Platform Risk: Surviving Apple's Catastrophic Changes

Geniuslink is a platform that helps you make more money from affiliate links by localizing where a buyer purchases. An example would be that if you’re in the United States, you’re going to see the link localized to the US version of Amazon. If you’re in Europe though, you don’t want to see the US version of Amazon. That’s not how you buy things. Geniuslink instead sends those customers to their own localized Amazon storefront.

You might even say it’s a GENIUS idea.

Yep. Made that joke all by myself.

Geniuslink is a scalable, non-VC backed venture making over $2 million in revenue.

In this interview, you’re going to meet two of the co-founders, Jesse Lakes and Shannon McGuire. They’re not only co-founders, but also life partners. We didn’t get into that dynamic in this interview, but maybe that’s a second interview in the future.

Besides the point, I’ve gotten to know Jesse and Shannon a bit at the Craft & Commerce event by ConvertKit the past two summers, and also a good chunk of the other team members of the Geniuslink team. They’re a team that supports creators incredibly well and they’re just one of those teams that is super easy to root for.

Especially when you know they’ve been through a lot but keep working on their mission.

In their words, the Geniuslink team has had four catastrophic events where they lost 40-80 percent of their revenue essentially overnight.

Yep. Not one, two, or three of those. FOUR events where their revenue sinks to half or more of what it was roughly 24 hours beforehand.

We’re not going to deep dive into all four of those catastrophic events, but we’re going to deep dive a bit into Geniuslink’s story so you can avoid those situations, or make it through your own catastrophic events with your venture. Especially if your venture is one that is platform dependent. Aka, a venture that wouldn’t exist if another company or software didn’t exist.

In this case with Geniuslink, if Amazon or Apple didn’t exist, Geniuslink wouldn’t exist either. Geniuslink is dependent on those companies being successful but having some holes that need to be filled.

Here’s my deep dive conversation with Jesse Lakes & Shannon McGuires, the co-founders of Geniuslink:

Note: These answers from Jesse & Shannon are cleaned up from the interview, so they’re not exact quotes per se. They’re cleaned up so you can read it easily!

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How did you get your start in entrepreneurship?

Jesse: Initially, I was trying to figure out how to make millions in college. I wrote this great business plan to do this website, and according to the research, I was gonna be a millionaire before I graduated college. It was of course based off of pre-dot-com era CPM rates.

This was the end of 2000 when I was working on this business plan. Obviously, those numbers just disappeared and I was left with the affiliate marketing is really the only way to do ads. I couldn't get any ad buy. That started off a kind of interesting relationship with affiliate marketing where I hated it.It wasn't paying out nearly what my spreadsheet said I should be earning. It was an interesting beginning of the journey.

Fast forward a handful of years, I graduated college and after spending some time in Colorado, I realized that I did not want a day job.

I ended up being a whitewater rafting guide in Colorado and Costa Rica. I would go back and forth based on their rafting seasons, but between the rafting seasons, I would spend time working on some website projects.

How did you get your start in entrepreneurship?

Jesse: Initially, I was trying to figure out how to make millions in college. I wrote this great business plan to do this website, and according to the research, I was gonna be a millionaire before I graduated college. It was of course based off of pre-dot-com era CPM rates.

This was the end of 2000 when I was working on this business plan. Obviously, those numbers just disappeared and I was left with affiliate marketing as being really the only way for me to do ads and generate revenue. I couldn't get any traditional ad buy.

That started off a kind of interesting relationship with affiliate marketing where I hated it. Affiliate marketing was hard and wasn't paying out nearly what my spreadsheet said I should be earning. It was an interesting beginning of the journey.

Fast forward a handful of years, I graduated college and after spending some time in Colorado, I realized that I did not want a day job.

I ended up being a whitewater rafting guide in Colorado during the summer and Costa Rica in the winter. I would go back and forth based on their rafting seasons, but between the rafting seasons, I would spend time working on some website projects.

