Opinions

[Michelle]

Hi all,
I had an interest in a particular site for sale which I was out bid on by a BIN buyer. The site sold for only $500 so this might be an uninteresting thread for many of the big $ investors here but I would appreciate your thoughts on a couple of things that crossed my mind during the auction.

You can view the listing at Flippa here. You will see my multitude of questions to the seller in the comments area and I asked her more via PM later on. I had no trouble establishing the validity of the ownership, the legitimacy of the seller in terms of clearly not a scammer and so on and the general level of work involved with the business currently.

What I struggled with was putting a value on the 800 members; was there 'real' value there or was I imagining an 800 strong set of baby boomers who should be able to be easily marketed to on so many fronts? I found it difficult to determine just how many of the 800 were actually active. I'm confident that I could have grown the membership and monetised this well but I dug my logical heels in thinking I could start something similar from scratch and throw $500 of AdWords advertising at it and know how targeted the traffic was, so I was only prepared to part with a couple of hundred $ for what was on offer. But were there other factors of value here too such as age of the domain etc that I underestimated? I could see the two previous listings generated very little interest which worried me that perhaps I was seeing some value that really wasn't there.

At the end of the day it wasn't a great fit for me but if this were a 'work at home mum' forum I would have been even more tempted...... but how do you determine the real value of something like this? I believe forums are notoriously difficult to get established, so does that mean this type of site is a good buy when we're talking only a few hundred dollars even though there is no profit to speak of? Is that a great opportunity to capitalise on the previous owner's weakness in monetising the member base or is it not that black and white? I feel it is probably a site by site proposition where you would need to get a good handle on how targeted the members are etc, doing so with any real confidence could be a challenge I imagine?

Do you think there was anything of value in what was on offer? Was a lot of my thinking flawed? I'd appreciate any advice on offer.

[3Six]

Welcome!

You've raised some great questions in the thread the answers to many of which the seller should have provided in the original listing. I'm not impressed with her using all caps to answer. To me that either juvenile or indicating lack of internet savvy. Do I want to buy a social network built by someone who may not be internet savvy?

On the other hand, she does seem to have built up a nice network in the space of only six months. But the six month bit worries me. People selling so soon after startup are generally people who've realised that they can't make as much as they thought from the site ...or the money made doesn't justify the time they are spending. In these cases I do not accept at all any revenue projections and I go purely by what conservative estimate I make for possible profit.

[Clinton]

The Site Details "Established" date seems to be wrong in a lot of listings at Flippa. Going by that, this site is six months old. But in the description he says it's two years old which sounds about correct.

Michelle, value is entirely in the eye of the beholder as you know. I don't believe there's any such thing as "real value".

Not only are communities difficult to get established, they are notoriously difficult to monetise. If you don't already have some experience with monetising communities then you're going in largely with your eyes shut. You'd be making the purchase to experiment with rather than in the certain knowledge that you can make a profit. In those scenarios you want to throw at the site only an amount that you feel comfortable gambling with.

A community expert on the other hand may have the contacts, the products, the arrangements with a merchant and the stats on how various promotion measures work with different demographics. To him this site may be worth a lot more.

Two people. Two different values. Both 100% correct.

What's worked for me when buying is sticking to valuing properties based on what I thought I could make with them rather than the metrics on the table or what my competitors were doing.

[Michelle]

Welcome!

You've raised some great questions in the thread the answers to many of which the seller should have provided in the original listing.

Oh I agree a lot more detail should have been in the listing, it was a pain to have to ask it all and even more via PM. A good example of how NOT to write an auction listing.

I'm not impressed with her using all caps to answer.

LOL! I was surprised by the caps too.

To me that either juvenile or indicating lack of internet savvy. Do I want to buy a social network built by someone who may not be internet savvy?

Good point.

On the other hand, she does seem to have built up a nice network in the space of only six months.

The listing shows it was established in mid 2008 and she mentions it was in its second year. Maybe I confused things by asking about how the member growth was over the past six months. I only specified six months as I wanted to gauge if there was any organic growth month in month out or if it was dying a slow death.

Thanks for your feedback 3Six.

The Site Details "Established" date seems to be wrong in a lot of listings at Flippa. Going by that, this site is six months old. But in the description he says it's two years old which sounds about correct.

I think I confused the issue by my 'six month' question re member growth.

Michelle, value is entirely in the eye of the beholder as you know. I don't believe there's any such thing as "real value".....

....What's worked for me when buying is sticking to valuing properties based on what I thought I could make with them rather than the metrics on the table or what my competitors were doing.

Thanks for sharing your perspective Clinton, that all makes a lot of sense, I don't think I'll agonise so much next time.

[SitePurchaser]

Hi Michelle,

I think you asked some good questions relating to the actual operation side of the business.

Regarding the value, $500 doesn't sound too extreme or anything. I guess what I would have focused a bit more on was analysis of the traffic. When you have a forum, you will want to see a lot of return traffic, and long periods of time spent on the site. I didn't catch anything about that on the flippa page.

Figuring out how strong those 800 members would be, you have the distinct advantage of being able to join the forum and seeing for yourself what people talk about and if it fits your business goals. Also, you can check the time stamps on when posts were made etc. to check the activity level of the forum.

The only weird thing to me was that they were not able to montize the site better. 1,700 uniques and only $5 in donations? Maybe the members really don't like the webmaster that much? Why not? Why didn't they do a better job at monetizing?

Once you figure that out, it would be easier to judge the value of what was on offer. If things looked good, I would say anything around $500 sounds reasonable to me, give or take few hundred dollars.

[Michelle]

Thanks for your input SitePurchaser.

I got a lot more detail via PM from the seller and did get into the forum and had a good look around at the new posts volume over a couple of days etc. From what I could tell, the members were quite fond of the owner, that actually worried me...how would they take to someone new: that would need careful management and time. I agree with you, the price was quite reasonable for what was on offer.

I've since met the seller in person and understand her business focus and direction and why the site was underdeveloped. She's quite savvy and has a number of interesting web business in her portfolio.