In our very first episode, Michael had a discussion with Flippa’s CEO, Blake Hutchison. Know more about how Flippa is creating a ‘better experience’ for business buyers, tips and tricks on how to beat the algorithm, and sell better. In a more personal discussion, Blake shares his tips, habits, and routines to be an effective CEO.
GUEST BIO:
Blake Hutchison is the current CEO of Flippa. Under his direction, Flippa has undergone great strides in improving the processes, experience, and security measures of the marketplace. Before joining Flippa, Blake developed an impressive executive track record at global brands like Xero, Good44, Luxury Escapes, and Lonely Planet.
Connect with Blake: Email | Twitter | LinkedIn
SKIP TO THE GOOD PARTS:
00:25 – 03:58 – Know more about Blake and their recent journey in creating ‘better experience’.
04:15 – 08:14 – Flippa in numbers and a bit more insider details.
08:14 – 11:39 – Are Empire Flippers and FE Enterprises Flippa’s competitor? How Flippa differs itself from the “competition”.
11:40 – 16:54 – Buying or selling a profitable business? Blake shares some tips how to get it right the first time.
17:02 – 21:01 – Verified by Flippa badge will be rolling out soon. Know more details about it.
21:38 – 23:59 – Beat the algorithm: Selling know-hows from Blake himself.
26:26 – 35:33 – Predicting future demands and trends.
36:05 – 42:42 – selling domains at Flippa Marketplace
43:03 – 45:40 – Attracting more buyers and sellers on the marketplace
46:12 – 48:19 – How quick can you sell your website on Flippa?
48:59 – 00:00 – Auctioning your website on Flippa
53:39 – 57:12 – Tips, habits, routines to be an effective CEO
57:12 – 58:44 – Want to Blake Hutchison’s direct contact? Hear it here!
SHOW TRANSCRIPT:
Michael Bereslavsky 00:12 Hello Blake!
Blake Hutchison 00:13 Hi Michael! How are you?
Michael Bereslavsky 00:16 Good. Thanks for joining. So, where are you calling from?
Blake Hutchison 00:18 We are in Melbourne, Australia.
Michael Bereslavsky 00:22 Nice! So, we last spoke about 10 months ago, when you first became the CEO of Flippa. And I really loved that you are reaching out to some of the top sellers and kind of discussing some challenges to see how to improve things. So, I’d love to know how it’s been so far? What’s it been like running Flippa and what was your focus for this year?
Blake Hutchison 00:53 Yeah. Thank you for the opportunity to be on the podcast. First and foremost, it’s an absolute privilege to run a business like Flippa. We’ve got a huge community and we’ve obviously got huge responsibilities to that community. We know how much they want to use Flippa and they want a good experience. I guess joining Flippa, we discovered that there was, I guess some historical changes that have been made to the way that Flippa was operating, which had made it a little bit difficult for buyers and sellers to connect specifically buyers who wanted to find the right thing at the right time. And then as it relates to the seller, it is the way in which they were able to communicate and then drive viewership and ultimately bids and offers for their particular listing. And so we’ve been working hard to understand how Flippa historically worked and what people liked and also to understand how Flippa should work in the future to make that experience better.
01:58 And so what that means is we’ve tried some things. Some of those things have worked really, really well and we’ve tried some things and some of those things have worked terribly. And that’s the nature of working in a marketplace of this size. We’ve got, over 600,000 community members. We get over 21,000 new community members, be it buyers or sellers each month. And so not everyone is gonna love the changes we make. But we are doing them, at least we think for the right reasons and it’s about how quickly we can recover the demand for all of those super sellers, premium sellers and just people who use the platform. We get regularly. We want to create a nice experience. So look, it’s been challenging definitely. But, to some extent, I think we’ve done a good job with a few things. So we’ve done a good job with enabling buyers to create profiles and then matching them up with the right businesses.
03:04 And to some extent, I think we’ve done some things really poorly. We’ve played around with the link hierarchy and the way in which things surface to the top and the product team has done their very best to try and I guess reinvigorate what we’ve seen historically as good demand and good volume for any given listing. And essentially way, sort of going back to the future, if you like, where we’re working on a lot of things. You may have seen, the new homepage actually went live a couple of days ago. And so the link hierarchy has been improved. It’s more similar to what people may have seen pre-2016, there was a big change in 2017 and 2018 and so here in 2019, we’re kind of going back to the future to some extent. So hopefully that gives people some sense of what we’ve been working on.
Michael Bereslavsky 03:57 Nice! Sounds like you’ve been quite busy. Could you give us a big picture of where is Flippa right now in terms of a number of employees or revenues, sales or some other numbers that you are focusing on?
Blake Hutchison 04:13 Yeah, so, employee wise we have 27 staff and the 27 staff located around the world. So we have, the vast majority of our staff between North America and Australia. But we also have, individuals in Manila, in the Philippines, both engineering and customer support. We also have some staff working out of a European office who are there to serve the growing European demand that we have in the buyer and seller community. So from an employee standpoint, we’re growing, we’re actually looking to hire some support staff, customer success, and sales. Sales are defined as two ways, both the kind of education of buyers and sellers as they come on the platform, but also account management.
