New episode will be posted this weekend on SEO Strategy, Marketing Demographics and much more!!
As many of you know by now Gwen Stefani is a LinkedIn Influencer. So in the spirit of naming random celebrities as influencers I hereby nominate Tom Green (sorry Seth Green you were a close second) and Seth Macfarlane. My justification is as such.
Macfarlane has built a recognizable media empire with some of the most well known brands in the world including Family Guy, American Dad and The TED movies.
Tom Green is best known the Butler, Road Trip movies, his show and just honestly being my favorite brand of odd.
Other than No Doubt Gwen Stefani hasn't done much if she is a Influencer I nominate some real talent to be recognized as well.
Running a two-sided marketplace, we see interesting arguments from both the buy and sell side. Consider these two questions:
“Why would anyone pay money for a website that can be built from scratch for next to nothing?”
“Why would anyone sell their profitable websites rather than just keeping/growing it themselves?”
The former is clearly a website builder—someone who can’t understand why anyone would buy when it could be built from scratch. The latter is a buyer—someone who sees the opportunity to grow/expand purchased sites and picks them up to work on them directly.
What’s left out of this equation are investors.
While investors relate more closely to website buyers, their thoughts on valuation, multiples, and ROI differs in a few key ways.
Why Websites Are UndervaluedMy guess is, if you’re reading the Empire Flippers blog, you’re already pretty familiar with the idea of buying and selling websites. So there’s no need to rehash the argument for why digital assets are worth looking into—I’m sure you’re aware of both the opportunities and potential pitfalls in buying websites.
However, I believe that many people in the online business community sometimes miss the bigger opportunity when it comes to the way they think about digital assets. The online business community, it seems, is a little spoilt in terms of ROIs. For example, it’s entirely possible for someone with a strong SEO skill set to bootstrap an SEO business on relatively little capital and be making four figures within a few short months. Doing business online allows you to avoid a lot of the upfront costs that are traditionally associated with starting a new business, and the “bootstrapping” or “lean startup” concepts are well-known in these circles.
Because successful online entrepreneurs are so used to high ROIs on their capital, I believe they also undervalue the assets they’ve built. On top of that, because so much of online business is built around efficiency and speed, many people who operate in the web marketing space seem too focused on the short term at the expense of the long view. Selling a site for $100K is more attractive than making $5K per month over the next 20 months if you’re mainly focused on the short term.
However, if you take a step back and start looking at websites as an asset class or as an investment, and if you start comparing websites to more traditional investments like stocks, bonds, or property—well, suddenly selling a $500-a-month site for $10K might not seem as attractive anymore.
The Current Investment ClimateIf you’re someone who’s already familiar with money management and the larger investing world, you’ll know that the current investment environment is pretty tough. Attractive investment opportunities are few and far between—U.S. government and corporate bond yields are pretty much as low as they’ve ever been, and the U.S. stock market is currently trading at a P/E of about 20, which is not egregiously expensive, but is definitely above the historical average of 15. There are probably still pockets of good opportunities in Real Estate, but these can be difficult to pinpoint without extensive local knowledge. Property values in most places have fully recovered from the financial crisis.
If we look further afield, both emerging markets and Europe look to be on shaky ground. Many emerging markets are economically tied to China, a country with significant structural problems (and where the stock market just dropped 30% in a matter of weeks). Europe has its own problems—it’s dealing with the ongoing issues with Greece, and even if that is eventually resolved, it seems like the region will face continuing instability due to the inherent flaws of their currency system.
In this rather arid investing environment, the returns on digital assets (websites) look incredible, even when we take into account the additional risks that are inherent with buying websites.
On Average, Digital Assets Are Grossly UndervaluedBefore I go into depth about why websites are undervalued, I’ll run through a few traditional asset classes to demonstrate the extent of the undervaluation that I’m talking about.