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How did building websites lead you to writing a book about the iTunes affiliate program?

Jesse: One of those website projects I worked on was a series of websites that took soundtracks from extreme sports films. I would earn a little commission every time someone clicked to buy a song from iTunes or Amazon. It was with these websites that I had this nice hockey stick growth in traffic. Super exciting. However, my revenue was really flat.

So, I was scratching my head trying to figure out what was going on. My “A Ha!” moment was when I realized that it turns out people around the world love skiing and surfing and snowboarding and music. Surprise!

My, “Oh No!” moment, which came shortly afterwards, is when I realized that all these people around the world that were clicking on my links were essentially getting served up a broken user experience because I was using the US version of iTunes and Amazon.com, which at that point, you could only buy from when you had a US based credit card.

I called up my best friend, an engineer at Microsoft, and just said, "Can we make a link that sends people to the right place based on their location or device or language, etc.?". He gave me the classic engineer response and was like, yeah, I can build anything, but you have to write the requirements doc.

That started the next phase in this journey. It's about the time that I met Shannon (now life partner) and decided not to go to Costa Rica for the winter. I wanted to stick around Colorado and hang out with her. I also spent that winter just digging in to figure out how the iTunes affiliate program really worked so I could tell my buddy how to fix my problem.

I got my buddy the information necessary for him to start building, but then ended up with a bunch of information that another friend who later became our CMO for a bit, encouraged me to write a book about. I spent a lot of time that winter  writing my first book: “Mastering the iTunes Affiliate Program.”

It was an ebook. I then spent most of the spring and into the summer getting ready to publish the book. I had it professionally edited, had a cover designed, and was really excited about it. Just as I was about ready to publish it, I sent a copy off to Apple saying, "Hey, I'm a huge fanboy of iTunes, of Apple in general. I think you'll appreciate this. You have an amazing affiliate program. Here you go!"

I received a cease and desist and they threatened to sue me if I published the book.

Yeah, it was a bit of a turnaround.

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How did a cease and desist letter from Apple lead to a job managing the iTunes affiliate program?

Jesse: I hopped on a call with this woman that happened to manage the iTunes Affiliate Program. She was the one I emailed the copy of the book to, and for the first 30 seconds, we were very civil and polite. For the next 45 minutes, she just screamed at me. Who the f*** was I to be spreading all these lies? They’d never heard of me! There's no way that I could know anything about the program.Everything I had written must be lies. I was gonna ruin the program, I was gonna ruin her life, etc.

We came to the agreement that I would give them a few weeks to review the book before I published it. A couple weeks later, she sent me an email back. I had three pretty trivial mistakes in a 160 page /60,000 word book.

They then ended up extending a job offer. I didn’t think twice and promptly traded in the flip flops for a cubicle and a commute in Cupertino.

Initially the job was as a remote contractor but quickly became a full time on premise role. So, I asked Shannon, “Hey, you wanna move to the Bay Area?”

Shannon: I think the answer was a resounding yes. It was the end of a long day and I was sitting in a cubicle, when I answered the phone. I was like, “yes, let's go”. About a month later we were headed down and Jesse started Apple full time.

Jesse: Shannon ended up working at Apple as well, ironically. We were there for a couple years.

I was on the marketing team, trying to learn everything and spent those next couple years essentially just making the book I wrote obsolete for the most part.

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You’re at Apple and doing well. What made you want to leave Apple and start Geniuslink?

Jesse: The one issue that they actually paid me really well to make worse was around this whole concept of geo-fragmentation.

The gist is that when a company wants to grow, it often expands internationally with regional and country-specific storefronts. They'll then typically spin up affiliate programs to help grow each of those international storefronts. When they're doing that, they're creating essentially two different problems.

First, they're creating a challenge around user experience and second, a challenge around monetization. For example, someone in the UKshould go to the UK store that will sell that song to someone with a UK based credit card. They should not go to the US store because they can't buy there because the US store can only sell music to those with a US based credit card.

