In this part 1, free subscribers get the first hour of the conversation; paying subscribers also get part 2 in their RSS feed. As is typical, part 2 elicits more insights as we get deeper into the conversation.
Part 1 Show Notes
Getting Into Website Investing
Starting With a Struggling Business
25 years ago, Matt and Liz bought a struggling manufacturing business, which was their first foray into business. Here, they learned the ropes about business and entrepreneur life. Eventually, they turned the fortunes of the business around, with the help of mentors and friends whom they learned from. They then got into buying and selling businesses (mostly manufacturing businesses), and through it, they also got to network with lots of successful entrepreneurs. Later on, they would become involved in business brokering with private equity firms, who would not look to flip these businesses, but would rather roll up as many as 10 businesses from the same industry together and float them on the stock exchange.
Expanding the Manufacturing Business
Apart from buying and selling businesses, they also got into buying and selling real estate, and the profits they would earn from it would go straight into their manufacturing businesses, thus helping them expand. They say that this is a faster way to get more capital, rather than taking out loans from banks. They would very much rather stay away from debts.
Matt and Liz now teach people who are looking to get into website investing through the eBusiness Institute. Teaching mostly beginners, they try to help them get to their first 6 figures (discussed more in part 2). However, they’ve realized that there is a whole new level of investors they could teach: ones who have a substantial amount of money to invest in a website, but do not know where to start, or do not even want to do it themselves. They are now thinking of how to connect these kinds of investors with knowledgeable people to help run their websites for them.
A Possible Solution?
Richard thinks that these investors are better off putting their money in a fund that owns different websites and has a dedicated team managing these websites. Owning a website and commissioning people to work on them is not really the optimal option, considering the expertise and time required to manage them. Matt believes that this is a new trend which will gain traction over the next 12 months. However, there aren’t many funds that are public and are specifically targeting content websites, with a few being media companies like Dotdash and internetbrands.com. A lot of them are doing this privately, like Digital Dividends. This is definitely something to look out for in the future.
**Richard recorded this episode before the pooled fund episode with Michael from Domain Magnate.**
The Brisbane Angel Investing Scene
Being one of the better angels groups, and having good contacts with Silicon Valley, it has a really strong and vibrant startup scene filled with young entrepreneurs. Though not a lot of website businesses are coming in, there are quite a lot of good deals happening around.
Building a Community
Angel investing is not just about making money, but also about building a network and giving back to the local community. It’s quite popular among retired and semi-retired investors. Therefore, if you’re young and looking to make a lot of money out of it, Matt says you are better off buying websites.
The startup scene in Brisbane tends to have really high valuations, partly due to founders’ expectations, but mostly due to Silicon Valley investors injecting lots of capital into small startups, sometimes in the millions. This is definitely hard to compete with, and as a result, valuation has been driven up unrealistically.
Episode 17 Part 2
In part 2 of this conversation we discuss:
Why Matt recommends beginner website investors to build first before buying
Renovating sites bought from Flippa
Crafting the perfect website listing
Making money from expired domains
Facilitating the setup of funds through skilled operators
Part 2 is for paying subscribers, you can access by hitting the button below.
Enjoyed this episode or have any questions? You can leave a comment at the bottom of the web version of this post.
Richard Patey (Host) & Avi Silverberg (Producer)