3 ms·

3 years in a very unpredictable field is a very long time. Anyone can come up with exactly the same product in much less time than before.

cpayne 11y ago
Not sure why this comment got downvoted without a reply. Anyway, I remember hearing the same argument when Youtube exploded. It's one thing to have a product (Bingo Cards, Youtube or whatever) but distribution and an existing client base is another.
bigiain 11y ago
That's true - what is gonna be much harder for any new competitor is to match BCC's SEO. Nine years worth of intelligent, diversified, and Google friendly reputation building is not going to be duplicated quickly. It wouldn't be an _impossible_ task to outcompete BCC I suspect, especially if the new owner just lets it coast and wind down instead of staying on top of the game (which Patrick readily admits he hasn't done for some time), but I suspect you'd probably need a PPC budget of around the same magnitude that the new owner just paid to kick-start a competitor - even if you already had production-ready code and a suitable hosting platform ready-to-go. I think you're right - in that assuming "it'll be paid off in three years" is a naive view of the way SaaS businesses age - but I also suspect there are already several "exactly the same product"s out there already, none of which have got the traction BCC has, and that the value here is not in a bunch of code that makes PDFs from lists, but in the business backend and the historical web presence and SEO.
- tptacek 11y ago
  My understand of this is roughly: * There's a fairly liquid market for sites of any sort that have a demonstrated ability to generate revenue. * The valuation of those sites goes up when revenue is recurring. * The valuation goes up with history/track record. * That market is not especially oriented towards teachers. Given the universe of different sites you could build that would charge a subscription fee to serve some niche of customers, it would be pretty weird to compete for the Bingo Card space. (I was surprised at how liquid the market for this stuff was.)
  - bigiain 11y ago
    "it would be pretty weird to compete for the Bingo Card space" I guess the only counter argument is that there's now a "product market validation" that says a Bingo Card site is "worth" $60k to someone. If I had nothing else to do and - for example - a Wordpress plugin that'd let me create one of these in a weekend, it'd be a not insane idea...
    - larrys 11y ago
      Where do you get the 60k from? The price listed (57k) was the asking price afaik we don't know what it actually sold for.
      - bigiain 11y ago
        It's just that $57k rounded to one significant digit. Not an accurate assessment, but at least a vaguely supportable "here's why I'm going this side project!" claim...
  - edanm 11y ago
    "(I was surprised at how liquid the market for this stuff was.)" I'm fairly surprised by this too. Why do you think that market is so liquid? I will note that in Software, Entrepreneurship == Innovation in many people's minds (i.e. a startup inventing something new). In non-software entrepreneurship, buying an existing business and running it is considered a very common path to becoming a business owner. As is starting a copy of other existing businesses (e.g. another restaurant), or even flat-out extending an existing business (e.g. the amazingly successful business innovation of "franchising).
    - tptacek 11y ago
      I don't know. I personally feel like it shouldn't be as liquid as it is; it seems like an extraordinarily risky way to earn a return that is, after expenses including time, not that much better than what you might get aggressively investing in the market.

cpayne 11y ago

Not sure why this comment got downvoted without a reply. Anyway, I remember hearing the same argument when Youtube exploded. It's one thing to have a product (Bingo Cards, Youtube or whatever) but distribution and an existing client base is another.

bigiain 11y ago

That's true - what is gonna be much harder for any new competitor is to match BCC's SEO. Nine years worth of intelligent, diversified, and Google friendly reputation building is not going to be duplicated quickly. It wouldn't be an _impossible_ task to outcompete BCC I suspect, especially if the new owner just lets it coast and wind down instead of staying on top of the game (which Patrick readily admits he hasn't done for some time), but I suspect you'd probably need a PPC budget of around the same magnitude that the new owner just paid to kick-start a competitor - even if you already had production-ready code and a suitable hosting platform ready-to-go. I think you're right - in that assuming "it'll be paid off in three years" is a naive view of the way SaaS businesses age - but I also suspect there are already several "exactly the same product"s out there already, none of which have got the traction BCC has, and that the value here is not in a bunch of code that makes PDFs from lists, but in the business backend and the historical web presence and SEO.

tptacek 11y ago
My understand of this is roughly: * There's a fairly liquid market for sites of any sort that have a demonstrated ability to generate revenue. * The valuation of those sites goes up when revenue is recurring. * The valuation goes up with history/track record. * That market is not especially oriented towards teachers. Given the universe of different sites you could build that would charge a subscription fee to serve some niche of customers, it would be pretty weird to compete for the Bingo Card space. (I was surprised at how liquid the market for this stuff was.)
- bigiain 11y ago
  "it would be pretty weird to compete for the Bingo Card space" I guess the only counter argument is that there's now a "product market validation" that says a Bingo Card site is "worth" $60k to someone. If I had nothing else to do and - for example - a Wordpress plugin that'd let me create one of these in a weekend, it'd be a not insane idea...
  - larrys 11y ago
    Where do you get the 60k from? The price listed (57k) was the asking price afaik we don't know what it actually sold for.
    - bigiain 11y ago
      It's just that $57k rounded to one significant digit. Not an accurate assessment, but at least a vaguely supportable "here's why I'm going this side project!" claim...
- edanm 11y ago
  "(I was surprised at how liquid the market for this stuff was.)" I'm fairly surprised by this too. Why do you think that market is so liquid? I will note that in Software, Entrepreneurship == Innovation in many people's minds (i.e. a startup inventing something new). In non-software entrepreneurship, buying an existing business and running it is considered a very common path to becoming a business owner. As is starting a copy of other existing businesses (e.g. another restaurant), or even flat-out extending an existing business (e.g. the amazingly successful business innovation of "franchising).
  - tptacek 11y ago
    I don't know. I personally feel like it shouldn't be as liquid as it is; it seems like an extraordinarily risky way to earn a return that is, after expenses including time, not that much better than what you might get aggressively investing in the market.