How To Buy Websites and Turn Them Into Profitable Businesses – Chris Yates

This Post: How To Buy Websites and Turn Them Into Profitable Businesses – Chris Yates

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have you been lonely all you on so as Mario mentioned what I do is I actually buy websites and what I tell people I do with them is turn them into businesses so to give you the background and how this whole idea and process came to life I have to go back to my first job coming out of college which was out of Las Vegas I was working in a marketing department kind of running the day-to-day marketing department managing the team they’re running the advertising budget that kind of thing and my employer at the Times name was David and David invent rly became what I consider to be a really crucial part of my life became my mentor and he believed in me so much that we decided to spin off a separate company which was ended up being a marketing company I headed it up that kind of thing providing services and as I was going along with this business I decided that at some point I really did want to get back like Mario said back to the northwest back to Missoula eventually and so after a while of growing that business making successful ended up buying my business partner former employer out David of that business moved up to the Seattle area ended up back in Missoula so after a while David called me up and it turns out that he was he had just signed a deal to close the business that I used to work or to sell the business see he used to work for for a major company out of the East Coast and he was looking for his next thing to do and so we started brainstorming together and both he and I had businesses where we had a lot of employees to deal with a lot of clients to service and all those kinds of things and so we were thinking well it’d be great to have a business that didn’t require really any in-house employees something that we could really do from anywhere since I was in Montana and he was in Las Vegas and something that you know we had capital but we didn’t have a lot of time to invest so something that’s sort of semi passive and so we came up we researched a little bit on the internet we came up this concept of why don’t we just go out and buy existing websites that already have established revenue streams use some of our knowledge and skills that we’ve learned from building our businesses and apply them to these websites so that’s how this idea sort of came about so we we got into this business and the first thing that we did was we decided that we’re going to actually get educated on how to do this we didn’t want to just go start buying websites and spending money thinking that you know it’s a little risky to do so the first thing we want to do is get educated we went out and we bought a training program spent a few hundred bucks on it at a website called buying and selling websites calm so we bought the training but the training program learned it all of that kind of thing and you know this is we were really excited about it so at that point we went out and we’re like well we could go spend a bunch of money on a website but we really don’t know what happens let’s go find somebody who already has done this in the past and lets you you know let’s let’s see if they want to partner with us in our first deal so in July of 2010 we ended up buying fifty percent of a website with these other guys that we had met who had already done this kind of thing before and after that shortly thereafter we bought several more websites and just all sorts of markets across the board totally different websites no real strategic plan other than we’re going to buy anything that looks like a deal that was our plan so and that was going fine I mean everything was really really good we were getting returns unbelievable returns like 62 180 percent annualized buying these sites and managing them and this was you know very exciting to us and at that point I’m like man I got to get out of this marketing business so I decided to sell that company and focus full-time jump into the deep end so to speak and get into this market and what ended up happening is that we had a couple of people we had bought sites from start calling us up and saying hey you know Chris David we have a couple more sites you guys interested in buying it we’re like yeah you know we’ll buy them and that light kind of came on like man this is the way to do it rather than one of the things when you buy websites is that there’s an auction website called Flippa and the challenge with Flippa is that you end up at three o’clock in the morning bidding on a website and they have what’s this this like for our auction extension to prevent sniping so you’re up at three in the morning and somebody else puts a bit in and then the auction just gets extended again so you’re up till 10 etc etc so this wasn’t the best way to do it and we started realizing man if we get people coming to us to sell their sights boy that would be the way to do it so what we decided this most strategic way to do that would be to position ourselves as the experts or the authorities in the website buying market so considering the fact that our business was going on in buying websites what do you guys think we ended up doing we went out and bought three websites that were the authorities in this market what a shortcut right so we ended up buying buying buying and selling websites calm which is kind of like our flagship training program whatever and from the guy that we bought the program from originally and then we bought another website from the guys that we worked with on that first deal that I mentioned they had an e-book website that was teaching people how to flip websites and we bought one of the top industry blogs called click websites calm and basically kind of like monopoly started buying these properties in this market and did a few tweaks to those sites and and basically let people know that we were looking to buy sites we had money to buy him just submit him to us and we started getting deals coming in to us at that point and this was great you know again the returns were doing we’re coming in really well and so at this point we’re like okay let’s start looking at maybe some bigger site so we we were ready to buy weed kind of sign the agreements on our first six-figure website and we have a friend who was an angel investor and we approached him with the concept of coming in with us into the business buying into the company and