Thanks Jim for the beautiful photo!
Look at the tech media today and you’d be forgiven for thinking the only way to start a successful web business was from scratch. Or, maybe, to Kickstart one if you don’t have the cash to invest in bootstrapping your own startup.
But as we know well here at Flippa, there are other options. Like buying a smaller web business and building it into something great.
Flippa itself wasn’t a startup built from scratch — it was spun out of business that had been bought into by founder Mark Harbottle years earlier.
So this week I sat down with Mark to ask the question: what’s better? To buy a startup, or to build one from scratch?
Is it more expensive to buy, or build?
From the outside, it can look like building a startup from scratch is the cheaper option—you don’t need anything to start, other than time.
Not so, says Mark.
“I started SitePoint.com with $500 back in 2000. I formed a partnership with my co-founder, Matt Mickiewicz, who already had a site with some traffic and a little revenue.”
Of course, Mark brought more than $500 to the table. He contributed vision, “deep experience in the space, and a plan to build out the team and turn it into a real business.” So, pretty much the same things you’d need if you were going to build a business idea from scratch.
Is it easier to be objective about a business you’ve bought, or one you’ve built?
Mark considers all his businesses—including SitePoint, 99designs, and Flippa—labours of love. “I’ve been deeply involved with those businesses for years, and it is difficult to see the forest for the trees at times when you’re so close to everything,” he reveals.
The solution to the perspective problem—regardless of whether you’ve bought or built a startup—is to get outside advice.
“Having good advisers and mentors around who understand what you’re trying to do is important.” Sometimes, says Mark, it’s the only way “to get a 30,000-foot perspective on things when you need it.”
Isn’t there more financial risk in buying into a startup than in building one yourself?
To that, Mark’s answer is simple: “Only invest what you can afford lose. For me, that was a few hundred dollars and a bunch of spare time.”
And as for external investors, Mark advises startups of all kinds to “never take money from any outside investor unless you truly believe you are onto something and you can demonstrate traction.”
So he believes it’s usually easier to start out with an idea that already has a little traction.
I will always seek out opportunities that have some movement already, rather than starting from scratch.
Well, can’t you get more traction with a disruptive startup you’ve built from scratch than by buying into someone else’s idea?
“SitePoint has been an educator of web designers and developers for over 13 years now. We have given a lot over a long period of time to the web community in the way of free content, education, resources, and help,” Mark explains.
But he agrees that 99designs, the crowdsourced design startup he built from scratch, “is a lot more disruptive than our other businesses. 99designs applies new thinking and a different model to an industry that wasn’t serving the lower end of the market very well at all,” he says.
“We also received a lot more word of mouth which helped with our growth.”
But, he says, the single most important factor in 99designs’ success was, in fact, its initial incubation—and the traction it gained—at SitePoint.com.
“We already had a large community of designers and small businesses customers via SitePoint.com who were early adopters of 99designs. 99designs came out of the blocks with enormous traction thanks to SitePoint. We were profitable from day one and grew like a weed from there.”
He adds: “The early growth fuelled by SitePoint.com made it near-on impossible for the heavily funded copy cats to catch us.”
When Mark talks about “traction”, he’s talking paying customers and profits, not media mentions and hot headlines.
So What’s Better: to Buy or to Build?
If he was starting a business today, Mark says he’d start by looking at his motivations.
“You first need to decide why you’re going into business. If you just plan to have a small lifestyle business on the side that generates some extra cash for you, and perhaps one day becomes your full time gig, buying a small site from Flippa with a little traffic is an excellent way to get started. Look for a site in an area you’re passionate about and work to grow it over time.”
“Learn as you go,” he adds. “It’s not that hard.”
But what if you want to built the next Facebook?
“Maybe you still buy a site for the experience of running a small online business,” Mark suggests, “but I would also think about attending a few of the Startup Weekend events to get a feel for what’s happening in the real world. Meet a co-founder, get inspired, have some fun, and start networking with mentors, investors and the like, and take it from there.”
The Bottom Line
“Just have a go,” Mark finishes. “Do something. Partner with someone. Buy a site. Start one from scratch. It really doesn’t matter. Just take the first step and follow your nose from there.”
“I definitely think starting a business today is easier and cheaper than it was 13 years ago.”
Inspiring words. So what are you waiting for? Let us know about your ventures in the comments, or right here on Facebook: