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EFP 110: Becoming a Better Dealmaker

EFP 110: Becoming a Better Dealmaker

Justin Cooke September 19, 2014

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There’s an art to becoming a better dealmaker that goes beyond finding a willing buyer or seller.

In this episode, Joe and I will dig into the strategies we use to find common ground between buyers and share some of the trickier strategies used to ensure a win-win deal.

Becoming a Deal Making Mogul

If you’ve been in impossible deals before and failed to close, this episode will give you insight into how we personally get it done.

Check Out This Week’s Episode Here:

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Topics Discussed This Week Include:

Actual vs perceived value post-deal.
Getting in the heart of the issue.
Making undeliverable promises.
Structuring an earnout.
Buyers worried about PBNs.
Making offers below list price.

Mentions:

Spread The Love:

“It’s really hard to get repeat business if the other party feels screwed.” – Justin – Tweet This!

What are some of the impossible deals that you’ve made work (or not work?) Any closing advice for the rest of us? Leave a comment below and share your stories!

Justin: Welcome to The Empire podcast, episode 110. There’s an art to becoming a better deal-maker that goes beyond finding a willing buyer or seller. In this episode, Joe and I will dig into the strategies we use to find common ground between buyers, and share some of the trickier strategies we’ve used to ensure a win-win deal.

You can find show notes and links to this episode at empireflippers.com/dealmaker. All right, let’s do this.

Announcer: Welcome to The Empire Flippers podcast. Are you sick and tired of gurus who have plenty of ideas but are short on substance? Worried that ebook you bought for 17.95 won’t bring you the personal and financial freedom you long for? Hey, you’re not alone. Join thousands of others in their pursuit of neat profits, without the bullshit. Straight from your hosts, Justin and Joe from Empire Flippers.

Justin: All right, Joe, so this episode was inspired by a sticking point we had with a seller recently. It was coming down to the end of the deal, we’re really close to getting the deal done, and the seller came back and said, “I want to make a deal for an extra 1% of the total purchase price of the deal.” These are the types of things that are aggravating when you’re the one trying to structure the deal, right?

What’s 1%? Just make the deal. What is 1%? And these are types of things that I think you have to be able to work with. You have to be able to work with with the buyer and seller. Can you imagine losing a deal over less than 1% of the total deal value?

Joe: I can do more than imagine it, it actually happened. So yeah, it’s a funny thing. I don’t know why sometimes people get entrenched with this idea, they draw a line in the sand, and they just can’t overcome getting this thing done.

Justin: We’ve had a lot of this recently, where we’ve had to finagle the deals, we’ve had to basically massage the deals into happening; and I think this is a sticking point for lots of people, whether they’re on the buyer’s side, or the seller’s side, or they’re in our position, where they’re brokering a deal.

And I thought this would be a really fun episode for us to cover, because it’s something that’s really top-of-mind recently, it’s something we’re doing a lot of.

Joe: I find myself in this situation a lot, being the deal-maker in a possibility when the buyer and seller are just so close, and I think that a lot of listeners out there can probably benefit from this because a lot of that deal-making, sales kills are something you can use in life, not just in selling or sites.

Justin: The other thing, too, Joe is it’s really fun when you make impossible deals work out. Right? Like one side can’t see the other side’s position, and it just seems like everything is lost, and you’re able to come up with something that really benefits both sides of the party, and you’re able to complete that deal. It just feels like a win.

Joe: Yeah, absolutely. It’s very rewarding.

Justin: The other thing, too, is that everyone can get an easy deal done, so the ones that are really easy to kind of work out, and those are the ones that are just get-mes right? But the hard deals are really where the money’s at. If you’re able to make the deals that seem impossible, you’re able to make those possible, you’re going to make a ton of money doing that.

All right, before we get into this, let’s look at Hot Money’s featured website listing of the week. What you got, buddy?

Joe: This is a finance affiliate site, making a little more than $2,000 a month net profit. It gets around 8,000 [inaudible 00:03:09] a month. It’s in the finance niche, but okay, it’s a little low-brow. Right? We’re not talking stock or commodity trading, or something like that.

But it is definitely related to the finance industry, so if that’s one of your interests, you should check it out. The site is extremely passive, doesn’t even require any content updates. The seller has had it effectively on autopilot, and it is based on the South African market, so it does use a .nz domain, but it ranks very well in South Africa for its money terms.

Justin: That’s pretty random, I mean a South African site in the financial niche. If you want to take a look at that listing, you can check out empireflippers.com/dealmaker. All right, everybody, let’s get into the heart of this week’s episode.

Announcer: This is The Empire Flippers podcast.

