Tobias Ratschiller

[ This post is part of a short series on Buying and Selling Websites]

Find a Good Niche

Don't Reinvent the Wheel

• There is no learning required.
• Support is widely available.
• Development is ongoing and not dependant on you or your developers.

Chose a Good Domain

• A premium domain is a backup. It brings a value by itself, adding to your website worth. Even if your development fails, you should be able to recoup part of your investment by selling the domain (if you bought at a smart price).
• If there was already some content on the domain, and that content is topically related to the site you are planning to build, it can give you a significant boost and shorten the time to traffic.
• Premium domains are brands. It is much easier to sell an advertising deal to a hotel in Kyiv when you are Kyiv.com than when you are visitkyiv.co.ua.

Traffic, Traffic, Traffic

SEO Explained; or the Million Dollar Question Answered

• Making your site easily accessible to crawlers (and you have to try hard to fuck that up if you are using a standard system like Drupal or Wordpress)
• Coming up with interesting and valuable content
• Spreading the word so that people will find, consume, and spread your content and return to your site

1. Find influencers in your topic and get them to link to your content
2. Write guest posts, columns, editorials on other sites and include links to your site
3. Make it easy for people to share your content on social media
4. Engage with people on Twitter and Facebook and point them to your site (when appropriate)
5. Answer questions on Quora, Yahoo Answers, etc, with references to your site (when appropriate)
6. Run competitions that include something where people link to you
7. Come up with infographics, great photos, or videos that people naturally tend to link to
8. Make sure your videos on YouTube link back to your site
9. Ask for a link at every occasion. For example, we did a body painting for the Euro 2012 soccer championship. Of course we asked for links from the painter, the photograph, each model, and the studio. :)
10. etc etc

Passive Income is Key

Keep the House Clean

• Add Google Analytics, with AdSense tracking enabled
• Have the site on a dedicated server or VPS with no other sites, so that you can pass the whole set up to a buyer, if he is interested
• Add a URL channel in AdSense if you run AdSense on more than one site to make verification of income easier
• Keep track of expenses and income in an Excel sheet
• Document your supplier/vendor/outsourcing relationships

Take Your Time

Enjoy the Process

Summary

I often get questions about our business of buying and selling websites. People either don't want to believe that you can actually make money on the Internet or want to know all details at once.

So I wanted to write a short series to explain the basics and share some of the things we learned since starting this five years ago.

1. Developing Web Sites for Resale
2. Buying Websites
3. Selling Your Website for Six Figures
4. FAQ Me. Common Questions.

Domain brokers come and go quickly. A new one contacts us each week. It's the easiest way to get started in the domain business without upfront capital investment. Unfortunately, the people with no money to invest are usually also not the best sales people ever, so the actual turn over rate is low. Even if a domain broker is really good, there are a couple of problems:

• The time investment is significant if you do it right. You would have to do market research, contact end users, advertise. Just sending the name to five of your previous buyers and putting it up on your mini site does not make you a good broker. 
• Most domains sell in the $1,000 - $15,000 range, making commissions unattractive for a single broker or small team. You have to turn over en masse and you would do that by building a marketplace platform like BuyDomains or Sedo, not by single-handily brokering names.

1. Verified Google Analytics, and earnings with a stamp of authenticity. Every website investor must still do their due diligence) but when reviewing brokered listing you should be able to assume that at least sources have been verified.
2. Informative offering pages with background on the business and owners. The one paragraph descriptions at Latona's just don't cut it. I would like to see a combination of owner-supplied listing text and a broker description similar to the Flippa-A-List mailing list.
3. Give uniform information about businesses. In an ideal world the broker should work with each owner to create a uniform set of financial data and traffic figures.
4. I'd suggest that brokers focus on high value names with asking price of $50,000 and above. Flippa is okay for the rest and if you want to do a good job as broker, the amount of work you will have to put in does not differ much whether it's a $10,000 or a $200,000 sale.
5. Brokers need to work actively to promote listings beyond their website and mailing lists. Please give details on how you intend to earn your 15 percent.
6. Be transparent. I would like to see your closure rate. Average sales price. Time to close. Team size. Etc.

