How Does A Website Buyer Choose What To Buy?

Goran Duskic is a serial entrepreneur with a storied experience in buying and selling websites. During this interview, led by Flippa CEO Blake Hutchison, we gain a bit of insight to his strategies that have led to his ownership of over 50 successful websites. From understanding your own skills, to working within your budget, to reading the industry and interpreting trends, Goran opens the doors to his own experience in buying, running, and selling websites so that we might learn from his successes and also his mistakes.

A transcription of the video content is posted below for your convenience.

– Good afternoon everyone and welcome to another Flippa webinar. Today I am joined by Goran Duskic. Goran is a prolific website investor. He’s founded multiple companies, he’s had a couple of successes as well as an entrepreneur, successfully exiting his businesses and today he’s going to give you some insight into his quite prolific website investing journey to date as I said, Goran owns many websites, I believe the portfolio is now up to 50. Goran thank you very much for being with us today.

– Thank you for inviting me Blake. Thank you for this kind intro. I’m happy to be here and hopefully I can contribute to Flippa community.

– Wonderful so what we’re going to do Goran is we’re gonna help out the big Flippa community that are first time buyers to the platform. They’re obviously very excited about getting into digital asset investing, be that as an investor or someone who’s going to build, run, and ultimately grow an asset. Now you’re a successful entrepreneur, before we get started, just give us a brief introduction to WhoAPI, the business that you’ve been running for nine years.

– Yeah so WhoAPI is basically a set of APIs that helps developers around the world to integrate into their own systems for different reasons. For example we’ve had clients like banks, but also website builders and hosting companies, cyber security companies, so it’s a really diverse crowd from around the world in the US, Australia as well, Japan, so it’s a 24 hour gig, you can say. We’ve received angel and venture capital for this startup and I suppose it’s going okay compared to the businesses that failed but also, it’s also going just okay compared to the big acquisitions and investing rounds you’ve been reading on TechCrunch for example. So that’s kind of the story about WhoAPI.

– Fantastic, thanks you. It sounds like a wonderful journey obviously you’ve got some outstanding customers from around the world, so congratulations there. Now let’s get into your journey. As we said, you’ve got over 50 websites in the portfolio but what made you get into this space to begin with?

– Yeah so I was looking for a way to, save some money, to create some sort of passive income as I’ve been reading a lot of books about investing and obviously if you are reading books about investing from an American author he’s gonna say real estate, real estate, which doesn’t really apply to Croatia, if you look at the prices of the houses and the, people moving away from Croatia, so it’s not like we have an influx of immigrants and immigrants from, like the United States so it’s a totally different ball game, so I was looking for something else obviously. And this was before the Bitcoin craze, before it shot up to 20 thousand dollars or whatever, so I was looking into Bitcoin also, and read a few books about Bitcoin and talked to some, Bitcoin investors and I then realized I should really focus on something that I am passionate about and something that aligns with my skillset and something that I could be working on for a long, for several years at least. So my first company was web design, web hosting company, we built websites for our clients here in Croatia and realized, wow I like building websites, I know pretty much everything about websites there is, I already have a systems administrator on the payroll, I have my own dedicated server, maybe I could try this, maybe I could start buying some websites and see how it goes. So the very first website I bought it was obviously a scam and I didn’t do due diligence and I lost two thousand dollars.

– [Blake] Okay.

– And I asked my lawyer if we could do something about it and he told me that the whole cost of suing somebody and the whole thing to go after him would cost around two thousand dollars. So my, okay, so I have to spend another another two thousand just to go after this guy so I just said, okay, this is a learning experience I learned how, how some data points could be manipulated and essentially that’s how that was the first thing I looked into when I was gonna do my second deal. But I didn’t buy any websites for I think two years, or maybe even more, before I was really comfortable and I had much more money to play with and my approach was totally different, I wasn’t even looking for the same type of deal and my due diligence process was also different.

– [Blake] Okay.

– And anyway, to answer your question, the website I bought was chemistryjokes.com for $500.

– Wow.

– I thought that was a great deal, I thought that the name itself was worth $500 and, so that’s I suppose a point you can take if you know a value of a domain name you could buy the website itself just for the domain name and then the revenue is just kind of a bonus if that makes sense?