Justin: All right, so this episode is all about becoming a better deal-maker, the dow of the deal, let’s call it. And we’ve got a few points that we really want to bring up more generally. I think this is for deal-making in general. Let me have some specific things that we’ve seen with buying and selling websites that we think will help our listeners.

The first point we want to bring up is the win-lose fantasy or fallacy, you might say. Everyone publicly says they’re looking for a win-win, “We look for win-win deals, we only do win-win, every side wins,” that’s really nice to say, but some of those same people will privately tell you, “Well, I’ll take a win-lose as long as I’m the winner.” Right, Joe?

Or some, even deeper down, are going to say they actually prefer a win-lose situation. They feel like they want to win, they want to take something away, they want to pull something over the guy on the other side of the table.

Joe: Yeah, and these are the people you definitely have to avoid, because they’re not the kind of people that you want to be in a deal-making relationship with. Sometimes it’s unavoidable, and maybe you can use that to your advantage, but if you can, avoid doing business with people that are in these win-lose-type scenarios.

Justin: These people, I think, that secretly prefer the win-lose, they believe they’re always a winner or a loser. Right? So if you’re winning, you’re taking away, you’re taking food off the table, their children’s plates or whatever. I am putting it in your own, so they believe you’re taking from someone else, and you have to take from them, to get anything.

So that’s kind of their driving philosophy. But there’s a problem with this. Right? With the win-lose deal. If you want to be the winner, and you’re looking for a loser, let’s just say a sucker, or someone that is willing to bow down to you, and offer you the win, there’s an opportunity cost of waiting for the losers to walk by.

So, if you’re always avoiding deals that may … you may have to make adjustments to meet, then you’re going to miss out on all those deals that walk by, and you’re always looking for the sucker. You’re always looking for the loser on the other end of the table, and you may be missing out on a ton of deals by waiting.

Joe: Yeah, I think this is such a valid point. It just goes to show you, if you do good business, you probably make more money than just trying to scam people.

Justin: There’s a practical problem to this, too, it’s not just the philosophical idea. It’s really hard to get repeat business when the other party feels screwed, so if they feel like you’re screwing them over, or they feel like they’re walking from the deal with a loss, or it’s a losing proposition for them, they’re not going to want to come back; and so the lifetime value of your customer, or your brokerage client is not going to be high because you’re not going to get that repeat business that can earn you a ton of money in the long run.

Joe, for example, lots of our buyers, close to half, I think, are actually repeat buyers, and we would lose most of that if our buyers, for example, ended up feeling screwed.

Joe: Yeah, absolutely, and that’s why when I get a seller that … I feel a little bit cheeky on, and don’t think that he’s out for the right thing in terms of the deal, I’ll just not approve his site, because I can definitely see these guys coming a mile away, and that’s a big part of our approval process, it’s something we think about.

And when you go into deals, I definitely think that you should think about that, too. Don’t think about just the structure of the deal, think about the person, as well.

Justin: And, you want to bet, Joe, that there are deals that we said no to that were actually good, and that would have been a good buyer, and there could have been a win-win. Maybe we were being a bit too cautious, but I prefer that, man. I think it’s … It puts us in a situation where we feel comfortable doing it.

I think the best deals is when both the actual and the perceived value by third parties are high after the deal has been done. So the seller, a day later, a week later, a month later feels good, they’re happy with the deal. The buyer obviously is feeling good about the deal, but it’s actually good for both parties, and so in an ideal situation, that’s what’s going to happen, is you’re going to have both parties, both the perception and the actual deal they walked away with was great.

The second point we want to make about deal making is that you need to learn how to peal back the onion, and what we mean by that is that the first answer you’re going to get from someone is rarely the real underlying issue, or reason. When it comes down to sellers talking about the reason they want to sell, their first answer may be something like, “Oh, you know, I was looking for money for other projects.”

But that’s not terribly helpful for us as brokers, right? We want to know more. So we ask them again, “Okay, so what kind of projects? What are you looking for?” And they answer with something like, “Oh, you know, I wanted money to invest in offline businesses.” “Okay, that’s great, but that’s not really … ” The heart of the issue. So what is it really?

Well, they need $48,000 because he needs to invest in this business, he’s going into business with his brother on a carwash company, and they’ve been looking to do this for years. Okay, now we know where you’re coming from, and from a broker’s perspective, that’s great. Right, Joe?

Joe: Yeah. I love this tip, and this is true, not just of selling sites, or buying sites, but of any deal-making. You really got to get to the root cause of what the other party wants, because that’ll help you in the negotiation to provide something of value that the other side can walk away from.

