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great 4am read
i'd say keep the forum if its what you enjoy running/owning. a forum worth a few million must be nice!
Who the fuck are Internet Brands? And why do they want my forum?
- Thread starter bcc423
- Start date
great 4am read
i'd say keep the forum if its what you enjoy running/owning. a forum worth a few million must be nice!
I have two forums. One of which I put countless hours in over the last few years trying everything to get it to stick, but it's a complete failure (site is great, but the forum is dead). The other one I threw up as an afterthought on a site I paid very little attention to and it took off and is now the authority in a low-mid size, somewhat lucrative niche (that I still haven't bothered to monetize for some reason). I have no idea what made one work, and the other not, but I do know getting a forum going is not easy.
Shit. They were bought for $640M with net profit of roughly $1.53M/mo?
That's like 35-year multiple. And most of their properties don't seem to be showing much growth (at least not according to compete/quantcast/alexa).
WTF?
Has the next bubble already begun?
That's like 35-year multiple. And most of their properties don't seem to be showing much growth (at least not according to compete/quantcast/alexa).
WTF?
Has the next bubble already begun?
This.
If you like your users and your community, you might want to think twice about selling it to these guys.
If you are just after the cash, now might be the time to dump and run.
Sell. Don't sit to high on your horse (not saying you are) - but the growing the proceeds of the sale can and will be quicker, and odds are more stable and efficient, than the forum growth.
If this is a concern, I suggest doing research on some of the forums they have acquired in the past to see how the community reacted. I was a regular reader of dvdtalk.com at the time it was acquired and remember some complaints about the changes. Some of these threads may still be on the forums after they changed ownership.
For example, here is the thread from DVD Talk about the purchase:
DVD Talk Forum
They also purchased 6speedonline.com awhile back. Most of the "regulars" up and left, and one of them started a new site lol
bcc423 - just out of curiosity, is your forum related to something you're passionate about, or did you create it just because you saw an opportunity/gap in the market?
On an unrelated note, it's hard to imagine that there are still lucrative niches out there without a huge forum that would be almost impossible to overtake ...
bcc423 - just out of curiosity, is your forum related to something you're passionate about, or did you create it just because you saw an opportunity/gap in the market?
On an unrelated note, it's hard to imagine that there are still lucrative niches out there without a huge forum that would be almost impossible to overtake ...
I don't think so. If we assume 10% annual return on investment, then to make, say, $10k/mo (or $120k/year) you would need $1.2M of working capital.
On top of that, half of your interest would be eaten by inflation. So you would really need something like $1.8M just to come out ahead at the end of the first year.
$1.8M per each $10k/mo of profit a website makes is a really high multiple -- 15 years. So you aren't likely to get that kind of money by selling it.
On the other hand, the ad prices (if you sell ad space) will always be adjusted for inflation (by the market itself). No matter how bad the economy is doing, someone will want to advertise something to somebody.
As far as I can see, making a living through investments is reserved mostly for the super-rich or for risk-takers. I'm neither.
Neither. I stumbled upon it by accident without knowing what the fuck I'm doing. And then decided not to give up. Eventually, it became one of my favorite projects and I dropped all other ventures to concentrate on this one.
from what I've heard, they scoop up sites at about 4x yearly rev, hence, when they were just bought for 30x rev, they made out quite well...
I'd talk to them, expect a low ball offer I'd think, but talk to them as you know they have deep pockets and can afford quite a bit.
I'd talk to them, expect a low ball offer I'd think, but talk to them as you know they have deep pockets and can afford quite a bit.
Do you guys think it's safe to disclose my entire marketing strategy to them?
Right now, they are willing to offer "high six figures, maybe low seven figures." But I didn't give them much more info than aggregate numbers for each major metric and the overall business model. It's a good offer, but only if you have a website that's not growing. For a stable website of comparable size, it would be fair offer. But in my case, that's just not good enough. My forum is really growing.
One of their people I talked to explained to me that the more they know about my business the less risky it is for them (which makes sense), and as a result the more money they might be willing to offer.
I could explain to them how I promote my forum, but then it could be cheaper for them to replicate my business than to buy me out.
If I say nothing, they'll assume that I just rely on long-tail search engine traffic (as most forum owners do) -- that's a high-risk low-growth-potential model. You get dropped by search engines -- you are fucked. My model is a lot better. Only 30% of my business depends on search engines.
