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Growth Risks With Facebook’s Machine Learning

Facebook has very advanced machine learning capabilities. More often than not, you’re better off reaching your customers for a cheaper cost by reaching a broader audience instead of a narrow targeted audience. But how is that possible? In theory, targeted audience should work better? But with strong ML, the broader audience delivers better and cheaper results provided that the initial customer dataset was correct.

But what happens if you get the initial data wrong? It puts their ML chase your customers in the wrong direction. Let me explain.

When building a Facebook page, growth is going to depend a lot on you first 100s or 1000s likes. Hence getting your first subscribers or customers wrong, can put you altogether in the wrong direction. I can think of 2 reasons why that could happen. Firstly, your upcoming page subscribers are likely to come from the network of your existing subscribers due to sharing and other engagement. And secondly, the engagement behavior of the first data set of subscribers with your content will define how engaging your page is and eventually define the placement of your page in the newsfeed and other Facebook algorithms.

So getting the initial dataset of subscribers/customers is extremely important. It is why I’m generally way more careful in the start when building a Facebook page or an e-commerce store through Facebook ads but later on take the liberty to test all kinds of traffic. It keeps my seed-data clean. The data that is going to be used to build the entire user-base later on.

If you have a question, please feel free to ask in comments.

Three Types of Founders & Financial Planning

I think I can categorize founders into three types when it comes to their financial management with regards to running a business.

The fist type of founders, and I think these are found in most abundance, do not really like to make projections and plan finances. They are extravagant with their expenses and while many times they are really good at generating revenue and achieving growth, they are still often seen in debt, or raising more funds, or struggling in general most months than they are not, despite the high amount of revenue. I’d say it’s a miracle if any of these founders and their companies survive in the long-term. The only reason they may is because their business model is extra ordinarily profitable and can afford a lot of money wastage.

The second type of founders like to make too much projections, and cut cost everywhere. They believe in MVPs and lean-startup models. They don’t spend money on creating features that someone may or may not use. They test everything with a small amount of people using unscalable methods to generate data. Their future scaling decisions are also data driven. They sometimes cut so much costs that they are often seen working long hours. They also struggle with hiring and team building because of their lower cost mentality.

The third type of founders are somewhere in between. They appreciate projections and financial planning. They love MVPs and lean-startup models. But they spend a large amount of money in building team, delegating tasks, and also on R&D which eventually results a lot of times in wasted features and money. But they do it because in the long-term it’s worth it.

In Pakistan, most of the founders I’ve met are the first type while I feel most founders should aspire to become the third type of founders.

How Crypto-Assets Will Play Out In The Long Term

Idea of the internet and the TCP/IP protocol was formally adopted in the 80s. In the 90s we started to see some of the companies reflecting some of the things that can be done on the internet. Amazon was founded in 1994 and Google was founded in 1998. But the internet bubble called the “dot com bubble” burst in 2000. It is when we saw the stock market crash, and most internet companies from the era simply failed and disappeared.

The bubble was real. A lot of companies with bad business models raised wild amount of money and created no value. A few companies survived. At the peak of bubble, Amazon’s stock was worth nearly a $100. At the bottom of the crash, it was nearly $5. Today, it stands at a whooping $1870. So in hindsight, Amazon and companies like Amazon weren’t the problem. Internet wasn’t the problem either. The internet created real value as we all can see today. The problem was excessive speculation and get-rich quick sentiments and since it wasn’t sustainable the market crashed.

I feel crypto-assets are a lot like that. The idea of decentralized crypto assets was first properly proposed in the 90s by Nick Szabo. By 2009, Bitcoin, the first crypto asset of it’s kind was released. By 2013, we had many more crypto-assets including Namecoin, Litecoin & Ethereum. But I’d say the crypto bubble burst in 2017.

I think the crypto-winter might last as late as 2027. During the crypto-winter, most crypto-assets that exist today will have disappeared forever. But there will be Amazons and eBays of crypto-assets, the ones that will survive. By 2037, they will value collectively in trillions of dollars.

2037 will be a great time for crypto-assets, just like 2019 is a great time for tech industry in general.

All of this is speculation, of course. I don’t have the crystal ball. But it is what I believe in. What I also believe in is that the history never repeats itself, but it often rhymes.

Disclaimer: The information provided is for informational purposes only. It should not be considered legal or financial advice. To the maximum extent permitted by law, I disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

Scaling Digital Businesses is Piece of Cake

Yesterday, I sat down with my friend whom I’ve learnt a great deal from, Zeeshan aka ZSM. He runs a restaurant in the heart of Islamabad called Khyber Dodai.

A few weeks ago they shot an ad for one of their food items and it just took everyone by the storm. The result in the following weeks, they started to get a lot of business.

But they didn’t have the space to host all the customers that showed up. What Zeeshan said to me afterwards, I found very assuming and true. He said this isn’t like your cloud. We can’t instantly scale to accommodate more people. This isn’t like your dropshipping either. We can’t sell what we don’t have, and have a vendor take care of shipping, handling and fulfillment on your behalf. This is different and it has its limitations.