Earlier this year in March I went on a trip in South America and visited Argentina, Bolivia and Peru. In terms of business it was quite an eye opener for me and I'm convinced that there are huge growth opportunities in Latin America's Internet sector.

It started with the travel preparations. Booking flights or trains in countries like Bolivia or Peru is a pain. To book a flight from Santa Cruz, Bolivia, to La Paz, Bolivia, I not only had to call to make the booking, but I also had to fax in scanned copies of my passport and credit cards.

In general tourism is not well developed except in the most common touristic areas such as Machu Picchu. When we took a boat tour across Lake Titicaca, we (two persons) were alone aboard a huge ship - dedicated tour guide included! For the price we paid (I think something like $200 for the day) this could only be a loss for the tour operator.

1. How To Start a Startup - article
   I would anyone looking to start a business to this article.
2. The End of Geocities - post
   As a commenter on this post says "Struggling to meet the bills, having a dream, and pushing until you are successful." Everyone sees the successes, but few share the hard realities.
3. Why We Do What We Do - video
   Legendary Tony Robbins TED talk. 
4. 8 Secrets of Success  - video
   Eight secrets, less than six minutes.
   
5. Ze Frank- video + bonus song
   Save the song at the end for the hard times.

It's that time of the year again. I love the time between Christmas and New Year's. Business is quiet and there is time to look back and plan for the next year (even if it usually comes down to the same Pinky And The Brain quote: "Gee, Brain, what do you want to do next year?" "The same thing we do every year, Pinky - try to take over the world!").

2010 was without big surprises in our business. I had said in the beginning of 2009 that crisis years are building years, and in 2010 we continued what we had begun in 2009. We bought over 50 developed sites this year on forums, Flippa, and via private deals. In addition, we started a promising cooperation with the Domain Developers Fund to develop some of their names in equal rights joint ventures, the first ones being TCM.org and Holland.net.

... or how we increased our CTR from January 2010 to August 2010 by over 300+%. You can literally double or triple your AdSense revenue just by optimizing the ads.

Here are some leanings that we found had the most impact on our revenue. This may be common knowledge among publishers, but it took us a while to come this far, and cost us tens of thousands of Euros along the way. Unfortunately, the AdSense Terms of Service disallow disclosing of the exact CTR or other figures, therefore limiting meaningful discussion - probably that's why we didn't find useful articles when starting!

I assume you are familiar with the basics of optimizing AdSense, such as the AdSense heatmap, setting up channels for measuring your experiments, and Google's basic color suggestions.

Split test everything. The software mantra of "Don't touch it when it's not broken" does not apply here. With AdSense, continuous improvement is key. The best way to test is split testing (variation testing), which often leads to unexpected results. Obviously different sites and different industries have different preferences and requirements. It surprised me though how different sections on one website performed significantly different. Here is an example. The Danish business directory on Denmark.net performed much better (0.5%) with a red border than the English language version did - there the red border was actually detrimental to CTR.

How to split test AdSense: Here is a quick way to implement version that serves two or more different channels on the server side with a random distribution. This is easy to do in PHP:

mt_srand((double)microtime()*1000000);
$rand = mt_rand(1,2);

if($rand == 1)
{
// serve AdSense channel A
}
else
{
// serve AdSense channel B
}

1. There is only way to do it: My Way, Frank Sinatra.
   "Yes, there were times, I'm sure you knew,
   When I bit off more than I could chew,
   But through it all, when there was doubt,
   I ate it up and spit it out."
2. Say it loud: We Are The Champions, Queen.
   "No time for losers
   'Cause we are the champions - of the world"
3. That's what we do. Build. Rock and roll. We Build This City, Starship.
   "We built this city on rock and roll"
4. This song is for the n-th hour in the airport lounge: One Night in Rio, Louie Austen.
   "Well after flying for seven hours in economy class
   I was really mad, three crying babies
   And no more liquor, and no sleep"
5. Need some energy? Yes, Yes Y’All, Sergio Mendes.
   "And you don't stop, and you don't quit."

Here are a few thoughts on the state and future of domaining.

1. Domains Sustain Brands
The primary use of a domain is to build or to sustain a brand. The primary goal of a brand is to drive sales.

A generic domain such as Candy.com is an instrument for a business to advertise them as category leader and to ingrain them into the mind of consumers as such. A brand thrives on resemblance, and a common word with ".com" at the end is easier to remember than an artificial name. Therefore, the more "common" a domain is (generic, .com), the more value it has for the brand. The less common it is (artificial names, less known TLDs, potential typo TLDs like .co or .cm), the more money has to be spent in marketing and advertising to achieve brand awareness.

2. Type-In Traffic Is Dead
In the early years, domains had type-in traffic - people typed generic names into the browser address bar and the browser appended the ".com."

If you type a generic keyword into the address bar today, IE will try to go to http://keyword, Firefox will go to the first Google search result, and Google Chrome will search Google for the keyword.

Even if you consider direct navigation traffic as type-in traffic, users only type domains they remember very well (twitter.com, google.com) directly into the browser, and they do so at an decreasing pace. Many users default to using a search engine even for direct navigation. Some studies say such navigational traffic is 15% of all searches.

On most large websites, direct traffic is less than 5%. Anyone with a nephew who is half skilled at SEO can produce more targeted search engine traffic than even the best undeveloped domains get.

If you have a domain portfolio with thousands of targeted names, type-in traffic will obviously amass to decent, yet shrinking traffic numbers - a thousand drops will form a puddle eventually. Money with type -in traffic is only made at scale.

For anyone else, type-in traffic is just not a relevant factor anymore.

3. New TLDs Need Branding

If we believe that the goal of a domain is to sustain brands, new generic TLDs will have to become brands themselves. If nobody recognizes "newyork.restaurant" as a web address, marketing money spent promoting it is in vain. This is a factor in favor of .brand TLDs (such as .canon), which, together, may change consumer adoption at a faster pace.

4. Applications Before Brands.

What makes the Internet interesting are its interesting applications. If you have a great idea, like Twitter or ChatRoulette, and can execute it well, the brand will be built virally and the name and domain don't matter. It's advisable that you don't get a really stupid domain like flickr.com or you will waste millions of visitors on flicker.com. But that's about it - you don't need a category killer, multi-million Dollar domain if you have the idea and can execute well.

5. Domain Investing Is Here To Stay

There always was and always will be money flocking to marketing and branding. Since good domains are finite, they will stay valuable assets and continue to attract money in the secondary market.

6. Domain Values Will Continue To Rise

Since domains are part of branding and marketing, it's ridiculous what amounts of money we are talking about when we look at most domain sales. In a corporation's marketing budget, $100,000 is a rounding error. Even private people blow $50,000 or $100,000 on a new car, Small businesses spend hundreds on letter heads, business cards and USB stick gifts. Yet a domain that can make an entrepreneur's marketing life so much easier is not seen to have value by many. The actual value of the fundamental structure that a domain can be to the branding process cannot be overestimated.

Much of the increase in value will come from end user sales, though, as established domainers continue in a wait and hold position, or even sell select names. Auctions and insider aftermarket will continue to be weak.

7. Parking is Bad, But It's Nearly Dead

Fortunes got built on parking, but really, a parked page is as useless to a consumer as a one way street plastered with billboards. Today, parking only makes decent money on typo and trademark infringing names. That's not going to get better and even large portfolio holders are moving away from parked to slightly more useful models such as Demand Media's or Epik's.

8. There Is No Such Thing As A Developed Site

Domainers talk about developing sites but in reality you need to develop businesses. Cash-earning, income-producing, profit-making businesses. This is actually quite hard and many domainers simply have skill sets (analyzing, collecting, investing) which are not natural fits for starting a business. Even worse, the curse of easy money from parking got many domainers lazy and unwilling to invest in learning new business development skills.

9. The "Domaining Industry" Will Remain Stagnant

Actually what calls itself "domaining industry" is composed of 70% run-alongs who couldn't tell a good name if it was delivered to their house with a gift wrap, 30% domain squatters who live off typo and trademark domains, 5% people who try to find real investment opportunities and 5% professionals. Probably there are less than 250 professional domainers in the world who live from pure domaining income. Conferences in the industry are ridiculously small with 200-500 attendees at best - compare this to SEO or affiliate events, heck even with gaming, adult, or geek conferences, all of which draw larger crowds regularly. Not to mention that half of the domain conference attendees are sponsor employees.

Unfortunately, for every one of the 70% wanna-be-domainers who leaves to greener pastures, there are five others who come to try their luck at domaining. The barrier to entry to this market is the $10 reg fee.

Most of these gamers have no real purchasing power, so they are not even influencing the secondary market. Further, there is minimum correlation between purchasing power and where you fit in the industry (the 70% idiots end or the 5% pro end), so often money is spent on non-assets like trademark domains in land-rushes (like $7k on porsche.me, subsequently lost in UDRP).

Most of those 5% with a significant interest in finding opportunities will move or at least get more involved in other web marketing industries (SEO/SEM/affiliate/tech).

What actually makes up the bulk of the real domainining industry is registries and registrars.

10. Registries, Registrars Will Remain Cash Cows

While nobody knows at this point how successful the new TLDs are going to be, one thing is for sure: those who will make immediately money of them are the registries themselves and the registrars. Those who already distributed 200 million domains will continue to do so in new TLDs. Registrars don't particularly care which TLDs are in demand as long as their absolute sales increase. Registries on the other hand will continue to suck the money out of domainers with creative land-rushes and auctions.

Domaining, while highly profitable, is boring to me, like all investing in virtual assets (stocks, etc). My passion is creating stuff.

Out of the Alexa Top 500 websites, just twelve have what domainers would call premium, generic domains. There's along road ahead if domainers want to show that they can develop successful sites too.

Almost exactly ten years ago I wrote an article titled PHP From an IT Manager's Perspective for the Intranet Journal. Today PHP is widely established in corporations and accepted as Java's little brother. The downside of that evolution is that for rapid web 2.0 development technologies like Ruby on Rails have somewhat overtaken PHP in geek popularity.

Generally, these days I'm much more excited about frameworks such as Drupal than about base technology like PHP. We use Drupal extensively in our websites. I love its simplicity, flexibility and the great community behind it.

From time to time I'm advising corporations, state organizations or start-ups on what technologies to choose. Last week, I was in Vilnius at the European Institute for Gender Equality, talking about their use of Drupal. Here is a slightly modified version of the presentation I used to give their management, editorial and technical staff an idea what Drupal can do.

What would you do if you owned a store that is normally visited by 100 people a day, and suddenly, starting on a random day only 10 visitors come in?

You are fucked, that's what.

And still, this is what happens to small businesses and start-ups so often that you would almost call it normal. An important customer cancels their contract, the webserver goes down, a snafu messes up your inventory, or Google decides to stop sending traffic to your website. And with small overall revenue of maybe a couple hundreds of thousands to one or two million per year, all of these events have the potential to significantly affect your revenue.

Most of these have already happened in my businesses in one way or the other. Most recently, the traffic died on one of our websites. This is your worst nightmare if you have a website that is depending on organic search traffic. One day, you wake up to virtually no traffic.

I just posted a commentary on iPad usability on iPadManiac.com.

Thanks, Apple, for throwing us back to a beautiful 1999.
Today, web usability is largely a solved problem. We know what works, have experimented and conducted field tests, and routinely optimize websites to increase conversion metrics.
Then comes the iPad. Some apps remind me of the web in 1999, just more beautiful. Remember the web a little over 10 years ago? Some websites that wanted to be especially avant-garde toyed with Flash or large image maps. On those sites, your mouse became more of a discovery device than a point and click device.
Today it is the same with iPad apps: anything can be a user interface element. There are no standards, and it seems Apple is not doing a good job (yet) defining and enforcing guidelines.