– Yeah, absolutely makes sense. Particularly if it’s an aged domain name and it’s got some domain authority to it. So your, what is you strategy? So you own 50 websites, what is the approach that you’re actually taking? What interests you about the sites you buy, are they all the same? What’s the strategy?

– Well my strategy changes. So for example, when I was buying my first websites my strategy was okay, let’s see how this process of buying and moving the website really works, what sellers are out there, what do I want to look into the seller, so it was more a learning process of everything. Of positioning myself as an investor or I should say a buyer to the seller, see how to communicate because not all people are the same. You are dealing with sellers in Asia, in America, in Europe, they all have different vocabulary, different styles of selling. Some are first time sellers, some are repeat sellers, so there’s a learning curve, if you’re a newbie. So that’s one strategy, just learn as much as you can, right. Then the second strategy for me was, building my portfolio and seeing okay what works for me, what works in a website, what kind of niches I want to work on. And this also changes because sometimes you feel, oh I really wanna do, I don’t know, gaming, I wanna do gaming websites and then you realize ah ha, with the games there are trends, games come and go, I don’t know Flash is now dying so if you bought some websites that have Flash games, this is obviously gonna go down over the years so, you begin to learn about trends and you start to build your portfolio and then third strategy for me, which I’m currently at is, I’m trying to condense my portfolio I’m trying to combine some of the smaller websites into some bigger websites and obviously if you’re doing great and your budget increases, at first you’re buying just small websites and then you’re going to grow into medium websites and hopefully to some large websites and then again your strategy changes with the size of the deals you’re involved in. But kind of a…

– Could you define a small, medium, and large?

– Well I suppose the easiest way would be on your budget, up to a couple thousand dollars would be a small, and then a medium up to mid-five figures, maybe three figures, depending on where you’re from, and then above six figures you would say it’s a large deal but then again, I think it also depends where you’re from. If you’re in the United States and you say to somebody this website is making a thousand dollars you can’t do anything with a thousand dollars but if you’re in Eastern Europe like I am, you have no college tuition, no college debut, you own the real estate you live in, and you’ve bought the car that you’re driving, obviously you don’t have any debt, then a thousand is pretty much all you need for a really nice life here. So it really depends also where you live.

– Yep, super interesting. Now you mentioned to me through the beginnings of when you and I were getting to know each other you mentioned that it’s really important the people you surround yourself with. What do you mean by that?

– Yeah as a website investor, people and tools is something that you’re working on and working with every day throughout the day. When you start buying and selling websites you’re going to do the due diligence and check up on the websites, see if the backlinks are there, see if the key word, the key word position is there, if the website is opening quickly, if it’s slow, if it has SSL certificates installed, all that, so you need some proper tools to check on the website, like a doctor. And then the people are also really important because as soon as you start buying and selling websites you are going to be dealing with people and if you are lucky, like I have been, then you encounter some good sellers, you’re going to be interacting with them on a repeat basis. Some of these sellers have also particular skills, let’s say in SEO, in social media, and they could be offering you some services to build up the websites that you’ve bought from them. So you’re going to deal with those people and it’s really important that these people are trustworthy, skillful, experienced, ethical, and that you’re on the same page with them.

– And so you mentioned people, you’ve bought a lot of websites, now are you tending to buy multiple websites from the same person?

– I’m agnostic, so I buy off the marketplace, I’ve bought, and I do buy from some forums where I see websites advertised. And then, if I find a repeat seller who has a good portfolio, good websites to sell, we stay on weekly basis in touch, some of them I consider my friends now, we talk about, about everything, so I do buy, and I do buy, let’s say, there was this, few times actually, where I bought a small portfolio of websites. The person would want to focus on some new venture or wants to get out of it completely or has some old websites just lying around and then I just take them off the table for them. And for me it’s an asset to either, build a bigger website or just to have it as a passive income just lying around, an active website that’s bringing some revenue.

– Okay, so let’s imagine that you’re on a marketplace or you’re in a forum and you come across a website. What are the, what are the top three, what are the top things that you look for, before you make a decision as to whether you inquire or not.

