Today we catch up with online entrepreneur Jeff Taylor, CEO at Devise Media, to discuss his experience founding a successful web development company as well as his $300,000 sale of FightState.com on Flippa. This interview is a must-read if you’re thinking about selling a high-value content site.
Tell us about your background as web entrepreneur.
I became involved with digital marketing over 7 years ago. I had a great job as a Business Intelligence consultant, helping the public sector make intelligent business decisions based on their data. I was incredibly fortunate to have been given the chance by the owner of the company. It was a great 5 years, the money was excellent, but something was missing, I just wasn’t happy. I decided to risk it and follow what interested me the most, which was creating and building websites.
I quit with no guarantees of succeeding. I think every entrepreneur has probably faced this decision at some point. You can’t be halfway in. I started a Web Design firm that focused on building websites for local area businesses, and then from there expanded to providing digital exposure and marketing services for client websites. I soon realized that client work is like having hundreds of bosses; that’s when I made the push to create digital assets to earn revenue for myself.
What is your education/employment/career background?
College is expensive and I didn’t want to take out massive loans to get myself in serious debt, so I joined the U.S. Navy to pay for college. It was an amazing experience, I was able to travel the world, and learn so much about other cultures and countries. I still talk with a bunch of the people I served with. All amazing people. The irony of it all was the experience in the Navy and secret clearance was what got me hired and a strong job afterwards, not my education.
When did you begin building and buying web businesses?
I started building web businesses outside of clients 4 or 5 years ago. It’s been a rewarding experience. I’ve met so many great people. I’ve had some great partners. My partner Evan Lisabeth has been right there with me for most of it all. Couldn’t have done it without him. The years of experience, and knowledge gained from working with people have been the most valuable asset. With the right knowledge and experience time is irrelevant.
What kind of sites have you worked on in the past?
I’ve had multiple seven figure website sales, revolving around fitness, gaming, and style. I’ve also had several six figure sales revolving around MMA, Tech, and Health. Those sites have ranged from affiliate based sites to display advertising. They all had strong communities of support that were passionate about the niche. These websites have all been content based sites (articles/videos). Very low tech. Anyone with decent WordPress knowledge could have built them.
Any special skills that you bring to the table?
Hundreds of hours of watching YouTube videos, reading forums, and learning from others. I don’t know of any course that will teach you what you need to know. You just need to get out there and fail as much as possible, and fail fast, so you can figure out what works and what doesn’t. Stop waiting for the perfect time. Stop reading this interview. Go work on it right now.
I don’t think there’s anything special I do in particular. I love this stuff. It never feels like work. I think maybe that plays a big part in it.
What brought you to Flippa? Why do you use Flippa?
I’ve used Flippa since the early days of it. It’s always an exciting experience. There’s not many experiences in this business better than seeing that bid icon light up. It’s no secret that Flippa has high visibility and a large, active userbase. I want to get as many eyeballs on a sale as possible. I’ve always focused on building quality sites with very strong communities that support them. There’s nothing to hide or shy away from. The sites I’ve sold are the result of months to years of tedious leg work, so I want them to be seen, and Flippa is the obvious choice for that.
You once sold FightState.com for $300,000 on the Flippa marketplace, what was that experience like?
It was a great experience. It was actually one of the largest public Flippa sales ever at the time. The response was overwhelming. Nothing drives exposure like a Flippa listing. During the course of the sale, I answered hundreds of messages, and met some great people. The Flippa staff was very helpful and provided excellent support throughout the entire auction through their account management service. Their support was invaluable, and made the experience very smooth from listing all the way to escrow and transfer. I’ve never had a bad experience with Flippa.
This interview i’m doing with Flippa is in itself proof of the great support from the staff.
For those who don’t already know, tell us what the site about?
Fightstate was a very popular (Alexa top 10k) entertainment website revolving around combat sports (MMA/Boxing). We put together a team of fight nerds who spent their time scouring the internet for the most entertaining martial arts content.
