My name is Justin Cooke, I am the co-founder of Empire Flippers where we help others buy, sell, and invest in online businesses.

Along with my business partner, Joe Magnotti, we started building and selling our own websites back in 2009-2010, but eventually pivoted to a brokerage & marketplace where we bring together sellers, buyers, and investors to close deals.

The company has grown quite a bit in the last few years - from $200K in sales in 2012 to nearly $10M in 2016 - enough to get us listed at #161 on the INC 5000 list. To date, we’ve helped broker more than $22M in online business sales and are on track to do around $18 - 20M in 2017.

We are a US based company, but run our business from SE Asia and we’ve grown our team by hiring “apprentices” and bringing them halfway around the world to join us. As they grow they become part of our core team.

Our management team is technically “location independent”, but we all get together every 3-4 months to spend a month working together. Our current get together is happening right now in Saigon, Vietnam. We just hired 4 new apprentices and are experiencing one of the biggest months in the company’s history with over $3 Million in online businesses sold.

I’m a fan of Reddit and the /r/IAmA sub, so I’m really hoping to provide value and give back to the community. We broker almost every type of online business (Adsense, Amazon Affiliate, FBA, E-commerce, Private Affiliate, iOS apps, SaaS, etc.) and have seen thousands of unique and successful businesses. You can read more about the 11 most popular type of online business models here: https://empireflippers.com/11-popular-business-models-online/

Feel free to AMA about buying, selling or investing in online businesses, building management teams, starting a podcast, growing our business, interesting niches, living/working remotely, or anything else!

Proof:

Twitter

Shopify

Previous AMA


Edit 1:

Holy S***! - thanks for all the questions/comments/love - You all are awesome and the questions have been extremely interesting to answer- keep them coming! Sorry I haven't gotten to DM’s yet - I am going try to get to those tomorrow and focus on answering as many comments as I can today.

For anyone curious about selling, but wondering how much your site is worth, we've created this Valuation Tool. It will give you a "rough" estimate, but we actually use this to list/price the businesses with us, so it's pretty accurate.

If you know you're ready to sell, you can submit your site for sale with us here.

If you're wondering what types of business we have listed for sale, you can check out our marketplace and review the businesses we have for sale.


Edit #2

Quite a bit of our business success was due to creating high quality content that educates and expands our industry which is why we LOVE doing things like this - we really enjoy interacting with everyone here. I hope you're digging it as well.

Getting quite a few in-depth questions that we've covered elsewhere. For people really looking to find out more about entrepreneurship, our apprentice model, and our thoughts on business in general, feel free to check out The Empire Podcast here (Listen on our site, on iTunes, on Stitcher, etc.) It's our not-so-weekly show that I think you might dig.


Edit #3

Hey all - thank you so much for this amazing opportunity! It's after 2am here in Saigon, Vietnam right now, so I'm going to cut this off and go to bed tonight. I'll wake up tomorrow and try to get back to your questions - hopefully you'll find them helpful/useful.

I know plenty of you are new to business - particularly online business models - but we wrote a post that goes into some depth explaining how each of the 11 most popular online business models works.

It's for newbies mostly, but even if you have some experience you might find some value...especially when we talk about them from a buying/selling perspective.

You can check that post out here:

11 Most Popular Business Models Online

Again - thank you so much and I'll try to get back to more of your questions tomorrow!


Edit #4

Thank you all so much for stopping in - I had a blast doing this! I think I answered most of the questions you had, so I think it's time to shut this down. If you didn't get an answer I probably answered a similar question someplace else.

Want to get on a call with our team to discuss buying/selling online businesses?

Click here to schedule a call

Thanks again for your questions, comments, and insights - really appreciate it!

Comments: 1727 • Responses: 83  • Date: 

thomasmagnum1015 karma

Here's one.

Let's say you have a very successful site. You want to add a related niche, that could live on a site of its own.

Is it better to add the niche to the existing site, using the power of the domain/ranking you have already, or to start a sister site, that can grow on its own and eventually be sold separately ?

any example ?

jwcooke1411 karma

Here's something interesting - the multiple go UP as you build larger, more profitable sites.

So, for example, 4 separate websites earning $5K per month each might be worth $120K each, but one larger site earning $20K per month might be worth $600K or more.

The further up you go in value the larger the multiples, all else being equal.

beefy_miracIe208 karma

I'm aware subdomains don't get any "juice" from the TLD via conventional SEO methods...