Justin: Yeah, until you get to the heart of what the other side wants, you’re not going to be able to see if there’s a real match. If you’re offering something they really want, or they need, if you’re able to meet their needs. This is a lot easier to do when there’s trust in place, as well. So when there is trust between you and the other party, the walls are going to come down much easier, and they’re going to be more likely to allow you to peel back their onion.

Another example that we see is on the buying side. We ask buyers, “Okay, what type of site are you looking for?” We’ll get answer like, “They should be a passive earner. I want a passive earner.” “Well, of course you do. Why do you want a passive earner? Why is that important to you?”

And they say, “Well, I want something I don’t have to spend too much time on.” “Okay, so you’re looking to spend … you don’t have as much time available. Could you elaborate a bit further?” And then we’ll get something like, “I’m brand-new to this, I want to get started with a site that isn’t too difficult,” and now we know the type of site to place them in. Right?

Something that I think has a lower learning curve, that’s not going to be that difficult for them to get started with, and we can help guide them to get them in the site that’s going to be a good fit for them, whereas if we just hear, “ Oh, a passive earner,” well, that’s not terribly helpful, and we’re not able to place them as well as we would have liked to.

Joe: Yeah, so I think what you’re really driving at here is getting to the fear, and once you find out what the person’s fear is, you can help them overcome that fear, and that’s what’s going to make the deal work. So, in this particular example that’s … we made this opportunity happen.

Justin: Yeah, and if it’s a site that does require a lot of work, or it’s more like an intermediate, or advanced-type website, then we can make sure they avoid that. We’re not going to go tell them, “Hey … ” Even if it’s a site we really like, right? That we’re really interested in, we can not share that with them because we know that probably wouldn’t fit with what their real core need or want is for a website.

Our third point we wanted to talk about is don’t write checks your ass can’t cash, and what we mean by this is that making undeliverable promises is a rookie move. So if-

Joe: Yeah, we see this all the time on Flippa, where a guy’s just promised the moon and stars. They say, “I’m going to be able to do this for you, I’m going to be able to do that for you. The earnings will do this, or I will go ahead and … ” And it just seems like something that they’re never going to be able to keep up with.

Justin: Anytime you see, “guarantees,” start being thrown into the mix, “I guarantee this is going to happen,” specially on something that you know it’s not easily guaranteed, it just doesn’t make sense. And what I think it makes happen is it makes the seller, or the person on the other of the table look desperate. Right?

They’re going to start throwing in these last-minute offers that are just totally unbelievable and they’re setting themselves up for at least a perceived win-loss. When one or two of those things doesn’t come through, they’re going to look like donkeys.

A lot of times, with website sales, this has to do with post-sale training, so maybe the seller is promising to do all this extra, crazy work, or they’re promising it’s going to earn X amount of money for X amount of months, and that’s just ridiculous. You’re going to look like a rookie, and anyone who’s serious about buying, if you’re the seller, if they’re serious about buying they’re probably going to avoid you, because they’ve seen this stuff before.

I think this really happens on both sides of the table, too. So if you’re selling, you could be building a bit of a Ponzi scheme. Right? So you’re making all these promises, and you’re just kicking the can down the road, you know? Eventually you’re going to have to a-up. It’s going to come to fruition, and you’re going to be screwed; whereas, if you’re a buyer, you’re basically building a house of cards that’s just not sustainable, because you’re making …

“I’m going to pay out all this money over time,” and then you end up screwed, as well. This can actually happen on both sides. A buyer, it might be where they’re promising X amount of earn-out that’s really not sustainable for the business, they can’t actually make that promise, but they’re making it to get the deal done for less money upfront.

Joe: Yeah. I don’t think it’s going to be a Bernie Madoff kind of situation, but I do think that the unintentional consequences of someone just making all these promises to all these buyers is that they just can’t keep up with the demand, and then things just naturally fall through, and at the end of the day they just kind of wipe their hands of it and say, “Well, I did what I could.” And everything falls apart.

Justin: All right, Joe. So that’s some of the deal-making experiences and tips that we wanted to share. Let’s talk a little bit more specifically about the buying and selling websites space. The first thing we want to bring up are what are the different ways to structure an earn-out?

We hear this from buyers, and probably worried sellers. About, “How is this going to work, exactly? What’s it going to look like?” And there are a few different ways you can go about doing this. The first, that I think is the most probably straight-up, straightforward deal is the X% upfront, and X percent after training.