05:09 So those people who will help our buyers and sellers find something, negotiate, understand what is right and wrong about a particular business opportunity. And we’re hiring for those people in Texas. So mostly Austin, Texas, but we have some room for remote head count also, in Dallas and Houston as well. So a little bit of recruitment going on across North America, which we think is really critical. It’s still the biggest portion of marketplace demand for Flippa as it relates to sales. We’ve seen really, really good growth in kind of the higher value listings on the platform. And that’s not something we’ve seen some comments outnumber in the community where people say, oh, Flippa’s clearly, only orientating itself to high-quality businesses or big businesses or businesses versus startup sites and domains in reality. That’s actually how Flippa has paid for some time, literally five years.
06:12 The vast majority of revenue has been derived from higher valued listings. So call it $10,000 plus listings. So that’s actually the reality of Flippa. And so it’s actually not that we’ve said we’re going to ignore domainers. It’s not that we’ve said we’re going to ignore status site operators, it’s just that that’s the life Flippa has orientated. And so we’ve therefore by nature of the revenue orientated some of our product management and product development efforts around that community because you often go where the opportunity is and the marketplace has shown us that that’s actually what the opportunity is. So there’s a little bit of effort there, but I should say that’s not to say at all that Flippa is ignoring a big, large historical community of domain owners, buyers start-up site owners, and buyers. In fact, the new website, the new homepage is very clear evidence of how much emphasis we’re putting on all channels within the marketplace. And so Flippa is actually growing and it’s growing in particular across the areas that we just talked about before. The plus 10K e-commerce websites, content and advertising sites, which are either backed by affiliate revenue, AdSense, Amazon associates accounts and any other revenue streams within the content dynamic. We’re also seeing growth in the number of SaaS businesses, software as a service businesses and marketplace businesses listing on the platform. And, so, we’re in a growth mode, we’re seeing about 4,000 new listings come on board each month.
Michael Bereslavsky 08:12 Nice! So I’m curious to dig a little bit more into numbers. You mentioned 27 staff, and we know that, so one of your biggest competitors is probably Empire Flippers and they have, I believe about 60 people right now and FE Enterprises are also a little bit bigger. So does that mean that you are currently probably behind them in terms of sales as well or how would you compare that?
Blake Hutchison 08:48 Yeah, as a private company, we don’t reveal revenues, but I would be very surprised if Flippa was behind those brokers, I think the clear thing is that we don’t consider them competitors.
09:04 They’re brokers and brokers are fantastic, we see four thousand listings a month. We say four and a half thousand new verified registered buyers each month. We say 21,000 community members join each month. We’re a marketplace where our technology platform, which provides for a buyer to connect with a seller at speed and at scale. And that’s very different to the way a broker operates. And so they’re always going to be heavier on human resources because the nature of running that type of business requires very specific skill set. It’s a broker skillset and we’re big fans of brokers. We have 30 brokers operating on our platform. We have fantastic relationships with our brokers and they are a huge reason why Flippa is what Flippa is today. And so we don’t need to hire lots of brokers to manage our community because we have brokers who manage our community.
10:07 We have account managers who manage our community and we have this network of buyers who are running the process themselves who are quite sophisticated and skilled. What I’ll admit is we need to do lots of work around education. So, helping sellers understand how to value their business, helping sellers understand the sales process, and similarly helping buyers understand how to go through the due diligence process and negotiate in a constructive and polite manner, which is really important. And then ultimately how to transfer assets once you’ve got the conclusion or the pointy end of the deal. I can’t speak to how big Empire Flippers or FA international are. I’m sure they run great businesses. I’m sure they are having success. I hope they’re having success, but quite categorically we just don’t see them as competition. We’re a marketplace. We’re heavily dependent on, discussions, watchers, comments, bids, and offers. And so we think about our business from a marketplace dynamic standpoint and they think about their business from a clearance standpoint. So they’ll only ever accept businesses that they know they can sell because they’ve got x number of brokers who can deal with x number of leads. Now, Flippa context is a technology company which has a 10-year old, very, very well architected platform. We can deal at scale. And so that’s the most important from our perspective.
Michael Bereslavsky 11:36 Yeah, absolutely. Makes sense. So I have quite a few short questions for you, with, via receipt from our followers. So, in terms of the buyer’s perspective, one of the biggest complaints that we’ve seen, and I can tell from our perspective, we’ve been selling and buying on Flippa even before it was Flippa, you know, back then it was Sitepoint and we, I think about half a million dollars in sales now. So, I can tell you that I’m quite experienced with both sides of that. Yeah. And in terms of buyer perspective, one of the biggest complaints in mind, beginner buyers, people who are first time buyers or second-time buyers, the change is that they feel a little overwhelmed. They see too many listings. They are not sure, you know, it looks risky, they’re not sure how to choose. So what is your recommendation for them and how are you kind of improving the experience in that?
