In this episode of the Domain Magnate show, Michael speaks with website investor Richard Patey. Richard gives advice on selling sites and discusses with Michael how to fix the common mistakes a first-time seller can make.


Richard Patey is an online entrepreneur. He started his first business in 2009 after quitting his job and made a living off selling his SEO and WordPress website services. He went from niche to niche until he realized how investing in these websites had their own bright world and from then on offered his services under Flipping Websites which he also sold later on. He currently owns and runs Website Investing Publication that helps provide much-needed information and keeps investors up to date on relevant digital news while continuing to build his portfolio of sites he continues to operate.

Connect with Richard: WebsiteTwitter | Linkedin



Michael Bereslavsky 0:09 Welcome to another episode of the Domain Magnate Show. Today we have Richard Patey. website investor. Hi, Richard.

Richard Patey 0:19 Hello. Very good to be here. Good to speak to you again.

Michael Bereslavsky 0:22 Yeah. So we’ve been speaking for some time now. Through, your podcast through as a means. I think we’ve been in touch for a few years now. Right?

Richard Patey 0:33 I think so. Yes.

Michael Bereslavsky 0:35 Yeah. And, yeah, it’s been interesting to see and keep tabs on what you’ve been up to. So give us a quick introduction. Like what is the main thing we’re doing now? What did you use to do before?

Richard Patey 0:51 Main thing right now is a publication on the platform called Substack. It’s about website investing, and it’s a weekly newsletter and a weekly podcast. Some other benefits that has a paid component to it. So that’s my main focus. Previously, I was building and selling content sites. And in between those two, I was partnering up with investors as the operator. So I’ve got I’ve had experience on selling, acquiring, operating, and now I’m doing a media play covering the industry.

Michael Bereslavsky 1:21 That’s pretty cool. So you’ve done quite a few deals then as well. If you had to guess like how many sites Would you say that you’ve acquired for yourself for investors or consultant for acquiring?

Richard Patey 1:33 Acquired myself with my own money? Zero. Well, I mean, I buy domains and build out on them. So like revenue-generating sites is not something that I acquire. It’s something that I build and sell. But with investors, like I’ve consulted and partnered on, you know, good three to five acquisitions, and I’ve operated a few sites outside of that, where the veto had already acquired them and was looking for an operational partner. So maybe been on the, on the buy side, you know, actively involved about five to 10 times. But in terms of the number of deals that I’m looking at every week, because I run a weekly newsletter for paid subscribers, right, curate the best deals that I find across the marketplaces. And so you know, every week I’m looking at 10, 20, 30 different deals and doing due diligence all the time. So yeah, very familiar with what to look for acquiring revenue-generating sites, but so I see website investing as two different parts now. And the part that interests me the most is what I’m doing, which is building out. So you’re acquiring non-revenue-generating starter sites or abandoned blogs or age domains that have SEO authority, and you’re investing in content primarily, and also a few links as well. So it’s mainly that’s what I’m now focused on. And that’s the more interesting part for me to personally play in. Because I prefer to build and sell sites rather than acquire and put my capital back in that way. So I have lower risk tolerance. But, I’m building up a pretty cool domain portfolio now actually, I’m very happy putting…that I’m buying, like at least one domain a day right now, which is, which is kind of funny. But I’m getting more into the domain investing world and seeing how what lessons can be learned from that. And bring it over to the world of website investing. So that’s, yeah, that’s the answer.

Michael Bereslavsky 3:40 That’s pretty cool. So we’ve been discussing that all these different things like on and off and different deals. And I see that you now look at the different deals. So I’m curious to dive into that a little bit more. Like is it mostly on the low end there sites with low revenues? Or you also look at some of the higher revenue-generating businesses?

Richard Patey 4:08 for the newsletter that paid subscribers? Yeah. So it’s most of the subscribers are looking for revenue-generating websites are looking to acquire an asset and get the cash flow immediately from it. So I’d say that the majority are interested in that and average deal size, or the most typical that they would be interested in would be from 50K to 200K kind of mark. I’ve got a few subscribers that are interested in seven-figure deals. So really, I mean, I don’t discriminate in terms of the deal size I like to include in what I’m looking at, and what he likes me to include at least one age domain that can be built on and now there’s going to be a new segment for starter sites every week. And so if I see a good deal on Empire Flippers or Investors Club that’s a 50K asset or a 500K asset. Regardless of the asset price, I’m going to feature that if it meets my due diligence and my criteria for featuring a listing, so it can really range and so I think I featured, you know, one seven-figure deal before there was on Empire Flippers, I think. So I don’t discriminate in terms of keeping the deal size small. But in terms of the greatest number of investors interested, it would be, you know, around the property like 100K asset price would be the most popular deal size for these guys to want to pick up.