Typically, reputable, well-known website brokers (like the one whose blog you’re reading) sell sites for 20x to 35x their monthly earnings. If we take this figure and compare it to the historical P/E of the S&P 500 (about 15x annual earnings), we immediately see the huge difference between valuations. Even at the high end of website valuations, 35x would be considered extremely cheap in stock market terms. 35x monthly earnings is roughly equivalent to a P/E of 3. The sites that are sold here on EF are typically sold at about 20x-36x monthly earnings—equivalent to a PE of 1.67 to 3.00 in annual terms.
Therefore, for the same amount of earnings, digital assets are on average about 5-8 times cheaper than stocks.
Next, we move to bonds. Bond yields right now are basically at historical lows. I won’t make a comparison to government bonds, since U.S. government bonds are more or less risk free and thus aren’t a good comparison to investing in websites, which are risky. Instead, I’ll use the (rather arbitrary) 20y Single A Corporate Bond Yield* of 4.51%. So you can buy the debt of a good-but-not-great company and earn 4.51% a year on your money. If you buy a website at 20x, your return should work out to about 60% a year.
*Without going on a long diatribe, bonds rated BBB and above are considered “investment grade”, and bonds below BBB are termed “junk bonds.” Single A bonds are one level above BBB. I wanted to use BBB as it’s the lowest level of investment grade, but the single A data was much easier to find and understand.Next, we move on to real estate. Real estate is probably the best comparison to make when thinking about websites as an asset class. While stocks and bonds are pretty much as passive as you want them to be, both real estate and websites are assets that require some level of upkeep, and in both cases, having a relevant skillset can help a lot when it comes to maintaining/improving the asset (e.g if you’re good at DIY, you can fix houses up to improve their value).
Real estate fares a little bit better than the other investment types that we’ve discussed; on average, real estate investments yield about 9%. Still, compared to the 60% that we get from a valuation of 20x monthly earnings, 9% a year doesn’t seem all that attractive.
Here is a quick table I put together to demonstrate the potential differences in returns
U.S. Equities (S&P 500)
Wall Street Journal
P/E 20x Earnings Yield of 5%
20 year AA Corporate Bonds
US Real Estate
20x Monthly Annual Yield 60%
The Reasons Why Digital Assets Are CheapFirst and foremost, I believe a large portion of website undervaluation stems from the fact that the mainstream investment community hasn’t caught on yet. While I’m not sure there would be enough supply to support the kind of large scale securitization that we saw with mortgages or student loans, I do believe that at some point, the financial world will spot this little pocket of value, exploit it, and push valuations up across the board. In fact, I believe this is already happening on a smaller scale—if I remember correctly, here at EF, Justin and Joe currently in the pilot stages of an investor program.
Another reason websites are undervalued is because it takes a specific skillset to buy, manage, and improve websites. For those who aren’t familiar with online business, a lot of these skills can seem daunting. (If you don’t believe me, just start talking SEO or CRO with someone who’s not in the internet business space and watch their eyes glaze over.) Because these web marketing concepts are so foreign to most people, they effectively act as a barrier to entry, in the same way that renovating an entire house seems like an impossible task to somebody like me.
On top of the skills required to run a website, you also need to learn proper due diligence—this acts as another barrier to entry for traditional investors. While the end goals behind proper due diligence for online and offline businesses are similar, the practical steps that you need to take to complete good DD on an online business are completely different than with offline businesses. Instead of doing channel checks and monitoring walk-in traffic, you’ll be looking at Google analytics and evaluating conversion rates.
There’s also inherent risk when buying a website. At the end of the day, it’s impossible to deny that buying a website is riskier than investing in other asset classes at face value. With stocks, bonds, and property, there are clear legal frameworks and investor protections in place. While there is definitely fraud in all of these markets, the % of outright scams in the website market is definitely significantly higher than what you’ll find in more traditional asset classes (particularly on marketplaces like Flippa—there are good bargains to be found there, but there are also many, many less-than-legitimate listings).
Buying websites through a good broker (like Empire Flippers) definitely helps to greatly reduce this risk. However, you should remember that you’re ultimately responsible for your own due diligence.
Also, it’s probably true that on average, websites have a shorter lifespan when compared to other asset classes. It’s easy to imagine a company like Target still being around 20 years from now, but it’s much more difficult to say the same about your fishing rod affiliate site.
So yes, on the whole, website investing is riskier than investing in more traditional asset classes. However, I don’t believe that the increased risk fully justifies the huge valuation gap. In other words, I believe that even taking into account the increased risks, websites are still significantly undervalued when compared to the broader investment universe.
Thinking about Websites as AssetsAt this point, you might be thinking “Okay, so websites are cheap on average—but what’s the actual point of this article?”
Well, here it is. Websites should be considered assets or investments. This means that investors should be comparing digital assets to other assets classes to gauge their attractiveness, and they should be buying,managing, and selling their websites as if they were assets rather than commodities.
Changing your mindset in this way should lead to the following
You should approach the digital asset marketplace in the same way that you would invest in an exotic, frontier market. In this hypothetical frontier market, companies are undervalued across the board, and the returns can be great. But the legal framework is flakey and the overall transparency of the market is low.
Many people would shy away from investing in this kind of market—but that’s not the correct approach. Just think about the amount of wealth generated by those who got in early at a place like China (even considering their recent stock market troubles). The correct approach is to learn the necessary due diligence skills, work out the best practices, and then invest cautiously.
You should treat websites like investments—take a long-term view, buy carefully, and sell only at the right times and for the right reasons. Chances are, you’ll do well.
Imagine you were an investor interested in investing in an exotic country. The prices of companies in this country are low, and the returns are good, but the legal system is unreliable and opaque and the accounting systems are completely different than what you’re familiar with.
That’s exactly how you should view the market for digital assets. Treat it as an entirely new investing environment, learn the best practices, familiarize yourself with the systems involved, and tread carefully. The only real difference between investing in websites and investing in an exotic frontier market is that in most frontier markets, you need special legal permissions to invest. But in the market for websites, there’s a level playing field, and everybody has access.
The market for digital assets is like the Wild West. While there are great risks involved, there is also great opportunity, but only if you proceed with discipline and caution. Those who perform recklessly will end up regretting it, but those who do it properly will be rewarded handsomely.
In the end the part that truly matters is when you look at digital properties as an asset class you realize how grossly undervalued current digital real estate is.
The purpose of this piece is to educate on how both websites as a form of income generation and domains as a form of capital appreciation should be considered when you think of ways to build assets.
On April 7th I will be attending the free Entrepreneur Simplified event. I hope you will join me there. You can get details and find out more at the following link.
This is really cool. You can find the original article and read more at techcrunch.com
Yet more proof that Minecraft is more than just a game comes our way today. Microsoft already has plans to use the platform, which it bought for $2.5 billion, to help kids learn and for virtual reality, and now we can add artificial intelligence development to that list, too. Today, Microsoft announced a project that enables artificial intelligence researchers to tap into the hit title to sculpt and develop their tech. AIX is a new software development platform that researchers can use to develop ‘agents’ — AI-powered characters — which roam Minecraft worlds.
The idea is to equip them with the smarts to behave like a regular player. So that includes basic commands, such as climbing up a hill, and more complicated requirements like navigating varied terrain, building out landscapes and just surviving from the game’s vicious zombies. Katja Hofmann, who leads the project, explained that Minecraft’s openness and creativity present larger opportunities to explore and develop AI than currently exist. That’s not unlike the reasons why Google-owned DeepMind has focused on Go, having just defeated a legendary human champion of the Asian strategy game over a five game series. “Minecraft is the perfect platform for this kind of research because it’s this very open world,” Hofmann said.
