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.
