Platform Dependency Risks: What Indie Hackers Must Know

Imagine you’ve built an indie SaaS tool that relies on Twitter’s API for fetching real-time data or engaging with users. For years, this integration has been the backbone of your product, helping you automate tasks, analyze tweets, or generate valuable insights for your customers. But in 2023, Twitter suddenly increased its API pricing, shifting from a free or affordable model to new tiers that charge as much as $100 a month for basic access, with enterprise plans costing as high as $42,000 a month. Overnight, your tool becomes financially unsustainable, and you’re left scrambling for alternatives or considering shutting it down.

This scenario isn’t hypothetical many indie developers, bot creators, and small businesses faced this exact situation when Twitter dramatically increased its API pricing. This is a classic example of platform risk, where the reliance on third-party platforms exposes your business to abrupt and potentially crippling changes. For indiehackers and solopreneurs, understanding and managing platform risk is crucial to ensuring long-term business survival.

How Platform Policies Can Undermine Small Business

Many businesses have faced consequences due to sudden policy changes from platforms they relied on. Here are a few notable examples of how these shifts have impacted companies and forced tough decisions.

• Reddit’s API Pricing Change - The Apollo App Case: Reddit’s 2023 API price increase brought massive costs to Apollo, a popular third-party app. Developer Christian Selig shared that the new rate — $12,000 per 50 million requests — would cost Apollo roughly $1.7 million monthly. Even if limited to paid users, the API expenses far outstrip revenues, forcing Apollo to shut down. Selig voiced disappointment over Reddit’s pricing, which he felt contradicted prior promises of fair rates. You can read about it here.

• PostMyParty and Meta’s API Closure: PostMyParty, a platform for scheduling online events, was heavily impacted by Meta’s shutdown of third-party API access. Founder Daniel Burge shared that the closure jeopardizes seven years of work and over 10,000 customers, many reliant on Facebook-based events. This wasn’t Meta’s first abrupt shutdown; years prior, it ended its Events API without notice, nearly derailing PostMyParty. Such changes highlight the risks for small businesses reliant on platforms like Meta. You can read more about it here.

• KTool’s Challenges with Twitter API Pricing: KTool, a service that formats Twitter threads as Kindle eBooks, faced platform risk after Twitter’s new API pricing made it costly to support Twitter threads. The pricing now consumes about 1/7 of KTool’s monthly revenue to handle around 80 threads. In response, KTool’s founder is considering either dropping Twitter support or making it a premium feature with a higher price. See more details here.

• Vine Sudden Closure: Vine was a highly popular video-sharing app that allowed users to create short, six-second videos. It became a cultural phenomenon in the early 2010s. But in 2016, Twitter, which owned Vine, decided to shut the platform down. Vine creators who relied solely on this platform were left stranded, losing their audience and income streams overnight. This highlights how a business dependent on a single platform is highly vulnerable to platform decisions. You can read more about what led to its sudden decline here.

• Zynga Facebook Dependence: Zynga, the game developer behind hits like FarmVille, experienced significant setbacks when Facebook changed its algorithm in 2012. Zynga had grown massively by leveraging Facebook’s viral sharing features, but the changes in Facebook’s policies dramatically limited Zynga’s ability to reach users. As a result, Zynga’s growth stalled, and they had to find other distribution channels. You can read more about Lessons to be learned from Zynga’s risk factors here.

• CartHook Shopify Restrictions: CartHook, founded by Jordan Gul, was a successful Shopify app that enabled merchants to offer post-purchase upsells. However, Shopify implemented a major platform change that restricted CartHook’s functionality, essentially blocking the app from operating as intended. Despite CartHook’s success, it had to pivot away from its reliance on Shopify and rebuild its business outside of Shopify’s ecosystem. This example highlights how platform restrictions can stall or even cripple the growth of SaaS businesses. This story was taken from this video on platform risks by Rob Walling.

Surviving Platform Shifts: How Companies Adapted

• Mailchimp: Mailchimp is an excellent example of a company that successfully mitigated platform risks. In its early days, Mailchimp relied heavily on Facebook and Twitter integrations for its marketing automation services. However, as social media platforms started restricting third-party access and raised ad prices, Mailchimp shifted focus to multi-channel marketing and built features to engage users through email, postcards, and Google ads. By owning its user relationships and diversifying its marketing channels, Mailchimp significantly reduced its platform dependency.

• Spotify: Spotify, a popular music streaming service, has faced ongoing challenges with Apple’s App Store, which takes a 30% cut of subscriptions made via iOS. To counter this, Spotify filed an antitrust lawsuit against Apple and redirected users to subscribe via their website instead of through the app. This allowed Spotify to sidestep Apple’s fee while retaining control over customer payments.

• Basecamp: Basecamp, a project management tool, realized that depending on Google and Facebook ads for customer acquisition was unsustainable as ad costs rose. They shifted their marketing strategy to focus on word-of-mouth referrals, content marketing, and even books like Rework that promote their philosophy. By focusing on organic growth, Basecamp minimized the risk of platform changes impacting their business.