This can look like an 80%-cash-up-front deal, and 20% once the training’s been complete. So what that does, it would just guarantee that the seller has an incentive to complete the training, and the hand-over and everything that they said they would do in terms of X amount of hours on the phone, or handing over all the training, or standard operating procedures for the business, that type of thing.

It makes the buyer feel a bit more confident with doing the deal, as well.

Joe: Yeah. This is what I like to call “the conditional earn-out.” They pay something up front, and then they will pay the rest if you do the other thing. This kind of helps the buyer get over that fear of, “Well, what happens if he just takes my money and run, and doesn’t do X, Y, or Z?”

So this helps that particular case.

Justin: The second type of earn-out you might have is X% up front, and then another X% per month, and this can get a little trickier. So let’s say that you’re doing 70% up front, and 3% a month. It’s just a flat … you’re going to get that same amount over a month, so basically it’s just so the buyer doesn’t have to come up with all the cash up front, and they’re able to pay it back with some of the earnings over time.

And it’s not conditional, it’s just they’re going to get that X dollar amount every single month. That’s one way to do it. But it can also be tied to things like a percentage of earnings. Right? So, yes, over time, maybe six months, or 10 months, or 12 months, the seller’s going to get the full 100%, but it’s going to be on a basis on a percentage of the earnings per month.

If the site doesn’t do as well, it may take 18 or 20 months to get paid out, whereas if it does better, they may get paid back in four or five months.

Joe: This is more the traditional earn-out scenario that I think most people are familiar with. Yeah, and like you said, sometimes it can be a little bit conditional-based on certain things like hitting objectives, and revenue goals, and whatnot. But normally it’s just kind of a way for the buyer to get “seller financing,” so this allows them to not have to put everything up front, he can kind of pay for it over time, and it makes it a little bit of an easier pill to swallow.

Justin: Another way it can get tricky is let’s say that I’m buying a $100,000 site, and what I do is I offer 70% up front, and I’m offering 30% over the next 10 months. So basically I’m offering $70,000, and I’m going to give $3,000 a month for the next 10 months. But that $3,000 per month has a contingent. The site has to make $5,000 net profit or more. If it doesn’t, I don’t pay out the $3,000.

So if that only happens, let’s say five out of 10 months, I as a buyer have only paid $15,000 plus my original 70, putting it at 85, so I actually am only paying 85%, whereas if it hit 5,000 every month, I’m paying the 3,000 the whole time, and the seller gets the full 100%.

Quite a few numbers, but these things can get a little trickier depending on how they’re structured, and I think what helps here is clarity, so as long as the deal is clear for both parties, and it’s been very clearly laid out, at least know what they’re getting into, and know the risks involved. That’s something that we help with when we’re structuring a deal.

Joe: Yeah, and I think one of the ones that we actually did, and we got a deal done, was … There was a high season, one of the very large months that was upcoming for a particular site, and so what we said was … The buyer paid, let’s say 60% up front, and then was doing the rest on an earn-out, but we said the high-season months, January and December, could be split between the buyer and the seller.

This allowed for them to pull value of that holiday season, and felt like they got a win-win out of the situation.

Justin: Yeah, there’s a situation where the seller was taking a lower offer up front, and they were okay with the earn-out, but the biggest concern, the seller’s concern was, “I know I’m going to crush it this holiday season, I want to make sure that I get a piece of the upside, as well,” and the buyer was willing to do that, as well, because he was pretty sure that it was going to work, and be great, and it was a way for him to get it for less cash up front, so that was an interesting deal structure.

Another question we get, this would be our second point, is, “As a buyer, how worried should I be about PBNs?” PBNs being private blog networks.

Joe: Oh, the big, dangerous PBNs.

Justin: You should be worried about PBNs, I think there’s no real way to ensure that everything’s going to be hunky-dory, there’s no guarantee here. There are some ways to mitigate the risks.

One of the first things we mention to you, potential buyers, is say, obviously if the PBN is included, that’s pretty helpful, because you’re going to be controlling the links, you’re going to have access to that PBN, and you’re actually going to take over and run that PBN.

This is likely, or more likely with the larger deals, for a $15,000 site, it’s not likely they’re going to include the PBN, but for an 80, 100, $150,000 site, that PBN may be included in the sale.

Joe: Yeah. I’ve been trying to tell sellers that more and more. And please, if you’re a seller out there right now, and you have a PBN, try to price the PBN into your sale. That will make it so much easier to get things done.

Justin: Of course, there’s no way to guarantee this to the buyer, but obviously if you’re getting the PBN delivered with the site, that makes it a hell of a lot easier. There’s some benefit PBNs, too that we should mention, is that with the PBN you can remove links, or you can make changes to it, whereas if you’ve got a bunch of links that were put out there through other means, maybe you don’t have the access to actually move, or change those links to different pages, or remove them completely if you need to.

