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Flipping websites a con?


A post last week from Flippa.com marketing manager Luke Moulton prompted a fierce response from some of our readers. To look at the post, titled 7 things you must do before attempting to sell your website, with its six comments, you wouldn’t initially think this to be the case.

This is largely because the most passionate responses bypassed our formal comments section. It seems that some critics were so annoyed by the recommendations provided for ‘flipping a website’ (or the underlying concept of ‘flipping’) that they felt the need to contact Anthill staff personally by way of email, phone or tweets.

When offered the chance of a rebuttal, each declined. It seems that abhorrence of the practice comes hand in glove with a strong desire for anonymity.

One critic who did not mind sharing his thoughts alongside his name is Craig Reardon, founder of web services firm The E Team. Some of his thoughts already appear as comments below the initial post.

When asked to provide a rebuttal, on behalf of the anonymous and outraged, he explained:

“A website without the correct business infrastructure of good management, stock, plant, equipment and systems is simply an empty shell. Yet website ‘flippers’ promote their websites as if they are a walkup passage to riches. Sure, the prior owner may well have attracted a lot of traffic that led to sales, but if the new owner doesn’t have either business or online marketing skills, the site can fail overnight. The truth is that these opportunities are simply businesses with an online channel to market. The website itself has little intrinsic value.”

Anyone who heard Reardon speak at Anthill’s Melbourne Online Marketing by Design Seminar in November last year will appreciate that he knows his stuff. And on this point above, I couldn’t agree more.

For example, the last 18-months has seen numerous attempts by large companies to buy or build web ‘communities’. In most cases, they instead bought or created web ‘platforms’.

You might think I’m just playing with semantics here but the distinction is very real. A community is built on a platform. It needs the platform to exist. That makes a platform important. But a platform without a community is worthless, like a ghost-town, the only inhabitants being search bot software, gliding through the site like digital tumbleweeds.

Reardon’s words of caution above should sensibly be observed by anyone with a desire to purchase an online business. A platform is not a community (nor is it a business).

However, the aspect of the post that seemed to generate the most criticism was Moulton’s analogy that selling a website is in many ways like selling a house – it’ll benefit from a lick of paint. Once again, we asked Reardon to explain why this might get people upset:

“[T]hat analogy is fundamentally flawed. A more accurate analogy is renting the same office space as a previously prosperous business. Just because that business was prosperous doesn’t mean yours will be just by occupying the same space.”

It seems, according to Reardon, that most of the angst could be overcome if the term for trading ‘websites’ was refined to trading ‘web-based business’ because that would describe what they truly are. A strong business can offer a road to riches.

But can a well-built website also deliver results — even ghost-towns?

Most of the language presented to me and the crew during this behind-the-scenes angst-fest employed emotive and baggage-laden language like ‘misleading’ and ‘fraudulent’ to describe the practice of flipping websites.

However, I’m personally not too concerned or even alarmed about the growth of an industry built around the sale of even ‘platforms’, whether they are just ‘websites’ or have matured into ‘web-based business’.

We do not see this type of outrage emerge each month when Businesses For Sale magazine is published. Nor do we see consumer advocates protesting outside the offices of SEEK commercial. In each of these cases, we are more likely than not to be influenced by the maxim ‘buyer beware’ than any moral outrage for a potential victim purchaser.

And what about those people who are able to take a ‘platform’ and through their own skill and networks create a successful ‘community’? In some circles, this is called a strategic sale and happens when a business is sold to another company that is in a better position to profit from the asset than the seller.

So, am I missing the point? Have I overlooked an important factor? Is flipping websites a con?