• Epic Games (Fortnite): Epic Games, the creators of Fortnite, famously clashed with Apple and Google over app store fees. Both platforms take a 30% cut of in-app purchases, which led Epic to launch their own game store and challenge Apple in court. By building their own store, Epic reduced their dependence on these third-party platforms. You can read more about it here.

Understanding Types of Platform Risks

1. Dependency on Distribution Channels: Many indie businesses rely on app stores or platforms like the Google Play Store or Shopify to reach their customers. A change in policies or fees, or even the platform’s decision to limit access, can significantly impact a business. For example, startups in India have accused Google of charging excessive fees on the Play Store, impacting their revenue models and making it harder for small players to compete .

2. Algorithm Changes: Platforms like Facebook, YouTube, and Google constantly tweak their algorithms, which can drastically affect visibility and engagement. Businesses relying on organic reach or paid advertising on these platforms can see their customer acquisition channels dry up almost overnight if the platform decides to deprioritize their content.

3. Infrastructure Platform Risk: This occurs when your product is heavily built on another platform or API with no easy replacement. For example, if you’ve built a tool that relies heavily on Twitter’s API or Shopify’s checkout system, you’re at the mercy of these platforms. A sudden change in their policies can leave your business in jeopardy.

4. App Store Platform Risk: If your primary customer acquisition channel is a single platform, like the Apple App Store, Shopify, or Amazon, you’re exposed to platform risk. These platforms control visibility, and small changes in policy can dramatically impact your reach and revenue.

5. Platform Fees: Platforms like Google Play and the Apple App Store charge significant fees, often around 30% on in-app purchases. A rise in these fees, as many app developers have accused Google of in recent times , can severely af businesses relying on app sales for revenue.

6. Deplatforming or Account Bans: Some platforms may remove or ban accounts for policy violations, often with little recourse. If your business depends on a social media presence or app store listing, deplatforming can lead to a sudden and devastating loss of revenue.

How Indie Hackers and Solopreneurs Can Mitigate Platform Risks

As indie hackers and solopreneurs, we need to be proactive about reducing platform dependency. Here are some strategies to mitigate platform risk:

1. Diversify Your Channels: Don’t rely on a single platform for marketing, distribution, or revenue. If you’re dependent on Facebook ads, consider diversifying to Google Ads, SEO, or content marketing. Likewise, if your app is solely available on the Apple App Store, explore Android marketplaces or web-based distribution to reduce reliance on one channel.

2. Build Direct Customer Relationships: One of the best ways to mitigate platform risk is by owning your customer relationships. Collecting emails through newsletters or building community engagement via direct outreach helps you keep in touch with your users, even if a platform restricts your access. You’re not entirely dependent on an algorithm or app store for traffic.

3. Explore Self-Hosted or Open-Source Solutions: Consider self-hosting parts of your product or relying on open-source platforms when possible. This is especially important for infrastructure platform risks. For example, if you’re using a third-party payment processor, having a backup plan like Stripe or PayPal can help in case one service changes its terms unexpectedly.

4. Create Backup and Exit Plans: Always have a contingency plan. For apps dependent on a specific API, make sure to research alternative services. If your business relies on app stores, ensure you have other channels ready for distribution.

5. Negotiate with Platforms: Establishing good relationships with platform representatives can go a long way. Sometimes, platform restrictions or pricing can be negotiable. CartHook, for instance, tried to negotiate with Shopify to keep its service operational but ultimately had to move on to other platforms. Persistence and communication are key.

6. Focus on Resilience: Some businesses are built to withstand platform risks better than others. By focusing on building a strong, independent brand, you reduce the likelihood of being negatively impacted by changes outside your control. Additionally, diversifying your revenue streams can make your business less vulnerable.

7. Diversify Your Revenue Streams: Never rely on a single platform for income. Explore multiple revenue sources, whether it’s through selling on different marketplaces, running affiliate programs, or building a strong email list.

8. Build a Community: Engage your users directly through email lists, forums, or social media groups that you control. This helps you maintain access to your customers even if a platform changes its terms or algorithm.

9. Monitor Platform Changes Closely: Stay informed about policy or algorithm updates on platforms you depend on. Subscribing to developer updates or being part of relevant communities can help you react quickly to changes.

10. Have Contingency Plans: Always prepare for the worst by having alternatives ready - whether it’s moving to another API provider, migrating to a different platform, or diversifying your distribution channels.

Conclusion

Platform risk is an unavoidable reality for indie hackers and solopreneurs, but it can be managed effectively. By understanding the different types of platform risks, staying informed, diversifying revenue streams, and building direct relationships with customers, founders can reduce dependence on any single platform and build a more resilient business. Learning from the experiences outlined above equips you to better prepare for the challenges platform changes might bring.