Michael Bereslavsky 5:45 So do you follow up later and help people acquire the businesses they interest in? Or do you just introduce them and that’s it, like the people respond and want your help and in facilitating the transaction?

Richard Patey 5:59 No, so I don’t. So previously, I was the operator, and I’ve done consultancy where I would help an investor require a deal. And then I’d be in place to operate the website. I’ve stopped all of that. And I’m now focused on a media play. So I’m focused on creating content and curating the best deals that I find. And within the publication, paying subscribers can ask me any questions. There’s a discussion thread, but I no longer offer support with an acquisition or with operations. So no, that’s in the past.

Michael Bereslavsky 6:39 That’s pretty good. And they still do some consulting if people want you know, some kind of advice on buying?

Richard Patey 6:49 I do. I mean, I try and just push everyone to Clarity. So I have a profile on and you can you know, buy by the minute. A number of our, you know, the more serious paying subscribers are asking for additional help. And I’m kind of putting it back onto them in terms of what support they would look for and how they would price it because it’s not something that I’m looking to offer. And I don’t really have any capacity to offer consulting right now. But if enough people want a higher tier, you know, package, the paid subscription is only $49 a month. But if enough people ask me for a higher tier one, then maybe some, you know, $499 a month offering could happen at some point, but I’m going to have to get people involved before I do that. And I’m now at the point where I’m trying to get I need to get like a deals analyst on board to support me and need to get start getting some writers involved as well and help with the podcast because it’s turned into far more than a full time job and I can no longer cope by myself. So right now, not And anything like that, but in the future, if it makes sense, and I can scale it with the team, then that might be something that that I offer but not right now. No.

Michael Bereslavsky 8:09 That’s pretty nice. So it seems like the podcast is done quite well, even though you start that new one quite recently, right? And you’ve had the previous established podcast flipping websites, which which now became quite popular. And I know that many people were really like that you were so transparent and so open about things that you were doing. So you should probably have to build a substantial community.

Richard Patey 8:38 Yeah, I already had the the audience which helps. And I mean, I only just syndicated the podcast to, you know, iTunes and Spotify. We’re now recording on Tuesday. I only did that on Friday on Saturday, like this weekend. I just hadn’t hadn’t got around to it. But even so like because I built up a personal email list and an audience I had a good place to start from. And, you know, the most popular podcasts were immediately getting, you know, 200-300 downloads, like immediately, which is may not sound like a lot to people that don’t have preyed upon us before. But It normally takes like a quite some time to get to that level or get to, you know, like 1000 downloads an episode mark. Yeah. So with it’s indicated, and if I free up some time to now promote the podcast in a way that he deserves it, it should it should get to similar levels as the previous one for flipping websites and, and continue to grow. So yeah, I mean, it’s the third time I’ve done a podcast and if everything gets easy, I mean, I’ve been doing this entrepreneurship thing for a decade now. And things just Yeah, you’ve followed the path of least resistance long enough and you can end up in a place where you can get traction. Pretty quickly. Yeah.

Michael Bereslavsky 10:06 Yeah. Yeah. It seems like you’re pretty good at podcasting. I know I could use some tips. I’m curious. Like we’ve had this podcast now for like a bit less than a year. And we’ve gotten some traction, but we haven’t really been able to grow that much. What have you found to be like really useful for growing the audience?

