Comment by masukomi | Hacker News Reader

Comment by masukomi | Hacker News Reader

Re the emails / support / whatever being stressy... dude. It's been like no time at all, and you had a spike. You don't have to reply to EVERYTHING ASAP. All things in moderation. Set up an autoresponder politely telling folks that you're a single person and the spike in requests is a bit overwhelming. ask their forgiveness and let them know that you'll get to people as soon as you can.

With that out of the way, congratulations on the spike in traffic.

After having been on the front page of multiple programmer sites I can tell you it's just that. It's a good day. You may even get a good week out of it.

Unless you are incredibly atypical the spike in traffic will not last. There's absolutely no basis for assuming that traffic will continue at the spiked rate. It tells me your either naively optimistic (sorry to inject an unpleasant reality) or trying to sell it quick to someone else who is naively optimistic.

The upside is that the onslaught of requests is that since it's a spike, they will die down and you'll be able to catch up. The longest, and hardest, i had was a project that ended up with me stuffing envelopes every night and making daily trips to the post office sending of letters to people around the world because my offer started getting passed from message board to message board. It lasted about a month.

I'm very dubious of the belief that adding "more advantages" would get you a 10-15% conversion without any evidence to back it up, especially when you can't even be sure of the 1% conversion rate you think you can get for the current state of things.

You can't extrapolate an enduring income stream (or even an amount of work) from a single small spike.

Everything in this comment is correct.

If I may also give a brief suggestion, coming from a place of a lot of love for bootstrappers and sympathy for your situation, there is a line in your post which suggests that people compensate you for the 2.5 years you put into this when making an offer. I am afraid that this is at variance to how the world works generally and how acquisitions of small websites work specifically.

People pay for their future revenues, not your sunk costs. In the world of small website acquisitions, you'll be valued at something like 1X your previously proven annual revenue, not at a linear projection from what spike day looked like. If that number is -- let me pick a representative example -- $100, then you have a $100 site, not a $60,000 site, even if $60k is a reasonable approximation of the cost of duplicating it using market labor.

Also, as someone who also has struggled / struggles with depression: it is much much better for yourself and the world on net for you to just say "I am under stress and cannot email today, therefore, I will not email today." than for you to be adversely affected trying to get people replies to their questions about a browser game. Some people may be discomfit by this. That's fine. There is an entire Internet full of browser games. There is only one you. Do whatever you need to to not have this adversely effect you and your loved ones.

Congratulations on shipping, by the way. Very few people can do it. You demonstrably can. That's awesome. You've got a lifetime of shipping successful software businesses ahead of you, regardless of what happens in the next short while.

Is it really that low? 1 times annual revenue? So BCC would be worth only a mid-five-figure number (not sure what your last reported numbers were)?

1 times annual revenue is actually a bit high. I've seen affiliate sites sell for 4 to 6 months of revenue. The reason is that after paying for the labor to maintain it there is very little profit in those websites. You are buying a job basically.

Also, it's not unheard of for a small physical business to make 10% profit margin and to sell for 10 times profit. So that's around 1 time revenue as well.

There's a premium for established sites (user community, backlinks, PageRank) compared to brand new sites.

It really is that low.

BCC might get a slight premium because I have better options for buyers than Flippa, it has an exceptionally long history, and there's some value from association with me, but websites are not valued like businesses or startups.

There exist plenty of excellent reasons why this is true: extreme risk from sites which are overly dependent on one or two traffic sources, implicit cost of operation often not being counted as a cost by the owner (BCC runs itself... It only requires the very occasional attention of a Rails-competent Ubuntu sysadmin. That's "free" to me but not free to the new buyer, and that sort of stuff adds up quickly when compared to five figure revenues.), transaction costs (time, training new owner or staff, etc) having to get recouped, a risk premium because it is a market for lemons and buyers feel that sellers may sell because of material no disclosed information like "I recently pissed off Google and the site may vanish from the Internet", etc.

Ultimately of course things are worth what a buyer will pay you for them, but market is about 1X for "typical" sites at the moment.

> Ultimately of course things are worth what a buyer will pay you for them

An example of that would be finding someone (or more likely them finding you) who needs to build your product and can choose between starting an $XX.000 development project delivering in X months or your product which is ready right now.

Yep. A telecom did that for Appointment Reminder within a week of launch day. They wanted to do what Square recently did -- acquire a drop-in offering to cross-sell to SMBs.

Anecdata: they opened with a $100k offer. I said that I had built it to run rather than to flip, but that everyone has a price, and that I'd be unable to turn down a million. No deal happened, obviously.