– Sure, well that’s a great question because that would probably, that would reveal how experienced I am or how knowledgeable I’m not or I am. So I would say that’s learning process. Right now I’m seeing that old websites and to do better, they don’t disappear overnight. So age is a crucial factor I would say, that’s one. Second, is it has to fall under my budget, so if it’s an opportunity that would ask me to invest, let’s say 50 thousand dollars, or 100 thousand dollars, it would, I would risk too much of my money, so it’s a deciding factor for me. So that would be the second. Then the third, I would say either it would have to fit into my portfolio, like diversity or something I could, I could use it with some other websites I have, or it would have to, it would have to emphasis some of the skillsets that I have or that my team has. So I know a good example would be a website built with django. I bought a website that was built in django and it was an old website in the graphic design industry and I really liked it but it was in django and obviously buyers tend to like WordPress and they weren’t excited about this django website. I asked my developer, what do you think about django, he’s like sure, yeah, I’d love to work on a website built in django so I bought it and this still is one of the best websites that I bought, so you have to look for deals that would cater to your skillset or your teams skillset if you have a team.

– Okay, now let’s talk about after that. So you’ve decided that you’re interested in inquiring, it’s suited your portfolio, it’s got some nice age about it, and you are interested in the subject matter.

– Can afford it.

– Can afford it. Okay so you’ve now inquired, what is it that you’re specifically as a buyer going to ask this seller, how do you start off the dialogue?

– Well, for first of all, I don’t expect for him to, discover something that’s bad about the website, or something that’s good about the website. You have the responsibility and you have to, you have to know these things. So that, I take care of that by myself. Obviously if the seller is willing to help, I listen to it, but if you’ve ever bought a used car, it should really go into one ear and out the other. So what I’m really looking for with the seller is, what kind of a person he is, what kind of background he has, where he is from, just get to know him on a personal level. And then, try to figure out why he is selling. As I mentioned before, some of them want to, I don’t know, they got a, full time job and I don’t know at Google or some big company and they need 100% to focus on it and they have to sell those, let’s say, several small websites they own. So that’s kind of one scenario and you really have to familiarize yourself with the seller and see why he is selling the website so that’s kind of what I’m looking for at this seller.

– Okay, and what about, actual website performance? What are you gonna analyze?

– Well first of all I’m gonna try to figure out if the revenue is really there. Obviously I’m buying websites with revenue so that’s a crucial component. So I’m gathering as much evidence as I can about the revenue from the seller of course with the screenshots and the video, if it’s possible, and that’s kind of one thing but the other thing is you have to be able to explain to yourself if this is supporting the revenue that’s being generated, if the website doesn’t have a lot of traffic, or if the traffic is suspicious and you can’t connect the dots between the revenue and the traffic that’s being generated by the website, that’s something that I would either try to investigate or talk with the seller or I would just completely avoid the deal, just look for a new deal. You have to be able to see, either on Google or social media or somewhere else, this traffic being generated and this revenue being generated. If I don’t see it, I’m just, I’m out of there.

– And how are you–

– [Goran] The seller.

– How are you verifying revenue other than the data points that are being provided to you from the seller?

– Yeah so that’s a great question because that was my first downfall. I had one that I was thinking I had validated the revenue, I saw the screenshots and I thought that the revenue was there but then, then the revenue was faked and my AdSense account got banned and the whole spiel happened. I am trying to verify how the revenue is being generated. Is the website there for, let’s say, top three key words on Google. Is the video that’s so popular on the website, is it being liked and shared on YouTube? I’m always looking for the background. That’s kind of, I have to be able to connect the dots how this revenue is being generated. And then the proof that the seller is showing is just a bonus, if I see the AdSense screenshot, if I see the Amazon Affiliates screenshots, that’s kind of a bonus, that’s the one piece of the puzzle that I’m trying to connect with the whole ecosystem of the website and how the website is working.

– Okay, so let’s talk through a negotiation a little bit. Once you’ve got some more comfort in who the seller is, once you’ve gone through and you’ve verified, some of the information, how do you decide, obviously they’ve got an asking price, but how do you decide what a fair and reasonable price is and what’s your current view on, multiples?