Richard Patey 10:29 Yeah. So with, with flipping websites, the thing that really grew that I think, again, because like getting data from podcasting is really hard. But I was able to generate a lot of iTunes reviews because I was giving away free hrs subscriptions. I either had 10 or 20 of those to give away, so that really helped. And so I think that got more exposure, I would assume so in iTunes or whatever the apps Apple has one. It’s just atrocious the setup on Apple. So I think that helps to get to get traction. Yeah, I mean, it’s still hard to get discovered, it’s still very hard to discover it’s still an issue. You know, I’ve seen stats where in some country Spotify has now taken over as the most popular app in terms of the number of downloads of episodes in, or the number of total downloads in some countries as hiring with Spotify and iTunes. And I’m certain Spotify is gonna overtake Apple, like globally within a few years. And so it’s far more important to be on Spotify and iTunes now, I really don’t care about iTunes, I just experienced on Apple is just terrible. So but I mean, I added it there because I mean, obviously that’s the thing to do. And a lot of people still use the podcast app or iTunes or whatever the setup is. I stopped using this a long time ago, but I think that helped get traction with flipping websites. But what really helps, is having your own direct relationship with your subscribers with email subscribers, so having a really engaged list will just drive everything. And that’s why being on a platform such as substack is, is really great for me because everything drives everything else. So I have a Monday newsletter where I recap the past week’s news for website investing. And, and so that’s going well and so that attracts more subscribers. And then every Friday is a new podcast episode. And every post you do on substack, you have the option of emailing out so I’m emailing once on Monday with the newsletter once on Friday with a podcast. So every email subscriber gets the podcast delivered to their inbox. And then within substack, you can actually click on the audio file and you can play on the web browser immediately. So being in a platform where everything can benefit everything else is very, you know, is a very useful thing. So, my newsletter subscribers, it’s driving the podcast and now that the podcasts are syndicated, they will pull more people into building the newsletter list and, you know, guest posting and being on other people’s podcasts and, you know, this will drive everything else. So just being able to tie everything together is really useful.

Michael Bereslavsky 13:29 Yeah. Yeah, some really good advice. So you’ve been dealing a lot with first time buyers, I imagine. What would you say are some of the most common mistakes that they often make? Or what are some things they should really keep in mind?

Richard Patey 13:47 Yeah, I think that the, so I was able to kickstart the publication with the paying subscribers that are interested in the deals with…from my existing network, and these guys are repeat buyers. So that was what got me going like the first 50 paying subscribers. And now on substack, the new subscribers that I’m getting, I imagine are newer to the space. And they are seeing the newsletter that can get shared on social because every email is also a web page. And I’m putting some Facebook ads been behind it. So I think going forward now, these are new in people new to the space. And so yeah, they, I think, you know, wanting to learn more about what a good deal looks like before they pull the trigger. And you know, where you can get burned is that the major one is by buying a content site that is dropping after a recent Google update. And if you’re not aware of being able to spot that within Google Analytics maybe the traffic downtrend is hidden because there’s been a spike in in a different traffic channel. If you’re just looking at total pageviews, maybe things don’t look too bad. But if you add a search filter, you can see that there’s a big drop. I think that is the main risk. And knowing when a Google update has just happened not and trying not to close a deal, just afterwards. I think that’s that’s where you can get burned the worst. Because you don’t know whether the asset that you’re buying has been affected or not yet, it can take some time to take a few days for Google updates to show up. So yeah, just be careful around Google updates, although obviously, more. The most number of times Google doesn’t let you it doesn’t give you advance notice on that. So you just need to be careful that if there has been a Google update and you are involved in acquisition, you need to just see if you can extend that inspection period or hold off before you, you know, transfer the money. I think that’s that’s the main issue in terms of first time buyers getting burned by buying a site that was doing $3,000 a month, but one that he was now doing $1000.

Michael Bereslavsky 16:16 Yeah, that’s a good point. We see that quite a lot now as well. So we every time we consider we buy something we always have our SEO team look at it. Generally, we look at Google Analytics and Google console. So the Google Search Console would generally be the easiest, I think, to give you an idea if there is like a sudden drop.

Richard Patey 16:39 In terms of impressions?

Michael Bereslavsky 16:40 Yeah, in terms of impressions in terms of rankings if an update happened, because it might take a few days until it’s more official, and also the looking at HR reps or SEM rush that can be helpful.

Richard Patey 16:57 Yeah, so I mean, HR is my primary tool and the I mean, it will show like a drop immediately or within a day or so of Google updates. But I have been realizing that you can’t rely on the extent of the drop that is that you know, the fall or rise that is showing, you can often be quite out in terms of how severe the update has been for the website. So it’s something that I’m no longer relying on. But if I see a trend down in interest, then it’s definitely something that I either mentioned, if I’m recommending a listing, if I’m featuring a listing, or I’ll hold off until it’s, you know, showed its hand before featuring a listing, because, the primary responsibility that I feel is not featuring something that could cause the loss of capital. So I’m not willing to feature something unless I’m confident enough that it’s looking a decent purchase. So yeah, I think that’s the biggest way that investors can get burned. But I mean, other things are less critical, the kind of things that they you know, you that you do when you’re working with investors on acquisitions, you look at backlink profile and how traffic is spread. These things can be better managed. But yeah, just make sure that you’re not acquiring something that is trending down, I think is the biggest thing.

