were going to go out of business before they got acquired.
They were doing what Uber or Amazon is doing now—burning billions of dollars in order to capture market share. Sounds like Chewy was one of the early ones taking that approach.
You must have balls of steel to be able to raise that much, lose it all, and sell for billions. What they pulled off is absolutely incredible, so I don’t mean to shit on them. It’s just, as the other guy watching it happen, I had a good 6-month head start. It was frustrating.
This is why I’m not a big fan of ecommerce. The biggest issue in ecommerce, outside of the competition, was that we were selling commodities. The products could be found at Amazon, Chewy, PetSmart, Petco. If we invested earlier on in a private label, if we did our own brands that you couldn’t find at Amazon, that would have given us a leg up.
On growing a content site from $0 to $5m/month
Was it difficult for you to sell this company? Or was it just inevitable?
It was very difficult because it was probably the hardest I’ve ever worked on a company and it didn’t have a good ROI for me. So it was very frustrating. I put in long hours and I had an amazing team. People worked their asses off and no one saw the return that everyone thought we should have.
But you live and learn. From that company, we got back into content marketing. This is, I think 2012? It was when Facebook opened up the gates to 3rd-party linking.
So for the first time you didn’t just post status updates about your baby — you could post links to publications and media. Facebook is littered with news sites now. But back then, it was a new thing.
We started posting a ton of content for our tech business and we quickly realized that we were driving so much traffic to our pet site that we said, “We can actually make more money putting up advertising instead of just pet products. And we can use that money to buy more Google keywords for the pet company.”
What did growth look like when you took that approach?
I had never seen anything like it before. We went from doing $50k a month to $100k a month, and then $1m, $2m/month in revenue. The crazy part was there was no COGS against it. There was no cost. We had a very small team when we were launching this, just my co-founder and one writer.
The pet business was struggling because of the competition, because of the commodity we were selling. The content marketing side was really in its infancy. We figured this could be something really big — well beyond pets.
We said, “Let’s sell off the pet business, thin out the content marketing arm, and see what we can turn it into.”
I think it was 2011 or 2012 when we did that. We sold off PetFlow and we spun out a company called LittleThings.
LittleThings went on to do some really big things. And there was no VC put into the company at all. I think when we sold it, we were doing $60m in revenue.
We had 100 employees as of a year ago. It’s more fun when you’re not shipping to customers and dealing with other customer service complaints. You’re producing content, driving traffic, and monetizing it. That’s kind of the world I prefer to be in.
It seems there’s a cautionary tale of building off someone else’s platform. Do you think it’s even possible to build up a company that size without that?
This was a constant debate internally and with our board. We were always trying to figure that out because Facebook was being so amazing to us.
We were getting a ton of organic traffic, and the paid side was going well too.
Most of the feedback from the board was, “Lean all the way in as far as you can to Facebook because if this lasts, you will completely own the platform and be one of the largest publishers in the world.”
Then the other side of the room would say, “That’s risky. What if something happens?” So I try to take advice from as many people as I can, and I saw the writing on the wall. When something is too good to be true, it’s probably not going to last.
But it did. It lasted for four years. At the same time, we said, “What can we do to kind of shore up our defenses?” We invested in SEO and web push notifications, but it didn’t move the needle.
Pinterest, Instagram, all these platforms — we weren’t able to monetize them to the tune of 10s of millions of dollars a year.
You have to create content for many different platforms. Sometimes it’s easy, but most of the time it has to be specialized. You can’t just take a video you shot for Facebook and then port it over to LinkedIn, Twitter, Instagram, and Pinterest. It just doesn’t work.
But in the end, it didn’t matter. Facebook was still the majority of our revenue and it made it very difficult when Facebook pushed back. The Russian propaganda thing came up and Facebook went very anti-media.
If you ran any media site, you lost so much reach at the beginning of last year. They cut down everyone’s exposure. It hurt a lot. But from Facebook’s perspective they said, “We’re giving away all this free traffic. We don’t need to. People will happily pay for it.”
We switched as fast as we could once organic started to dry up. We moved over to the paid side, and paid means that instead of getting a million people to your site every month for free from Facebook, you have to pay 2 cents per user. As long as you’re making 3 cents or 4 cents on the ad you’ve put in place, you’re fine. That’s called an arbitrage. Pay 2, make 4, you’re happy.
That worked for a while — I’d say for a good year, until Facebook started raising the floor for what the minimum price per user onto your site would cost.
Which again sounds fine, but if my site is only making 3, 4 cents per user from all the ads on it, and I’m paying 5 cents, now I’m upside down and I can no longer afford to do that unless I bury the user in ads, which destroys the user experience.
So that was the downfall. We lost the organic.
What was the feeling like when overnight, organic traffic dropped from 30% to 5%.
Once that happened, we were in trouble. The problem was that revenue came in at a very high margin because it’s organic. You’re not paying for it.