The site had multiple large social profiles that supported it, with hundreds of thousands of fans across Facebook that would send an average of over 6 million visits to the website a month. We worked hard to build up the community first. The website was an extension of the social community itself.
We had countless articles go viral with coverage from BBC, Vice, Yahoo, and hundreds of mentions, retweets from famous fighters, boxers, and other social influencers. In the end the hard work paid off and the business sold for $300,000 on Flippa.
Any advice for other web entrepreneurs looking sell websites on Flippa?
Be patient, don’t rush the process. Explain details clearly. Try to answer every single message and comment. It can be a lot of work, but it can also be very rewarding. You never know who you could be speaking to. I’ve actually met future business partners through Flippa messages. It’s been a great vehicle for my business, I couldn’t recommend them any higher.
So there you have it, that’s Jeff’s Flippa story! If you have a high-value content site that you might like to sell on Flippa, request a free website valuation and we’ll get back to you within 24 hours to let you know what your site is worth!
I recently had the opportunity to sit down with Cindy Molchany, a web entrepreneur who started CraftBeverageJobs.com after reading the $100 Startup by Chris Guillebeau. The site quickly exploded, and after 3 years of hard work, Cindy decided to sell her business on Flippa for $20,000.
As a first-time Flippa seller, Cindy details what the auction process was like and what it was like to work alongside our account management team here at Flippa.
Tell us about your technical background and how you started CraftBeverageJobs.com.
My background is in wine and beer marketing, and I have no technical background per-se except I had started a WordPress blog or two (but I’m not sure you can say that is a “technical background”).
When I came up with the idea to launch Craft Beverage Jobs, I actually did it as a way to grow exposure for my digital marketing services to the industry. I thought offering an industry job board with compelling content and a strong social media presence would help me stand out among the competition and drive interest for my digital marketing services.
When I discovered I could build a job board the way I wanted using WordPress and a $100 plugin, I was up and running within 30 days as a way to challenge myself after reading “The $100 Startup”.
Craft Beverage Jobs actually ended up quickly taking on a life of its own, and the more involved I got with building and growing the site, the more interested I became in Online Business in general and the less beverage marketing I did. Funny how that works.
What made you decide to sell your website?
The simple answer is that my interests have evolved, and I was neglecting it. I knew the site and concept excited people, but I didn’t feel like I had much left to contribute in order to take it to the next level. It needed fresh energy.
Tell us about your first sale went.
My first sale was a flop!
A website isn’t like a car where you can look up the Kelly Blue Book value and understand what a good market value is – even though a lot of “experts” will tell you that it’s as black and white as adding a 2-3x multiplier on your site revenue (or profit – not sure which one is used).
So when I initially launched Craft Beverage Jobs for sale on Flippa, I had zero confidence going in because how I valued the site was in such contrast to what the online calculators out there showed. And even though I got a couple of “Buy It Now” offers above the reserve price I set initially, I ended up pulling the auction only after a few days because I decided I would rather keep the site then sell for less than what I thought it was worth.
I thought that was it, but then shortly after I ended the sale, Joseph at Flippa reached out and extended the offer to do an evaluation for me and to potentially work together should I decide to relist.
He confirmed what I suspected all along. That value is in the eye of the beholder, and he expressed confidence (in his expert opinion – not a guarantee) that I would get a price I would be comfortable with.
What was it like working with our account management team?
Having access to the account management team made all the difference in the world. With the free upgrades, the featured newsletter spot, and the social media promotions, my auction got a lot of attention from many different interested buyers. In addition to the validation on value, I was able to ask for help on strategy up to the very end of the sale. This was very important to me because it gave me the confidence I didn’t have the first time around.
In all honesty, Flippa can be a little intimidating – especially for a newbie. I didn’t want to make a beginner mistake on something so important to me, and working with Joseph was like having a coach the whole way through.