Michael Bereslavsky 18:41 Yeah, that’s that’s a good point. So when we look at at affiliate sites with organic traffic generally, like we look at a bit of everything, of course HRF, sem rush, like the external tools, and then looking at Google Analytics at Google Search Console. So the main things like you mentioned, would be there searching if there is a recent update if there is something fishy going on, like sometimes there would be some inconsistency and then then you’ll just be able to spot them immediately. If you know something just doesn’t add up. But in general things like looking at the traffic pages, sometimes you’d have all the traffic like 80% of the traffic coming to one page. So that’s not terrible. Yeah, it’s like reasonable especially for a smaller site. But it is something that might be higher risk. Like if that’s one rock that you are depending on especially if like that’s the page that has all the backlinks coming through it and all these backlinks are low risk, high risk. So then of course, we would look at the backlink profile also. And one of the like one of the recent trends, most up to date method, I think is to look at the look at the top competitors going to evaluate their anchor. What’s the exact term? Like that anchor proliferation and like the percentage of their exact anchor versus like as anchors and then like, these kind of things on your backlink profile to see that it’s not like much spammy than the average competition, things like that.

Richard Patey 20:30 Yeah, yeah, for sure.

Michael Bereslavsky 20:31 yeah, SEO has become quite technical, I think. So a lot of people especially first time buyers, we might not realize that it’s pretty technical, like people will think that you just go and buy some backlinks and then you just go and add some more content, add some articles. And unfortunately, a lot of SEO agencies still look at it just this way, just backlinks and content. But there’s really a lot more that goes into into like making a page rank.

Richard Patey 21:01 Yeah, I think technical is huge. And, yeah, it’s not, it’s not a skill that an investor will have if they wanted to be involved in the website. And it is not something obvious either. If you don’t know that something is not set up properly, you’re not going to see it. So yeah, having someone that can do technical SEO really well, or having an agency that provides that I think is really critical. And it’s so easy to mess up a site, even just doing a migration, it’s so easy to screw up your traffic and not be able to get it back. If you miss a redirect to something or, you know, redirected to HTTPS or, or, you know, the subdomain to the root domain if you miss something like this. I’ve seen six big assets, you know, get destroyed just by by missing this kind of thing. And so yeah, I think the most upside that you’re going to get if you outside of conversion rate optimization is probably in technical SEO And, you know, if outside of conversion rate optimisation outside of adding more content and adding more links, the upside is, you know, improving the technical SEO on the site and or reducing the number of pages by doing a content audit. If you’re buying a website that has more than a few hundred pages, then before adding anything new, you need to audit the existing content, see which pages are bringing in very little traffic or have little or no links or any useful links and look to remove those or rewrite those before you even consider adding more content. So yeah, it’s a very technical space. It really is. I mean, content websites are the most simple business model when you compare to e commerce or SAS or anything. So I mean, it’s the most passive model possible, but you still need active involvement in order to make The cash flow coming in and you know, at the multiple that you you know, that you acquire acquiring at 30 X, you know, you want to maintain, you want to get past two and a half years cash flow to get your money back like you need to maintain the revenue and so that there is a lot to learn. You don’t need to be the one doing it, but you did there is a lot that needs to be to be learned in terms of you know, what the primary components that you need to understand, to maintain to grow and not to screw up a content site. And so with the publication with the paid part, I have standard operating procedures, I have about 10 of these processes for how I get upside out of content sites. What I used to do when I was the operator, you know, everything that you’re doing, I mean, there’s, there’s no magic to this, it’s, you know, it’s optimization. And so investors can follow that. But yeah, there’s there’s definitely a level of SEO knowledge that you need to have. If you are not going to be paying for an operating company.

Michael Bereslavsky 24:12 It can be complex. Yeah. They find that the investors beginning investors often follow these recipes. And that they would often go and learn everything and learn up all the technical SEO and do it themselves?