So, there’s an upside to PBNs, as well. One of the other things you can do with a PBN is to require an earn-out over a longer period of time, and you can actually give the seller more than their list price. So say, for example, I was going to do … as a buyer, I said, “Oh, they’ve got a PBN, but I want to make sure this PBN stays in place, so what I’m going to do is I’m going to give them 70%. Right? And then, I’m going to give them … I don’t know, just about 4% over the next 10 months.”

So they’re actually getting 110% of the sales price they were asking for, I just want to make sure it’s an earn-out, and it’s based on the fact that those PBN links stay in place.

Joe: Yeah, we recently had a buyer do this. He gave 2% for a pretty long time to a seller, to make sure that the links stayed in place in his privately-owned PBN, and the seller was more than happy to do that, of course, and the buyer felt that they gave them a little bit of insurance to make sure that things stay the way they are right now.

Justin: Yeah, that’s the other thing. You can actually do it in perpetuity, or for as long as you’re going to be owning the site. You can pay 2%, 4%, 5% for five years, 10 years, and make sure that the seller has an incentive to keep those things in place.

One of the third issues or questions that comes up pretty often is, “Can I make a lower offer on the sites that you have for sale?” To be perfectly clear, and to tell you a dirty little secret, all brokers are going to take, sometimes take, less than list price. And in some instances, the sites go for much lower than the actual list price.

Now, we happen to get pretty close to our list, because our multiples are pretty reasonable. The reason we came up with 20x a long time ago, is because that’s what the market demanded. We put sites up for a dollar at auction, no reserve. We saw that, that was a pretty fair multiple, and what we’re hearing is that many of the brokers, or many of the other brokers, they’ll list either much higher, or lower to get a quick deal.

A lot of times they end up going for much less than list, and end up pretty close to the 20x anyway. I thought that was pretty interesting.

Joe: Yeah, I mean, if someone’s listing at 36x, I just can’t believe that they’re getting that in this day and age. It just goes to show you that there are deals to be done out there, but I always tell depositors this when we’re communicating internally is, “If you don’t feel the site is worth what we list it at, then go ahead and make an offer. As long as it’s reasonable, that’s something that we’ll definitely take to the seller.”

We’ve had people come in and make low-ball, less-than-50% offers. That’s just not going to fly.

Justin: Any offer that’s under 50% we generally don’t even take to the seller. To go back really quick, Joe, you mentioned 36x, and obviously you’re talking about 36 times its monthly net profit. There are deals done at 100x, right? At 120x. 10 years worth of profit. And those deals are generally much larger companies, and they have some other inherent value.

A lot of the tech startups, recurring billing, the funded companies are going at that level. But not for websites under a million dollars. It’s just not typical.

Joe: Yeah, because their scalability and their market cap is much higher than where they’re at right now. So that’s why, as an investor, you have the possibility of getting into that category. If you have a site that’s all about teddy bears, I don’t care how much you scale that site, it’s just advertising site for teddy bears. You’re never going to make it to a thousand times the monthly net profit.

Justin: Can you make a note of that? Joe hates teddy bears, apparently. I hear what you’re saying, man. The smarter the niche, the smarter the opportunity, unless you can find some creative way to expand outside of that.

The other thing that buyers or depositors should know is that we guide the sellers on offers we feel they should accept, reject, provide a counteroffer to. And I think this is important because the seller gets an offer of, let’s say 80%, just straight up cash deal of value, but the site’s only been listed four days.

That’s probably not going to cut it. There’s probably going to be more people that come along and can get them a better price than that, so we might tell them to hold off, maybe they can counter; whereas if the site’s been up for a long time, and it’s really niche-y, meaning it requires technical skill, or some kind of knowledge or ability that most people don’t have, and they get an offer, we might tell them to take the offer, or to come close to it, and why that’s the case.

The funny thing is, it’s actually in our interest to do the deal. We want to get the deal done, but never to the point that we’ll push a buyer or seller. In fact, some buyers are like, “Do you really want to do this deal? But I’m not sure that I can,” and we just tell them, “I know that maybe this one seems like a great fit, but we are going to have other sites along in a month, two months, three months, that might even be a better fit, so don’t stress.”

Make sure you pick up the right site for you. And that may not be the one that you’re looking at now. Maybe you just can’t come to terms, maybe you just can’t make a deal on this, but another one will be along that’ll be a better fit, so don’t stress yourself out too much about it.