What suggestions would you have for others looking to sell their website?
Putting heart and soul into your website can most definitely add value.
It’s about finding the right buyer, not just any buyer. Talk to people who express interest, answer all their questions (the more the better the sign), and find out their intentions with your website.
And jump at the opportunity to work with the Flippa team if given the chance.
Would you like to add any closing statements?
I miss running a website like Craft Beverage Jobs, and am already starting a new transactional niche website to build, grow, nurture (and maybe sell on Flippa one day).
Enjoy reading Cindy’s story? Continue reading more Flippa case studies now.
The Website Acquisition that Boosted Revenues by 4x with no Additional Traffic
In the Summer of 2015, MonetizeMore purchased a polling site called MisterPoll.com, a website that enables users to create polls, share them and then provide the statistic results. At the time of purchase, MisterPoll.com was only running AdSense directly on-page, which MonetizeMore saw as a huge opportunity to increase MisterPoll.com’s ad revenues without even increasing traffic. MonetizeMore has been in the ad optimization industry since 2010 and has some of the best ad optimization tech and experts in the industry. In this case study, the team at MonetizeMore reveals just how we were able to take a site, and within one month, grow the site’s revenue by 4x.
The MonetizeMore team started by implementing the most widely used ad server in the world called DFP (Google owned). The implementation of the ad server enabled the team to run many revenue sources at once, include direct sales ads and incorporate complex ad optimization techniques. The first technique that was implemented was integrating Google Ad Exchange (AdX). Google Ad Exchange is the best performing demand source in the world. It is even more powerful when integrating in DFP using a technique called dynamic allocation. Since Google owns DFP and Ad Exchange, the two technologies are able to communicate with each other so that DFP always knows what AdX will pay for each impression. As a result, the publisher can be confident that AdX only serves when it is the highest paying demand source. This is a very important part of ad optimization and realizing a publishers’ ad revenue potential.
Once DFP and AdX were implemented, MisterPoll.com saw a revenue increase of about 50%. This was a nice increase but MonetizeMore was not done there. The next step was to implement managed demand ad networks. Managed demand ad networks are traditional ad networks that send ad tags to publishers that have passbacks if the ad network is not able to payout on a minimum RPM for that ad impression. They are implemented in DFP at price priority level and the priority levels are adjusted on a daily basis based on past performance. Six managed demand ad networks were implemented and after a month of optimizing, the ad revenues more than doubled.
The last and most important step to ad optimization was implementing header bidding. Header bidding is a similar process to dynamic allocation for non-Google demand sources. Each header bid network makes a bid via an API, then the highest header bid will compete against Google and the managed demand sources. It is called header bidding because it is enabled via a header container technology which is implemented in the header of the page and the auction happens within the browser before the DFP auction. MonetizeMore has a header container called PubGuru.
Header bidding dramatically increases ad revenues and page RPMs for similar reasons that AdX implemented via dynamic allocation increases page RPM. The technology ensures that the highest bidder wins the ad impression. When you maximize the ad revenue for each ad impression rather than educated guesses via managed demand, you see some incredible increases in ad revenue. This boosted the MisterPoll.com revenues to 4x compared to the monthly revenues before the site was acquired. PubGuru header bidding not only increased the ad revenues but it also:
- Eliminated passback ad impressions which improved site speed
- Decreased blank ad impressions
- Increased the accuracy of DFP reports
- Decreased the daily hours needed for ad optimization
There is no doubt header bidding was the most important implementation on MisterPoll.com that contributed the most to the ad revenue increases and additional benefits. However, the previous 3 steps were integral to the success and also enabled header bidding. If you are considering to purchase a website on Flippa that monetizes via programmatic ads, it is in your best interest to follow the four steps that MonetizeMore followed.