Richard Patey 24:32 No, no, I don’t I mean, I wouldn’t do that myself. Like, I know basic technical SEO. But I’m definitely not an expert. If I knew that if I had a big site that I thought could benefit from an audit, I would purchase one from an expert. I mean, SEO is too broad for one person to be an expert in all areas. You know, backlinking is can be a career you know, like technical SEO can be, the thing that you need to focus on your content optimization is, it’s a full time thing if you want to be the best at it. So no, it’s definitely not possible for an investor to…It’s not feasible to try and get to an expert level. But you need to be able to understand where the opportunities are with a site that you’re building, whether you’re looking to acquire and be able to, you know, know which suppliers, or which operating companies are good to involve to do that for you. So you need to have that understanding of identifying what’s currently broken, what the, what the potential upside is how you can achieve that. But no, you if it’s an investment that is complementing, you know, you’re looking at bringing websites as an asset class that is part of a wider portfolio of assets, then, you know, it’s kind of contrary to getting too involved in the operations. But you need to understand, you know, what the game is just like if you’re buying a property to rent out, you need to understand the area, the economics, the rental income that you can get and what you need to do to fix, you know, property up. You need to have that overall knowledge with websites in order to not get burned. If you are not, you know, hiring like an operating company to run it for you.

Michael Bereslavsky 26:34 Yeah, makes sense. Absolutely. We, when we deal with investors, we usually make sure that they understand the basics that understand how how the business works. I give them the most basic things like how does it generate traffic because you have content that ranks in Google? And then what are the risks so the biggest risk might be that you’d lose with those rankings to Google update or to a competitor, just kind of things like that, the basics. And I think just just having that bird’s eye view picture of what’s happening of how the business operates. But the main risks the main opportunities, what what is the potential growth, that’s really important. And the other, the technical SEO and the link building that could be pretty, pretty difficult to do and probably not required for most investors. But just understanding how it works is important. And then also, like being able to validate the risks in general is quite helpful. Just looking at Google Analytics is probably enough for most things, I think, because even looking at hrs could be a little bit more intense.

Richard Patey 27:55 Yeah, I mean, this is the thing is like how active do you want to be when you are investing in these websites? You know, do you need to be the one that understands? And can you know, put your finger on where the risks are? Do you need to have your Ahref subscription? Do you need to log in and check the backlink profile and look at the anchor text? Or do you just need someone that is doing that initial kind of checking due diligence for you to to you know, to set out the risks and the upside, and then you pull the trigger on on that advice? Or you have a company such as, you know, what you how you work with investors where you offer that support and run the asset. So, yeah, it really depends how involved you want to get. Just understanding. I think understanding, you know, technical SEO backlinks you know, what would a natural looking anchor text profile is for the nation, just high level understanding of these things I think is critical. And whenever I was considering with a previous flipping websites business, I had a page where investors could apply to work with me. And on the initial phone call, I just spent trying to put them off as much as I can, you know, by saying, you know, if this is the first purchase that they’ve ever done by saying, you know, do you realize that you could lose 80% of your traffic and revenue? Potentially with it within a month? Like, are you happy with this, like, are you happy to have this potential risk of loss? Because this is a portfolio play like it doesn’t make any sense for an investor to own one website. You know, you have all your eggs in one basket you need to to really benefit from this and get a yield and get growth you need to have equity ownership in a range of websites and a portfolio of a bucket. I think fund is a natural extension of this space. It makes zero sense just to own one website. Unless you are, it’s a capital amount that you’re not not afraid to lose, and you see it as something to learn and something interesting and a fun game. But if you’re doing this, to protect your capital and to get a return, then yeah, you need to you need to be acquiring or having ownership in a larger number of assets. And at that point, you will need an operating company to manage them for you. So yeah, it’s an interesting space, for sure.

Michael Bereslavsky 30:39 Yeah, that’s what we’ve come up with as well. So that’s the direction we’ve been going as well. So we have this one fund and we are sitting at the second fund currently. But we’ve seen that there is among investors also there are many who are perfectly comfortable just owning one website. I think that there are still wastes. So I agree that it’s definitely preferable to have multiple if you are looking at as a more basic investment. And there are also ways to reduce risk. And also, just like I think like making sure that you make a good deal making sure that you’ve spent a lot more effort on due diligence. And then, like you mentioned as well. Having a good management companies having someone who’s really good at issue management. That would make a huge difference.