I found his comparisons very interesting and so I want to reiterate to all of you the power that digital businesses hold. It’s the ability to sell what you like to 3 billion+ potential customers.

This Article Will Completely Change Your Life & I’m Not Click-baiting You

Do you know when a butterfly flaps its wings in South America, it can cause hurricane in North America. A butterfly can cause a major catastrophic event in a different continent. This is known as the butterfly effect. Although it is called the butterfly effect for a completely different reason, but the example narrated is real. And the takeaway is that tiny decisions you will make today will have huge consequences on your life.

Let me explain this further. I became a tech entrepreneur by accident. I encourage you to read how that happened. Had I not landed on a random web page that day which happened completely out of accident, I might not even be in this industry at all. If I weren’t in this industry at all, I wouldn’t be writing this blog. And if I didn’t write this blog, you wouldn’t be reading this right now.

Because you’re reading this right now, the outcome of your life has already changed. If you weren’t reading this, you could have been doing something else, that would have had a different outcome on your life. But this article has already changed your life and when I said I wasn’t click-baiting you, I meant it.

I can remember many examples of how small actions had massive affects on my life. I’m going to share another one below.

In 2013, our Adsense account was disabled. We lost so much money there, I don’t even have the right expressions to describe it. In 2018, someone launched a class-action lawsuit against Google inviting all other parties to file their claims. Who could have thought a simple form that my co-founder filled in under 3 minutes would mean we’ll be getting paid for everything that was held 6 years ago. That we’ll be winning a case against Google. Without ever hiring a lawyer or ever thinking to file a lawsuit against them. By simply filling a form digitally.

A simple digital form and a huge amount of money. It sounds unreal, even to me, but it isn’t. It happened because of a small action that had a major impact on our lives. And so if you’re not taking actions, you are playing with the outcomes of your life.

So go ahead and make the decisions that you want to make because down the line they will not only change your life, but those of thousands of others.

Life seems chaotic. But chaos has order. Chaos is deterministic but it’s also very unpredictable. It’s unpredictable because often we don’t know the initial conditions and actions. But if we did the unpredictable chaos becomes very deterministic. And so if you take the right initial actions today, you are quite likely to have a deterministic future, no matter how chaotic life may feel.

Leaving Your Own Business

There was an occasion when I had to move on and leave a large amount of money behind. I had to leave a business that I co-founded. I can’t say it makes me happy about it. But I will say staying back would have made me unhappier.

It’s a challenge where you choose an option that makes you as little unhappy as possible. And certainly, it isn’t an easy challenge. But I believe with all my head and heart, despite feeling otherwise sometimes, that moving on was the right decision.

I made my decision with the following in my mind

“If you can’t see yourself working with someone for life, don’t work with them for a day.”

Naval Ravikant

Yesterday, I spoke to another founder who made a similar decision a few years ago. He left 7-figures on the table to move on for personal happiness. In the end life is a pursuit of happiness. Money is nice, but it’s not always the answer, especially after you have enough of it.

Why Shane Used Two Identical Laptops For Work

In 2013, I and my co-founder Saad, travelled to NYC to meet a native-ad company we worked with. We were one of the largest publishers for the native-ad company at that point, and they took a lot of interest in our business. They wanted to learn more about us and our work and so we were invited to their office to deliver a keynote, where we also met one of our relationship managers, Shane.

We also met Shane a few days later on a cold December night, while he hosted us for a mouthwatering steak. Later he invited us to his place which over-saw the breathtaking Hudson river. An unrelated but interesting event, he invited over another friend who smoked weed at his apartment which I saw happen for the first time in my life. On his bed, I saw two MacBook Pros, identical to each other with the same specs and colors. I was surprised and I wondered why would someone buy two identical laptops. And so I took the liberty to ask.

I was shocked with the answer I got. Shane had two MacBooks because one of them was given to him by his employer – the native ad company while the other one was his private property. I learnt that Shane also gives out freelance consulting on the side and doesn’t do it on his employer’s MacBook.

The reason why he doesn’t do it is because of “conflict of interest” which is roughly defined at Wikipedia as a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another.

And by Shane’s definition of conflict of interest, using his employer’s MacBook to generate freelance consulting revenue on the side is a violation of trust put in him by his employer.

Since then, I’ve taken conflict of interest very seriously. I have kept it close to my heart. I’ve avoided it as much as practically possible for me. I’ve encouraged others to do the same and I hope and expect that Pakistani entrepreneurs will start to avoid or mitigate conflict of interest seriously.

Facebook LookAlike Marketing Hack That Will Save You Tons of Money

I have yet to meet a performance marketer who has not fallen in love with Facebook’s LookAlike audience feature. If you provide minimum data (100 users) to Facebook about your leads or customers, it can find more potential customers for you that lookalike your seed data.

