While there are many examples of startup entrepreneurs selling dominant websites for a gazillion dollars. A less known fact is that small, or even micro websites can be sold. In fact, there is a thriving private market for sites which fill particular niches or have the potential to be much more than the founder could manage.
In the spirit of demystifying this process of selling any website, big or small, I’ve developed a list 4 simple things that are key to selling digital assets such as sites and apps. It’s important to note that we don’t need all 4 to make a sale, very often just 1 of these will suffice.
Probably above all things is the number of people frequenting a site or using an app is the quickest path. Any site that has this should really be able to sell the eyeballs. The main reason for this is that correctly or incorrectly, the web is still largely seen as a media vehicle and so ‘eyeballs’ are still valued very highly. In fact, heavy traffic may even reduce the sites ability to make money, as was the case with Youtube which only recently started turning a profit more than 5 years after it was sold for $1.6 billion. It must be said that the traffic doesn’t have to be mass. It could be highly sought after niche content traffic of the right people. This could include a membership database.
2. Technology Platform:
If you have built something of value, a site that functions well, and does a job using technology, then this asset itself could be sold. The price should be at least what it would cost to make from scratch or the cost less ‘renovating’ the technology. Sites which have unique or new technology platforms can often be sold at prices far above the creation cost because they can provide a great short cut for other businesses who either don’t know how to build it, or don’t have the time.
3. Brand Name / Market Presence:
A brand name or .com that is known for something can be quite valuable, even if the idea and concept did more work than the site itself. There are still plenty of words and url’s that can be sold on ‘pure potential’. If we have some good media coverage from when we launched, or throughout the journey this can really enhance the potential for the selling process. A market presence might also include a deep content trail. This could even be the accumulated words of a long running blog, listings on a classified site or any other form of crowd sourced content. Although we think that content should all be fresh to have value, the truth is some long term solid long tail content is often the hardest thing to build in a web business, and smart buyers know this.
We know the world has really changed when ‘revenue’ or ‘profit’ are the last on the list. But the truth is that revenue should really be the end result of getting the first 3 items on this list right. Which is why so many sales happen before this occurs. The suitor knows this, and is essentially trying to acquire the asset at a discount, prior to the realisation of its full value. That said, if you do have revenue then the minimum amount we should ever sell the business for is equal to annual revenue. But we all know that any digital asset could be sold for many times more.
While it’s better to have all 4 of these, there are arguments that we can extract more value if we are pre revenue. The 2 classic examples are Youtube and Instagram, which both sold in the billions before they had any money coming in. If you’re interested in seeing the selling price of some other famous digital assets and websites, I think this chart is interesting as it breaks it down into many segments.
I’m also sure these 4 items are non-exhaustive when it comes selling out, so please share any others in the comments.