OWN YOUR FUTURE – LIVE 2020 took place live (from our homes) on July 9th 2020. The video included here was recorded at that event.
Blake Hutchison is the CEO of Flippa. He eats, sleeps, lives, and breathes within the world of investment and digital acquisition and is excited to share his deep industry knowledge with the Flippa community.
What People Want
Our Flippa community is growing. Every day we hear another story of another individual changing paths, finding a new beginning, and taking control of their future. Blake believes that the path to independence and financial security comes from making smart choices and making smart digital real estate investments today. He’ll share stories of the community and share what makes this community an example for the future.
I should say it is 3 a.m. here in Melbourne, Australia, so as you said, it’s gonna be a fairly significant marathon, a marathon for all of you taking in all the insights and inspiration today, and a marathon for my good self joining you from Melbourne, Australia at 3 a.m. So good morning, from me to you and welcome to Own Your Future.
What an incredible time that we all live in. Some of us have been working from home for many years, but for some of us it’s been a new journey for the last couple of months. And certainly here in Melbourne for those of you who don’t know we’ve just been locked down again for another six weeks as we look to take back control. But enough about that, as the CEO of Flippa I get to watch from the sidelines as a global marketplace to buy and sell digital real estate and online businesses.This will be a positive and transformational period for so many of us. New jobs, new opportunities, and certainly many, many life lessons. Click To Tweet
I’m convinced that this will be a positive and transformational period for so many of us, new jobs, new opportunities, and certainly many many life lessons. The conference has come together beautifully, we’ve got some outstanding speakers. They hugely inspirational, they’ve had outstanding careers. They know a lot, they’re gonna tell us a lot. And we can’t wait to hear their thoughts, ideas and opinions. To kick things off I’m gonna give you a small and quick snapshot.
We’re gonna cover three things, firstly, digital real estate, and we’re gonna look at that in comparison to some other asset classes. Secondly, trending topics, we see millions of searches on Flippa every single month, and this data provides us with unique insight, so we’ll take a look at that. And then thirdly, different business models. How much can you actually earn if you wanna start or acquire one of these businesses? And then let’s say you did wanna buy one, how much would you have to spend to get your hands on a high performing digital asset which would enable you to take control of your future. And then of course, the real stuff starts we get to these outstanding speakers, so let’s do this.
In June, there were 30,000 new buyers that joined the Flippa platform. This opportunity is now at fever pitch. There were nearly 4,000 sellers. These people are investors. They are perspective first time online business owners, and they are those that are looking to supplement or replace their income. They are makers and creators looking to realize or create new value. And as I said, we take a front row seat, and watch all of this play out. Business models have matured substantially over the last five years. It’s now easier than ever before to start an online business.It's now easier than ever before to start an online business. Click To Tweet
The online business owners themselves are becoming far more sophisticated. The marketing patterns that they use. The way they acquire customers, the cost to acquire customers, it’s all changed. There’s now also a ready market of buyers. Meaning that for small business owners they can pursue exits with the same upside traditionally reserved for big businesses. This concept of acquisition entrepreneurship is becoming mainstream. It’s often easier to acquire something with traction than it is to start something from scratch. But regardless, there’s more people than ever before moving into online business and it’s exciting to see.
But how about this Ben gave you some outstanding statistics, it talks a lot to the transformational nature of the world today. 40 to 70% growth in consumers who purchase most or all of their items online for almost every category. Now of course, there have been some categories which have seen some declines. But overall, the trend online is creating opportunities for all of us, and that’s what we’re here to talk about today. So some industries are substantially up.
Some industries are facing it tough right now. Traditional occupations are being challenged, but the real question is, will it be a transformational time for you? Is it time to acquire? Is it time to start? Is it time to sell? What training? What lessons? What can you take into the next few months which will set you up for the next five years? Tech use has changed dramatically, not only the number of people but also the frequency at which people are using tech has changed forever. And not only that platform accessibility has made it easier than ever before.
Shopify is now the second largest retailer behind Amazon, and of course, they don’t sell anything. They provide a platform to make it accessible for online business owners to get up online and trade. So almost all online business owners today have benefited by utilizing low cost, high impact, and widely accessible platforms. As we keep saying, and I’m sure you’ll hear it today a lot, “The time is now.” So let’s take a super simple view of the world that we now live in.Shopify is now the second largest retailer behind Amazon, and they don't actually sell anything. They provide a platform to make it accessible for online business owners to get online and trade. Click To Tweet
This looks like a wonderful home, I wouldn’t mind living in that one, it’s probably got a beautiful view. But if you choose to invest here and many people do, it’s arguably the most widely recognized and understood asset class. You could probably depending on the location, depending on where you are around the world, you could perhaps expect to get a five to 7% annual return on your investment, sounds pretty good. Or take the prior 10 years.