It doesn’t just sound sexy. It works. It works wonders. It’s the most amazing feature I’ve seen on any ad platform thus far. But you can make it even more amazing by following a simple trick.

If you have worked for even a few weeks in the internet marketing industry, you’d be aware that the advertising marketplaces work on bidding and competition. Since more and more people are trying to reach customers in US, UK, Canada, Australia & Europe, advertising is generally more expensive in these geos compared to Pakistan, India, Philippines, Mexico, Brazil etc.

And to take advantage of this location arbitrage, all you have to do is begin your ad campaign by targeting customers or audience in a cheap geo-location like Pakistan or India. Once you have 100+ leads or customers from one country, you can use that data to create LookAlike audience for any country including the US. This saves you serious costs in data acquisition which is often done by losing money. And you end up with a valuable data for very little ad spend that allows you to scale your campaigns in any country.

To build LookAlike audience, you’ll need a customer file, engagement on your Facebook page including video views, or website data using pixel. To learn about pixels, watch this. To learn how to build custom audience, watch this. And to learn how to create LookAlike audience from your custom audience, watch this.

How VC Funding Can Kill Innovation

A few days ago, I published a blog post about my views on the future of the open internet. The post mostly focused around Twitter which went from being a very open platform to becoming a very centralized platform completely killing 3rd party apps that it stole innovation from. I believe all these decisions were financial and were driven by pressure from the investors.

Twitter & 3rd Party Apps

A lot of features that we see today on Twitter were actually originally developed and created by 3rd party apps. In fact, the first twitter client for both Mac & iPhone were developed by 3rd parties. Some of the clients got acquired by Twitter including TweetDeck & Tweetie. TweetDeck’s support was killed from all platforms except for Mac. Thousands of other apps were ruthlessly killed by discontinuing API supports.

Financial Decisions

Twitter said the decisions were made to discontinue support for “legacy APIs” at the same time acknowledging that no new APIs will be created. In my opinion, the decision was a financial one, and largely driven by what the investors wanted off Twitter.

Fred Wilson, a VC who invested early-stage in Twitter said in a blog post he wrote in 2016

In the early days of Twitter, there were third party applications (Summize for Search, Tweetie for iOS client, etc). These were all built on Twitter’s API. If Twitter had imagined itself as a protocol instead of an application, these third party applications would not have had to compete with (or get bought by) Twitter. But at the time, there wasn’t an obvious way for Twitter’s founders and management team to benefit from a protocol-based business model.

Fred Wilson

Posterous & Twitter

But the damage wasn’t limited to Twitter clients. Twitter acquired and closed other services too.

Posterous was an ultra-simple blogging platform with focus on social media integration and ultra-easy mobile blogging using emails with support for many forms of media.

Posterous grew at a very fast rate and had over 15 million users by 2012. They ran a wide-spread campaign asking users from smaller or dying platforms to import their blogs to this new dead-simple platform. Anyone who did that most likely regretted that decision as Twitter acquired Posterous in May 2012 only to shutdown the blogging platform, and all blogs hosted on it in the next 6 weeks.

All for financial reasons.

It’s Not Twitter

I don’t hate Twitter. I love it. But everything that Twitter has done was done in the financial interest. And somehow I don’t think it is what Jack wanted off Twitter. If he did, he would have had built Twitter like this from ground-up. But he didn’t. Because he had different plans for Twitter. Plans that obviously changed as financial concerns got in to the picture.

And it isn’t Twitter alone. I only expressed my thoughts with reference to Twitter in continuity of my original post about the open internet, which was also written with Twitter in mind.

All large tech companies have killed platforms and services, acquiring only to shutdown, for financial gains.

And while it looks sexy to say that we’re trying to change the world, with decisions like these we’re actually just trying to change our own lives and those of our investors’. As killing innovation isn’t how you change the world.

Why Credit Cards Are Good, And Especially For Internet Marketing

As I’ve written before, real wealth is built when your money is compounded. Similarly, wealth can never be built if you’re in debt because your debt is also compounded. I wanted to begin this blog post by highlighting the obvious and that is that you should never get into any kind of debt including credit card debt.

But the problem is not with your credit card but your spending habits. And with the right spending habits, credit card is your friend and not your foe.

In 2016, when we launched our dropshipping business, we did a massive spend on Facebook advertising. We were maxing out 4 credit cards daily and were clearing the credit card bills daily as well. We could have used our debit cards too, except that they don’t come with loyalty points, cashbacks, airline miles converting into free tickets, free fuel, chargeback privileges, and theft protection.

The key is that you must always use your credit cards like debit cards and never go in debt. You should always clear your bills timely, and never spend money that you don’t have. I advise you to enable “auto-pay” when getting your credit cards and link it to your current/checkings account.

Here’s a proof of me redeeming points for fuel just 2 weeks ago.

Not using credit cards is like leaving free money on the table. And not using them right, is like giving away your future money as well.