You can complete the four steps on your own or outsource it to a company like MonetizeMore. If you decide to do it on your own, you can use the PubGuru SAAS solution to guide you through each step at your own pace. If you don’t have your own direct account with AdX, you would need to use a company partnered with Google (Like MonetizeMore) to offer AdX demand. If your site gets over 5MM page views per month, you can qualify for a free DFP implementation. If you get more than 20MM page views per month, you can qualify to become a premium publisher and MonetizeMore will handle all ad optimization for you so you can focus on the more important parts of your business.
Whether you decide to outsource your ad optimization or do it in-house, make sure to make a decision and stick to it. The worst thing you can do is ignore this low hanging fruit. Do not settle with just running AdSense. Otherwise, you are leaving a significant portion of revenues on the table, just like MisterPoll.com was.
I’m joined here by Richard Jordan, a web entrepreneur and Flippa Super Seller with $133,867 over 26 transactions and a 100% positive rating. Richard and I discuss his success of buying and selling websites on Flippa, and drops a few hints on how others can successfully do the same.
Tell us about your background as web entrepreneur.
I received a degree in Computer Science in 2009. Rather than working for a company like Google, I stumbled into making money with websites and instantly became fascinated with operating web businesses. I started doing freelance webmaster work, but I quickly grew tired of working for other people who had no idea how to properly operate their online business. That’s when I started investigating owning my own websites portfolio to become my own boss. I figured that if I owned websites I could make the same amount of money and not have to work for other people. Ever since then, I’ve been maintaining my own websites portfolio and haven’t looked back!
What originally brought you to Flippa, and why do you continue to use it?
One of my clients wanted to sell his site and asked me to list it on Flippa back in 2011. This opportunity opened my eyes to the world of buying and selling websites and I immediately became hooked. Since I was still building my portfolio, I was mostly buying websites, whereas now I am mostly selling websites on Flippa. At one point, I owned and operated on a portfolio of about 50 different websites. I sell on Flippa because nowhere comes close to having as many buyers as Flippa does.
A lot of your recent auctions have had no reserve. Are you simply motivated to sell or is there a strategy there for you?
I have full confidence that the Flippa market is mature enough that nothing will sell for anything I would be too unhappy with. Plus I am pretty attached to my websites and have a tough time negotiating a price privately. The auction format takes away my seller’s remorse issues. Whatever happens, happens, and typically it works out better than I could have ever hoped.
Would you recommend a no reserve to other sellers? If so, why?
It isn’t for everyone, but if you’re motivated to sell, I would highly recommend it. In general, websites are hard to price. I can tell you when a website is undervalued, but I have limited ability to predict what it is worth to someone who is a specialist in that niche. Some niches I might know and be able to set that price as well. That said, there are a lot of much more talented people than me out there at growing sites, and there are a lot of niches, each with its own unique factors.
How did you get to owning such a large websites portfolio? Were most of these bought, or did you build them yourself?
Personally, I am not that great at building or growing websites. I have a system for buying though that has worked well for me, and I think could work well for others.
You have just listed TheTolkienForum.com, PoemOfQuotes.com, and FeldGrau.com/net. Can you tell us about these listings?
They are sites I have purchased over the last 5 years. They were all old and neglected when I purchased them. In the case of TheTolkienForum.com I made a software change to grow the community. PoemOfQuotes.com is a great site that I have owned since 2013 that makes on average $400 / month via AdSense without any maintenance. It is a hard one for me to sell at no reserve, but I know it will work out and find a smart owner. FeldGrau.net / FeldGrau.com are the type of cool, old sites I love with timeless topics. Feldgrau centers on German Armed Forces in World War II, and Feldgrau is the nickname for the color of their uniforms. Feldgrau.com is an information site, and Feldgrau.net is a community site. Both are being sold together as a package deal.
If these sites sound interesting to you, check out their auctions here: TheTolkienForum.com // PoemOfQuotes.com // FeldGrau.com.
You mentioned to me you were writing a book. What is the book about and when will it be finished?
