I want to sell my site and community.

https://news.ycombinator.com/item?id=2164902

by throwaway54321 • 15 years ago

9 10 15 years ago

news.ycombinator.com

I have a website that's been around since the beginning of 2010, and it's grown to around 1M impressions per month (300k uniques). From adsense alone it generates around $1200 - $1500 per month. We have a iphone and android apps. We're starting to see the beginnings of a community -- users identifying one another, making conversation on the site, asking questions, etc.

For personal reasons, I'm interested in selling the site. My question: what should my lower bound asking price be? I'm sure that with full-time work, the site could generate MUCH more revenue than it currently does. I've read that 2x / 3x annual revenue is the norm -- we haven't even been around for a year, so that's a little difficult to calculate.

Is 100k unreasonable? 50k? 500k? Also, how do I go about beginning this deal? Will someone literally write me a check for the amount, or deposit the money and I hand them over the credentials for the server and the source code?

Any advice or anecdotes would be appreciated.

adelevie• 15 years ago

What assumptions are you relying on when you assert that more work on the site = more revenue?

throwaway543213• 15 years ago

I'm basing that assumption on the fact that, in the past, whenever I spend a week or two weeks or a month completely focused on the site, I see a significant (2x or 3x) increase in revenue.

Sometimes it's because I find a way to get more traffic, and sometimes it's because I can find an ultra-targeted advertiser to pay for an extended period of time. The problem is that I have zero interest in the subject material and would prefer to rid myself of it completely. But it's definitely got significant value and I want to make sure I don't just give it away for nothing.

patio11• 15 years ago

Assuming you're selling via something like flippa:

You've been around less than a year? Figure on 1x proven revenue. If your AdSense earnings to date are $8,000, then the offer would be about $8,000. If you're lucky, someone might annualize it ($8k in 8 months -> $12k).

Why so little?

1) Your site is new. Shiny new things are risky: how much of the ongoing traffic is trendseekers who will be gone in two months? What is the odds of Google deciding to smack you down in the next 6 months? etc

2) You are currently valuing your time at zero. The purchaser of the site will likely own many websites and operate them as a business. He does not value his time at zero. People in our industry are expensive: it is highly likely that, if you take the imputed value of your salary out of those AdSense checks, the site is actually losing money every month. (You may, for whatever reason, undervalue your own fair market value. Your purchaser is likely to be savvier about it than you. By the way, if you can routinely get websites to 300k uniques per month, here's my most important piece of advice: $1.5k is not a large amount of money for you anymore.)

3) You have what you believe to be a reasonable expectation of continued growth. The purchaser of the website will not bank on continued growth: if it happens, it is his upside, but as he maintains a portfolio he will probably be unwilling to make this site his #1 priority. He also knows that many sure things can catch a bullet from Google two months down the line, quite possibly for something he has no control over.

4) Everybody says they're selling the site for personal reasons and everybody in the market assumes that this is code for "I believe that this site has peaked and want to maximize the amount I get for it prior to it entering into a period of decline or getting burned."

Now, in terms of mechanisms, most serious deals end up with the site getting placed into escrow -- you convey the domain name and assets (logins, whatever) to a trusted third party, purchaser pays trusted third party, trusted third party effects simultaneous transfer. My low-end valuation for you would put you close to the point where some people might do a deal without escrow.

Factors which could make a difference:

1) Finding an individual buyer who saw strategic value in the website. Like, hypothetically if you were Crossword Puzzle Creator and I decided to buy you, you're more valuable to me than to Random Affiliate Marketer #302 because I have obvious cross-promotion opportunities with my existing business.

2) Things which make your traffic or revenue stickier than it would otherwise be. (You'd get much more money if you had $1,500 a month in rebill income from subscribers or from people buying upgrades in an online RPG, etc.)

3) Factors which tend to make your traffic more valuable than the value you are extracting from it currently. (If you were generally getting people through organic Google searches with high commercial intent, for example, substandard monetization at present might not be a barrier to a dedicated purchaser who thought to immediately rip out your monetization and then do it properly.)

4) You demonstrate higher than average salesmanship ability in identifying and then selling a particular prospect on the value of this site, as opposed to going to a marketplace like flippa.

throwaway543213• 15 years ago

Thanks for such an in-depth response.

Pertaining to #4 -- it really is for personal reasons. I'm actually quite reluctant to sell the site, as it routinely generates money for me and requires very little work. I do not believe that some sort of peak has been reached. I merely want to work on other things and not have it constantly on the backburner. The subject material isn't universally acceptable as "safe" content, either (it's not porn, though).

Yes, the site is relatively new. My traffic, though, doesn't look like a typical viral site -- it's very slow growth, very organic, and I have zero reason to believe it's about to hit a cliff of any kind.

Also, my adsense earning are as stated, but I am able to get some companies to advertise directly on the site for about that amount per month alone. So the revenue is actually twice that amount. Unfortunately, this isn't a dependable recurring source of income, due to the subject matter mostly.

Is flippa a good place to try to sell a site like this? I've been contemplating doing a threewords.me - style sale, but I want to limit how connected my identity is with the site. It's an interesting situation, to say the least.

Again, thanks for the advice. I didn't expect anyone to answer at 1am :-)

FreebytesSector• 15 years ago

To add to this, you would also be required to sign a non-compete agreement most likely that would prevent you from duplicating the site for some time period. The brand is something that you are not including in your price. Branding has not been seen as being very important, but even in the span of a year, there is a trust that can form in consumer relationships on the web.

Flippa_com• 15 years ago

The question of how to value a website is always a tricky one. patio11 has really nailed it - especially in terms of how important demonstrated revenue is to your final sale price.

A few additional considerations based on our surveys of Flippa buyers: the niche that your community is about influences valuation on par with the amount of traffic you have. This is closely followed by the level of trust you establish (readily influenced by patio11's point on salesmanship).

Given the number of qualified buyers we have on Flippa, I'd be inclined to say that our auction process may be your best mechanism for establishing ultimate price for your property.

Either way, best of luck with your sale. Do not hesitate to contact us if there is anything we can do to assist - more than happy to work with you on optimizing your auction if you do go down the Flippa path.

throwaway543213• 15 years ago

Thanks. I wish I could reveal my site -- many folks on HN are probably familiar with it, but I don't want to let on that I'm looking to sell.

Once the cat's out of the bag, it's hard to go back, and the community may not like the fact that I'm obviously in it for the money.

petervandijck• 15 years ago

I sold a site for $30K, they transfered me the money, I transfered them the domain etc. (after signing a short contract). There was some basic level of trust involved.

As for price, you'll probably get lowball offers and are better off keeping it. That's been my experience with another site. I only got offers in the $10-20K range, and for that, it was better for me to just keep it running.

Unless you find people who run sites with the same subject matter and offer it to them. They should be interested and may offer you a better price.

Feel free to email me personally to discuss offlist :)

vijaymv_in• 15 years ago

I am interested in looking at the site for a reasonable price. Please reach out to me @ vijay@sohosquaresolutions.com

jeffepp• 15 years ago

Depending on the space it is in, I know someone who would be interested. My email is in my profile.

I want to sell my site and community.

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