Richard Patey 31:42 Yeah, yeah, if you’re buying and you see clear upside if you know that you can improve conversion rate and double the amount of revenue, or combine that with optimizing content or removing pages from the Google index or any combination of things where you’re confident that within a number of months, you could be, you know, potentially doubling the revenue, then your traffic falls by half. Assuming this math holds. It’s a hot day here in the UK. You know, you should be at least be even, right. But, um, but yes, I mean, you know, content websites, the nature of the game is that you rank them in Google Do you get you get organic traffic, and you rely on that you can diversify. You can, you know, get social traffic going, you can get Pinterest, you can run, potentially run some ads to affiliate content that converts Well, you can build an email list. I had a software reviews site where the email list actually drove the majority of the revenue. So there are ways to do that. But ultimately, the you know, the flywheel is organic search, and Google can take that away from you. So if you know that and you’re comfortable playing that game, then that’s fine. But if you’re investing, you know any significant capital at work after Google and you haven’t liked it you haven’t been hit by Google update yet? And if that would be a bad thing in your life and make you know, you would make a bad day then yeah, it doesn’t that’s not a good place to be. But yes, like a portfolio is the way that you protect against any one or two websites potentially being negatively hit. And also identifying enough upside definitely helps. But I mean again, like if you bought an Amazon associate site back in early March and traffic maintain the same through you know, the May update, you know, your revenue will already be half now because of the condition change in April. So there are ways to you know, potentially protect traffic or get it upside from traffic will get upside from conversion rate, but yeah, there’s also ways that, you know, affiliate programs, if you rely on Amazon to there are ways that they can take that away from you. So again, yeah, understanding how websites generate revenue and how you can generate upside and potentially double an asset and be able to flip that. That’s a great thing to understand and a great experience to have. And if you’re seeing as an education as well as the high cash flow, then that’s great. But yeah, no, you should definitely never rely on a consistent, you know, revenue level for years to come, which is why I think the revenue that multiples got got way out of control. You know, we were seeing multiples on brokerages and marketplaces, starting with a 440 x monthly multiple was starting to become the norm before the pandemic. And I just think that anything more than two and a half years, maybe even two years for a content website is a little bit it kind of, I’m not sure it’s pricing the risk perfectly perfectly enough, especially with the Google updates seem to be, you know, more and more harsh. You know, like the November eight one destroyed a lot of sites that May 4th one destroyed a lot of sites. Obviously this traffic goes somewhere and some sites benefit. But I think Yeah, like identifying a site with upside but also buying at a multiple that makes sense is just as critical, I think. Yeah.

Michael Bereslavsky 35:39 Yeah, I agree. Yeah, also that’s exactly how we fit things into our model of due diligence and, and looking at deals. So we have these free different parameters that we look at. Then we evaluate every deal. We look at the numbers and that’s of course the multiple revenues, the trends All these different things. And sometimes there are websites that are seasonal, sometimes it’s important to see where the industry is going. And then the opportunities to see what can be improved. And often that could be, you know, finding more affiliate programs or signing up if you higher value affiliate programs higher value on a platform, like media, or thrive so and the last one is looking at risks. So it’s really important to understand the main risks and how to mitigate them.

Richard Patey 36:35 Yeah, I mean, it’s totally fine to to pay, you know, a huge multiple of revenue, if the assets are undervalued or not priced in, you know, if you see a deal that actually has a premium domain that isn’t factored in, which is why I’ve started getting more into domaining. I find that really, really interesting. You know, if a deal comes with a large email list that isn’t leverage well, or if you could use that email list to drive revenue to another website in the same niche or or website that is targeting that similar demographic, you may be able to leverage that and generate more total revenue is totally fine to overpay. If you’re able to if you think the overall assets are undervalued, you know, if the site is not generating…is very bad at converting traffic into revenue, then it’s totally fine to pay a lot more. But yeah, I think just focusing on price to earnings. And I think going forward, the website investing space is going to get more sophisticated with valuations. And I think it’s going to be more than just, you know, putting a multiple on on the earnings, I think we’re going to start looking at the value of the content and what that would cost a purchase the value of the revenue and I think I kind of see I’d like to get to a place where we we add up all of these different components, you know, what is the domain name worth anything is the email is worth anything. Because there are platforms now where you can buy and sell YouTube channels, Instagram channels, and these things are not factored into to deals, you know, it’s just a revenue. And people assume that all these individual assets, they’re all driving the revenue, so they’re already priced in. But I think what makes the most sense, what I’d like to see is you add up, you place a value in all the individual assets, and then maybe on the revenue, you price that two times, you know, yearly revenue, not the crazy three x or four x that we were seeing, and then combine everything else together to get a more accurate valuation. So I think what I’m starting to move away from just valuing purely on revenue, or net income, because I don’t think that that makes the most sense. In a space where there are far more, you know, valuable assets digital assets than just the website. So I don’t know how I got into that tangent. But um, yeah,