Blake Hutchison 12:38 It’s a great question. We hear that a lot. And firstly, it is overwhelming. I completely accept that it’s overwhelming. Marketplaces where you’ve got so much supply-side-demand, are often a little bit overwhelming and it does come down to some really, really good quality search functionality to be able to find what is right and then once you found what is right, it comes down to really, really good data availability to verify that listing. And so the first thing is, we empathize and so where we’re putting in some efforts around that very very quickly. The second thing is some recommendations. So first and foremost, use Flippa search functionality and filter down to a level where you get a constrained set of results. And so you can do that for websites. Obviously, you can do it for apps and you can do it for domains.
13:40 Now if you’re searching for a website, the key thing is to use the filters as it relates to business model, e-commerce, SaaS, marketplace, advertising, and content. The second thing is to use the most active filter on the top right-hand side of search. Most active will give you some sense of where other buyers are spending their time. And if other buyers are spending their time there, then you’ve almost got some level of verification playing out. Other people have gone through the process of asking questions in the comments section, mounting discussions, watching the listing and waiting for updates. And so that gives you some sense like in any marketplace of where the good quality lie, where the good quality resides. So that’s the first thing. Second thing is, ask the right questions and discover the data, which will give you some sense of whether it’s a really good quality listing or not.
14:41 Now I know that’s hard and we’re putting in some place, some measures. So we’ll talk about the measures in a moment. But the big questions to ask are obviously, can you give me some sense of, and it does differ by business model. Can you give me some sense of your average order value for e-commerce? How many unit sales do you make per month? How many unit sales in the year, what percentage of sales are through paid marketing, what percentage of sales are coming organically? So that would be for e-commerce. If it’s SaaS, it’s a little bit different. What is your annual recurring revenue? What is your churn, what is your lifetime value? How many paying customers do you have and how long have they been retained for? It relates to annual recurring revenue. So each is a bit different. And so we ask buyers to learn the art of asking the right questions.
15:36 Now we have a responsibility there. So there’s a couple of things. One, we can connect to more and more data sources. So we currently connected GA, so Google analytics. We also connect for the right for certain sellers who use Quickbooks online. We also connect to Quickbooks and so that gives buyers instant access to their financial data at the cloud accounting software level, which is fantastic and we’re going to be connecting to all of the different platforms. So the Shopify’s, the big commerce’s, the Wix, the Square Space, the WooCommerce, et cetera. And we’re going to be providing access to dashboards direct out of the software itself. In addition to that, we’re going to be putting in place some scoring so that businesses that have certain elements to their listing gets scored higher. And therefore are shown preferentially. You won’t be able to pay for that preferential treatment. You’ll have to show that by way of data. And so there are some of the things we’re doing. But in short, I completely understand the frustration. It is hard. There’s lots on the marketplace and it does come down to showing a little bit of discernment and curiosity to try and find what is a really great, great website business, upward domain to acquire.
Michael Bereslavsky 16:54 Yeah, that sounds great. It seems like you’re putting in a lot of effort to make it better for buyers. And what are your thoughts about vetting? Do you do some vetting now or do you plan to do more of that in order to, you know, help the first time buyers?
Blake Hutchison 17:15 Yeah, yeah, that’s a great question. So we will soon be bringing in place a verified by Flippa badge. Now interestingly, we will architect how that plays out. And critically, it doesn’t necessarily mean that something that isn’t verified by Flippa isn’t good quality. Because the key question is scale. And when you’ve got 4,000 listings of different price points, Flippa is never unlike a broker. We’re never gonna eyeball every single piece of data for every given listing. It’s just not humanly possible. That’s exactly the same as Airbnb, not eyeballing every apartment or home. It’s exactly the same as Upwork or Freelancer or Task Rabbit or eyeballing all of their community members. It’s just not possible when you operate at scale. And that’s the fundamental difference between being a platform and marketplace and being a broker. They’re very different things. So what we will do, though. is we will put in place, a 25-point check.
18:31 And so the 25-point check will basically enable us to, on a listing, get a subset of listings which passed that 25-point check. And we will then eyeball each one of those. We will then verify the data attached to those and we will put a verified by Flippa stamp on those listings. Now critically, that won’t be every listing. And critically it doesn’t, it also doesn’t mean that great listings are still not available. Of course, they’re available. It’s where we’re not going to be able to verify everything, but that’s one of the things we have in our plan.
Michael Bereslavsky 19:07 So, it sounds like you are planning to have some algorithmic solutions that would be, if you are for listings that seem more interesting, probably based on revenue and as effectors and age and then, you know, you would have your staff go all of them manually. And do you have some ideas? What kind of listings that would be, or what percentage of listings would potentially become verified?