The book is about what I have done for the last 5 years. The website world has allowed me to find freedom, love, and hopefully some children soon. I doubt I will make much from the book, but I want to give back. My teachers were sellers on Flippa, and I want the cycle to continue as I transition in my life. I want to inspire someone to take what I have done and exceed it. If one person looks back and feels as thankful as I do then I will be happy with my choice.
I will be giving away everything I know in the book, so it may end up being a bad move if I lose too much money in the stock market and have to come back to buying and selling websites. I have a website book.rdan.co where people can sign up for the book. You can also submit requests for general topics for me to cover and specific questions to answer in the book. The book should come out next month, February 2017. If people find the book helpful, then I might offer services to help people buy websites.
Any advice for other entrepreneurs looking to sell their websites?
I would advise people to stop being promotional when they advertise their websites. It is a turnoff. Let the facts speak for themselves. People see right through you, and then you just come off as a bad person. Have empathy for your buyers. Both a buyer and seller should benefit from a transaction.
Would you like to add any closing statements?
I’d like to leave with a short excerpt from my book, The Trust Fund: Autobiography of a Website Flipper.
Because of my Flippa auctions, I have received questions about how I acquired so many aged, AdSense autopilot websites. As I am ending my journey in this market, I wanted to share my intellectual capital so that future vagabonds down this life path may surpass me and reach similar liberating life circumstances as myself.
My fiancé openly questions me about whether I have a trust fund. I have no job or schedule while she, like many (maybe even you dear reader), spends long hours toiling in the salt mines of corporate America. I am blessed by finding an alternative path in life. I have created my own trust fund with passive income generating websites. But for those who read my story, you may find that it is not an easy path. I hope my story may also help some to turn back before tackling what may be a painful, unfulfilling journey.
Richard Jordan has been buying and selling websites for over 6 years now and still buys and sells websites to this day. Want to be notified if he creates any new listings? Check out his profile and click on ‘watch seller.’
Investing in websites is appealing for several key reasons. The first is the return on investment. High quality websites sell for three times annual earnings which means they are generating 33% profits each year. That’s pretty good right?
You are your own boss when you own a website. That means you have the flexibility to work when you want and as hard or as little as you want.
And finally, there is a pervasive narrative that websites can be passive sources of income. That begs the question:
Can Websites Truly Earn Passive Income?
Cash flow from websites will never be as passive as opening a savings account at a bank and seeing interest from your deposit year after year without lifting a finger. On the other hand, there are many web businesses that run with limited owner involvement because they use tools and methods to reduce or almost eliminate the workload. One of my websites takes no more than three hours per month of effort and consistently earns over $3,000 per month.
In this article I will tell you what to look for if your goal is to buy a passive website. Then we will discuss what you can do if you already have a website which isn’t passive now but could be in the future.
What to Look for in a Passive Website Investment
What Does the Seller Say?
Always look at what the seller has to say about how much work is involved to operate the website, but never believe it.
Is that a bit harsh? Only a bit.
A few sellers may actually remember everything they do and accurately estimate how much time it takes them to do it… but not many of them, I assure you. People are bad at estimating and worse at remembering.
Sellers may have skills and knowledge you don’t have. That means it will take you more time than it takes them, at least at the beginning. On the other hand, I often buy websites where I have skills the seller doesn’t have and end up saving time because of it.
Nevertheless, talking with the seller about what they do, how they do it and how much time it takes is one of the most important things you can do. Not only will you get a much better idea of what the important tasks are, you will also begin to learn what it would take to make the website truly passive.
Hands-Off Transactional Websites
Many web businesses make their money one transaction at a time. When you are evaluating the business model of a website it is important to look at the steps involved in a transaction. Take an eCommerce jewelry site for example.
A customer visits the site, looks around at different products, adds one to their cart, goes to checkout, enters their contact information and payment method, and then waits for the product to show up at their door. All of that is what the customer does.