But are subdomains such as product1.mywebsite.com and product2.mywebsite.com valued like this because they share the name? Or does value tie in to rankings more than brand recognition?

Thanks.

jwcooke244 karma

I wouldn't build on sub-domains. If you were considering subdomains or separate domains, I'd suggest separate domains. (Best, IMO, would be to do them all under the same domain, though)

s0v3r1gn22 karma

What if you closely and transparently integrated the sites? All the cross linking and the fact that a used visiting from either domain would transparently navigate between the site could be just as beneficial.

You would just have differing entry locations for the site based on the domain. But them being separate would mean that as the properties grew you could spin off or even sell off the pieces without dismantling the rest of the site and you'd have a well known domain already connected to the property.

I could see such an approach being even more valuable than using a single site if your goal is sell the additional sites at a later date due to the existing built in value of their separate domains.

jwcooke35 karma

I've seen this done successfully. (And unsuccessfully) The big players do it. (That are worth far more than the businesses we transact with)

I think I see MANY more do it poorly, though, which is why I wasn't recommending it...for most, anyway.

If you're doing this transparently and on large, authority properties, there's no problem with Google. If you do it badly, with more spammy properties, you're putting yourself at risk.

iNEEDheplreddit571 karma

Do you think Richard Hendrix can successfully pivot Pied Pipper again?

jwcooke175 karma

Haha. Saw a preview - doesn't he get fired this next season? Great show.

iNEEDheplreddit101 karma

First episode of season 4 aired this week.

jwcooke110 karma

Sweet! Watching after this...

onemansbrand318 karma

Previously, you mentioned you would be looking into changing the commission model you currently charge on websites listed on EF.

When will this be looked at? For someone with online properties in the high six and low seven-figure valuations, I am not sure how the 15% fee can be justified.

Also, how do you deal with fraud? I know previously you had a pretty big issue with a Russian (think they were Russian) customer. What systems do you have in place to protect the buyer / seller and your own interests?

Thanks guys!

jwcooke173 karma

We've definitely looked at and discussed it. Since our last AMA we've continued with our current model and have seen continued growth. We're now selling 7-figure businesses and haven't yet run into any issues.

For the most part, I think our customers think our value proposition is worth it and enough of them have gone with us for us to continue to grow. I think if growth becomes stunted it's something we'd look harder at.

Wow - yep, definitely had an issue with credit card fraud. We KNEW it was potentially a problem, but hadn't actually had an issue yet. Once that happened, we definitely had to change our process.

Our vetting process (for the businesses and the sellers selling them) has been continuously tweaked and I'm guessing that will continue. Although we represent sellers, it's important to us to keep the quality of our marketplace high. Especially considering many of our buyers are repeat sellers.

Does that make sense? Let me know if I need to expand on something...

NOMADIC_HOBO115 karma

I think a 15% fee is justified and is the going rate for any marketplace bringing in qualified traffic.

What I am not into is the $300 ebay style fee to list.

That is why I use flippa instead.

Though you probably get more qualified buyers and I do like the empire flippers model better for both buyers and sellers the upfront fee does limit you quite a bit when there are other places with much more flexibility.

I do however recommend you guys to anyone looking to by their first property 😀

jwcooke269 karma

Thank you! Sorry the $300 list fee is a limiting factor for you.

I can assure you we'd remove it completely if it didn't help us. Having that $300 barrier keeps out many of the sites we don't want submitted for sale. Sure, it keeps out a few that would be a good fit, but it's a worthy trade-off, IMO.

onemansbrand50 karma

Interesting, I'd say the $300 listing fee is odd, but then it does guarantee payment for the initial administration work.

It definitely wouldn't be a make or break for me choosing EF over Flippa, the 15% which would be a heart clenching $150k on a $1 million deal is what steers me away from EF from a seller perspective.

jwcooke84 karma

The $300 is refundable if we decline to list your site, if you decide to not list your site before it's made public, etc. We only keep it if we accept and then list your site publicly. We make hardly anything on listing fees overall.

Now - the 15% is definitely where we make our money! We do quite a bit of work for that, though, and have a great success rate for our clients.

suitedupforaction234 karma

What are the 2 important non-negotiable traits your apprentices have that got them hired by you?

jwcooke470 karma

Skillsets and experience are important, but not as important as you might think for the softer-skill roles. (Sales, CS, etc.)

