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On this episode I talk with Jeff from from Website Investors.
- How Jeff got started with making money online by seeing a $500 Google News Site course and then realising it would be better just to buy one from Flippa for $3k instead and get taught by the guy selling it for hiring writers, publishing news and what stories to go after
- When you’re buying a site, what you’re really buying is a repeatable process that you can emulate and automate
- Jeff got his money back from the initial news site in just 2.5 months, monetized by advertising.
- Jeff has gone on to purchase over 300 sites from 50-60 transactions, buying large groups of micro sites that were bundled, and started building sites himself as buying doesn’t become as valuable once you learn how
- Jeff stuck with google news for a year and a half before experimenting with drop ship ecommerce before moving into lead gen sites, content sites and amazon review sites which he is into heavily right now
- Jeff typically purchases with the idea of holding but in practise does sell a lot off and has consolidated his portfolio to a dozen or so main active sites.
- He talks about how a lot of successful guys put all their energy into one main site and then have a few smaller symbiotic sites that feed into the main one.
- He doesn’t advocate large portfolios unless they have a lot of synergies across sites so you can employ teams doing the same kinds of activities.
- When looking at new sites to buy you need to leverage your own knowledge, where ugly sites can be better investments by fixing a site that has obvious problems that has traffic
- If you buy sites from a broker you will not get a discount as they know market rates, but it can still be a great deal.
- You can still find discounted sites on Flippa, especially if you employ someone to research for you and follow a process to filter out bad sites. People will also reach out to you with a site they are looking to sell if they see you have sold a similar site in the past. There are big advantages to private sales where the seller can get cash within hours rather than weeks. Jeff uses escrow.com and for deals less than $10k would not even use a contract, but over $10k would do the typical asset purchase agreement (APA)
- Jeff wrote the book The Website Investor which teaches people how to value sites on sale and buy better at typical multiples (Centurica also publishes an annual report of site multiples). Jeff does a risk based valuation first in terms of how stable and predicateble a revenue and traffic source is and how old the site is.
- You don’t need to get a sale price, even if buy at market rate and there are opportunities to leverage your skills you can still increase the asset value dramatically, i.e. better utilise a mailing list, improve conversion rates
- Shout out to the Rhodium community where opportunities to buy sites come up
- Jeff has also had experience of buying from a seller through a broker and then the person reaches out directly with new sites available as selling a site can be laborious, so many questions to answer.
- Jeff is currently in the trading up mode, having sold off a lot of sites, gravitating towards larger businesses that he knows he can automate and do not require a lot of direct interaction with customers.
- There are some sites Jeff may never sale some sites that are great cashflow; reasons for selling are customer support having purchased a software company even though they have high MRR.
- Jeff enjoys being an operator in his portfolio, as well as being an owner
- Outside of online assets, Jeff hasn’t bought into any bricks and mortar business, just investing in mutual / passive funds. He sees the possibility of moving more into a deal maker role.
- Talk about how online assets don’t feel real until you sell them – online assets are not as permanent and it’s almost impossible not to be at the mercy of Google, Amazon or Facebook to some extent. The risk / return paradigm is more or less a law of physics.
- Apparently IRS in America wants you to treat online assets as real assets that depreciate over time – if it’s intellectual property it can potentially be put on a balance sheet and depreciated over 15 years. Another categorization is software that is an asset that can be depreciated over 3 years and in the US there is a provision for wordpress sites that can be expensed in the same year up to $25k.
- Jeff has developed the Own The Web course to help people get into purchasing online businesses as well as other courses at ownoptimize.com
- When buying sites you should check out their link profile using tools such as ahrefs or semrush and also request (restricted) access to google search console. Post sale, practically it is really hard to protect links in a contract. Ahrefs gives a history on when links are first picked up – if 80% are acquired within the last 3 months you should probably run away as likely artificially created. If links have come on gradually over time you can have more confidence. This is covered in Jeff’s course.
- At the end Jeff turns the interview on me and asks what extent I’m using autoresponders and funnels in the authority sites I’m building!
- Once you become expert at something it becomes simple to you yet to others still complex. The reason experts create courses is because every time you develop expertise in an area, that’s an asset that you own and if you’re not leveraging that asset in a number of ways, we are being inefficient with how we have been blessed (through hard experience and mistakes).