I showed them a 5x increase in all metrics since the beginning of this year, but I can't discuss the specifics. Which means I can't convince them that the growth won't stop. And they want specifics before they make their formal offer. Otherwise, they'll assume the worst and lowball me with the "high six figures" bullshit offer just to avoid taking on risk. (which I completely understand)
Non-compete agreements are out of the question, unfortunately.
Is there a good way to handle the situation?
Right now, they are willing to offer "high six figures, maybe low seven figures." But I didn't give them much more info than aggregate numbers for each major metric and the overall business model. It's a good offer, but only if you have a website that's not growing. For a stable website of comparable size, it would be fair offer. But in my case, that's just not good enough. My forum is really growing.
One of their people I talked to explained to me that the more they know about my business the less risky it is for them (which makes sense), and as a result the more money they might be willing to offer.
I could explain to them how I promote my forum, but then it could be cheaper for them to replicate my business than to buy me out.
If I say nothing, they'll assume that I just rely on long-tail search engine traffic (as most forum owners do) -- that's a high-risk low-growth-potential model. You get dropped by search engines -- you are fucked. My model is a lot better. Only 30% of my business depends on search engines.
I showed them a 5x increase in all metrics since the beginning of this year, but I can't discuss the specifics. Which means I can't convince them that the growth won't stop. And they want specifics before they make their formal offer. Otherwise, they'll assume the worst and lowball me with the "high six figures" bullshit offer just to avoid taking on risk. (which I completely understand)
Non-compete agreements are out of the question, unfortunately.
Is there a good way to handle the situation?
You're most likely talking to a rep who wont act on it AT ALL. Besides, just because they can replicate what you do doesnt mean they will have a succesful forum. Your forum is filled with active users and fresh content. Their's will be empty.
Don't count on this. Internet Brands are the biggest forum owners on the internet, they can build a community in a heartbeat if they think there is a market to exploit.
They are so serious about being the biggest forum owners, they bought vBulletin.
@bcc, you're gunna have to decide if you want to run with the big dogs or stay on the porch.
THIS! And... those guys are really aggressive on all fronts.
I've heard phrases like "finalize in 2-3 days", "wire transfer", "get it done right away" from two people I spoke with in their organization. They aren't fucking around. To tell you the truth, I've never seen any large company acting so aggressively. And it seemed like to them it's business as usual.
The thing is, I'm making $20k/mo now. And I know I can double it in six months.
And probably double it again by the end of 2011.
(just from adsense and some ebooks -- no sponsorhips, no vendors, or any other kind of monetization I could be doing)
So if I sell it for, say, $800k then I'm a fucking idiot. I'll regret it later on.
I guess I could try some sort of an earnout clause, but I read about at least one company they fucked over with earnouts. So I don't want to do that either.
Of course, I could take that $800k, and start a new forum in a different niche. But I'm scared of failure. I've started so many little ventures over the years, that starting another one at this point seems like too much to handle.
i wouldn't sell. you are already banking well with the site.
once you have 800k stashed you will be glad you didn't sell.
once you have 800k stashed you will be glad you didn't sell.
they own a couple of big Apple forums (very active), but not only that. They own sites like hotscripts and others.
Congrats on building up a forum that size! Critical mass must have been a real bitch
keep us posted
Congrats on building up a forum that size! Critical mass must have been a real bitch
keep us posted
It also depends on whether the site is a "renewable resource" as opposed to a "perishable" one. For instance, if your forum is a Farmville one, then I would say dump it because there's a good chance that your traffic will die off once the game dies.
But if you own a forum where there will always be a need to chat about the niche topic (for instance a medical site about herpes or hemorrhoids), then ya I would say hang onto it and milk it for what it's worth.
But if you own a forum where there will always be a need to chat about the niche topic (for instance a medical site about herpes or hemorrhoids), then ya I would say hang onto it and milk it for what it's worth.
Personally, I would try to get them as close to a mil as you can, and then dump it fast and do it again (after parking at least half the dough in high yields).
Thing is, IB is hip to your action now, and if you play too hard to get, they will just sit back a bit, observe, and duplicate and then start a war with you for users. Which they will win.
My advice- take the cashola and do it again. Your strategy will work in other niches...
Thing is, IB is hip to your action now, and if you play too hard to get, they will just sit back a bit, observe, and duplicate and then start a war with you for users. Which they will win.
My advice- take the cashola and do it again. Your strategy will work in other niches...