Let’s have a look at the S&P 500, and let’s look at annualized returns. seven to 8% annual return, pretty good. Takes a brave investor, very knowledgeable investor to go into this space right now. Or how about this? We’re talking about an undervalued, less well recognized alternative asset class. Investing here in an online business should enable you to return 30 to 40% ROI per annum. Now that is outstanding. That is where I place my money, that is where Flippa orientates its attention. And you’ll hear from lots of speakers today talking about lots of inspirational topics, places to invest, ways to use your money, et cetera, but this is likely to be a recurring thing.
And it’s a recurring thing because right now there is a community of buyers feasting on what is still an undervalued asset class. So let’s have a look at some of the numbers. This is quite exciting, so each month Flippa takes a look at the way buyers are using our platform. We take a look at the way buyers are using our platform because it gives us exciting indications of where demand is among a sophisticated few who are looking to acquire online businesses. And there’s a few that have been at the top for a long period of time. AdSense powered websites are considered safe bets.AdSense is the number one search term on Flippa. Click To Tweet
AdSense is the number one search term on Flippa. Amazon and that could be either websites powered by the Amazon Associates Program which of course is Amazon’s affiliate business, or it could be e-commerce businesses powered by FBA fulfilled by Amazon. Amazon’s powerhouse distribution and user acquisition platform giving small business owners access to their incredible leverage and network.
So those two are often at the top, but where it gets more exciting is what we’re seeing in the category and industry space. And as you can see in item six through 10 there’s been this dramatic shift away from certain industries like travel. And that industry and many others have been replaced by industries in categories like fitness, music, and health. The topics and the categories that bear a content business or an e commerce business can thrive upon today.
There is so much demand right now, and so if you have something that is in one of these industries, it could be the perfect time to sell or bid. I respect that you’re probably leveraging the opportunity right now. In turn, if you’re looking to buy this is where the competition is hot. This is where valuations are being pushed up into the right, and then of course, you’ve got the Mainstays.
People are still looking for blogs powered by ad revenue, affiliate revenue. They’re looking for small SaaS businesses, and everyone is always on the lookout for well optimized SEO businesses, all those businesses that provide VPN services. Now of course, there’s lots of data that we can share, but one of the things we do love doing is looking at this top 10 every month. So to around this app before we kick on to these exciting speakers far more exciting than I am.
Let’s take a look at these different business models, and let’s take a look at some real examples, because there’s really two questions that I think people should be asking themselves. If you get into online business for the first time, or if you are an established online business owner today, you wanna give yourself a benchmark, how much can you make?
And then secondly, let’s say that you’re looking to invest further for the very first time. Let’s say you want something which has established traction. We wanna know how much do you need to spend.
So let’s take a look at three quick examples; the first one is a website called personalitymax.com. It’s an AdSense powered site that provides personality testing. The awesome thing about Personality Max is it’s mostly a passively run business, there’s very low operational overhead. The business was operating for nine years, and for that nine years worth of effort, or bid only spending a few hours on the asset awake right now. That business was making nearly $45,000 per annum. Now tell you what if you’re working a nine to five job, almost anyone would love to say an incremental $45,000 per annum into their bank account, that’s fantastic supplemental income. But here’s the thing, this is a strong performance business as a said operating for over nine years.
Now if you wanted to acquire a business like this, you would have had to part wise with $254,000, so $254,000 run it the way it’s been running, and get yourself an annualized return of 43,500, that’s a content site backed by AdSense. And then how about a small SaaS business? The great thing about these smaller SaaS businesses, particularly if they’re well optimized, well run, well built from the start is that again, you often don’t have to spend a huge amount of time to get some supplemental income.
This business watermarquee.com which was providing a watermarking service for photographers, wedding photographers, event photographers, et cetera. It had been operating for eight years, and it was making nearly $14,000 per annum. Now to get $1,000 plus into your bank account, again, fantastic supplemental income. And a lot of people are buying these websites as investments. They’re absolutely using them to supplement not necessarily replace their income in full. And in this particular case, a three times annual net profit multiple saw this business sell at $43,000.
So I’ve gone through a content business quickly, gave you a sense of how much you could earn. This is a SaaS business gives you a sense of how much you could earn, how much you’d also have to pay to acquire an asset like this. And then lastly, e-commerce.
Now, the prior two examples had been in operation for longer periods of time, five to 10 years. In the case of Blue Tees Golf, it’s an e-commerce business. It’s got a diversified revenue source in Amazon as well, but it’s very different, operationally, it’s advertising heavy, huge amounts of money spent for an ROI that money’s most likely spent on Facebook marketing. It’s been operating for far less period of time, and as a result you can see them multiple impacted dramatically.
But again, still pretty good going, there’s very few of us who wouldn’t want an extra $110,000 per annum into our back pocket. As I said, the multiple is a little constrained as a result of its operating time, as well as, the way it operates. E-commerce tends to be a little more hands on, and say a content or smaller SaaS asset, and therefore, less of a high purchase price at $160,000.
So that should give you some sense of the types of buy prices as well as what you can earn. The critical thing is there’s so much movement in this space. There really has never been a better time. The time is right now to own your future. We have some outstanding speakers coming your way, and I hope you have a fantastic conference. Thanks for joining us today.