While working on our travel sites, I came across these beautiful pictures of South American landscapes.

1 Machu Picchu
 

Over the last year I've obsessed about productivity. As I became a dad, I needed to squeeze more into less hours. Here's a few tools I found and today I can't imagine being without them.

1. LastPass. Rule number one for any Internet user is not to use an easy to guess password. Rule number two is not to use the same password for more than one service. So you need something to manage your passwords and store them securely. I used to use KeePass, but LastPass is so much better with its tight Firefox integration and an iPhone application.
   
2. Remember the Milk. If I am to use todo lists and shared task management, it has to be extremely easy and efficient. Remember the Milk is. You can add tasks with a Google-Calendar-like command prompt, saying for example "remember to buy milk ^today #shopping" to give the task a deadline of today and tag it with shopping. Adobe AIR-based clients and Google-Calendar integration make interaction a breeze.
3. Synergy and DisplayFusion. At work I have a four screen setup using two computers (one desktop, one laptop). Synergy lets you share one mouse and keyboard for multiple computers - I can use my desktop keyboard and mouse to control my laptop. Unfortunately, sometimes the mouse or keyboard gets stuck, and the software was last updated in 2006 or so - still it's an indispensable tool until I find something better. DisplayFusion is an utility to expand the Windows taskbar and wallapers to multiple monitors.
4. SugarSync. I regularly use three computers (desktop at home, desktop at work and a laptop). Pretty soon I will add an iPad to that. I barely remember life before SugarSync, but what a hassle it must have been! I actually used to email myself important documents so that I could access them from home. SugarSync keeps my "My Life" folder that stores all documents and pictures synchronized between all computers that I use. Plus, it has an iPhone version, version control ("access the document version from two days ago") and file sharing.
5. LogMeIn.com. In my company, we deal with large data sets, such as directories with millions of companies. Sometimes it's handy to leave the work PC on to do some number crunching or complex SQL queries - and with LogMeOn I can access it from my browser at home to see the results.

Since this month we had to develop and launch our newest batch of country tourism websites (Visit Brazil, Visit Argentina, Visit Chile, Visit Peru, Visit Bolivia and Visit Paraguay), I wanted to see some official country logos and asked a colleague to compile a list of country tourism brands.

Here it is - enjoy! I think my favorite is France.

... is that misunderstandings are frequent.

I asked a designer for references on illustrations similar to this:




(source: theoatmeal.com Twenty Things Worth Knowing About Beer)

and this is what I got:

1. iPad Mini:
   
   
   
2. Hitler doesn't like it.
   
   
3. No women in the iPad team?
   
   
4. Big iPhone:
   
   
5. The real iPad:
   
   
   
   

Inspired by my friend Herve, let's do a review of 2009.

This was a very important year for me in many ways.

Most importantly, I became dad in June. In business, a big change was from pure domaining to site development.

1. Big lesson: When you switch to development, focus on building up revenue, not on selling your site.
   Compared to selling domains with no revenue, selling developed sites with revenue is very difficult. Revenues and statistics need to be proven, there is limited capital on the market buying large developed sites, and end-user sales happen only if there is significant revenue on the site. We have largely given up trying to sell sites and concentrate on making money with them.
2. It's easy to build sites with a couple of thousand daily visitors. It's harder to achieve more organic traffic with repeatable processes.
   
3. The easiest way to monetize is still AdSense. Direct sales lead to much higher income, but require lots of effort and hand holding for customers.
4. I need to learn about more monetization options. For example our hotel bookings revenue sucks.
   
5. Becoming father is great for productivity.
6. Vienna is more fun than Bratislava (the girls are hotter in Bratislava, though. Since I'm married, I have to discount that factor).
7. SEO = getting back links (but I can sell you The Ultimate Guide To Get Your Site Ranked Number One for a special price, today only, of $99 $49).
8. I read the Four Hour Work Week only to realize that I already spend less than four hours per week on admin/boring stuff.
9. I learned how to change diapers, that babies don't really speak until they are a year old, and that I can live with 5 hours of sleep.
10. Finally... I want to get tanned in December too!
    