– The worst answer it depends and it changes over time. Obviously the multiples are going up, up and up so who knows how that’s going to proceed, I think today they’re around 30X on a monthly basis but then again it depends on the age of the website and other factors and how experienced the seller is, who the seller is, if, some sellers are asking 40X multiples and, obviously they have the right to do this because they’ve prevetted the website, they worked on the website, they know the website, bottom up, they know what the website is capable of, so that’s also a good multiple if it’s something that you can work with. But I’ve also bought websites with 10X multiples. They are riskier, you have to know what you’re doing, and you have to be prepared to, for the website to tank basically, just to delete it off your portfolio. And there, if this happens you can also, you can have a backup plan if the website has a valuable domain name or you can reuse the domain name for a different purpose or, park it on another website that you own. Then you can basically, limit your downside on the deal that, is gone bad.

– And how much of your decision is based on the prior companies, or the prior 12 months performance, versus future opportunity. I often say that buyers are looking for opportunity but they pay for performance. What’s your general viewpoint and when you’re looking at an acquisition, no doubt you do have an eye to opportunity, but how do you think about opportunity and its relationship to your, the ultimate buy price?

– That’s a tough question. I would agree with what you’ve said. And also I would add to that, it depends on your strategy, why you are buying the website, if you’re buying the website for the opportunity, something that you plan to build, to create, to grow, I would say then it’s more important, the opportunity. But then if you’re looking for, the passive income, to not work so much on the website, to just let it ride until it rides and then if it dies off it dies off, then you are more focused on the past performances. So I would say it depends on the strategy and on the buyer, what he is looking for and what he is planning to do with this purchase.

– Understood, okay to finish up, what is your number one tip for a new buyer?

– Number one tip. Number one, I have several but what would be the number one? I would say, the number one tip. Well the number one thing is, this is going to sound philosophical, know yourself, but it is, you have to know what you are doing with, what you want to achieve. Is it passive income, is it big opportunity, is it this side gig for you, is it going to be a permanent employment, because it can grow into it. I would say you have to know why you are doing this. If you’re doing this for the quick buck you’re probably going to fail, you’re going to loose money, so don’t do it. If it’s going to be a long-term thing for you, then you have to have a certain approach. Yeah, yeah, number one tip would be, first sit down, take your piece of paper and write what am I trying to do with this.

– Yeah, I think that’s a really, really good point and one of the things we see at Flippa a lot is that people are buying their next job and so, their next job they need to expect to be paid like it was a career and so that means having subject matter expertise. So when you go to work, you’re typically hired because you have subject matter expertise and you’re also your employer expects you to be able to do a job very well. It’s no different with the acquisition of a website. You should buy something that you actually feel comfortable running.

– Of course, yeah you need to know your skillset, you need to know who you are because maybe you’re a great, let’s say graphic designer or a salesman or something but maybe you’re not that good at updating your WordPress website, maybe you’re not that technical, maybe you’re not, I don’t know you don’t have the budget to buy the best website that’s best for you. If you’re expecting a certain level of revenue, obviously you’re going to have to have money to invest into this website. So it really depends on the situation and the, thing you’re after, the future that you’re looking forward to.

– Absolutely, well thank you Goran, it’s been an absolute pleasure, a really, really insightful interview with someone who does this regularly and that’s hugely valuable for the Flippa community. We’ve got lots of first time buyers who are out there looking for their first acquisition and so to hear from someone like you is hugely valuable. Thank you so much for your time.

– Thank you, I mean thank you very much for inviting me, I hope it’s been helpful to the Flippa community, to first time buyers, obviously I’ve been a member of this community for a few years now and I’m really excited about what the future holds and I’m excited with the, Flippa community growing and becoming more experienced, as the sellers are and also the buyers, these are the people that I will also interact with and look for the websites there to buy and to sell so I’m really hoping that it becomes an even better place than it is today.

– Thanks very much.

– Thank you Blake, have a good day and greetings to everybody at the Flippa.

Benjamin Weiss

Benjamin Weiss

Benjamin Weiss is a marketing all-star at Flippa. He has well over a decade of experience running multifaceted marketing programs within the CPG industry and knows just what it takes to drive a business from vision to reality. You will often find him enjoying a cold beer on a hot day in Austin, TX.