also into this website that we bought and what he really liked about this particular deal not not just the you know the fact that we knew him already and he believed in us and all that kind of thing but but the idea that we could one put the money to work right away we could go buy a website that was already generating you know over I think it was so we estimated somewhere between five and ten thousand a month so we basically took 50,000 from him we put in our own 50,000 bought this website and the other thing that he really liked about this was that we had historic data to show him so he could see that you know our numbers were looking really good historically if we could just keep this up you know this has this has some room to scale and that’s one of the things he really helped us with one of the the key things that he has done with us is that the investor I’m talking about is he first thing he did was he SAT us all down three of us and we laid out our mission vision and values for our company raise your hand if you know exactly what your mission vision and values are for your company okay the other thing we started implementing was quarterly strategy sessions where we would sit down as a team lay out our ideas our priorities things that we’re working on and we’d come up with our top five priorities for the next quarter in our business actually was you do it for a yearly basis but you also break it down into a quarterly basis but that’s been one of the I believe one of the keys to our success to this point is really getting clear and getting everybody in alignment moving in the same direction so at this point we’re working with the investor all that kind of stuff and we started looking at okay well how can we scale this thing we started getting a lot of websites a lot of different markets or portfolio was getting pretty big all these sites were significantly different in terms of how they were making money how they were managed on an ongoing basis that kind of thinks we really had no one unifying system in place so that’s one of the things we started working on was building out the systems that we could apply to each of these websites and the one that I think was probably the biggest key system that we implemented right away was was this process of due diligence and valuation on our potential acquisitions so what we built was essentially a scoring model where we would score webs potential acquisition from zero to like 250 I think is that the top end which no sites can really get to that but the concept being that we would have sort of a unbiased number that we could work from so going from just buying anything that exists out there we started actually being slightly more strategic about it and and applying this valuation system to it knowing what our top end of buying the websites would be all that kind of stuff so our new model was we would buy any website that scored 200 plus on our scoring system so getting a little bit better in terms of strategy at that point things started kind of shifting a little bit and we had some rocky rocky pieces that came along so one of our sites was a pretty big site in terms of email marketing and it was had a lot of traffic from other countries and stuff like that and other countries aren’t used to the concept that you can unsubscribe from emails and things like that so we in doing those systems development that we had we chose one of our email marketing providers to handle all of the lists for all of our website so we basically had I don’t know 30 40 different lists and not in that account at that particular time it turns out that one of those lists was getting a very high spam complaint ratio so our email marketing provider decided well if one of your list is getting it we’re shutting your entire countdown we’re deleting all of your emails and in all my wildest dreams I would have never thought that they would have done something like this but we lost 200,000 subscribers overnight and we woke up the next day like oh my god and then more recently you know a few months later Google decides that it’s going to change some of the rules in terms of SEO so a portion of our portfolio was really dependent upon organic traffic and some of those were getting hit and rather than looking at this as a failure or you know getting down ourselves a kind of thing we said okay well well one how can we prevent this from ever happening again and how can we build systems around this so that this you know we prevent this type of thing from happening again one of the key lessons that we learn coming out of that is that we don’t put more than say ten percent of our piece of our business whether its revenue or control of your business into any anyone marketing channel any one website and a company Google included I mean Google probably was fifty to seventy-five percent of our revenue and if they start changing things boy we’re using Gmail well we’re also using Chrome well there’s a lot of areas that Google has control of our companies so we started recognizing that and making systems changes so that that type of thing wouldn’t happen again the other thing that we did was we started focusing less on sites that that weren’t really businesses we we were buying sites that maybe we’re Adsense websites that we’re making money just by generating organic traffic and clicks and we stopped focusing on those types of sites and we started looking at we have websites that sell legitimate products we’re adding a lot of value at these sites so let’s stop looking at these as websites and start looking at them as you know individual business models so that brings us to where we are today which is our strategy is again evolved into essentially buying a core business or website in one of the financial or the health market so we’ve identified specific markets that we we are working in becoming experts in those kinds of things we buy only by sites that have the potential to become legitimate businesses that and we have some lipman litmus test is the test that we use like you know can we buy traffic in this market is this a sight i’d be happy to put my name on you know those types we have little tests that we use in just in kind of deciding if this is one that fits that and then once we’ve got the core business there then we start buying complementary websites that leverage the knowledge in the business model behind that central central concepts oh so that’s how I you know essentially take websites we buy them and turn them into businesses so thank you