Joe: Yeah, whenever I’m talking to buyers or sellers about this kind of stuff I just say that my business and my reputation are not worth whatever amount of money I’m going to make on your site, so I’d rather wait until we have a good deal, and that you guys can walk away saying, “Hey, Empire Flippers did right by us, and they put me in a good situation,” so that’s kind of what I look for.

Justin: And the situation for us, and for our listeners, should be that you’re playing the long ball strategy. You’re in this for the long haul, and so a bit of cash up front in the short term is not worth putting your reputation at risk, it’s not worth putting people in bad deals. You want to make sure that you’re building up customers that are going to be ambassadors for your brand, that are going to go out and tell people, “Wow, this is awesome. You got to come check it out. I got a great deal.” And that’s going to promote your business in the long run, and build a long-term sustaining business.

All right, man, enough about this episode. Let’s get into news and updates.

Announcer: You are listening to the Empire Flippers podcast. With Justin and Joe.

Justin: All right, Joe, we are live with a new website redesign. Man, it’s been a long time coming. If you guys want to check it out, head over to empireflippers.com. We’d love to hear your thoughts, but yeah, dude, I’m really excited.

Joe: Yeah, big shout-out to John, to Dan, to Vincent, and to Mike for busting their ass, as well, making sure we got this thing done. A little bit late, but it did go up last week, and about a month and a week, or a month to two weeks delay, so I’m not very happy about that, but it does look great. It’s a huge improvement. The initial feedback is spectacular, but I would like to hear more.

Justin: Yeah, I love the fact that we can actually link to individual listings now. There’s a lot less confusion on the marketplace, so people can see the exact sites they’re looking for. I think they’re [inaudible 00:26:28] process is much clearer now, and there’s just a whole lot more information on every site that we have for sale, for potential buyers.

They can get a much better feel for what they’re looking at than they could with our previous website. And gone are the sand castles, and the guy flipping the coin. So we [crosstalk 00:26:46] done.

Joe: It’s definitely a simpler look and feel. I think we still have some stuff to work on, some of the mobile responsiveness, and some of the listing pages could probably be spruced up a little bit, and make the information a little bit easier to find, but we’re working on that stuff, and it’s a huge improvement of what we had previously.

Justin: Here’s something I’m really interested in, Joe. This is pretty cool. Have you heard of freemarket.com?

Joe: Yeah, I saw the Warrior forum post for these guys.

Justin: Yeah, so these guys, basically the guys over at freelancer.com bought the Warrior Forum about a year ago, not even a year ago now. And they launched a site called freemarket.com, so this is basically the Flippa competitor, and what they’re doing …

This is a DIY, do it yourself option for people looking to sell their own websites. Joe, dozens, hundreds of Flippa competitors have been along over the years, all of them come and go. I mean, they’re all expired domains, no one ever knew them, and they sucked, because it’s difficult to build a marketplace, to have buyers and sellers on both ends of the marketplace.

But I think these guys got a shot, and the reason I think that is freelancer.com has some cash. Those guys, much like the SitePoint guys over at Flippa, have businesses that are outside of this, so it’s not like … And they’ve got communities. The Freelancer has the Warrior Forum guys, the Flippa guys have SitePoint, so they’re building it out of much larger communities where people do want to buy and sell websites.

So I think they might be onto something. They’re have the success fee that Flippa is, at 5%. They’ve got some challenges where … I think they’re not charging a listing fee right now, so they are littered with crappy sites, and I think-

Joe: Yeah, so that’s what I was going to say. Is that I went over there, and it’s a little bit of a ghost town in the $20,000 to an up range. There’s just not a lot of options there. And the biggest problem with Flippa, besides the fact that they’ve raised their success fee to an unreasonable amount, I think, specially for a do-it-yourself platform, is the fact that under $10,000 is littered, it’s just jam-packed full of scams, and unknown stuff.

They’ve also introduced a new thing called “starter sites,” which are basically just websites that don’t make any money, because they’re trying to clean up their listing. It’s just in this low-end value area where marketplaces just struggle because they’re overloaded with a lot of things.

Justin: I think it’s really interesting. I’m actually writing a post about this right now, but it’s like I see these two companies really going head-to-head, specially in the buying and selling websites space, and it’s cool though. I think free market’s got a shot. They’re going to have to make some changes, but it’s fun to see these two larger organizations try to battle it out in this space, so we’ll have more updates as that goes along. I’ll be having a post out about that here in the near future.

Another bit of news we want to mention is we’re privately launching the investor program. So we’re looking at an Alpha test, basically we need a track record, so we want to show, with a few investors, that we’ve built up these sites. We need probably four to six months, maybe a little bit longer, to start the show of return, and show that this is a viable model.