“You can do survival mode, you can do ‘build battles’ with your friends, you can do courses, you can implement our own games. This is really exciting for artificial intelligence because it allows us to create games that stretch beyond current abilities.”AIX and Minecraft isn’t just about developing AI agents to exist in the game, Hofmann said the goal is to train the technology to learn from itself — just as DeepMind’s AI technology does when it plays Go, And, trivial though it may sound to non-players, Minecraft has all the ingredients to train AI agents and technology for the real world. “Building a robot and trying to teach it to climb a real hill is costly and impractical; unlike in Minecraft, you’d have to repair or replace the robot with another costly machine each time it gets damaged.
I am excited to see where this goes. Microsoft hasn’t always been that great about innovating so maybe this is the start of a step in the right direction.
Face it Windows 10 has it's share of bugs and as much as you want to a sledgehammer is not a solution :) Please put it down. Below is a list of fixes for the most common reason why Windows 10 disk usage maxes out to 100.
Slow Performance? Check Your Disk Usage This performance issue is most obvious when attempting to use Search (Windows key + Q) to find a file or program, and anything else that requires the drive to do some work (perhaps copying and pasting a group of files).
To establish whether it is a problem that is affecting you, when your computer next slows down press CTRL+ALT+DEL and select Task Manager. (Alternatively, right-click the Taskbar and select Task Manager.) Note that this may take some time to open with the drive being slow.
On the first tab, Processes, look for the Disk column. If you’re having problems with drive performance, this should be at 100%, and colored red to indicate whether you have a problem or not.
Once you’ve found there is a problem, you have several options available.
Check Your Anti-Virus Software As with any such performance issue, the first thing to do is confirm that your computer hasn’t been infected with malware. Your security software should be able to deal with this, whether it’s a free app or a paid suite. At the very least, tools such as Malwarebytes Anti-Malware should be able to scan your system drive and detect any problems, although with a heavy load on your drive already this may take a while.
If threats are found, use the software’s recommendations to discard them, and reboot, before checking your drive performance further. Hopefully you’ve resolved the issue; if not, then malware wasn’t to blame, so read on.
Disable Windows Search for Improved Disk Performance The next thing to check is whether the problem is to do with Windows Search. A bug in Windows 8 and 10 results in a sort of “search loop” that results in an increased load on the system drive.
To stop this, and prevent it from happening during your current session (until Windows is rebooted) open the Command Prompt (the quickest way is by right-clicking the Start button and selecting Command Prompt (Admin)) and enter the following:
net.exe stop “Windows search”
To permanently disable Windows Search or Indexing, press Windows + R, enter services.exe, and hit Enter. In the Services window that opens find the Windows Search entry and double-click it to open the Windows Search Properties window. Under Startup type, select Disabled. Here you can click Stop to abort the service. Click OK to save your changes.
You can also control which folders Windows Search indexes, which we’ve demonstrated previously.
A few moments after disabling Windows Search, your Windows 8.x or Windows 10 performance should improve considerably. If not, move on…
Disable Superfetch ServiceFor some reason, the superfetch service has been identified as a potential cause of these disk performance issues in Windows 8.x and Windows 10. To deal with this, open another Command Prompt (or if you’ve still got the earlier box open, use that) and enter:
net.exe stop superfetch
Again, wait a few moments to check whether this has had any effect on your computer’s performance. You should also run Check Disk in a Command Prompt:
chkdsk.exe /f /r
You’ll be informed that your PC must be rebooted for Check Disk to complete, so make sure you have closed all of your applications first.
If this doesn’t work, it is likely that you’re experiencing an iteration of this issue that is frustrating to realize, but simple to resolve.
An anonymous source tells me the Direct TV acquisition is intended as a long term replacement for Uverse TV. ATT currently makes little if any profit off of there Uverse service so the decision makes sense if true. Do you see Uverse eventually being phased out? Fiberoptic cable is expensive to layout and the operating margins are quite thin. What are your thoughts on this?