  1. No assholes - I know this sounds odd, but if they rub us the wrong way or we can't see ourselves working with them on a regular basis, that's a no-go.

  2. Coachability - Do we have something to teach them? Do they want to learn?

StaceB260 karma

I read this as couchability

jwcooke81 karma

Lol!

Jonas4272 karma

The trick is not to worry about how the assholes are rubbing you and instead worry about how you're rubbing the assholes.

jwcooke49 karma

:-)

ninjamuffin49 karma

How do you go about finding potential employees?

jwcooke90 karma

We put out posts to our audience like this one about hiring for customer service.

We then ask other peers and friends that have relevant audiences to share if they think it will be helpful for their audience and they typically do it.

We share for others too! Check out these available opportunities from others we work with, friends, etc:

https://empireflippers.com/apprentice-jobs/

fixade53 karma

On the mobile version of your website, the chat button is too easy to accidentally hit. Also once you hit it, the page that opens has a non-obvious cancel button.

Kaennar34 karma

Time to upgrade the QA/UX Designer.

jwcooke21 karma

Hah - that's actually on the list for us in Q2. :-)

patde9221 karma

With online businesses it is very difficult to use traditional valuation methodologies to derive a value. How do you value a company when purchasing or what are the steps you follow to get an idea of pricing metrics as a vendor and issuer?

jwcooke241 karma

Most online businesses under a $10M valuation (and outside the world of tech startups) are based on a multiple of net profit.

This multiple can vary pretty widely - from a low of 20X their monthly net profit up to 40X or more. The multiple will depend on things like how long they've been in business, how diversified their traffic/earnings are, and other risk factors with the business itself.

We've built a Valuation Tool that will help you get a (rough) valuation on your online business. We actually use this to list/price businesses for sale on our marketplace.

avoiceinyourhead22 karma

Out of curiosity -- why do they look at websites on a monthly EBITDA basis? I figured the multiples might have been bigger... especially since some brick and mortar goes for 8x to 12x annualized EBITDA. Is this because websites are riskier? Less stable revenue?

jwcooke39 karma

They are risky and less stable in some ways, definitely.

It's also a (relatively) new and emerging market. For example...there are hardly ANY website buyer agents. Why would that be? The market's not mature enough to demand them yet.

I'd mention, though, that most comparable offline businesses aren't going for 8X - 12X annualized EBITDA. Most are much closer to 2-4.

gfdgffdgfggf-13 karma

im sorry but as someone whose been doing online marketing and SEO for 10+ years, your valuation method is BS and flawed.

The fact you value companies making "5-10k" a month or "20k a month worth 600k" is utter BS ...you have NO idea how long it will be making 20k a month for, seriously, you could have competition come in next week and wipe out your entire income and boom all your money you just spent on a website making 20k a month is in the toilet being flushed down.

And lets be realistic here, online your income very rarely last longer then 5-7 years then it starts to dry out due to the market shifting.

I've had websites make me 500k+ a year then 3 years later they're losing me money due to billion dollar companies coming in and taking over the market. You can't say "that wont happen with these sites" because guess what? every billion dollar company is now coming online and dominating most niches.

jwcooke25 karma

Sorry - hundreds of comments I'm trying to run through and answered this pretty quickly.

Still - you might have been doing marketing and SEO for 10+ years, but I seriously doubt you've sold or valued as many online properties as we have. In fact, I'm sure of it.

We live/breathe valuations, transactions, etc.

Ultimately, an online business is worth what someone is willing to pay for it. We've gotten really good at predicting what people will pay.

You want to argue a business is worth more (or less) than someone is willing to pay for it? Good luck with that.

harryhov187 karma

Thank for doing this. I have a site that gets about 50k pv a month and brings in $400/mo through adsense and Amazon. It's growing but at a slow pace as I simply don't have the time. I know your threshold to list at EF is $500/mo for the last 6 months. Do you plan on creating a listing for small potatoes like me?

jwcooke245 karma

Hey Harry!

Unfortunately, we found less than $500/month to just not be worth it.

(Shhh...a little secret. Typically, if you're $450+ per month we'll let you in with an AdSense/Amazon site)

minisrikumar182 karma

Most business partnerships fail, how did your partnership with Joe Magnotti begin and what do you think made the partnership successful?

