In this episode of the Website Investing podcast, Avi speaks with Jim Harmer from Income School. Jim explains how he sold his entire portfolio, his strategies for building successful sites, and his incredible success using YouTube.
📝 Show Notes
He decided to sell their entire portfolio of websites, calling it a garage sale and documenting everything on his YouTube channel, Income School.
They did this because they were getting really busy with the huge amount of work and projects they were handling. They also didn’t have enough expertise to manage everything. In fact, despite getting tons of traffic, they weren’t able to take advantage of it, nor make the most of it.
They listed all their sites for sale in order to start their portfolio from scratch. The websites sold quickly, in large part due to how aggressively they listed and because they wanted to sell quickly.
They did not use a broker. Instead, they simply announced the intended sales on their YouTube platform. In the end, they earned around $500,000.
Valuing the Sites
Jim and his team priced most of the websites they sold at 32x revenue.
Many of the sites had no affiliate links, as they mainly used ads to generate revenue. Amazingly, they all sold within an hour - for the list price. Numerous offers came, and even reached around 20 for one site.
To choose a buyer, they selected the first 'Project 24' student who made an offer for the website. As these people were already customers, Jim and his team had a sense of trust in them.
Avi says that having an existing audience to sell to is a valuable asset, especially when you want an easy exit from a site or portfolio.
Jim prefers not to use a broker when selling his websites, as he’s had prior bad experiences with brokers who left him high and dry after doing several expensive deals. The process was filled with red tape, long back and forth discussions and coupled with horrible service.
Though he admits that there are good brokers in the industry, this particular experience definitely burned him and imprinted a lasting memory that deters him from dealing with brokers.
What options are there for new website owners who also don’t want to deal with a broker?
Jim says that joining a community is a great place to start, as you can post your listing in the group for other members to see. Another option is to just put a banner on your site explaining that it is for sale. Surprisingly, this has worked well for Jim, especially with his smaller sites.
One benefit of starting from scratch and building new websites for Jim and his team is that they have shown and taught their whole process to their students. Jim now has 10 sites in his portfolio - all of them less than a year old.
Buy vs. Build
Jim says that he would opt to buy only if he can find sites that are built the right way. Otherwise, he would build from scratch. He says that he rarely sees sites built in the right way or as he would like. Thanks to their Idaho-based writing team, they churn out tons of content for their sites, tailored to their needs and the sites’ needs.
Regular Garage Sales
Jim plans to make garage sales a regular thing for his Income School website, and post around 2 to 3 sites for sale each month.
These sites are all brand new and have been built from scratch by Jim and his team. The websites include all content and SEO, and are non-revenue generating sites. They are also buying some customers’ small sites that aren’t growing as expected. They will dump a ton of content on these and then sell them in the garage sales.
Though buying from a garage sale is different from buying an established site, what is great is that the sites will be worth a whole lot more in a year. This is due to their growth potential and the huge amount of quality content that they already have.
Jim will use the revenue from these sales to reinvest and build more sites from scratch, and then list these again using the same process.
Jim has three strategies for all his websites.
The first is build and hold, where websites that he thinks he could build a brand on would be held for the long-term.
The second is build, hold, and sell, which happens with the majority of his websites. This is for sites that have good potential for growth. He would build and hold them for a year to 18 months and wait until they're producing decent revenue before selling.
The last option is build and sell, which is just for sites that they have recently built, and have added content to, but no monetization. They would then sell them as is.
For these, any niche is possible, including the most fun and boring niches out there like power washers and concrete. Surprisingly, these niches are the source of many good keywords and search traffic.
When choosing a niche, Jim usually starts by picking a broad (and sometimes very random) topic, from which he determines its demographic and the audience who would search for the topic.
From there, he checks if that demographic would appeal to potential advertisers. If so, he starts searching keywords with the goal of finding an underserved topic. That underserved topic pulls the trigger for Jim.
They also do not try to limit themselves, because they love challenges. For example, they recently went into the cooking niche, which is a notoriously competitive one due to the number of people and sites online. Though success isn’t guaranteed, what matters the most is that it served as a great learning opportunity for everyone involved.
Jim says that it’s great to challenge yourself once in a while, and although it could be scary going into a whole new niche you know nothing about, the rewards may be better than initially expected. You have an advantage going into a new niche, since you’re entering it with a fresh lens, and with experience from other industries and niches which you can apply to this new one.
Entering the YouTube Game
Jim has found great success on YouTube with Income School.
Part of the reason they started the channel is because Jim loves blogging and has been a blogger for many years. The numbers you see on YouTube are incredible, and this makes the platform one that you definitely shouldn't ignore.
Income School already has a staggering 6 million views on its channel in only 12 months - an amazing feat for a blog.
Admittedly, this platform is relatively new territory in our industry, with many people still clueless as to how one can grow and sell audiences and channels.
Jim says that, to many people’s surprise, it is very doable and something that they are interested in at the moment. The reason is that YouTube has enormous audiences, with underutilized and under-monetized channels that could be making a ton of revenue with the right expertise and marketing.
Valuing a YouTube Channel
Jim believes that valuing YouTube channels isn't too far off from how we would normally value websites.
A 32x multiple is definitely a possibility for a YouTube channel, provided that you find the right one.
The only problem is that there is currently no standard, and it really is new territory, with Jim having seen only a few people sell their channels. Finding the right people and the right channels is key to a good offer.
Jim has a dedicated team, and a decent amount of experience and know-how of the workings of YouTube. Avi believes that Jim would be the perfect candidate to test the waters for our industry.
Enjoyed this episode or have any questions? Leave your comments at the bottom of the web version of this post.