Blake Hutchison 19:36 Yeah, great question. I don’t have a sense of what percentage I think that will play out as we start to I guess, perfect the algorithm as it relates to the type of listing, it will be the listings which provide access, so it won’t be startup sites because they typically don’t have revenue and revenue is a key component of a verified online business, digital or digital assets and or website. So that’s a really critical distinction that we will be verifying, websites and online businesses that are post revenue. In addition to that, we’ll be verifying websites which provide access to their GA, their Google Analytic data. And in addition to that, we’ll be verifying businesses which have some age to them. And so I don’t know the answer to that yet. We haven’t thought far enough along that process where it’d be a one-year-old business, a two-year-old business, a three-year-old business or a five-year-old business. I’m not sure of the answer, but essentially the businesses and websites that we will be verifying, there’ll be those that have characteristics that we believe therefore require a little higher touch. And that’s where we’ll be orientating our efforts.
Michael Bereslavsky 20:56 Yeah, that certainly makes sense. So we’ve talked a little bit about the buyer’s perspective and now kind of moving onto the sellers, one of the biggest issues that sellers have is because there are so many listings now, it’s difficult to get enough attention and attract enough buyers to your listing. So, do you have some suggestions for more experienced sellers, how to sell it better? Besides, of course, the basics. Like you know, adding a lot of details and a lot of integration and then the Google Analytics. How can people get more attention and sell faster?
Blake Hutchison 21:37 Yup. Good question. I think there’s a couple of things. The first one is most website owners don’t do a great job of articulating what it is about their website, which is actually special, so someone will say, my website reviews fish tanks. Now, that’s not helpful and buyers don’t gravitate to listings which are not accurate and not detail orientated. The more information, the more likely that buyers watch and comment and start a discussion. Now the way the Flippa algorithm works is the more watchers, the more discussions, the more messages, the more comments, the more bids and offers, the more likely other buyers come because that’s what we consider to be our marketplace dynamics. That is exactly the data which ensures that your listing finds its hands into more buyers. Now, the only way it will find its hands into more buyers is if you have an accurate listing, which completely and accurately articulates what are these that somebody is acquiring so it’s not my business reviews, fish tanks. It is my six-year old AdSense powered online magazine or blog reviews fish tanks has reviewed over 200 fish tanks and delivers revenue by way of an Amazon affiliate account.
23:29 Now I just made that up. I’m not suggesting that’s a perfect description, but the point is that’s the top of insight and detail that a buyer expects. Now if you have that, a buyer will comment, they’ll ask a question, a buyer will watch and the minute you get one, two, three, four, five, six and the list starts to grow, Flippa is just going to work. Flippa’s algorithm that will start to surface you up to as many people as possible. Because we believe in that listing thing the market place has told us to believe in that listing. That’s piece one. The second piece is Flippa is interested in promoting the listings which we think are priced well and reasonably and there are so many sellers on the Flippa marketplace which exaggerate their value and exaggerating your value won’t get you any buyer interest. And from a marketing perspective, the marketing and team at Flippa isn’t interested in promoting websites that exaggerate their value.
24:36 Why? Because Flippa is a success-fee-driven business. Ultimately we want to sell the good things cause the bad things don’t sell. And so the marketing team will look at businesses which are priced well based on their traffic and their revenue and revenue orientates to profit and then price point or asking price or in types, twin net profit multiple. And so for businesses that are priced reasonably, and that’s different for each business model, but if we see anything priced at a 7, 10, 12, 50 times net profit, multiple, our marketing team quite simply will not look at it. I’m being very, very honest, very transparent. But there’s two things that play out at it for them. One is marketplace dynamics and one is merchandising. And the people who benefit from marketplace dynamics have fantastic listings. The people who benefit from our marketing efforts are priced reasonably.
Michael Bereslavsky 25:39 Yeah, that’s a good tip about making your listing look special. I have definitely found that if you are able to stand out, you’ll generally get a lot more interest. It’s going to be much faster to sell. I think that’s great advice. And, in terms of current trends, I’m curious, what are you seeing as some emerging trends or you know, some potential things that there is high interest among buyers right now, but maybe not enough demand from sellers? Yup. So, what would be some of those opportunities for experienced sellers to get into?
Blake Hutchison 26:25 Yeah, great question. So at the moment, we’re seeing a lot of demand for Amazon affiliate businesses, so not fulfilled by Amazon. That there’s certainly a trend there, but Amazon affiliate businesses, so the businesses which are reviewing a product and making their money by way of affiliate revenue. So lots of demand for those businesses, lots of demand for niche businesses. The businesses which have a very good community orientating around a topic, a product or a theme, which isn’t hugely competitive. So there are large numbers of online fashion businesses. They’re not particularly interesting because they’re so easy to acquire, lots of them sell, but it’s also a competitive space. And so from a seller’s perspective, if you’re selling one of those businesses, you really need to shine through you to really need to stand out in the crowd. Whereas businesses that are operating on a niche basis, so we had a finance blog that was delivering AdSense revenue and it sold within 48 hours for $33,000.