You need so much more of it to make up that shortfall. We went from a company that was profitable to a company that was severely negative in a matter of a few weeks.
On finding great investment opportunities
During that time, you were also a partner at Westwood Ventures.
Yes, Westwood Ventures is me and my co-founder. Very small, but we do angel investing. We’ve invested in different companies over the course of 15 years. It’s been fun to get a little taste of different industries. It keeps your finger on the pulse of what’s going on.
Unfortunately, I haven’t had any Ubers or Facebooks in my portfolio. I’d say overall, we’ve broken even on our investments, which some say is actually pretty successful because it’s really hard to do angel investing without investing a ton of money.
How do you spot opportunities? What filters do you apply when you’re looking at investing in someone?
Deal flow just comes through naturally when you’ve networked for as long as my co-founder and I have. We have a lot of people, a lot of different industries that pass ideas between each other.”I just bet on the founder. The idea could change 10 times before they actually find traction.
I will say that I’ve made huge mistakes, where I’ve turned down pretty big opportunities because the business ideas were just terrible, but the founders were awesome. For new angel investing, you really don’t bet on the idea, you bet on the founder because the ideas change so quickly in the early stages.
I’ve watched ideas that were horrendous pivot into something completely different, and they’re really successful, and they have a billion-dollar exit.
I just bet on the founder. The idea could change 10 times before they actually find traction.
On finding time to relax
It seems like you jump from one company to the next. How do you recharge?
I’m in this weird state where I’m not at LittleThings anymore and I’m not at a day job. I’m not managing a large team for the first time in — I don’t even know, 19 years? It’s interesting.
For the first few months, I was freaking out. I hated it. I didn’t know what to do with myself. It was a run-around-with-my-head-cut-off kind of feeling. But slowly, you ease back into society. It’s nice to stop and play with your kids, take some time with the wife. You don’t have to wake up at 6 am, you don’t have to come home at 10 pm. It’s a very different feeling.
Luckily, I have the luxury to enjoy that now. But at the same time, idle hands aren’t great. You need to be doing something with your time.
Did you find it difficult to balance your business life and your personal life while at LittleThings and PetFlow?
I’m human like everyone else. I definitely noticed when I was having bad days or difficult times. I would come home pissed off and stressed.
There are other things going on that are totally unrelated to your company that you need to take stock of and appreciate and recognize.
You’ve been a master at content marketing. Is there any advice you would give to someone focused on that?
Getting ahead of trends is definitely very helpful. Just surround yourself with people who are a lot smarter than you.
I’m a good generalist, right? So there’s a generalist and there’s a specialist. For startups, usually they start with a generalist. As they get bigger, the generalist either turns into a specialist, or you bring in a specialist.
The people who can help support me in the areas I’m the weakest, the better the startup will do.
A lot of people are too proud to recognize where their flaws are. I think the sooner you could take stock of, “Here’s where I’m weak. Let me find people that could do those things better than me,” the higher chance you’ll be successful in your startup.
On trends he’s interested in
It seems you’ve got another startup in the works. Can you talk about it?
As I was saying about idle hands, I have to do something. I’ll be 40 in a few weeks. I’m still too young to just play golf all day — as fun as that may be.
You need to be doing something that’s less about making money and more about following your passion. I entered a whole new industry that I’ve never touched before, commercial real estate. Very different from everything I’ve done.
But I like the balance of owning something tangible and having dedicated cash flow. I’ve been focusing half my time on commercial real estate and that’s been really interesting. I love learning something completely new.
And then the other part of my time has been spent looking for the next arbitrage opportunity. Spinning up multiple projects where you put together something really wireframe and cheap. You throw it at the wall and see. “Hey, could I buy traffic for a dollar and can I make two dollars?”
On bootstrapping vs. raising funding
As you work with different startups, do you see any mistakes that early founders tend to make that could be avoided?
My biggest fear is taking on too much VC and then having the VC ride you for growth instead of business fundamentals.
But again, in this market we’re in right now, you get rewarded for the growth rate, not for the stable business. So I’m torn.
In a couple of years will WeWork just go out of business, or will they be bought for pennies on the dollar? Everyone will be like, “Oh, it was a huge mistake like Fab.com burning all that money.””I lived through the dot-com bust and the 2008 credit crisis. How much time do we have left before the next crash happens?
It’s something that I’m conflicted with internally because I saw it happen with Chewy. I went the fundamental route and they went for the moon and didn’t worry about making money. They won, I lost.
It seems like the last decade has been the VC trend of spending for growth, not for profit. What will it take to turn that on its head?
I lived through the dot-com bust and the 2008 credit crisis. How much time do we have left before the next crash happens?
Any advice for budding entrepreneurs?
Look, the advice is simple. Follow things that you enjoy doing. Follow your passion. Don’t rely so much on other people’s money, and try to run a stable business. So maybe you won’t be a multi-billion dollar business. But when the market crashes, you’ll have something to hold onto. You’ll have a business that actually can survive.