Flippa is now doing "due diligence" for you

[Clinton]

Flippa latest blog post: New Feature - Website Due Diligence

You’ll notice a new link, View the Full Due Diligence Data For This Listing, located under the main stats section on the auction page. Click on it to reveal the due diligence page

My reply to their post - which Flippa always holds for manual approval in case I've said something they don't like - is below:

Nice move, Luke. More information is always a plus.

I'd be careful about calling it "Full" due diligence anything. You don't want to give the wrong impression. Data is but a small part of the due diligence. 99% of DD is in interpretation of the data, coming up with the right questions, extracting what the seller is trying to hide, evaluating risks, making informed projections on the site's future performance etc. More than all of that it's in the analysing of the accounts, examining proof of earnings and uncovering the numerous fiddles used by Flippa sellers to drive up apparent profit and hide risk.

I don't take on any more due diligence work but having done DD on millions of dollars worth of site purchases I can categorically say that having the right data makes for a good start.

"And finally, the feature I’m most excited about, SEMrush data. SEMrush provides an estimate of the organic traffic being generated by the site as well as an indication of what it would cost to purchase that traffic based on AdWords cost per click data."
That's a good example of junk information. Associating free traffic with its likely cost if it were PPC traffic is a standard con by sellers that you've been supporting and encouraging. I've explained the flaws and either you don't understand them or you are intent on promoting the misinformation to artificially drive up prices.

Your thoughts?

[hooperman]

You are right to pick up on the fact that this isn't "full due diligence" anything, but then embellishment and hype are par for the course with Flippa. The danger is that the inexperienced are going to look at this "full due diligence" information and believe that that really is all they have to look at. If they do, there's a good chance they'll get scammed at some point.

You make a good point about DD not being a data dump but being analysis and interpretation. The DD info presented tells us that a home page is PR5, but the due diligence part is checking that the PR isn't faked.

It'll be interesting to see whether your post gets released in a timely fashion, Clinton. I won't hold my breath though.

[benitez17]

Flippa latest blog post: New Feature - Website Due Diligence



My reply to their post - which Flippa always holds for manual approval in case I've said something they don't like - is below:

Your thoughts?

I agree completely. Some of the information is helpful, but just because data is available doesn't mean it is useful. I wouldn't call it due diligence either.

I think that they are trying to make it harder for sellers to scam people, which is a good motive, but they aren't doing buyers any favors by providing junk valuation tools like the PPC cost estimates. They might as well have gone to websiteoutlook.com and included its ridiculously inflated valuation also.

[christopheravell]

This is just more of the same from Flippa. I really cannot be convinced that they are not just trying to (for some odd reason) appease us "haters". This really causes further problems for sellers and further confuses buyers. Rather than all these stats a simple reminder to buyers would work better -- "Remember, if a listing sounds too good to be true it is. Nobody is going to sell a site that makes $1500/mth on autopilot for $5000."... and then one for those $200 sites "Remember, $200 is not going to buy you a ready to run profit machine. Most sites less than $5000 are just going to be starting points which will require much work to bring them into major profits." -- when they go to bid/buy they check those boxes.

[petertdavis]

I don't think anyone should jump on Flippa for doing this. I think it's useful information. If there are people out there buying websites who don't know how to use the informations correctly, I blame that more on the individual than on Flippa. I don't see this making a big difference in how I buy sites, but I do appreciate them putting together this data for us.

[petertdavis]

I see that as usual, Clinton has made a very good point. In fact, I'd agree that this data shouldn't be called "due diligence" at all, but rather something like "detailed site data" because it's not exactly what I'd call doing my due diligence. Though, verification of some of those numbers they have there might be part of what I do for due diligence, not blindly accepting them as valid.

[benitez17]

My main issue is with them endorsing the method of valuing traffic based on the PPC costs for a keyword. Other than that, more data isn't really a bad thing, even though I think most of it of no importantance.

I think they call it due dilligence because these are all stats that can be verified by Flippa and the seller can't mess with them or provide false data. Unfortunately, it also implies that those stats are all that you need, which is obviously not the case.

[Clinton]

As 3Six has pointed out on the blog (yeah, they publish even his comments though they still haven't approved mine ) and Peter has said: This is not due diligence, this is stats.

Flippa is intentionally blurring the distinction between stats and DD. That it helps to lull buyers into a false sense of security isn't their problem and, in fact, may be their intention.

As with valuing traffic on PPC costs.

It's about driving up prices.

[petertdavis]

Well, I wonder, if Flippa is labeling this "Due Diligence" and someone buys a site under the impression that Flippa has given its stamp of approval on those numbers, and the numbers turn out to be false, is Flippa liable for damages? Is Flippa really verifying that these data are in fact valid? Is that why they're calling it DD? I mean, if they're actually doing some verification on the data then maybe it is a good service. I mean, we're all just assuming they're not doing the due diligence on the data.

[benitez17]

Well, I wonder, if Flippa is labeling this "Due Diligence" and someone buys a site under the impression that Flippa has given its stamp of approval on those numbers, and the numbers turn out to be false, is Flippa liable for damages?

Good question given that they have said no to all requests for anything related to DD in the past because it could open them up to legal action. I assume their reply would be that the numbers are generated by a third party and they are just reporting them, but I wonder if the (incorrect) label for the information provided could pose a problem.

Is Flippa really verifying that these data are in fact valid? Is that why they're calling it DD? I mean, if they're actually doing some verification on the data then maybe it is a good service. I mean, we're all just assuming they're not doing the due diligence on the data.

All they are doing is collecting information from various sources and passing it along, so I don't know what verification is required. I think they are calling it DD because people have been asking for them to verify the information provided by sellers to help with DD, and since they can't do that automatically but can collect this information without any manual work, they labeled the information they are providing as DD to appease the people asking for it.