We’re not doing this on a wide scale. We want to test it basically, on the backend first, with just a couple of people that have already expressed interest, and we’re going to start rolling this out. We’ve got some really big plans in this area, though, we’ve talked to a ton of people that have some thoughts, and ideas, and interest in this.

And that’s everyone from the private investor looking to spend 40 to $100,000 on a website, all the way up to the institutional guys looking, talking about portfolios, talking about funds. So it’s a really interesting space, I think we’re a bit early with it, but I think there’s just a ton of opportunity, and we’ll be definitely heading in this direction through the rest of 2014 and 2015.

Joe: Yeah, actually, we have a call tonight with an investor, and I think he might go for the program. Very excited about it, and can’t wait to get it going.

Justin: So, buddy, I am in Chiang Mai right now. You’re back in Davao. We were both in Manila last week. Didn’t do recording because … Well, we did record it, but it was so bad we just couldn’t bring ourselves to publish it.

You are heading out to see me in a couple weeks. You’re going to be out here in Chiang Mai, hanging out with the folks, the internet marketing crowd up here in northern Thailand.

Joe: Yeah, I was just looking at it. It’s two weeks and a day from today, I’ll be in Thailand, so I’ll probably do a couple of days in Manila before I go up there. If you’re along the way and you are listening to this, let me know. Manila and Chiang Mai, and then Bangkok after that, and Vegas after that so … because we’re going to Rhodium Weekend. Right?

Justin: Yeah, buddy, Rhodium Weekend. Got a whole bunch of stuff going on. But we’re going to do an Empire workshop up here in Chiang Mai. Looks like October 9th. We’re going to another one on Bangkok, it looks like October 16th, and then we’re going to be in Las Vegas, we’re going to be doing another workshop on the 23rd, and we’ll be in Vegas from the 24th to the 26th for Rhodium Weekend.

If you don’t know what that is, check your email because I sent you an email about it, and we’d love to see you in Vegas, if you can make it out there.

Joe: Yeah, heavily discounted tickets. We’re not making a dime on those, in fact, I think we’ve given up our commission so that people can get a nice discount, and this way come out, see us, go to Rhodium Weekend, should be a fun little talk.

Justin: Yeah, buddy. There’s a ton of people that are going to be there, too. Chris Guthrie, we’re fans, over at Entrepreneur Boos. We’ve got Justin Gilchrist from Flip Filter, we got Jordan Harbinger from the Art of Charm podcast. These are all previous guests.

We’ve also got … we were just talking to Spencer over at Niche Pursuits, and it looks like he’s going to be coming out, as well. I don’t know if he’s going to be presenting, he was still talking about that, whether he wanted to do that or just be there as an attendee, but either way it’d be fun to hang out with him. We’ve talked to him so much for the last few years, it’d be great to finally meet in person, so that’ll be fantastic.

So, if you make it out there, we’d love to hang out with you over there.

Joe: Yeah. Ace Chapman will be there, as well. He’s a big guy we do a lot of business with, so I’m excited about meeting him, finally.

Justin: All right, buddy. So Listener Shouts, our indulgent, ego-boosting, social-proof site where we’ve got a 5-star iTunes review from Rick H. “This is not another boring interview podcast. Love the podcast, Justin and Joe actually have original content. They do have guests on sometimes, but I love that they don’t overdo it. Great if you want to learn about websites and business.” Thanks, Rick, I really appreciate the shout, and the 5-star review on iTunes.

We’ve got some people on Twitter. We got a ton of love and shouts about the new redesign, people like Chris Guthrie. We had Hayden and Greg over at NoHatDigital give us a shout, Kendrick [Kennison 00:33:28], Andrew Darian, Kevin [Greener 00:33:30], Glenn over at ViperChill, and a bunch of others. So thank you guys so much for the love on the redesign, and for tweeting it out. We really appreciate it.

We had a funny one from Charles Cooper, “It’s a great redesign. Only one change. You and Joe need cigars in your photos.” I think there will be a cigar lounge for us in Bangkok, so we’ll knock a few back, put on our smoking jackets, and enjoy ourselves in Bangkok.

Joe: Yeah, I’m not a big cigar guy, I don’t know. I want to be a big cigar guy, but it just doesn’t work for me.

Justin: Craig Hewitt on Twitter asks, “If you had one type of project you could build your online business from, what would it be?” After a quick back and forth, my reply or answer to him was, “I really love the magical educations space, I love the geo-targeted content, so you basically are targeting cities, towns, and talking about where the schools are for different industries, medical education space.”

