3 ms·

It really is that low. BCC might get a slight premium because I have better options for buyers than Flippa, it has an exceptionally long history, and there's s

by patio11 12y ago

It really is that low. BCC might get a slight premium because I have better options for buyers than Flippa, it has an exceptionally long history, and there's some value from association with me, but websites are not valued like businesses or startups. There exist plenty of excellent reasons why this is true: extreme risk from sites which are overly dependent on one or two traffic sources, implicit cost of operation often not being counted as a cost by the owner (BCC runs itself... It only requires the very occasional attention of a Rails-competent Ubuntu sysadmin. That's "free" to me but not free to the new buyer, and that sort of stuff adds up quickly when compared to five figure revenues.), transaction costs (time, training new owner or staff, etc) having to get recouped, a risk premium because it is a market for lemons and buyers feel that sellers may sell because of material no disclosed information like "I recently pissed off Google and the site may vanish from the Internet", etc. Ultimately of course things are worth what a buyer will pay you for them, but market is about 1X for "typical" sites at the moment.

mtrimpe 12y ago
> Ultimately of course things are worth what a buyer will pay you for them An example of that would be finding someone (or more likely them finding you) who needs to build your product and can choose between starting an $XX.000 development project delivering in X months or your product which is ready right now.
- patio11 12y ago
  Yep. A telecom did that for Appointment Reminder within a week of launch day. They wanted to do what Square recently did -- acquire a drop-in offering to cross-sell to SMBs. Anecdata: they opened with a $100k offer. I said that I had built it to run rather than to flip, but that everyone has a price, and that I'd be unable to turn down a million. No deal happened, obviously.
  - pbhjpbhj 12y ago
    Just ignore if you're not happy answering, but do you regret asking for that specific sum or are you content that it was the right amount to go for?
    - patio11 12y ago
      I feel like I'm hijacking someone else's thread now, so ask me some other time.
    - clarky07 12y ago
      As far as I know patrick hasn't released sales numbers, but I'm confident that he's got to at least be glad he didn't take 100k for it.
lifeformed 12y ago
How would you value a site that has no current revenue but many users? Would it just be something like PAGEVIEWS * POTENTIAL_CPM * RISK_AND_DIFFICULTY_FACTOR? I'm sure it largely depends on the type of site, but I was wondering if there's any general concepts to keep in mind.
- vladd 12y ago
  It's not that he doesn't have revenue, I doubt it even has persistent users. Users are generally 30-day active (trailing average). Here we're talking about a spike in traffic that the project got after some public exposure on news sites, I doubt we could predict at this point if everything will drop into the Trough of sorrow [1] or stick. Personally I tried the game and it seems to be at the first iteration in terms of usability for the masses, so I assume there will be little (if any) retention and more usability work to be done. [1] http://andrewchen.co/2012/09/10/after-the-techcrunch-bump-life-in-the-trough-of-sorrow/ http://andrewchen.co/2012/09/10/after-the-techcrunch-bump-li... Some improvement feedback: (1) develop more game-ability before explaining concepts on 5+ pages of text. Try to have a full-blown gaming engine with as few clicks as possible, and add concepts on top of it when the user levels-up. (2) watch your page loading speed. If it's not as fast as browsing a magazine, it's too slow for a game. (3) work to simplify the interface. Consider showing part of the vertical tabs only when the user levels-up. This should go hand-in-hand with (1). (4) try to move at least partially some content before the login screen. Give people a reason to sign-up. A perfect example to guide progress on those items: http://adarkroom.doublespeakgames.com/ http://adarkroom.doublespeakgames.com/
- prostoalex 12y ago
  Highly dependent on why it has no current revenue. Is it easy to introduce ads? Would it be AdSense-friendly? If so, what kind of ads would it attract? The best way to come up with comparables is browse the "for sale" section of Flippa https://flippa.com/websites/established https://flippa.com/websites/established
rambazambar 12y ago
Since I studied finance and investment management and also passed CFA level 1, I have to tell you: How much a company is worth depends on your investment horizon, which might be more than 1 year or you use more than 1 year's earnings forecast. But mostly you value dividends (discounted of course) and expected growth in price. This holds true for stocks of course. In this (I am talking about the OP) case you would probably estimate how risky the investment is and say if you would invest similarly risky in the stock market, you would want 10% per year. You estimate annual earnings say $500 and use your return to estimate the company's worth: $500/.1=$5000.
- patio11 12y ago
  Congratulations on successfully completing your studies. A question for you: let us hypothetically assume that you have identified a particular basket of stocks worth $5,000 using this approach, applying your personal estimate of their risk and your investment goals, and purchased them. Three weeks from now you receive a call from the CTO of one company you invested in saying that a vulnerability in the hypervisor at your VPS provider allowed a compromised co-tenant to execute commands in your instance as root. What is your plan of action for preserving the value of your investment, and does this retroactively change your approach to valuing the stocks you have purchased? This is a silly question, of course, because if one invests in publicly traded securities one does not have to operate their businesses for them. That is one of many reasons why owner-operators of businesses do not value them as if they were equivalent to investments in publicly traded companies.
  - 20100thibault 12y ago
    I think this is good case of Black Swan (it would be highly improbable the same problem hit all the companies in a diversified portfolio but could happen a la hearthbleed). There's an extremely insightful book written on the subject (the black swan by Mr Taleb). Wich I do recommend. Discounted cashflow = bullshit used to rationalize the sale price ( it can have some use in super long term predictable business like real estate with 10 year lease and well diversified tenants) Hope this was helpfull
  - 12y ago