27:39 We had a business called Thankbot and Thankbot, it’s really cool. So Thankbot basically, you upload a CSV, of records or type in a note and then it will send out a handwritten note. So you upload digital notes, they then send out handwritten notes and that business sold very, very quickly because it was considered a niche proposition. It was considered not to play around with lots of competitors and it was considered something which was very easy to grow on the basis of its existing traction. So niche interest type sites. A super interesting from business model standpoint, Amazon affiliate, and Adsense, well, AdSense is still hot. Amazon affiliate is growing. E-commerce is particularly good around subscription commerce right now, which is really interesting to see. And of course, there is an extraordinary amount of demand for SaaS businesses still, for obvious reasons. Recurring revenue is everyone’s dream.
Michael Bereslavsky 28:55 So at the summit up, make your listing special, include a lot of data. Focus on Amazon affiliate or simple business models and price it to sell. Is that right?
Blake Hutchison 29:12 Yeah. Price it to sell. And it doesn’t mean that you won’t get an amazing price, but the best thing to happen to a Flippa user, Flippa seller is competitiveness. So, what you want is buyers wanting your listing. Now the minute you overprice it, people don’t even come in. But the number of times we see businesses that sell 10, 20 up to 50% greater than their asking price is huge. That happens regularly, but it only happens if you set a reasonable price, to begin with. The best thing you can have is more than one person who wants to buy your business. The worst thing you can have is no one.
Michael Bereslavsky 29:56 So on that subject of price, do you have some data in terms of average revenue multiples? So profit multiples for example, for Amazon affiliate sites or SaaS businesses from what has been sold on a platform recently?
Blake Hutchison 30:13 Yeah, great question. I might actually pull that data and Michael and I’ll send it across to you and perhaps you can distribute it to the community. I must admit I just don’t have it at my fingertips, but certainly, SaaS businesses we are seeing sell upwards of three times net profit, multiple e-commerce businesses, we never see them sell above three and a half times and more typically we see them sell between 2.1 and 2.5. As it relates to AdSense businesses, I must’ve made, I can’t remember the exact numbers off the top of my head, so I’m going to send you that data if that’s possible and you can distribute it to the community.
Michael Bereslavsky 30:54 Yeah, sounds good. And we’ve talked about some current trends and what do you see as some future trends? Maybe a few years down the line, how do you expect this to change or do you think it’s going to be the same and you know, affiliate and AdSense sites will still be the most popular ones?
Blake Hutchison 31:13 Yeah, great question. Not necessarily. I think that we are still at the beginning of this asset class. And what I mean by that is the standard small business today looks very different to what it did 10 years ago, obviously. And so, if Flippa was founded 10 years ago and there were very few websites available to buy at that time and now the standard in, or at least the changing face of small business is digital and online. So I don’t think it will be what we are seeing today. I think it will be entirely different. I think SaaS is a very interesting one because I think that SaaS businesses are so rare because it’s so early in the SaaS life cycle. And so I think for many years to come and probably the sweet spot really will be in probably three to five years when there’ll be more and more SaaS businesses on the market who have realized the true value and, and now looking to exit.
32:23 But at the moment, most of them are scallops and so they’re not ready to sell. And so all the buyers want them, but all the sellers aren’t ready to relinquish them. And so I think that you’ll see more SaaS obviously over the next three to five years. But to answer the question, I think that new business models in the online sector are surprising us every day. Right? And so subscription commerce was one of those, clearly, marketplaces are, there are lots of them, but is still a relatively immature sector. SaaS businesses, as we mentioned, I think that Amazon affiliate is here to stay for obvious reasons. And so there are more and more people coming online who are very, very good marketers promoting niche topics and driving an Amazon affiliate revenue. So, I think that will stay for some time to come. But I think the most exciting thing is that we’ll probably see some emerging business models shine through.
Michael Bereslavsky 33:16 Yeah, that makes sense. I think that the attractiveness of most businesses is that they have practically unlimited potential. You might end up buying something that could become the next Airbnb and that’s not going to happen with an affiliate business because you might buy an Amazon affiliate website and maybe you’ll be able to grow with a little bit further or like, maybe you can get 50% more revenue in like 2x revenue. But if it’s SaaS business, it’s potentially so scale-able, so that probably attracts a lot of people.
Blake Hutchison 33:53 Yeah. One of the really interesting things there is, some people don’t realize that they should be a SaaS business. That’s the most amazing thing to me. So, there are some really good businesses on Flippa that are not SaaS businesses, so they’re not listed as SaaS businesses, but it should be. And so that’s an interesting part. Can you find a business that has traction that is paying a one-time fee for an unlimited license or has a community act divided against a particular interest or a niche that you can turn into a SaaS business as an example in this right now I’m not sure whether I’m being particularly fair to the seller. Cause it’s a great business, but, he charges a one-time fee. Well, actually it’s free to use for 99% of the community and then he charges a one- time fee for a perpetual license in perpetuity. That should be a SaaS business. He should be charging a monthly recurring right for access to his software and technology. And so think about that. I encourage your community to think about are there any businesses out there that they could acquire and turn into SaaS business?
