9. How John Rampton Lost $92 million of Annual Revenue by Building a “Skyscraper” on “Land” He Didn’t Own

Hello Monetization Nation. I recently interviewed John Rampton, who is one of the top digital marketing influencers. He is a regular contributor to leading business sites, such as Entrepreneur, Forbes, and The Wall Street Journal. John is a serial entrepreneur, and currently operates digital ventures such as Due.com and Calendar.com. In this interview, John tells the story about a business he grew to $110 million of annual revenue. $92 million of that revenue was from sales on Amazon. Amazon essentially shut down that business after they launched a competing product. John and I discuss why it is so important to build a “skyscraper” on “land” we own, along with other monetization stories and secrets.

Building a Skyscraper on Land You Own

John and I first met when we both worked for a company named FamilyLink. Family Link created the We’re Related Facebook app, which became the 4th largest Facebook app with more than 60 million app installs. As a part-time Chief Revenue Officer, we went from almost no revenue to more than $5 million of revenue in 12 months.

Unfortunately, Facebook saw how many people wanted this functionality and built similar functionality into their core offering. Then, Facebook made it extremely difficult for the We’re Related app to continue to operate. The reality is that publicly-traded platforms are going to ultimately make decisions that are in the best interest of their shareholders, which includes making decisions that better monetize their platforms.

Family Link truly built a skyscraper on leased land that Facebook owned, and Facebook had the right to take the land away any time they wanted. As a result, FamilyLink lost most of its business value.

Amazon Competing with 3rd-Party Vendors

Amazon used a similar strategy in which they allowed 3rd-party vendors to sell on their platform. Many of these 3rd-party vendors made a lot of money from their relationship with Amazon. Unfortunately, this is another example of building a skyscraper on leased land. When Amazon learned which products sold the best, Amazon decided to go directly to manufacturers and cut many of the 3rd-party vendors out of the loop. The 3rd-party vendors were essentially doing market research for Amazon so Amazon knew the most profitable products to sell directly. Amazon owned the land, so as soon as they had their own product, it was easy to preference their products on the Amazon platform.

The Rise and Fall of Organize

John purchased and grew a company named Organize. He sold a “scrap trap” that hangs on the end of kitchen counters. As you cut, you can scrape your scraps into it. He used Amazon and other platforms to grow his business. He estimates that more than 30% of the kitchens in America have this scrap trap. He went from “smaller 7 figures” to “8 figures a month.” Annual revenue exceeded $110 million.

John says that “Whatever a platform can give, they can take it away.” This is what happened to John and his company. One day the Organize team noticed a competing product that showed up higher in Amazon search results than his product. He tried bidding much higher amounts per click but was unable to get his listing above this new product. Amazon also undercut John on price.

After they launched a competing product, Amazon turned off John’s product listing and would not turn it back on. As a result in a very short period of time, John lost a $92 million per year revenue stream from selling products through Amazon. John had to lay off 76 people in one day. He liquidated his inventory and the business went under.

How Should We Work with Platforms

It’s ok to work with other platforms such as Facebook and Amazon. This can help to radically accelerate our growth, especially before we’ve built our own large platforms. However, it is important to realize that our relationships with those platforms will most likely change over time to their benefit and our detriment. So, we must build platforms of our own, such as our own blogs and email lists, where we have direct relationships with our customers and can contact them when we choose. Then, as we use other platforms such as Facebook and Amazon, we are focused on driving the traffic to our platform, so we can own the relationships, and are not dependent on other platforms.

Diversification

John encourages entrepreneurs and business leaders to diversify, to sell through other channels such as affiliate partners, so we are not dependent upon a handful of platforms, such as Amazon. John says about 85% of his revenue was from one source, and when Amazon chose to compete and shut down John’s business, he lost the entire company. John recommends that no more than 40% of a business’s revenue be from one source so they can weather the storm when they lose any one revenue stream. If a revenue stream becomes more than 40% of revenue, John pushes really hard to grow revenue through other sources, even less-profitable sources.

Here are four effective ways to diversify our revenue if one source grows too large:

1. Create new products and services so we aren’t too dependent on one product.

2. Develop new marketing channels so we aren’t too dependent on one channel.

3. Try to drive customers from other platforms to our platforms, such as your email list so you can build direct relationships with customers, and contact them directly when a platform shuts us down. John advises us to focus everything we can on driving every sale through our websites, so people learn that is where they go to buy from our companies.

4. Work with a diverse group of influencers through an affiliate program. Pay the influencers for sales that result from them sending visitors directly to your site. Platforms will probably not be able to take away these influencer relationships.

Liquidating Inventory

John tells a great story about how he learned to liquidate huge amounts of inventory quickly. He grew his liquidation revenue from about $5,000 per day to more than $150,000 per day just by hiring people to dance with signs on the sidewalk. He used this strategy to liquidate $500,000+ in three days.