Five things that will happen in 2010.

1. The Apple tablet will be the most interesting tech product of 2010 and be the same to netbooks as the iPhone was to mobiles. Apple shares will go to $300.
2. The economy will linger. Even tough in fact 2010's numbers will be worse than 2009's, people will speak of a slow recovery.
3. New TLDs will continue to be a hot topic (even though the first round will only be introduced in 2012) and the expressions of interest will show that there is serious demand from businesses. Nonetheless, .com will hold steady and we will see similar .com sales as in 2009 and 2008.
4. The already very small domaining industry will continue to fade out as domainers move to development, startups, SEO, affiliate marketing, etc.
5. The days of search engines presenting a page with 10 links are over and gone for good. Search engines will aggregate more data in more verticals, which will rock some industries (hotel and flight bookings, comparison shopping, and a wide variety of content sites come to mind). I'm sure there will be plenty of opportunities in this, but sure as hell I'm buying a lot more Google and Microsoft stock this year to hedge.
   

I am happy to report that I met one of my 2009 goals: The end of parking - unpark all of our 600 domains. I never liked parking and I figured it would be time to walk the talk, even if it meant giving up 4 figure revenue per month.

Instead of parking names, our goal was to develop sites that offer real value to visitors. Back into web development after a couple of years! And it's been going well, with growing visitor numbers on all sites.

The good thing is that the infrastructure that we used for our sites is scalable and can be applied to many more domains.

As intended, this was a year for ground work, and I expect at least the first half of 2010 to be the same.

I have a deep passion for the software and Internet industry that started when I got my first computer 15 years ago. With all the stress due to the crisis, it's sometimes easy to forget why we are in this game. So here it goes: Ten reasons why I love our industry.

1. Because this is an industry where a few geeks can create something that affects millions of people.
2. An industry that brings out services with 300 million users in five years and three year old companies with a 1 billion Dollar valuation.
3. An industry with a creativity that is unlimited.
4. Where nobody knows you're a dog.
5. That inspires "an urge to make dreams come true and the tendency to miss lunch" (TBL).
6. And forces you to learn and adapt, with an obsession for the new big thing.
   
7. Because the barriers of entry for new participants get lower continually.
8. Because the world's smartest people work in it.
9. And still is most suited to generalists - versus rewarding specialists and narrowness.
10. Because one of its first books ended with "A future so bright you'll need to wear sunglasses" and the most important magazine declared a Long Boom.
11. And bonus reason: Because it brings people together, globally.
    

Since I got a little baby daughter a week ago, I'm obsessing about time management.

My consulting company is almost on autopilot due to my fantastic team, and requires only financial monitoring and the usual rain making or memo writing. But we do have a few different projects that are time intensive mostly in marketing.

Before the birth of my daughter I used to work until 21.00 and then have dinner with my wife, read some books or watch TV.

Now, I would like to spend time from 19.00 on with my family (coincidentally, the little girl has an active phase then!). Somewhere, I also have to fit in my dog. :)

So, if I want to get my work done, I have to be more productive during the shorter day. This post serves to remind me of that goal!

• I stopped looking at my Google Reader until the evening. I may even switch to read the feeds on the iPhone. I read quite a few feeds and I used to do it around lunch - but it's so unimportant really that I moved it to the late evening.
• Same for news. I don't need news during the day.
  
• I noticed I get pissed off when people show me the usual bullshit videos, funny pictures, and other nonsense. I started to just ignore these.
• Facebook is a waste of time. I stopped going to it a while ago and switched to Seesmic Desktop, with notifications disabled. The business we get from Facebook is miniscule, so I'll just keep it at it.
  
• Same for Twitter, but we use that for business.
• I stopped using all IM except Skype.
• Most "social" business meetings (networking, status updates, etc) can be moved to a lunch meeting.
• I know I'm old, but my primary method of communication is email. I need to unsubscribe from all the BS mailinglists and newsletter that accumulated over the years and that I routinely delete today after a quick glance.