Michael Bereslavsky 35:22 Yeah, absolutely. That’s a very interesting angle to consider. So, let us move on to some other things. First of all, domaining, Flippa has entered domaining I believe about five or seven years ago. So it was not originally part of the marketplace. And I’m curious, how big thing is domaining for Flippa? Is it something like 10% of your total sales? So I understand you probably can not give us a number, but just to give us an idea of how big this is and how much focus is Flippa giving that?
Blake Hutchison 36:03 Yeah, I’m just having a look right now. So it looks like, well it’s about seven and a half percent. So seven and a half percent of the total transaction value is domaining, which means it’s small compared to the rest of the marketplace.
Michael Bereslavsky 36:31 But you’ve sold quite a few really expensive then ultra-premium domains before. I think you’ve even had one domain sale for about a million dollars. Is that right?
Blake Hutchison 36:44 Yes. So I think that there will always be a place for really, really high-quality domains in the macro environment to sell for large amounts. But what we are seeing is less and less high-quality domains up for sale each month or quarter. And I think that’s probably for a few reasons. One, I think that you can now acquire domains in any given category, you know, dot travel, dot food, dot whatever. And that’s probably opened up a market for an alternative beginning for a business. In addition to that, categorically, we are not the biggest domain environment in the world. And so, it quite simply could be that Flippa’s domain community is finding their way onto other platforms and trading on those other platforms. Now, we completely respect the domain community. And we will have that avenue and if buyers and sellers can connect there and use the marketplace constructively, we absolutely encourage that. But the reality is given, it represents seven and a half percent of the business per my look up just then, it’s clearly not where the vast majority of the community’s orientating their time and efforts.
Michael Bereslavsky 38:27 Yeah, it looks like you have quite a few good domain names listed on Flippa and I think we have some potentially really good deals for buyers because it seems that you would have a lot more sellers than buyers in the domaining space compared to, websites and online businesses. Yeah. So I’m curious, what type of domains have you seen to sell better on Flippa in general or compared to, for example, other marketplaces, you know, yeah. So what would be your suggestion for domainers? What kind of domains should we prioritize on Flippa?
Blake Hutchison 39:11 Yup. I think there’s a couple of things. So primarily, Flippa has the North American audience, so that’s the first thing to consider. Which means we’ve primarily got a North American buyer base and so clearly those domains which orientate to a North American, old business owner I’ve got to sell better than those that don’t. So that’s probably the first thing. I think the second thing is, um, I don’t think we’re probably any different to Sedo or Godaddy in the sense that it really does come down to the usability of the domain. And so if the domain isn’t considered usable then it’s less likely to get any demand or half decent value. I’m the first to say I’m not an expert in the domain space at all. That’s not my core competency. We do, however, have some members of the team who are experts. So I’m happy to take the question on notice and come back and we can then distribute that information back to your community. But I think you’re right in the sense that there are clearly still some really, really good opportunities for domains to make a good amount of money and there’s some really, really great demand for high-quality domains.
40:30 Now, what does that mean? So the first thing to say is that one of our colleagues here at Flippa, can basically provide a Hawaiian matching service for good quality domains. And so if anyone would like further detail on that, I can send a note to [email protected] or just address me directly if you like [email protected] and I will connect those individuals with my colleague. And in short, what she does is she ensures that it gets premium placement on the marketplace should she deem it to be a high-quality domain, which needs to find itself into the hands of the right buyers. So that’s probably the tip I’ve got. Send us an email, let us know that you’ve got a high-quality domain and we’ll make sure it’s in the hands of the right people.
Michael Bereslavsky 41:23 And I know that Flippa acquired a domain company a few years ago. I know it was a private transaction, so you probably cannot disclose many details, but if you can share some information about that, why did you decide to do that? How did it go? You know, are you looking to acquire more many companies or is it not an option anymore?
Blake Hutchison: 41:48 Yeah, I think that Flippa has realized that the strength of its operation is the marketplace less of brokerage. And so Flippa did acquire a business called domain holdings and that was a domain brokerage and Flippa has since divested of that brokerage. And so, I wasn’t here. I can only imagine that like any acquisition, it’s designed to add incremental value. And so if the business has divested of it, I can only imagine that it didn’t add incremental value, but I’m speaking out of turn to some extent. I’ve been the CEO now for 10 months and that acquisition took place many years ago. So, that would be my hypothesis.
Michael Bereslavsky 42:42 That makes sense. And moving on to some other topics, I’m curious about what Flippa is doing right now for promotion and marketing in order to attract more buyers and most sellers. And what was most effective in your marketing channels?
Blake Hutchison 43:02 Yeah, great question. The first thing to state is that Flippa’s demand does come from word of mouth mostly. And so Flippa is blessed by a very, very high net promoter score. Sellers and buyers who sell and buyers who buy have a very good experience. And so yeah, occasionally you’ll see someone comment about a scam. The reality is there are very few people who get scammed. They just happened to shout the loudest. In fact, it’s been one example of a fraudulent transaction in the last six months. So our marketing is benefited by extraordinary word of mouths, huge amounts of positivity around the marketplace experience and the fact that we are the speediest path to sell. And we have the largest buyer community in the world. And so with that, we get really strong word of mouth. So, Flippa doesn’t spend aggressively from a marketing channels standpoint. In fact, I would challenge anyone to find any example of Flippa spending money to go and acquire customers.
