As I alluded to in my New Years address, I was going to become more busy with some website launches.
Well, that ‘some’ has become ‘many’ thanks to an obsessive pastime I have had this year. That pastime is named Flippa.com.
When I found Flippa, I was stoked. I quickly realized it to be the channel where I could direct my multitude of interests in business, media, and starting a business sideline. I found my investment with Complex Games not moving along as fast as I wanted so jumped right into the world of website buying.
Flippa.com as a website and as a marketplace is attractively designed and very functional. It superior to eBay in both features and the quality of the listings. Flippa,com is like a well run computing machine.
In July 2010 I purchased my first website, a Flash Arcade. I then purchased a second website, a Persistent Browser Based Game and between these two sites I started generating some money! I could not believe it. These websites were established, had traffic, and a revenue record. I quickly thought it should become possible to develop a sideline that I could expand into a full time job.
In January 2011, I made a decision to start making website purchasing a serious business. Between July 2010 and August 2011, I made close to 200 bids and won 21 auctions, ranging in price from two digits to five digits. Most of the websites depend on Adsense for revenue, a few of them sell WordPress plugins, and a few sell Amazon and Clickbank products.
And I am sorry to say that only three of the 21 transactions is performing to expectations. Two of the 21 were pretty speculative and so far are not generating any revenue, but I knew that going in. Eight of the 21 are not performing to expectations, and the real kicker is that the final eight were outright cheats!
For the sake of disclosure, three of the purchases were negotiated outside of Flippa. I bid on them via the marketplace, and when the auction ended without a winner, I negotiated privately to purchase the sites. I should also note that each purchase is not just a single website. One of auctions was a collection of small websites so the actual number of websites I purchased is higher, so I can safely say that I am pretty well-diversified in terms of product reach and income stream.
In summary, here are the pretty sorry statistics of my Flippa marketplace experience (21 purchases between July 2010 and August 2011):
- 14% of purchases met my expectations. They either made the same amount of money as listed or have increased.
- 10% of purchases were speculative. They are not producing revenues yet, they needs more work, and I knew it.
- 38% of purchases were disappointing. The revenues dropped after getting the site. It could be either the seller were lying, hyping their revenue, or there is something I am not doing right to maintain the revenue. Regardless, it proves that a large percent of the sites have disappointed.
- 38% of purchases were outright cheats. The seller sold me a site that was incomplete, did not produce any revenues, and were general nightmares. I can say that it was a sorry combination of me being too trusting and particular sellers being liars and scammers. I need to take responsibility for being a Sucka as I trusted people when I should not have.
I cannot blame Flippa the company for such a poor showing. Again, their job as a marketplace is to bring people together, and they have done so dozens of times for me. I see evidence that they are working hard to get rid of the cheaters.
But because Flippa is a well run computing machine, then like any computer it is susceptible to successfully processing bad data. Its the old adage of Garbage In = Garbage Out. The Flippa marketplace may be a well run entity but the actual content the makes up the marketplace is now very suspect to me. There will come a point by which a marketplace gets tainted by association to a bad experience. Look at what happened with eBay and with Wall Street. Dishonest behavior and disappointing results that is allowed to be carried out unchecked, will eventually assumed to be condoned by the marketplace. I think Flippa knows this and will work harder to police its marketplace, but I doubt they will prevent the creation of new Flippa Suckas. The problem is that people need to get cheated before a cheater can be found out.
So what’s next? I am stuck with sites that are under performing but I am not giving up. While my experience with website buying has been unimpressive, I am going now switch over to website improvement (to find ways to improve traffic) and hopefully learn how to turn those disappointing and speculative sites into meeting expectations. Once there, I would then sell those sites to recoup some of my capital.
Given my experience, my advice to you is keep your Flippa purchases to $300 or less and slowly build up. Look for something that is generating some income so that you recoup your investment within 6-12 months and then put that new income to slowly expand. There is a high chance (74% as it was for me) that you will be a Flippa Sucka, but at least you would be only out a few hundred dollars and won’t lose sleep like I have a few times.