37signals selling Sortfolio on Flippa for 480k | Hacker News Reader

37signals selling Sortfolio on Flippa for 480k

flippa.com

64 pointsjroes37 comments

Why (to me) sortofolio is a bad investment for a buyer:

1) They made a big deal about the sell. "We are selling it within x days and if no one buys we will be shutting it down" because apparently its not worth their time; but at the same time, according to them it takes zero involvement from their part. Doesn't sell it in x days but makes it available at flippa.

2) Doesn't answer any important questions regarding the sale on flippa. Either its not worth their time or they are not telling the whole story.

3) As someone who would use sortfolio this looks like a complete lack of confidence on the business/platform by their owners and has unstable future as a product, so why bother using the service?

4) Sortfolio almost definitely exist as a platform and makes money simply because of its association with 37singnals. The product is nether impressive or unique.

To me the whole "will shut it down in x, if not sold" not only leaves a bad taste towards sortfolio but also its parent company 37signal. I am not sure exactly why.

Not to mention the people who've paid $99/month for a service. Surely if they're going to shut it down they need to sunset it properly.

It's always interesting when the hype meets reality, and it seems that the users of flippa are far more astute and deserve more credit than they're often given. They're asking the right questions and getting no answers. Clearly 37signals may price it at $250,000 but doesn't value it as such.

EDIT: Changed to $99/year. Thanks for pointing that out melvinram.

It's $99/month, not $99/year.

On Flippa they say "The premium membership is sold for $99/month. This is how we generate revenue."

> Why (to me) sortofolio is a bad investment for a buyer:

I don't want to get into a debate about absolutism or anything, but that's a pretty bizarre statement. "to me" = acknowledging my own subjectivity. "for a buyer" = a generalised group. Weird.

> because apparently its not worth their time; but at the same time, according to them it takes zero involvement from their part.

They didn't say "not worth [their] time". They said that it didn't fit with their core businesses and as a result they are spinning it off. Those are two different things. Sortfolio has been running without engineering support for a while, but it still costs them hosting and support, plus the fact that they have a fiduciary responsibility for a product which they aren't excited about and doesn't fit with their core business. This is their iPod HiFi.

> Doesn't answer any important questions regarding the sale on flippa. Either its not worth their time or they are not telling the whole story.

I think they are telling the whole story at a narrative level but not at a numbers level. No information about whether customer data transfers, etc. I don't see any reason not to believe them when they say that the business is profitable and they believe it could be grown. It's an alien concept to most people that a business making hundreds of thousands of dollars a year isn't wanted by its owner, but it happens. It's a smart move. Sortfolio is a mental distraction. They aren't putting man hours into it, but that doesn't mean it's not at the back of their minds. Having $20k of revenue per month = giving a shit about who it came from.

> As someone who would use sortfolio this looks like a complete lack of confidence on the business/platform by their owners and has unstable future as a product, so why bother using the service?

That doesn't make it a bad investment for someone. It means you shouldn't use it yourself. It's debatable that 37signals' brand has made the platform what it is (a C+ or B- web service which generates revenue), but I know plenty of people who could take it and make it a six-month project to increase revenues and give it some more clout. Do you believe that fundamentally there is a market for this sort of product? If so then you have a great head start by buying Sortfolio.

> Sortfolio almost definitely exist as a platform and makes money simply because of its association with 37singnals. The product is nether impressive or unique.

I agree that its success to date has been largely defined by the 37signals brand. I find the product moderately impressive in its restraint. I'll be interested to see where it goes from here.

"I don't want to get into a debate about absolutism or anything, but that's a pretty bizarre statement. "to me" = acknowledging my own subjectivity. "for a buyer" = a generalised group. Weird."

I'm sure he meant "in my opinion, it's a bad investment [for whoever buys it]". There's nothing bizarre on that sentence, really.

Re: #4 - It's trying to be manipulative, when there's no need to be. I too was turned off by their presentation of the sale as well.

I am guessing they don't have a lot of experience selling off things, especially things they are attached to. It sounds like they really don't want to sell it, or at least not let it fall into a competitor's hands.

Now, I understand DHH's resentment (or envy) against Pinterest, Instagram and Quora—everbody's raising money like shit while Sortfolio stays unsold for weeks. This shows one more time in which league 37signals actually plays.

Doing scalable business isn't 37signals' strength. And selling, networking and dealmaking neither => Flippa is generally for smaller sites/SEO stuff for low prices. This size of sale is better done through contacts or just a good seller who has these contacts and gets a commission. Otherwise you risk reputation damage and external effects on your other brands and entire group if offering your products/companies directly on Flippa or eBay (which feels just desperate).

Anyway, they had to raise funds and put a dedicated team on it when Sortfolio/Haystack was at its peak. Now, it's too late looking at Sortfolios decreasing traffic on Alexa. Nobody will buy it and that's something DHH never will get: it's not about your current revenues or status, it's always about you future expectation when valuing assets/companies/startups/businesses and that's how you sell

Yes, it's always struck me that many 37signals posts are lathered in passive-aggressive envy regarding other businesses rather than just getting on with their own. The only good 37signals post I can remember that wasn't of that kind, or just trite advice, was the nice photos of their office environments. It constantly amazes me how much coverage they get on HN. But I guess a lot of people use RoR as a breadwinner and have a connection in that way to them.

If you look at another "builder of tools the community uses" like, say, Linus it's different. His blog doesn't really make it onto HN, as it's often personal, whereas his G+ posts sometimes do. His G+ posts are usually about something specific though rather than recycled trash from popular business / personal wealth books - not looking at anyone in particular - with some added passive-aggressive venom towards the more successful.