What are your return rates overall and is there a specific business model that sees a higher return rate? what im trying to figure out is, which business model fails the most and which one succeeds the most?

jwcooke174 karma

Joe and I are pretty down on partnerships overall. Not because ours has been bad, but because we've seen so many others in bad business partnerships.

We've talked about it at length on podcasts:

https://empireflippers.com/afp-6-getting-down-and-dirty-on-partnerships/

https://empireflippers.com/partnerships/

We were long-time friends before doing business together. I think that's typically a recipe for disaster. (It was for our 3rd partner on the first business...a real mess)

It helps that we both considered the businesses needs and were able to drop our egos when thinking about what's "best for the business". We've gotten pretty good about dropping personal biases and arguing on the businesses behalf with each other, which is helpful I think.

I'm not sure on the second question. Are you asking which businesses are the most profitable? Are the easiest to get earning? Which fail less often?

that-other-username172 karma

To all the wannabe entrepreneurs reading this, remember survivorship bias is a thing. Just because something worked for these guys doesn't necessarily mean they succeeded because of it, it could be they succeeded despite whatever it is.

How much of a legal/accounting it team do you guys have? How is managing tens of millions of dollars in revenue different from managing 200k?

jwcooke88 karma

This...

Definitely true. Survivorship bias is definitely a thing. I try to keep that in mind - thanks for reminding me!

that-other-username27 karma

No problem! And not trying to be down on your accomplishment, you guys have done awesome, just trying to help people stay sharp :)

What do you think of Saigon? I've heard it's great.

jwcooke18 karma

Amazing place. We traveled a ton the last couple of years, but were always drawn back to Saigon.

I still get itchy feet and we travel around a bit, but like coming "home" here, heh.

single_double103 karma

What kind of sites sell for highest multiple of monthly profit?

jwcooke177 karma

Here are some characteristics that will give you the HIGHEST multiple:

  • Long history of continued growth/earnings
  • Recurring revenue
  • Not much of owner work required
  • Diversified traffic/earnings
  • Diversified monetization methods
  • Some level of paid traffic that can be scaled

geriseinfeld72 karma

Thanks for the AMA. What's the easiest online business model to create, grow and make profitable as a sole operator? In terms of speed too.

jwcooke119 karma

Thanks for the question. The easiest model is going to depend on your skillsets, obviously.

Are you better with FB ads than organic SEO? Do you prefer physical products or digital products? Are you a developer?

For someone new to ALL of this and looking to get started, I'd say AdSense, Amazon Associates, and lead generation sites have the least moving parts and are best for newbies.

They do require SOME skill, though. You'd need to learn KW research + niche selection, web hosting, content marketing, and onsite/offsite SEO to get started.

Hope that helps!

HungJurror23 karma

As someone who is interested in getting involved or starting in a similar business/trade how do you suggest I learn the IT stuff? Do you think an actual degree is necessary? At this point I'm an accountant and not very knowledgable with technology

I mean, I'm 21 and decent with software, I just know 0 about coding or other complicated IT stuff

I think I'd like to one day help out/consult local businesses but I have no idea where to start

jwcooke101 karma

No degree needed.

The best way to get started is just to...get started.

Seriously. Head over to GoDaddy (or whatever domain company you want to work with), purchase a domain, set up your hosting, add WordPress to the site, add a theme, and get started.

You'll donk your way through creating a site, figure a few things out, etc. Just start writing and then read blogs like Cloud Living, Niche Pursuits, Authority Hacker, etc.

iwas99x65 karma

Hello Mr. Cooke, Is it pronounced Cook or like Cookie?

jwcooke42 karma

It's pronounced "Cook" - thanks for asking!

minisrikumar58 karma

When Empire Flippers was first starting out, how did you get traffic? and what was the most difficult thing during the first year of running Empire Flippers?

jwcooke103 karma

Back when we first started out we were called Adsense Flippers. Honestly, we didn't sell anyone's sites but our own at first. We would build out these little Adsense sites and then sell them on Flippa. It got to the point where we were doing so many of these, that we became a Flippa power user. We started a blog that detailed our journey along the way, which helped a lot to build an audience initially of other niche site builders who were doing the same thing. When they saw we were selling these sites for a healthy profit on Flippa, people in our audience started asking us if we'd sell their sites for them on our Flippa account if they pay us a small commission fee. It got us thinking... maybe there is something here for us.