Due.com Invoicing System

John purchased an invoicing company, then he required hundreds of people to send him invoices to use that system. He logged in one day and the invoicing system had ballooned to 32,000 registered users and almost 200,000 invoices sent in the last 30 days. He was excited by this huge growth, so he purchased the Due.com domain name and added an upgraded subscription for people who wanted to send a larger number of invoices. Due.com now has more than 500,000 active users.

Calendar.com

John has created a new business, Calendar.com, that brings all of our calendars together into one place, allowing us to merge our personal and business calendars, but not allowing the personal events to be seen by business colleagues. Business managers can sign their teams up for Calendar.com, and see how their team members are allocating their time. With Calendar.com we can easily book meetings and publish our calendar online if we want to. Calendar.com already has hundreds of thousands of customers.

Freemium Business Model

John has very successfully used the freemium business model to monetize both Due.com and Calendar.com. John allowed customers to use the core software for free so that the services could get some traction and momentum. Then, once a lot of people were hooked on the software, he started selling upgraded versions of the services.

The freemium model also allows businesses to launch quick (MVPs) minimum viable products that can be rolled out to the market quickly to see if we have something the market really wants. Furthermore, as initial customers used the service, John was able to see what they were actually doing, and once he knew the most valuable features, he used that information to develop the premium subscription service. John also emailed all of the free customers and asked them what they would be willing to pay for. Then, he found the most common responses and turned those into features of the premium subscription service.

Recurring Revenue from SAAS Companies

John transitioned from being an e-commerce entrepreneur to being SAAS (software as a service) entrepreneur. He loves the SAAS model because it provides consistent, recurring revenue. He’s able to avoid huge revenue swing months and able to easily calculate the lifetime value of a customer.

High-Level PR Engagement to Grow SEO

One of John’s secrets to digital marketing success is using high-level PR engagement to grow SEO. John starts this process by writing for high-level publications such as Forbes, CNN, Wall Street Journal, Inc, Mashable, TechCrunch, and New York Times. He is not paid for these articles, but he is allowed to add links from those articles to his sites. Those links from high-quality sites provide tremendous value to John’s ventures and help them to rank much higher in search engine results.

Become the Very Best at Something

John advises that we should pick something and learn everything we can about it, and become #1 in the world at it. So many people think that to succeed in business you have to be the best at a million different things. Instead, he suggests that we should focus on becoming the best at one thing, and then expand over time into other things.

How to Become a Writer for Leading Publications

John gives advice on how to become an effective writer for leading publications.

1. Start writing for your own blog and start to build your following.

2. Then, approach smaller publications to help you build your reputation and following. As your following and reputation grow, you can start writing for larger and larger publications.

3. Then, network to an editor at a leading publication you want to write for. Work on nurturing a relationship with that editor, such as by commenting on and sharing content from that publication.

4. Focus your articles on providing actual value to the readers. Don’t be promotional at all, but it is ok to add links.

5. Be really authentic in what you write.

6. Build a large personal social following and share what you write with that following. It will take time, but be consistent.

Genuinely Help People Without Expecting Anything in Return

John says, “If you can build up trust with someone, they will follow you for life.”

John has a motto in life. He likes to genuinely help others without wanting or needing anything in return. John finds that 1 in every 10 people he helps will help him back. 1 in every 100 people he helps will turn into a financial relationship where John makes money. And, 1 in every 1,000 people he helps turns into a multi-million dollar relationship. So, John tries to genuinely help 3 people every day. The people that John helps are his tribe.

John shares a story of someone he started helping, and that person helped John in return. This relationship of reciprocity continued for years, and now they are making millions of dollars together as business partners.

Connect with John and His Companies

If you want to learn more about John Rampton and his companies:

Due.com — https://due.com/

Calendar.com — https://www.calendar.com/

LinkedIn — https://www.linkedin.com/in/johnrampton/

Twitter — https://twitter.com/johnrampton

Monetization Secrets

Thank you John for sharing your monetization stories and secrets with us. Here are some of the top secrets that stood out to me from today’s episode:

1. We can use a platform strategy to quickly grow our business. However, we need to build a skyscraper on land we own. This means we should focus on driving as many people as we can to our site and email list so we have direct relationships with customers that cannot be shut off by a platform.

2. We should diversify, so no more than 40% of our business is coming from one source.

3. The SAAS (software as a service) business model is very attractive because it can provide consistent, recurring revenue.

4. We can effectively grow our credibility and search engine backlinks by writing for leading publications. However, we should remember that when we do this we are building on land that someone else owns. For example, John put a lot of time into writing for Inc. One day he received a call that they were done working with him, and all of the effort he invested there was gone. So, we have to focus on bringing people back to something we own, such as an email list when we are doing a platform strategy.

5. We should genuinely help people with no expectation of anything in return. However, because of the law of reciprocity, many of those people will want to help us as well.

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Challenge

If we desire monetization we have never before achieved, we must leverage strategies we have never before implemented. I challenge each of us to pick one thing that resonated with us from today’s episode and schedule a time this week to implement it to help achieve our monetization goals.

Share Your Story

What ideas do you have about how we can leverage platforms to build a skyscraper on land we own? Please join our private Monetization Nation Facebook group and share your insights with other digital monetizers.