Just ignore if you're not happy answering, but do you regret asking for that specific sum or are you content that it was the right amount to go for?

I feel like I'm hijacking someone else's thread now, so ask me some other time.

As far as I know patrick hasn't released sales numbers, but I'm confident that he's got to at least be glad he didn't take 100k for it.

How would you value a site that has no current revenue but many users? Would it just be something like PAGEVIEWS * POTENTIAL_CPM * RISK_AND_DIFFICULTY_FACTOR? I'm sure it largely depends on the type of site, but I was wondering if there's any general concepts to keep in mind.

It's not that he doesn't have revenue, I doubt it even has persistent users.

Users are generally 30-day active (trailing average). Here we're talking about a spike in traffic that the project got after some public exposure on news sites, I doubt we could predict at this point if everything will drop into the Trough of sorrow [1] or stick. Personally I tried the game and it seems to be at the first iteration in terms of usability for the masses, so I assume there will be little (if any) retention and more usability work to be done.

[1] http://andrewchen.co/2012/09/10/after-the-techcrunch-bump-li...

Some improvement feedback:

(1) develop more game-ability before explaining concepts on 5+ pages of text. Try to have a full-blown gaming engine with as few clicks as possible, and add concepts on top of it when the user levels-up.

(2) watch your page loading speed. If it's not as fast as browsing a magazine, it's too slow for a game.

(3) work to simplify the interface. Consider showing part of the vertical tabs only when the user levels-up. This should go hand-in-hand with (1).

(4) try to move at least partially some content before the login screen. Give people a reason to sign-up.

A perfect example to guide progress on those items: http://adarkroom.doublespeakgames.com/

Highly dependent on why it has no current revenue.

Is it easy to introduce ads? Would it be AdSense-friendly? If so, what kind of ads would it attract?

The best way to come up with comparables is browse the "for sale" section of Flippa https://flippa.com/websites/established

Since I studied finance and investment management and also passed CFA level 1, I have to tell you: How much a company is worth depends on your investment horizon, which might be more than 1 year or you use more than 1 year's earnings forecast. But mostly you value dividends (discounted of course) and expected growth in price. This holds true for stocks of course. In this (I am talking about the OP) case you would probably estimate how risky the investment is and say if you would invest similarly risky in the stock market, you would want 10% per year. You estimate annual earnings say $500 and use your return to estimate the company's worth: $500/.1=$5000.

Congratulations on successfully completing your studies.

A question for you: let us hypothetically assume that you have identified a particular basket of stocks worth $5,000 using this approach, applying your personal estimate of their risk and your investment goals, and purchased them. Three weeks from now you receive a call from the CTO of one company you invested in saying that a vulnerability in the hypervisor at your VPS provider allowed a compromised co-tenant to execute commands in your instance as root. What is your plan of action for preserving the value of your investment, and does this retroactively change your approach to valuing the stocks you have purchased?

This is a silly question, of course, because if one invests in publicly traded securities one does not have to operate their businesses for them. That is one of many reasons why owner-operators of businesses do not value them as if they were equivalent to investments in publicly traded companies.

I think this is good case of Black Swan (it would be highly improbable the same problem hit all the companies in a diversified portfolio but could happen a la hearthbleed). There's an extremely insightful book written on the subject (the black swan by Mr Taleb). Wich I do recommend.

Discounted cashflow = bullshit used to rationalize the sale price ( it can have some use in super long term predictable business like real estate with 10 year lease and well diversified tenants)

Hope this was helpfull

I just included my background to point out the fact that my explanation is purely academic. Right now I cannot say whether your congratulations was sarcastic or not, but thank you ;)

To your answer: I wanted to point out what is being valued and how it works. In this case the only thing that is being valued is the income. All risks associated must be accounted for. This was also supposed to be a hint to another question regarding how to value a website that does not yet create revenue: here you value future estimated revenue.

To your argument: You are absolutely right, of course. But still you start with expected future income.

Similarly, icu argued that you do not have just one figure. I completely agree. But that also happens if you consider a range of assumptions instead of concrete numbers. And even if you have a limited amount of potential buyers and they might pay more or less, you have to have an idea of whatever your are selling is worth.