Whether that transaction is passive or not is dependent on the process and tools the website is employing. Here is a near worst case, least passive example of what could be happening behind the scenes:
The owner of the site hand makes the jewelry himself and keeps inventory in his home or office. If the jewelry is custom made, the scenario gets even worse.
So when the customer places their order, the owner packages the product for shipping, prints out a label with the customer’s address (or writes it, God forbid), applies postage, takes the package to the post office for shipping, comes home and emails the customer with a tracking number, orders more materials, inventory and shipping supplies to replace what was used, follows up with the customer some time later by email and who knows what else.
However another site might handle the same transaction in a completely automated fashion. The customer places their order in exactly the same way but:
The order gets automatically sent by the website to a manufacturer or distributor. The distributor packages and sends the order to the customer and also sends an email with a tracking number for the shipment. A system generated email is sent to the customer asking for a product review a few days after shipment.
Drop-ship isn’t necessarily more profitable than self-ship, but it is certainly more passive.
When you evaluate a website to buy, think through the steps involved to fulfill a transaction. Who performs each step? Are they automated? Can they be? This is a critical component of your due diligence, whether for an eCommerce site or any other site where a product is purchased one transaction at a time.
What About the Techy Stuff?
Look for sites that are running on industry standard platforms like WordPress, Joomla or Drupal. Many sites require very little technical support after they are setup. However, when something does need fixed or improved, it will be much easier and less expensive to find someone to do it if the site is built on industry standard tools. Beware of sites that say they were “custom built” unless you are prepared to pay to have it maintained. I’m not saying custom built sites are bad investments. They may have a unique differentiator that puts them ahead of the competition, but that does not mean that they will be passive plays.
Marketing and Promotion
In some unusual situations, sites have stable or growing traffic without much additional work. I mentioned earlier that I have a site that just seems to keep growing without much help from me. That is rare but I’ll tell you why it doesn’t take much support.
The site was old, almost 15 years old now. It is a content site with long and well written informational articles. The articles are linked extensively one to another. The original owner didn’t do any external link building, so all the authority from the site came naturally. Much of the content is interesting enough to attract comments from the visitors.
The site doesn’t do anything to make Google unhappy like having plagiarized content, paid links from other sites, too many ads, bad formatting for mobile users, old technology or manipulative keyword techniques.
Tip: Look for sites that are completely compliant with the rules of the big players they are dependent on. Content sites are dependent on Google. Amazon affiliate sites are dependent on Amazon. Others may require ClickBank, Instagram or ShareASale for their survival. This doesn’t mean they will always stay in good graces with their benefactors because those big companies change their minds several times a year. However, starting on the right foot by following the rules puts the business ahead of the vast majority of its competitors.
Many sites operate on a business model that requires manual work. Product sites may get their traffic from PPC that requires campaign management. Services sites may require someone to answer the phone or chat in a chat box. Content sites may require social media promotion. Sales may be dependent on a steady stream of emails or newsletters. Despite these mandatory activities, a site may still be relatively passive as an investment if the tasks are outsourced to an existing team.
Phone numbers and chat boxes on websites are tell-tale signs that a human is at work. Sites that ask you to fill in a form and request a quote probably have to have a real person responding to that quote request. Be aware of those elements of the business model and ask the seller how those tasks can be outsourced or automated.
Growth or Stability?
Keep in mind that it takes less effort to maintain the performance of a site than it does to grow one. There are very few web businesses that will grow without active effort on your part. The trick is to automate, systemize and delegate as you grow. I’ll talk much more about that later on.
Don’t make the mistake of thinking you can buy and then completely ignore a website. Like any business, if it isn’t growing a little, it will ultimately decline.
Summarizing What to Look For
- Manual tasks are outsourced or delegated and the resources are willing to continue working on the site after you buy it.
- Sellers who understand their business model very well. Smart sellers have usually automated or at least documented the key activities of the business.