Second, is the monetization piece. A lot of these affiliate programs are storefront specific or regionally specific. They may operate in different ways or have different affiliate networks that support them. While I was at Apple, I think we tripled the size of the footprint.. I think we added a zero to the total revenue running through the program as well. It was awesome to grow the program so significantly.

I was just making this problem that I thought was a pretty important problem worse, and of course, I was shouting from the rooftops, “this is a problem!” , but it wasn't a top priority for them.

At the same time Shannon and I saw Amazon was also expanding internationally adding more storefronts worldwide.

After a couple years, I realized that Apple was awesome. It was such a huge learning opportunity for me to go from raft guide to nerd that wrote a book to actually working on the other side of the fence and building an affiliate program and managing the affiliate program.

But, I also saw even more opportunities crystal clear and ultimately realized that if I kept on this path, I was just gonna be fat and happy. ButI wanted to hustle. It was an amazing job, but I wasn't done building.

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What were the first few steps after knowing you wanted to start Geniuslink?

Jesse: Step one was going back to my best friend, the Microsoft engineer. Early on I wrote him a check to build me a backend for these websites to start to fix it. It was very basic, but it worked and instantly started to see revenue coming internationally. Then the next step was realizing that, oh wow, if I have this problem, other people have this problem too.

The next step was getting the initial team together.

Step four was actually finding some real revenue. The first year, we really didn't have a revenue model for the service, so it took some time to build it out and actually start to see revenue coming in.

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What did growth look like initially? How did you get your initial customers?

Jesse: LinkedIn suddenly became cool because now I had a real job. Turns out you don't use LinkedIn a lot as a raft guide (the first job 😂). Once I was actually at a corporate job, those relationships were important.

I really worked hard on building a good LinkedIn network with the people I was working with. Once I left Apple, I had some pretty good connections with people that needed technology like I was building. So I was able to find some people there.

That being said, we initially built the solution to fix the problems that we saw with music, but it turns out that apps were a much bigger opportunity at that point. The iTunes Affiliate Program at that point also supported the App Store.

We had these two mobile ad networks that showed up as relatively early clients that were just pumping through a massive amount of volume. They were instrumental for us to get to that $100k milestone.

Once we got to $100k/month, we had our first catastrophic event. In total, we've had four events that have been nearly catastrophic. And one of those was that iTunes shifted around their affiliate program.

After I left, iTunes made some significant changes to their affiliate program and the monetization challenge essentially went away for all of iTunes and the user experience challenge also disappeared as most apps had the same unique identifier world wide (unlike music, TV shows, movies, etc.).

So, the two huge clients that really got the flywheel started, disappeared after a couple years. It was painful, but it also forced us to evolve, which wasn’t necessarily a bad thing. It was just after we made it to the$100k per month mark that everything came crashing down.

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What was one of the first revenue models that you tried?

Jesse: We had a really unique revenue model early on. It was called “Click Share.” (In the world of affiliate marketing, “Rev Share” (Revenue sharing) is pretty common, where the service would take 25 percent to cover their side, then the client gets the rest.) We were told relatively early on by Amazon that they didn't want us getting between the client, the publisher, and them. So the whole concept of Rev Share really didn't work because they didn't want us in the middle. So, we did something called Click Share. The idea that we knew that we were going to maximize every click going through our service because of the technology we’d built. So, what we do is we would take essentially 15 percent of the clicks flowing through our system (instead of say 15% of the revenue).

We had some rules to tilt the advantage towards our clients, for example,  we would never take clicks from their “base country.” This would ensure they would always see the same revenue plus some. This Click Share model essentially made it free for our clients and also aligned our incentives with our clients perfectly.

The goal was to make as much as we possibly could per click, which meant, making sure those sales and conversions and monetization was all optimized. That model worked well. Offering a free services is always helpful instead of hitting people up with a credit card three moves into their signup process.

It was so much more efficient than actually billing people.

It worked incredibly well until some lawyer in the UK for Amazon said that they weren't cool with it, which brought it all crashing down because we would typically make the vast majority of our revenue from those international programs. The UK was typically the best one because a lot of our clients were US (and our rules said they’d never share those base country clicks). It was amazing while it worked but it didn't stand up the rigors of time.

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You’ve mentioned that 4 major catastrophic events have happened to Geniuslink, what has your approach been after these events? How did you rebound?

Jesse: We've had four pretty major events where revenue is essentially cut by 40 to 80 percent essentially overnight. The first step is just to just step away. It's been pretty infuriating when it happens.

We worked so hard to get the business to this level and all of a sudden it just disappears. A lot of it has to do with platform risk. For better or worse we've been pretty focused, initially in the iTunes ecosystem, now Apple services. Yeah, we got burnt a little bit on that, but they were pretty good about letting us know what was happening.

There's usually some frustration no matter what. You need a minute. Taking  walks in the woods where no one hears you scream and shout and curse helps. And then, yeah, phase two is coming together as an executive team.

Shannon: I'm sure the first time it happened, we were all completely freaked out, jarred, whatever.

Jesse: Yeah, we just left our day jobs.

Shannon: Yeah, exactly.

But after you go through it a couple times, you start to have this almost like this like familiarity and comfort level with like the, “okay, we just got screwed.”

In some sick way, I think we got comfortable with that position. It's happened so many times that it's the three of us founders, we get together and we still have that rapport with each other.

We've always been good at just sitting down and no matter how much you disagree, everybody really hears everybody out.

Whatever we decide to move forward with, everybody's opinions were weighed into it. You start to get the comfort level with the we've been in it before and we pulled through it and I know we will this time too.

It gets a lot less scary. It becomes less emotional, I would say, after you've done it a few times.

Jesse: After the first or second time that this happened, someone referred to us as a cockroach, surviving a kind of nuclear winter. I thought that was a pretty good analogy. But after some time, maybe after the third or fourth time, I realized that maybe cockroaches isn't the right analogy, we are more of the Phoenix. We seem to come back better every time we have to rebuild.

One of our core values now is “Make Lemonade.” Things come crashing down and we're pretty good about being optimistic about how it leads to new opportunities.

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Is Geniuslink’s growth more systematic or random?

Jesse: We've been trying to nail systematic for years. It's been fits and spurts.

We fully drink the product led growth Kool Aid.

One of our core values is “Clients, not customers.”

It's a relatively low price point to join the service, but we still treat every client as best as we possibly can. That's led to not systematic short term growth, but systematic long term growth. I'd like to think that our reputation really helps lead to people sharing their experiences because they traditionally are not good experiences, but rather they’re great experiences.

The other thing that we've invested in is our domain. It’s obviously pretty short as a link management platform. “geni.us”, Genius, is our domain name and we got pretty lucky with that.

We've heard more often than not that one of our best marketing pieces is not ads or SEO or content, but just that people will see their peers using this funny looking link and end up at our webpage.

I think just going overboard on client success and the short domain have been the best systematic aspects for growth, but our growth has been incredibly lumpy.

It absolutely ebbs and flows. A lot of it's tied to finding a relatively large client. They stumble across us, have a great experience, and then share that with their peers.

As soon as I figure out where I can drop a dollar in and get more than a dollar back out, I'll certainly let you know. We have yet to find that.

Shannon: You can chug forward with your ad spend and your content marketing and everything. Then, it's the week that two big YouTubers get into a conversation on social media and just say they love Geniuslink that things explode.

Then all these people chime in and start saying good stuff about us. It's good for growth, but it's really just awesome for team morale. All the blood, sweat, and tears. It reminds you that we’re not just staring at numbers all day.

It’s that we do something to help people which is really awesome.