I really like the drop shipping stuff, too. So you’ve got Anton over there at dropshiplifestyle.com, who is having a retreat out here in Chiang Mai, we’re actually going to go to that, but he’s got a really cool course, so I think a really nuts-and-bolts course on getting a drop shipping site. If you’re interested in the physical products space, that’s the route I would take for that.

Joe: Yeah, I still think the quickest way to the money though, is going to be a QuinStreet geo-targeted content site. I just talked to a seller today, he has a site that makes about $1,500 net a month, all he does is add content, and it literally took him less than four months to get to that level, and all he did was slap QuinStreet on it.

He talked to … one of his friends at work did QuinStreet, and they told him about all these guys making lots of money building QuinStreet sites, and he said, “Oh, I can do that,” and sure enough, he did it.

Justin: Brendan English says on Twitter, “My day-and-a-half solo trip to Hong Kong was accompanied by the latest two EF podcasts. I needed to hear this stuff. Thanks, guys.” Well, thanks, Brendan. I don’t know how it took you a day and a half to get to Hong Kong, must have been a long trip, but I’m glad we were able to occupy your earbuds in the meantime, and thanks for having us with you.

Joe: Yeah, I’m thinking the same thing. A day and a half? Where is he coming from?

Justin: Antarctica, man. I don’t know.

Joe: Yeah.

Justin: We got a message on a blog called takingactiononline.com, they loved episode 108 on the anatomy of a $200,000 website. It got him thinking bigger than his goal of $500 a month for this Amazon site. I think that’s awesome because there is this kind of tendency to talk about niche, and little, and “How can I just cover my rent, or even lower, like my car payment, by building out sites?”

And I think there is an opportunity to think bigger, so if you’re able to within a year build a $200,000 website, maybe you should set your sites a little higher, and reach up a bit, because there are some opportunities out there right now where people are just crushing it.

We’re seeing these sites, people are selling these sites that are earning really well, and very stable, and growing. So maybe that $200-$300-a-month goal for a website can be improved.

We’ve got Glenn over at monsterpiggybank.com give us a nod regarding our monthly reports. He runs an interesting personal finance blog. It documents his journey to pay off his debt, and ultimately build personal wealth.

I like these types of sites. They’re very popular, right? Where you document your personal financial journey, and so he’s talking about our monthly reports in terms of a business perspective, and document our journey. I think it’s fascinating to see how people go from … That’s the thing, too, with these bloggers, apart of the bloggers that are documenting their personal wealth.

When they start tracking it, and they start measuring it, they start … Plus, they’re talking about it publicly, so it’s like, “Okay, well I have to do this. I got to pay off this credit card this month, or I’m going to look like a donkey on my next blog post.”

Joe: Yeah, they really have something that they have to stick to, for sure, and it makes it a lot more personable than somebody just giving, “The five best things you should do for finance,” yeah but how do you know that? And I think once somebody puts a little personal spin on it, and gives some feedback of how it worked for them, both successes and failures, it works out pretty well, just like it does for a business.

But, by the way, Glenn, love that name: monsterpiggybank.com. I hope to be Joe at monsterpiggybank.com one day.

Justin: We’ve got Craig, gives a shout, over at conventionaldisruption.com. He’s talking about the evolution of niche sites, and how they can help fund your startups. So he talked about how niche sites have changed over the years, but that people are still crushing it in …

Wonder if you can use that to kind of self-fund your big idea. Maybe you’re not building the $200,000 site, but you’re building a bunch of three or four, or $500-a-month sites, and you use that to basically give you the runway in a place like Chiang Mai or Davao, or Ho Chi Minh to build out that awesome startup that you really want to build. It’s using niche sites as a stepping stone to hit the home-run you’re looking for.

Joe: Yeah, anyone who’s not building sites, or things thinks they can’t do it, or thinks no one is doing it out there, I tell you, I talk to builders and sellers every day that are building these type of sites, and it’s definitely not that hard, it’s still very doable.

Expired domain, linking networks, lots, and lots of content, it does still work, and it does give you a good monthly income.

Justin: All right, Joe, so that’s it for episode 110 of the Empire podcast. Thanks for sticking with us, we’ll be back next week with another show. You can find the show notes for this episode and more at empireflippers.com/dealmaker. Make sure to follow us on Twitter @empireflippers. See you next week.

Joe: Bye-bye, everybody.

Announcer: You’ve been listening to the Empire Flippers podcast, with Justin and Joe. Be sure to hit up empireflippers.com for more. That’s empireflippers.com. Thanks for listening.

EFP 110: Becoming a Better Dealmaker