- Sites that use industry standard platforms like WordPress or services like Shopify.
- Sites that have integrated their systems with their suppliers, providers and partners.
- Sites that have end-to-end self service processes for their customers.
- Sites that don’t require extensive marketing or promotion to grow. User generated content, intelligent automated referral systems, long standing promotional mechanisms like permanent referral links and cross promotional agreements are examples of methods that reduce the need for manual marketing or promotion activity.
- Simple business models like content websites that earn revenue from Adsense. Note that driving traffic to content sites may be anything but simple.
- Sites that have automated maintenance tasks like new product uploads, comment moderation, credit card expiration notifications, etc., etc.
- Sites that are less depend on customer communication in the pre and post-sale process.
There are many others, but you get the idea.
What if I’ve Already Purchased a Website, and it is NOT Passive Income?
If you are a dismayed owner of a website that requires more effort than you care to exert, you have a few choices.
I bought a site that sold software and, surprise, surprise, the customers expected the software to work, to be supported and to be upgraded from time to time. It was profitable but it got tiring pretty quick. I sold it after a year and a half.
It might be hard to sell to people who have read this article unless they have a particular interest in your niche or business model.
Delegate or Outsource
If your business has enough margin to cover the cost, almost anything can be delegated to an employee, outsourced to a freelancer or contracted out to a service agency. Many tasks may not be as expensive as you think, particularly if you go the freelancer route. Do this with your eyes wide open and choose your resources carefully or you could generate more stress than you avoid.
Change or Tweak the Business Model
Consider changing business models entirely or modifying the model. Consider these ideas:
- Move from a self-ship to drop ship, or send your inventory to Amazon and let them manage fulfillment with their FBA service.
- Instead of selling and servicing your own products, pivot and sell some or all products as an affiliate so they take care of customers for you.
- Replace physical product sales with digital product sales.
- Eliminate services or replace with simpler ones.
There is a plethora of amazing, readily available software that can make your life much easier. Finding, installing and configuring the software may be a chore, but ultimately well worth it. Even these activities can be outsourced if you spend some time looking for the right help.
I can’t begin to list the thousands of painful tasks that can be performed with a little automation and system analysis. Just search for “automate ________” and fill in the blank with your pain point like Facebook Posting, email management, order processing or ad creation and see what Google suggests. Talk to people running similar websites or at least visit their site and become their customer to see how they have automated processes.
Passive income is a Holy Grail that we all seek and are willing to pay a little more for. Tell me your experiences with passive and non-passive website investments in the comments below!
Jeff Hunt wrote The Website Investor: The Guide To Buying Online Website Businesses For Passive Income. In addition to running his own portfolio of websites, Jeff helps entrepreneurs buy and optimize their web businesses. Learn more at www.OwnOptimize.com and www.HeckYeah.org.
I recently caught up with Riad Bekhit, owner and self-proclaimed Chief Potato Officer at PotatoParcel.com, after he appeared on ABC’s Shark Tank and secured a $50,000 investment for his spud-powered enterprise. Bekhit acquired Potato Parcel on Flippa in 2015, and he’s since rapidly grown the business, which now generates $25,000+ in monthly sales of…potatoes. See the exclusive interview below for an inside look at Bekhit’s Shark Tank experience and his growing online sensation!
You bought the site on Flippa last year. What motivated you to buy, and why PotatoParcel?
Before acquiring Potato Parcel, I had recently quit my job in software sales. I had several eCommerce projects on the side, but without a 9-5, I also had more free time to began plotting my next big move. When I came across Potato Parcel, I saw great potential, and I knew right away that I wanted to get involved. I was able to negotiate a great deal to acquire the business, so I pulled the trigger at $42,000 and never looked back.
Can you give us any insight into how the business has faired since the acquisition?