Congrats on passing CFA Level 1, however I would politely ask that you consider that valuation is an art and not a science. I have done lots of work valuing illiquid shares, for example series A in tech companies, as well as established SME businesses. Of course this is a whole different game to valuing publicly listed liquid stocks and their options--which I trade. I also respectfully reject that the best answer to "what is something worth?" is "whatever someone will pay". I know it sounds similarly cryptic but my answer is, "it depends". Therefore IMHO it's best not to get stuck in one point of view but to try different methods and techniques for estimating value. Some people might say, "build it top down and bottom up" but I say, "build it from all sides". By doing this you get a 'range of value'. There would be valid arguments for the price within the range and different buyers will sit on the continuum. I know this is obvious, but if you are an entrepreneur your job would be to convince a buyer to give you the highest premium possible.

Relating all this back to the post, I'd say that this entrepreneur is trying to do just that... Basically trying to give arguments for as high a valuation as possible.

This is why I believe comments giving an exact figure of $x are invalid insomuch that your method for answering "what something is worth" is not the optimal approach.

In consultation with several sources including website brokers www.feinternational.com, most apps in the mid-5 to low-7 figure revenue range go for 2-3x earnings (in this case, earnings includes any salaries the founders / owners draw).

This was consistent with the app I sold back in Feb, which went for 2.x times earnings.

Rob Walling's Startups for the Rest of Us podcast did an episode on this recently:

http://www.startupsfortherestofus.com/episodes/episode-197-h...

but that's usually something with years of sales history. it gets real shaky with only a few days of revenue.

That depends entirely on the type of site and how you come by that revenue. For some sites, it may be high. For others, it's way too low.

potential revenue growth is the only factor that would make things go up considerably.

At this point, I'm thinking of HackerExperience as a your job, a job that you don't want at the moment. HackerExperience is a new job, which may or may not stick around, and that job requires a lot of time and attention. It also doesn't pay very much. How much would you pay for a high risk, demanding job with low pay?

Once you can prove that spending $X on customer acquisition returns $X+something, then it'd be easier for me to think of HackerExperience as a scalable business. Until then, it's a speculative venture to me.

Good luck on your journey! HackerExperience will give you some great stories to tell :)

> trying to sell it quick to someone else who is naively optimistic

That's the vibe I got from this post too.

>Unless you are incredibly atypical the spike in traffic will not last.

The spike won't last, but it doesn't mean that it won't grow consistently from where it is into something much larger than it is today.

> It tells me your either naively optimistic (sorry to inject an unpleasant reality) or trying to sell it quick to someone else who is naively optimistic.

That's pretty judgmental. This obviously has the potential to grow. If he doesn't want to deal with it or maybe needs the money now, he isn't doing anything wrong by trying to sell it to someone that sees the same potential that inspired him to spend 2 years creating it.

Maybe he won't get $60K, and maybe he'll get more. Maybe somebody will offer to invest in it and allow him to draw a salary while he grows it. Maybe he'll be hired by someone that has a use for the talent and dedication he displayed by building this. Regardless of the outcome, it's clearly worth something, and if he wants or needs to sell, I hope he gets a fair offer.

If it grows slowly and consistently you have time to automate some of the repetitive task, find a revenue source, hire an (helpful) assistant, ...

Some solutions are not abaiable during a spike. For example, if you hire a moron to help during the spike, you still have to pay him after the spike has gone or fire him. (And you have even more problems during the spike, because you have to find him and coach him.) So it's better to wait until you know if the traffic increase is permanent or it's only a spike.

> The spike won't last, but it doesn't mean that it won't grow consistently from where it is into something much larger than it is today.

That is absolutely true, but investors don't invest based on "doesn't mean". The equation is discounted future free cash flow minus risk premium, and usually, minus how desperate you are to sell. If you are big and threatening (can take away Facebook's customers), then that adds some plus to the equation.

If you are trying to sell Apple we can talk about projecting future growth - the equation changes dramatically. A PHP game with a one day spike? No.

This could be the next minecraft, but more likely it'll make 1K this month, $500 next month, and so on into obscurity, is the thinking. Disagree? Show us the numbers. You'll get about 1x on those numbers, as others have ably pointed out.

I think we all agree he has done extremely well to get to this point, and that we hope he gets fair value. But I can't imagine spending that much money to basically buy myself a job in the hopes of a revenue stream that the owner has not generated for himself. I think the advice he has gotten to take a breather, and take stock in a few weeks is extremely sound. If he can make a case for his revenue #s he will get a nice price for his game. But he needs to understand what investors are thinking about his pitch. That is not bashing him or being judgemental, it is merely echoing what the market is going to be thinking. How else will he get fair value? The goodness of the investor's heart?

tl;dr - the things being written may be painful to read, but they come from people with experience and a friendly desire to explain how to do business valuation. It in no way implies an assumption of a limited upside in the future of the game.

Try the game, it's really unbalanced and unfair with new players, I doubt the spike will grow much

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