by patio11 12y ago

mtrimpe 12y ago

> Ultimately of course things are worth what a buyer will pay you for them An example of that would be finding someone (or more likely them finding you) who needs to build your product and can choose between starting an $XX.000 development project delivering in X months or your product which is ready right now.

patio11 12y ago
Yep. A telecom did that for Appointment Reminder within a week of launch day. They wanted to do what Square recently did -- acquire a drop-in offering to cross-sell to SMBs. Anecdata: they opened with a $100k offer. I said that I had built it to run rather than to flip, but that everyone has a price, and that I'd be unable to turn down a million. No deal happened, obviously.
- pbhjpbhj 12y ago
  Just ignore if you're not happy answering, but do you regret asking for that specific sum or are you content that it was the right amount to go for?
  - patio11 12y ago
    I feel like I'm hijacking someone else's thread now, so ask me some other time.
  - clarky07 12y ago
    As far as I know patrick hasn't released sales numbers, but I'm confident that he's got to at least be glad he didn't take 100k for it.

lifeformed 12y ago

How would you value a site that has no current revenue but many users? Would it just be something like PAGEVIEWS * POTENTIAL_CPM * RISK_AND_DIFFICULTY_FACTOR? I'm sure it largely depends on the type of site, but I was wondering if there's any general concepts to keep in mind.

vladd 12y ago
It's not that he doesn't have revenue, I doubt it even has persistent users. Users are generally 30-day active (trailing average). Here we're talking about a spike in traffic that the project got after some public exposure on news sites, I doubt we could predict at this point if everything will drop into the Trough of sorrow [1] or stick. Personally I tried the game and it seems to be at the first iteration in terms of usability for the masses, so I assume there will be little (if any) retention and more usability work to be done. [1] http://andrewchen.co/2012/09/10/after-the-techcrunch-bump-life-in-the-trough-of-sorrow/ http://andrewchen.co/2012/09/10/after-the-techcrunch-bump-li... Some improvement feedback: (1) develop more game-ability before explaining concepts on 5+ pages of text. Try to have a full-blown gaming engine with as few clicks as possible, and add concepts on top of it when the user levels-up. (2) watch your page loading speed. If it's not as fast as browsing a magazine, it's too slow for a game. (3) work to simplify the interface. Consider showing part of the vertical tabs only when the user levels-up. This should go hand-in-hand with (1). (4) try to move at least partially some content before the login screen. Give people a reason to sign-up. A perfect example to guide progress on those items: http://adarkroom.doublespeakgames.com/ http://adarkroom.doublespeakgames.com/
prostoalex 12y ago
Highly dependent on why it has no current revenue. Is it easy to introduce ads? Would it be AdSense-friendly? If so, what kind of ads would it attract? The best way to come up with comparables is browse the "for sale" section of Flippa https://flippa.com/websites/established https://flippa.com/websites/established

rambazambar 12y ago

Since I studied finance and investment management and also passed CFA level 1, I have to tell you: How much a company is worth depends on your investment horizon, which might be more than 1 year or you use more than 1 year's earnings forecast. But mostly you value dividends (discounted of course) and expected growth in price. This holds true for stocks of course. In this (I am talking about the OP) case you would probably estimate how risky the investment is and say if you would invest similarly risky in the stock market, you would want 10% per year. You estimate annual earnings say $500 and use your return to estimate the company's worth: $500/.1=$5000.

patio11 12y ago
Congratulations on successfully completing your studies. A question for you: let us hypothetically assume that you have identified a particular basket of stocks worth $5,000 using this approach, applying your personal estimate of their risk and your investment goals, and purchased them. Three weeks from now you receive a call from the CTO of one company you invested in saying that a vulnerability in the hypervisor at your VPS provider allowed a compromised co-tenant to execute commands in your instance as root. What is your plan of action for preserving the value of your investment, and does this retroactively change your approach to valuing the stocks you have purchased? This is a silly question, of course, because if one invests in publicly traded securities one does not have to operate their businesses for them. That is one of many reasons why owner-operators of businesses do not value them as if they were equivalent to investments in publicly traded companies.
- 20100thibault 12y ago
  I think this is good case of Black Swan (it would be highly improbable the same problem hit all the companies in a diversified portfolio but could happen a la hearthbleed). There's an extremely insightful book written on the subject (the black swan by Mr Taleb). Wich I do recommend. Discounted cashflow = bullshit used to rationalize the sale price ( it can have some use in super long term predictable business like real estate with 10 year lease and well diversified tenants) Hope this was helpfull
- 12y ago