The business is doing extremely well. It was instantly profitable and I recouped my investment quickly. We’ve continued to grow sales month over month, despite the many critics who said the site would never succeed. In the 13 months following the Flippa acquisition, we did $215,000 in sales, and things are continuing to accelerate with no signs of slowing down. Needless to say, it’s a great time to be an entrepreneur in the potato industry.
What was the process like applying to get onto Shark Tank?
It was actually quite lengthy. We first applied online and did not hear back from the producers for a few months. When we finally did hear back they asked us to send in an audition tape. Another few months went by after that, and then finally they asked us to come to LA to film the show. After filming, we were on edge because we weren’t guaranteed to air on TV, even though we pitched in front of the sharks. We were really hoping to air and were ecstatic when we heard we finally made it!
Once you were accepted, how did you prepare and come up with your your pitch?
We wanted to make our pitch fun, just like our product and company. So we decided to walk into the tank with potato costumes, sun glasses, and whip out potatoes from our back pocket. We also gave the sharks some funny potatoes too.
Riad (left) and PotatoParcel founder Alex Craig (right) pitching the business on Shark Tank
Did you go into it with any specific Sharks you wanted to do a deal with?
To be honest, we went into this not really knowing if we would even get an offer from any of the sharks. It can be a bit of a crapshoot sometimes with Potato Parcel, some people really get the business and love the idea, and others just think it’s a joke. That said, I did think Kevin (AKA Mr. Wonderful) would be interested, because of our high profit margins and the fact that he has invested in companies that sell customized products in the past.
What was it like pitching live to the sharks, and how did you deal with the nerves?
It was a lot of build up and preparation. Going through our pitch over and over again. Studying our numbers. Thinking of anything that sharks might ask us and having a solid answer for that. We were nervous for sure. A lot of heavy breathing. But once we started talking about our business it became more like a natural conversation with the sharks and the nerves subsided. That’s not to say it wasn’t intense, but the amount of preparation we put in really did pay off in the end.
Alex negotiated a royalty prior to selling you the business, can you tell us about that?
Alex sold 100% of the business to me on Flippa. However, as part of the sale we agreed that if the business was able to get on Shark Tank he would receive $1 from every potato sold for sixty days following the air date. Why did I agree? I owe Alex great credit for getting the initial traction in the early days of the business, and I also knew Shark Tank would provide a great platform to get the business in front of more people. Because of his contributions and the potential upside of the deal, the royalty was a no-brainer, and in the end Alex’s influence definitely helped us land a spot on the show.
You ended up with two sharks fighting over you, why did you go with Kevin over Robert?
It really just came down to their offers. When the other sharks backed out, Kevin O’Leary’s final offer was $50,000 for a 10% stake and a $1 royalty fee for up to $150,000. Robert Herjavec’s final offer was $50,000 for a 17.5% stake. In the long run, I though Kevin’s deal was the ultimately going to be the better deal (after the royalty gets paid off.) He is also a funny guy who really loved our quirky idea, and I think that because of his passion, he’ll be incentivized to continue to help us grow.
“The Queen of QVC” Lori Greiner (Left) and digital security mogul Robert Herjavec (Right) enjoying the sample products
What’s it been like working with Mr Wonderful since the show aired?
As of late, I have mostly been dealing with his PR and social media team. That’s one of the benefits of doing a deal with a shark like Kevin, he’s got a mountain of resources behind him and a lot to offer beyond the dollar signs. I’ve also had several calls with him since the show aired, and I’m excited to continue to grow the business with him moving forward.
What’s in store for Potato Parcel, and how can people follow what you’re up to?
We want to come up with new products, have more international ambassadors join our team, and possibly expand into a business including many quirky and funny gifts. But for now, we remain focused on our core offering, selling potatoes with customized messages inscribed on them. If people want to check in on the company, the best place is our official twitter. As for me, I currently work full-time on Potato Parcel and I see myself doing this for as long as possible! I’d prefer to always work for myself, and I prefer to do that selling…potatoes.