Michael Bereslavsky 39:15 I think it’s a good point. I agree to some extent that the current market is that’s probably the biggest inefficiency in the current market is that assets are not priced that well, the pricing is often based on on multiple, but multiple and age and some of those external factors, but it doesn’t take into account the risk as much as it should. Like for example, you would often see a site that’s maybe a year old, like less than a year old, and it has some pretty high risk SEO techniques. And it doesn’t have any kind of Mount any kind of competitive advantage is just ranking in Google. There is no social no newsletter or anything. And then you would see a site that’s been around for like five years, 10 years and has a newsletter has popular channels has a well diversified traffic, and like five different sources of revenue. And the difference is prices, maybe like 10% or 20%. That’s crazy. That’s Yeah, that’s completely ridiculous. How can you, I think i think people have to put a much higher value on risk. Because in the end, like if you’re not going to make a profit, if you’re going to lose money, it’s not because it was not a well age domain or it wasn’t a premium domain. It’s just because you misappropriated risks. So I think like focusing more on that would also help people find really great deals.

Richard Patey 40:54 I agree. And even putting a value on the link profile.

Michael Bereslavsky 40:58 Yeah, absolutely.

Richard Patey 41:00 Yeah, people buy domains for SEO, from, you know, the authority and the links that they have. So, you know, rankings traffic should have a value, link profile should have a value, the content should have a value, the dimensional value, other assets, email, their social profiles, they should all have individual values, because they could potentially be sold separately. And when they will start to be sold separately as marketplaces develop even more. And then, you know, revenue is something else that you then value or discount in the future, but it doesn’t make sense to the…

Michael Bereslavsky 41:38 Good point. Yeah, I mean, it’s if you are able to sell a Facebook channel and like a newsletter, and the accountant separately, that would definitely make sense to value. But like right now, I think it’s really difficult to, let’s say you buy a website that has a lot of high-quality content, but then it’s just not getting much traffic. So what are you going to do with the content? It’s, it doesn’t seem like you have a way to sell it right now. Like maybe you can rank it, you could maybe you cannot.

Richard Patey 42:12 Yeah, you can sell it as a starter site. So there is a category on Flippa starter sites. And then there are lots of people selling stuff in sites to improve designs out for investors, heck up com, and a range of others who are selling start asides, which is a domain brand new or aged plus content, and they’re valuing the content, typically, around five to seven, maybe even up to like 10 cents a word. That’s how they evaluate the content. These sites can come with, you know, up to 100 pages, and you know, 5, 6K worth of content. So they are being valued, but then yeah, when you get into the sites generating revenue, it makes no sense to me to then just completely disregard the value of the content.

Michael Bereslavsky 42:57 Yeah, well, thank you. It’s limited, like you wouldn’t? Let’s say you buy a site for $100,000. So you’re not going to be able to recover. Like maybe you can recover like 2000, like 5000 at most, right.

Richard Patey 43:11 If you lost all your traffic in renevue.

Michael Bereslavsky 43:12 Yeah, something like that, yeah, it’s like, a limited potential.

Richard Patey 43:18 It is. Which Yeah, I mean, the fact that you can potentially lose 80% of your traffic and 80% of your revenue, if you’re not able to, to improve that, you know, within one to three months, we’ve all seen this countless times from from a Google update means that, you know, this is a very high risk space. Now, you would also argue that, that’s why, you know, you get your money back in two and a half years, compared to other assets. You know, traditional businesses. You know, most other businesses are valued with higher multiples than that. Yeah. But like we said, it doesn’t make sense to me to pay three years of revenue and assume that the site is going through three years of Google updates totally fine. So I think I think we need to come to a place where we actually discount future revenue and do more sophisticated valuations and add up all the different components and come up with with a price or just, you know, come up with our own valuations and, and not just go blindly on on what a platform or broker puts out as the market price. Because I think, we were moving into a place where there was consensus that you know, 40 x, that these assets, you can you can do them anywhere. You can buy them, you can work on them anywhere. You know, there’s real advantages over most others assets especially, you know, physical property or physical, you know, brick and mortar businesses. So I understand that, but with content…and that makes sense with with, you know, with ecommerce, if you have your own brand, if you have a moat, but with most content sites, you don’t have a moat, someone can reproduce your content, do a better job, build more links and take your traffic. And so, there was consensus that okay, you know, multiples should be going up because these assets are awesome. And they are, but I think slapping you know, 40 X on revenue is way under pricing the risk, and there are better ways to do it going forward. I think multiples for the rest of this year, should be going down due to the pandemic. At least they’ve stopped rising from what I can see. Which I think is a good thing. But we just need to get more sophisticated and better appreciate the other assets that are involved in website deals. Yeah.

