Flashback: 8 figure sale and some advice

Now that Property.com is back on the block, time to drag out this older exchange from the vaults.

8 figure sale and some advice
Rick Schwartz: I have a company courting me for Property.com for about a year now. The current offer is a 3 year lease option with a $10M buy out at the end of the term. I have been dragging my feet in getting back to them. That is a LOT of money. But then I look at the value as Rick Schwartz sees it and I see a domain with the potential to be worth much more when developed and much more as we see a rising tide for great domain names.

To me the $10M is the floor. I would not even talk to a company for less than that. But in my HEART and in my soul, I believe that I will see property.com have a 9 figure value. I BELIEVE that. $100M-$350M. Some will shake their head. Not me. I understand how tall and wide this skyscraper can be built.

And of course with the lease option, may only be worth $500k and they get 3 years to sell it for the BIG $$$ that I believe might be there.

Thoughts?


RE: 8 figure sale and some advice
OF: To unlock a $100 million+ valuation while you still own it, I firmly believe YOU have to develop it. Yes, actual real honest-to-goodness development. You have the ultimate combo in property.com/properties.com which I assume gives you thousands of daily uniques to "seed" any developed site you put up there...

If you look at a lot of the really massive valuations for domains (actually, companies) that have sold recently, nearly all of them are anchored by a userbase - as opposed to simply a "visitorbase" i.e. get as many people as possible - hundreds of thousands or millions - signed up to be (hopefully) active members of something and that's where the extra digit is going to come from at sale time, because rather than starting from scratch the eventual buyer will be years further down the road to profitability.

Remember: it's going to get HARDER not easier to build traffic in the future (the trends always point that way, as there are an ever-increasing number of sites chasing a stagnant US/English-speaking internet market) so the cost of the future buyer acquiring those hundreds of thousands of ready-made relationships THEN (at sale time) will be that much higher still than it would be for them to do so now.

On the flipside, they're not going to hand $100 million to you and THEN start thinking about how to develop the thing from scratch. They're going to need that money for traffic, promotion, and growing FAST (assuming that they're just buying the domains, not a ready-made service with a membership base)

As to what to develop, well that's a tricky one. But with those domains you have the potential to be the "PlentyOfFish.com" of property - Plenty of Fish has basically slaughtered the dating market by providing for free 90% of what other dating sites used to charge for - and they have over a billion pageviews a month to show for it... So one idea might be to go through the top 50 real estate sites with a fine toothed comb, and note down EVERYTHING they're doing right (any interesting tools, services, maps, data, listing layouts, etc. etc. etc.) and then distill that down into a single service and start hiring programmers and a red-hot project manager to actually manage them, so that you don't have to mess with the day-to-day.

At the end of the day, somebody's going to have to go through something similar to the above exercise to unlock 9 digits from the domain - it might as well be you!

That's if you want to go for the biiiiiig bucks. On the other hand, $10 million's pretty nice too