44:18 So, most of that comes organically, what works for us, however are different lead channels. So, certainly, valuing a business is considered to be a sort of valuable, people want to understand the value of their business. And so our valuation calculator is the single best way to get on the right flip up at Flippa. It’s also the single best way to get a quick valuation on your website. Critically, that’s not a perfect valuation. It’s algorithmic and there are lots of things which go into evaluation of a website, size of the community, age of the site, age of the domain, current financial performance, traffic-base, marketing channels, whether they are paying for most or whether the vast majority of it is organic, organically generated, but it’s not a perfect valuation. But that’s our single biggest lead funnel. So since February, we’ve had over 4,000 people come through the valuation calculator, which is significant. That’s our single best performing marketing channel.
Michael Bereslavsky 45:40 Yeah, that sounds good. And you mentioned briefly the speed. I’m curious if you can share some details about what’s the average time that a website is listed on the marketplace, of average can have time to sale. For some, the most popular categories. So for example, websites under $10,000 or maybe between 10,000 and $100,000 for like an Amazon affiliate site.
Blake Hutchison 46:10 Yup, of course. So, there are two ways to list on Flippa. You can either list by auction and that’s obviously time-based or you can list by a fixed price, in which case you’ve got a minimum asking price, but it’s not a fixed time period. And so it’s quite split in that regard. And, so, the first comment is that across the board it’s 2.84 months. So, call it three months on average to sell a website. Now if you sell it to auction and most of the time auctions are less than $50,000. There are some anomalies, but most of the time auctions are less than $50,000. If you’re going to sell, you will sell between 30 to 45 days. On average. Most auctions run for 30 and then there’s often a post auction negotiation in the event that there’s no winning bidder. And so a lot of auctions actually sell post auction. That’s a really important thing from a seller’s perspective. And auction can be used to drive demand at that point. The best thing to do is negotiate with those people who have demonstrated some interest, categories. Again, I might have to take a question on notice and give you a sales cycle length for each category that you can distribute to the community. I don’t have that at my fingertips. I’m sorry.
Michael Bereslavsky 47:41 No, that’s perfect. So you mentioned 2.84 months and about, you know, 30 to 45 days. So that does sound reasonably fast.
Blake Hutchison 47:50 Yeah, that’s quick, right? I mean a lot of sellers sell more on business fast, it comes down to the quality, one and two we’re probably, I don’t know this categorically, but we’re probably the quickest path to sell globally. I can’t imagine that anyone who’s moving businesses as fast as us or websites as fast as us. And that’s because we’ve got the largest buyer pool you’ve got on demand.
Michael Bereslavsky 48:19 That sounds good! And one of the biggest issues with Flippa a few years ago for the sellers was there was a very large number of non-paying buyers. So you would often have someone winning the auction or you know, placing a big bidding offer and then just not following through. I know that you’ve implemented quite a few KYC methods and you know, and other verifications. But, that’s what still happens if that it’s still an issue. And you know, if you can share some numbers for example, or if it’s, or is that not relevant at all these days?
Blake Hutchison 48:58 Now, it’s relevant. Yes, it happens, but it was a very, very small percentage. I think that’s the important thing. Now, remember the web is a very vocal environment and so a small few can yell very loud. Flippa’s non-paying buyer market was always under 1.5% of transactions. That’s very small, but it happened. So I accepted it happened and we have invested lots of effort around this. It’s not perfect yet. So there’s a few things. The first thing is a KYC check. So basically what happens is when a buyer goes to buy something, we basically put them through, okay, I want to see, check, I know your customer checks. So there’s ID verification there. We do ask the same for sellers actually, but buyers obviously relate to your specific question. The second thing is really that sellers do need to take responsibility.
50:11 I know that sounds harsh, but they need to take responsibility for speaking to buyers during the sales process. We will see occasionally a seller say, great, someone just put in a bid for $15,000. I’ll close the auction except for that price. They’ve never heard anything from that particular buyer other than the fact that that person dropped the number one five zero zero zero into the keypad. That’s not a buyer you want to sell to. So what we encourage people to do is if you receive an offer that you are comfortable with, don’t close your auction and accept it, stop to get into a dialogue with that buyer. Because while Flippa accepts that we have a lot of work to do around ensuring that every buyer is verified, we accept that responsibility and we will take that on. But in the meantime, we ask our sellers to make sure that they’re not selling to someone that they’ve never had a conversation with.
51:19 You’re unlikely to buy a car, you’re unlikely to stay in an Airbnb and you’re unlikely to buy a house from the person that you have had absolutely zero correspondence with. It’s highly unlikely. Airbnb, you chat with them before you get there. Buying a car, you’ll typically make them before you go for a test drive and buying a house, you typically walk through the house and you meet real estate agent. It gives you some level of comfort. We simply ask that people go through that process on Flippa and ask the buyer to show some evidence of their interest and have a discussion over email on the discussion forum or of course on Flippa.
Michael Bereslavsky 52:07 Yeah, that definitely makes sense. And I find that it’s interesting that you mentioned Airbnb. I find it strange with you can go and book a house without exchanging any messages with the host. It just feels weird. Yeah. I hope the message before, you know, booking something unless
Blake Hutchison 52:28 Yea it’s fully a little bit different for them though, isn’t it? Because the actual experience is staying in the home, versus with a business or website, you need to understand how it’s being operated and whether the person has the means to afford it. And buying a $5,000 website, buying a $500,000 website, buying a $5 million website is often very different to spending 50, a hundred, $200 a night on some accommodation. The amount of money at stake is often higher on Flippa than it is traveling.
Michael Bereslavsky 53:05 Yeah, absolutely. And when we sell on Flippa, we always make sure to engage in some dialogue with potential buyers early on, send them some message, to check a little bit, ask when, what we are doing, what’s the experience with this kind of business to see, if they have the qualifications. I think it’s very important to have somebody really have good and clear communication.
Blake Hutchinson 53:30 Yeah, that’s right.
Michael Bereslavsky 53:31 Blake, finally, on a personal note so, I’ve listened to some of your previous interviews and you have quite an extensive history of running different companies. So I’m curious, what are some things, some habits, routines that you found to be very effective that I thought as CEO and running a company, what are some things that you apply for increasing operational efficiency?
Blake Hutchison 54:04 Yeah, it’s a wonderful question. It’s a great question. Not necessarily a question I expected. Well, thank you. It’s been really interesting seeing different industries and it’s been really interesting working with some fantastic leaders in different organizations. And, so, I learned a lot for those processes. But for me, to some extent, it comes down to asking myself every morning, what is the single biggest thing I can do to drive impact? And so I try to stay disciplined around achieving that one thing each day. And so that can mean that lots of things go unanswered. And it can also mean that you don’t get to everything. But in a business which has very, very significant growth ambitions, we see ourselves as empowering business owners all over the world to be able to exit. Be it someone who has a very small starter site all the way up to someone who has a $5 million business. We want them to have the opportunity to exit. And so that’s where we orientate our impact focus. What do we do right now to assist more people to be able to exit? And so that can mean at an engineering level, it can mean let’s improve on-boarding for our buyers and sellers so that we can connect the two of them. From a recruiting standpoint, it can mean hiring people who understand how to sell or how to operate or have lived within a small business ecosystem because they’re the people who will understand what our customers want. And so each day I wake up, it’s about what is the single biggest thing I can drive impact for. And after that, it’s very much customer orientation. So I always start my day responding to any customer queries before I do anything that is internally focused.
56:00 And so I’ve done that everywhere in all the organizations I’ve worked in. I start my day focusing on the customer and know that they come first and then I orientate internally after that. Probably the second biggest tip is, to limit prioritization to very few things, which is the nature of prioritization. But people will actually say, well, this is my priority. This is my priority, this is my priority. There’ll be lots of things that I need to work on. In our case, right now it’s very much about listings engagement. So that’s the number one priority of Flippa listings engagement. So your questions before were pertinent. And so I think that anyone in any organization, small or big, should think about the number one priority and only worked on tactical level delivery, which can influence that priority. And so that’s how I tend to orient my time and also the way I manage.
Michael Bereslavsky 56:55 Yeah, that’s a great question to ask yourself. As a leader of an organization, you know, what can I do today to bring the biggest impact?
Blake Hutchison 57:04 Yeah. I think it’s simple, but often we get confused and conflicted around all of the things that we’ve got to achieve.
Michael Bereslavsky 57:11 Well, thank you for sharing some thoughts and details. So how can our listeners contact you and any final thoughts or any final kind of piece of advice for sellers and buyers and why should people prefer Flippa over other options to sell their business?
Blake Hutchison 57:31 Yeah, great question. I think that there’s there’s some really fantastic progress out there. So, we respect that, that community from our perspective, we don’t think that there is a better place to sell from a speed, efficiency and demand standpoint. And, so if you’re looking to understand demand, there is no better place than Flippa because we have the greatest buyer pool in the world. We’re saying four and a half thousand new verified buyers join every single month. And that’s growing. So from a seller’s perspective, we see ourselves as the one and only real marketplace. It’s one thing to call yourself, a marketplace. It’s another thing to be one. So, that’s a key point. People can get in touch with me very simply. So Blake B-L-A-K-E @flippa.com. I’m also on LinkedIn, very easy to find, Blake Hutchison, H-U-T-C-H-I-S-O-N There’s no N in the middle, which most people always mess up. I’m at Twitter at Blakenow, B-L-A-K-E-N-O-W. But as I said, [email protected], and I’d love to hear from any and all of your listeners.
Michael Bereslavsky 58:44 Thank you Blake, and I’m looking forward to seeing how Flippa develops in the future.
Blake Hutchison 58:49 Yeah. Thank you, Michael. I really appreciate your time. Thank you for having me on your show today.
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