opinion

Adventures in Brokering: Don’t Charge for Potential

Adventures in Brokering: Don’t Charge for Potential

When it comes to the three different types of properties we sell at Broker.xxx — businesses, websites and domains — it is domains that are the hardest to sell. That’s because domains are almost entirely all unrealized “potential,” and you cannot sell a business on “potential” alone. I’ve run into this many times since I started buying and selling properties back in 2001, as well as during my investing and venture capital experiences.

Most people think there really are such things as “million-dollar ideas,” so they try to protect them with non-disclosure agreements and the like, building a secret project without anyone knowing about it. They safeguard their idea while they try to find someone who wants to invest in or buy it. The thing about ideas, though, is everyone has them. Acquirers don’t want to buy ideas or even the project you’ve built. Nor do they want to steal them.

Lengthy ‘feature lists’ and quality code are just not attractive compared with revenues, even if a business is not yet profitable.

You’ve heard of investors “investing in people” — what they are investing in is execution. That’s why a functioning business based on that brilliant idea of yours is worth something, whereas the idea alone — or that big ball of software you just paid to have developed — is not.

I’ve seen it happen many times before, and as recently as a couple of weeks ago. Someone has a dream and starts building. They have their budget — let’s say it’s $200,000 — and they expect to develop it for $100K and spend the other $100K on marketing. But, much like building a skyscraper, a bridge or a house, nobody writes a complete spec; there’s always unexpected work to be done or dreaded “feature creep” and change orders that come in. Before they know it, they’ve spent the $200,000, they have nothing left except a wicked platform, and it is ready for prime time.

But that’s when they reach out to me at Broker.xxx to try to sell it. My response? I tell them the truth: It will be challenging to sell a piece of software with no revenue. Why? Because anyone who would want to buy it has their own set of ideas, desires and needs if they’re going to pay just for coding a platform. Unless you created something brilliant and nearly perfect for their needs, it’s most likely that nobody else will want it; they are more likely just to build it themselves instead. They most certainly don’t want to pay for your mistakes. Acquirers want to buy your successes.

Lengthy ‘feature lists’ and quality code are just not attractive compared with revenues, even if a business is not yet profitable. Which reinforces the reality that buyers seldom buy on potential alone. A dreamer’s idea is worth virtually nothing without execution.

Sure, some stolen ideas have made other people rich over the years — ask the Winklevoss twins about their settlement with Facebook and Zuckerberg. Or read about Xerox and how it “inspired” Apple’s graphical user interface (GUI). But your “potential” and “ideas” are most likely safe from theft simply because investors want to invest, and acquirers want to acquire. Mark Zuckerberg and Steve Jobs were not investors; they were people who executed ideas to completion. Acquirers don’t want to build from scratch or operate something that you failed to do.

Remember, an investor and an acquirer are the same thing. An investor buys part of the business; an acquirer buys all of it. Often, acquirers are early investors.

Moral of the story? Don’t try to sell ideas or the potential of what your website might be one day. Execute your ideas, and execute them well. Then, come to me, I’ll sell your business, and we’ll drink champagne at closing. Assuming there’s not another COVID lockdown.

Juicy Jay is best known as the CEO and founder of JuicyAds. Known as “The Dealmaker,” his brokerage Broker.xxx is the largest marketplace in the world for helping people buy and sell adult websites, businesses and domains.

Related:  

Copyright © 2024 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

opinion

How to Halt Hackers as Fraud Attacks Rise

For hackers, it’s often a game of trial and error. Bad actors will perform enumeration and account testing, repeating the same test on a system to look for vulnerabilities — and if you are not equipped with the proper tools, your merchant account could be the next target.

Cathy Beardsley ·
profile

VerifyMy Seeks to Provide Frictionless Online Safety, Compliance Solutions

Before founding VerifyMy, Ryan Shaw was simply looking for an age verification solution for his previous business. The ones he found, however, were too expensive, too difficult to integrate with, or failed to take into account the needs of either the businesses implementing them or the end users who would be required to interact with them.

Alejandro Freixes ·
opinion

How Adult Website Operators Can Cash in on the 'Interchange' Class Action

The Payment Card Interchange Fee Settlement resulted from a landmark antitrust lawsuit involving Visa, Mastercard and several major banks. The case centered around the interchange fees charged to merchants for processing credit and debit card transactions. These fees are set by card networks and are paid by merchants to the banks that issue the cards.

Jonathan Corona ·
opinion

It's Time to Rock the Vote and Make Your Voice Heard

When I worked to defeat California’s Proposition 60 in 2016, our opposition campaign was outspent nearly 10 to 1. Nevertheless, our community came together and garnered enough support and awareness to defeat that harmful, misguided piece of proposed legislation — by more than a million votes.

Siouxsie Q ·
opinion

Staying Compliant to Avoid the Takedown Shakedown

Dealing with complaints is an everyday part of doing business — and a crucial one, since not dealing with them properly can haunt your business in multiple ways. Card brand regulations require every merchant doing business online to have in place a complaint process for reporting content that may be illegal or that violates the card brand rules.

Cathy Beardsley ·
profile

WIA Profile: Patricia Ucros

Born in Bogota, Colombia, Ucros graduated from college with a degree in education. She spent three years teaching third grade, which she enjoyed a lot, before heeding her father’s advice and moving to South Florida.

Women In Adult ·
opinion

Creating Payment Redundancies to Maximize Payout Uptime

During the global CrowdStrike outage that took place toward the end of July, a flawed software update brought air travel and electronic commerce to a grinding halt worldwide. This dramatically underscores the importance of having a backup plan in place for critical infrastructure.

Jonathan Corona ·
opinion

The Need for Minimal Friction in Age Verification Technology

In the adult sector, robust age assurance, comprised of age verification and age estimation methods, is critical to ensuring legal compliance with ever-evolving regulations, safeguarding minors from inappropriate content and protecting the privacy of adults wishing to view adult content.

Gavin Worrall ·
opinion

Account-to-Account Payments: The New Banking Disruptor?

So much of our industry relies upon Visa and Mastercard to support consumer payments — and with that reliance comes increased scrutiny by both brands. From a compliance perspective, the bar keeps getting raised until it feels like we end up spending half our time making sure we are compliant rather than growing our business.

Cathy Beardsley ·
profile

WIA Profile: Samantha Beatrice

Beatrice credits the sex positivity of Montreal for ultimately inspiring her to pursue work in adult entertainment. She had many friends working in the industry, from sex workers to production teams, so it felt like a natural fit and offered an opportunity to apply her marketing and social media savvy to support people she truly believes in and wants to see succeed.

Women In Adult ·
Show More