I don't think it's actually envy, it's simply making some noise, which gets them more attention and thus more business.

The irony, of course, is the name of their blog.

Really good observations about their posts:

> passive-aggressive

> recycled trash from popular business / personal wealth books

Um, would you not call Basecamp and their suite of software scalable business? 37signals makes tons of $$ off those products that scale to millions of users. I think they know how to scale a business...

On another note, I don't think DHH gives a shit about Pinterest, Quora or Instagram (none of which have even come close to making a single cent of profit)

> Basecamp and their suite of software scalable business?

Basecamp is a scalable business considering what it is but I doubt that 37signals makes tons of $$ with Basecamp (check their Alexa traffic, it's an aged product and overrated, popularity still comes from Rails, most that I know switched years ago to other tools).

> I don't think DHH gives a shit about Pinterest, Quora or Instagram

http://37signals.com/svn/posts/3177-all-the-oxygen-trapped-i...

They are popular because of Rails among developers, most of business/non-technical people have no idea about they're affiliation with Rails (or what Rails is for that matter). On the other hand, Basecamp is used widely by lots of small businesses and not only IT companies and it's fair to assume that most of their revenue comes from it.

"I doubt that 37signals makes tons of $$ with Basecamp"... Really?

A few people have attempted at figuring out 37signals annual profits (which mostly come from Basecamp). Some veeeeeery conservative figures put their profits at around 10M a year. Probably a multiple of that. To you it obviously isn't "tons of $$". I get it! Next, you're going to say that no one pays for "time-tracking" anymore...

Your comment is ignorant on so many different levels I'm not sure where to start so I'll start with the most _______ part:

* I didn't realize that anyone still considers Alexa to be even slightly accurate.

* You're confusing having a strong opinion as being resentful.

* Doing scalable is exactly what 37s has done for the last approx. 10 years. There are 2 parts to a "scalable business." 1) Can you acquire clients in a scalable way? 2) Can you serve them in a scalable way? Basecamp has thousands of paying customers and I've almost never seen an ad from them so that proves the are able to acquire them without a significant customer acquisition cost. They sell software. Do I have to say more to prove they can serve them in a scalable way.

* "it's not about your current revenues or status, it's always about you future expectation when valuing assets/companies/startups/businesses and that's how you sell"

I have a bridge to sell you that will generate a billion dollars in the future. Interested?

* "is shows one more time in which league 37signals actually plays." They are willing to kill a product that takes very little time to maintain and it generates $18k/month in profit. Think about that.

* I don't think they are going to end up selling it and will likely just shut it down if they will stand by their "sell by x or shut down" claim. Regardless, I think your comment says more about you than about 37signals or DHH.

>They are willing to kill a product that takes very little time to maintain and it generates $18k/month in profit.

This. I didn't and still don't understand why they want to kill it.

If you can potentially generate more than $18k/month by being more focused on your core product, why not?

As raganwald mentioned earlier, Jack Welch of GE got out of areas even when they were making money. They only stayed in if they can be #1 or #2.

It's about mental bandwidth. The 37Signals way is to ruthlessly (try to) cut down on all the non-essentials for growth.

> Now, I understand DHH's resentment (or envy) against Pinterest, Instagram and Quora—everbody's raising money like shit

Given his ability to execute and monetize a business coupled with engineering talent that would be obvious to any VC given his stewardship of RoR do you really think if DHH wanted to raise VC funds he would have any problem?

Envy comes from wanting something you can't have, not something you don't want.

* Doing scalable business isn't 37signals' strength *

Who cares why he chose his path?

Everyone's different. He's happy so that's the right path for him.

>Now, I understand DHH's resentment (or envy) against Pinterest, Instagram and Quora—everbody's raising money like shit while Sortfolio stays unsold for weeks. This shows one more time in which league 37signals actually plays.

In the league of producing actual products people use and making very nice money off of it,

rather than the league of making BS social sites and making a killing on idiotic investors and/or the general stock market?

>Doing scalable business isn't 37signals' strength.

Apple is a scalable business. Microsoft is a scalable business. McDonalds is a scalable business. IKEA is a scalable business. IBM is a scalable business.

Pinterest, Instagram and Quora and BS social fads, as "scalable" as FriendSter, MySpace and all other fads.

They can make money (sharks and idiots are in abundance) but are in no way a real scalable business.

I agree. Selling on Flippa effectively kills any brand goodwill Sortfolio had. Worse yet, not responding to the questions being asked will ensure the site won't be sold.

Been listed for 20 days already, all questions remain unanswered in the comments, no analytics/data provided, listed profit == listed revenue.

The way Sortfolio works is that designers and agencies pay to be listed on the site. But if you build a good following on Dribbble, you'll start receiving new job offers every week. So why would you pay $99 a month for Sortfolio?

This means Sortfolio doesn't include the best designers, since they don't need the service it provides. There are still some good design agencies on there (because they can afford the price), but I'm not sure how long that will remain a viable market.

The bottom line is that if your barrier to entry is money instead of talent, it'll be hard to reach the best people.

This is one of the fundamental things 37signals doesn't seem to understand. In a winner-take-all market, which includes any market with strong network effects, you want to get as big as you can as fast as you can.

Charging for the product makes that harder and opens you up to having someone compete against you for free while monetizing indirectly (via ads, affiliate revenue, secondary services, whatever).