Michael Bereslavsky 46:08 Yeah, absolutely. And yeah, on the positive side, the high volatility in the market, it’s also benefiting all of us who are like more professional and that scene because it just means that there is a higher difference between what would be a good deal and a bad deal. So that just means there is more opportunity to make profit more opportunity to do like to be able to bring value in the marketplaces.

Richard Patey 46:39 Yeah, I agree.

Michael Bereslavsky 46:42 Cool. So what’s next for you? You are doing this newsletter? Do you think you’re going to continue and grow that, like being that like, fill that space of like educating and providing information for buyers curating information?

Richard Patey 47:00 Yes, I mean, this is my main focus. And it will be for years to come, you know, the next one to three years this is what I’m going to be doing. I like the fact that it’s a media publishing play. And I really like the fact that there’s no SEO involved at all, not trying to get traffic from Google or not trying to rank any of the posts on the publication. It’s all for subscribers. And no one can take your subscribers away from you. No one can take paid subscriptions away from you. And there are good opportunities for for running advertising in the newsletter and the podcast. So monetization with this is really easy. And I view it as far more sustainable than any other business or content site that I built previously. So I found a very good place to play in you Yeah, what I can say I’m not sure whether I’m considering as I can you know, a lot of people are subscribing to become educated about the space. I kind of see it more as like a, like a news play like a media play, and a curation play. I don’t want to be there’s not going to turn into some kind of course or I don’t want to be seen as, yeah, I want to start removing myself as you know, as the expert, you know, I want to make it more of a team player, I want to get other people involved. I want this to be able to to build into something more sizeable. And, I guess, education’s that, you know, is a good term to use. I mean, domain investing has been around a lot longer than the website investing. There’s a lot of domain investing websites and publications and podcasts. And yeah, this is kind of the first one focused on the website, investing space and just seeing how they have been doing things and copying, you know, good parts of what they’re doing. And yeah, so this is what I’m going to be doing for the foreseeable future. And it’s a very scalable, anti fragile business model for me and just in an industry that I’m still very fascinated by. But yeah, I don’t want to be, it’s not going to be you know, the the PT brand. That’s how I kick started it. It’s going to develop into more than just myself and get other people involved and, you know, get people who, you know, my focus needs to be on the on the publication and understanding where the industry is going. I can’t do that and be an expert operator. Now I want to connect with and interview the best people in the industry. You know, I recently had Matt the last podcast was with Matt Diggity. It’s hard to argue that anyone is better at than him at what he does with SEO and website flipping. So I’m just going to keep connecting and building my network and bringing in the best people. And, you know, break down what they are doing and distilling that and just yeah, capturing that as many valuable insights that I can that will make people looking to move into website investing more knowledgeable and more skilled at assessing risk and deploying capital into the space. So the space is continuing to grow. It’s still a large part of it. It’s still, you know, wild west days. But yeah, it’s, uh, yeah, it’s a great place to be. And yeah, this is my main focus for the foreseeable future, as long as it doesn’t burn me out and kill me first. But I’m already looking to conversations with a couple of people get them involved with writing and curating deals, so Yeah, I’m in a good spot.

Michael Bereslavsky 51:04 Oh, that sounds good. Glad to see that that you found your spot. Well, thanks for joining us for this conversation. Good to chat. And so tell us how can people reach out to you when people contact you and and more about your newsletter?

Richard Patey 51:19 Sure. Easiest way to to get a publication is it redirects to a subdomain that’s on the platform called substack redirects to Pay TV, my surname. I will change that at some point. I have been thinking about trying to buy but the guy wants 5K, which seems too high to me, but also as his base develops, and as my interest in domaining increases. I think we’re going to start seeing this as wider than just a content site. There’s a big widening of digital assets. Going forward, I think we’re going to see this more and more. So I’m going to be involved in, you know, digital assets for the foreseeable future. Maybe you could even count crypto in that, which I’m interested in as well. But um, so, yeah, right now it’s called website investing publication that may change in the future. But yeah, this is the space that I’m covering. So is the best place to reach out to me. I’ve got a personal website as well, but that would be the best place.

Michael Bereslavsky 52:30 Well thank you. Have a good day, Richard.

Richard Patey 52:32 Thank you. Cheers Michael, I appreciate it.

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