Eventually we started selling so many other peoples sites instead of our own, we stopped building our own and eventually transformed our little niche site journey blog into an actual brokerage (and rebranded to Empire Flippers)

jwcooke26 karma

We got our first traffic/audience almost entirely through content marketing. That drove search traffic, but we were also involved in other forums/communities. Maintaining an active presence there got some audience.

We also connected with other bloggers/podcasters in and around our industry. They would have us on their shows, interviews us, or link to us when appropriate. We ended up "drafting" each other as our businesses grew over the years. Sites like Tropical MBA, Niche Pursuits, etc.

markwebster156 karma

Hi Justin,
How has the recent Amazon affiliate payout change (mostly decrease) affected sales prices? Obviously prices will be down a little, but are buyers more skeptical about sites monetized through a single affiliate program or channel now?

jwcooke44 karma

Sites have definitely taken a hit. This is a rough guess, but probably down around 20% or so across the board from the listings we've seen?

We saw some hesitation around Amazon Associate sites for a week or two, but that's mostly passed now that the change has been announced and finalized. Here's a blog post on the topic:

https://empireflippers.com/amazon-commission-changes-end-era-opportunity/

mindlessASSHOLE50 karma

I've been in the military for 13 years and work in food service. I plan on retiring in 7 years but want nothing to do with food service. I have a pipe dream to be able to travel the world and work from a laptop much like your company. What would be the beginning steps I would need to do to work for a company like yours? What should I be learning to help me achieve this goal?

jwcooke86 karma

Thank you for your service. I was in the US Navy for 6 years from 1996-2002, so heading down that path is definitely possible!

I did a podcast interview where I talk in some depth about our apprenticeships:

https://www.authorityhacker.com/apprenticepodcast/

Here are some others we know that have apprenticeships available right now you should look at:

https://empireflippers.com/apprentice-jobs/

docdc46 karma

Very interesting model. One of the biggest challenges with online businesses is that many of the conventional economic metrics can be spoofed. Traffic (and even transactions) can be spoofed. What does Empire Flippers do to weed out this kind of fraudulent businesses?

Also, how do you guys go about setting a 'multiple' on revenue/transactions to set a sales price for a site?

jwcooke61 karma

You're so right. We've seen many of the ways people use to fake/spoof traffic over the years. Additionally - the bots have become more complicated. It's something we regularly look at.

That being said - we value based on earnings, not traffic. You can spoof all the traffic you want, but it won't necessarily make the site profitable!

Our multiple was based on a formula we've put together over years of selling websites and online businesses. It takes our other sales into account and we adjust it over time. Larger multiples based on less risky factors (diversity of traffic/earnings, quality of content, etc.)

poobly21 karma

Couldn't I just fake business for a drop shipping company? There's no audits of revenue I assume? Are there revenue guarantees post sale?

jwcooke18 karma

You could try!

We've gotten awfully good over the years at sniffing most of these out. Enough to where we're just not a soft target...you're better off listing on those platforms that do NOT dig into the traffic/financials.

pete_mcal45 karma

When vetting websites for sale on Empire Flippers what is your process and policy when it comes to PBNs and links which seriously violate Google's policies?

Is the buyer always informed of these, and do you need to see a sustained period of traffic before approval to omit churn/burn risk?

jwcooke37 karma

We sell websites and online businesses that use Private Blog Networks (PBNs) but we require disclosure of the PBN, which is unique in our industry.

We always inform potential buyers through our marketplace about the PBN.

We require the business to have 12 months of history and at least 12 months of steady earnings for businesses we sell.(6 months for AdSense/Amazon Associates) Many are around 2-4 years old.

Trackbikes15 karma

Hi Justin, I have a similar question, why don't non PBN built sites have a better valuation than ones built with a PBN?

thomasmagnum8 karma

I agree - there are a few sites I considered buying on EF but the PBN is there like a shadow... sooner or later either the seller will pull the plugs on those links, or Google will pull the plug on rankings.

Scary!!

jwcooke11 karma

One way around that is to buy the PBN along with the business. (We've had that happen) Or agree, post-sale, to continue to pay the seller to keep the links in place. (Gives them an incentive)

It's not a SURE fix, but helps to mitigate the risk at least.

Leftover_Salad37 karma

In a rapidly expanding business which you own, how much do you decide to pay yourself? How do you split finances between what you live on, and what goes back the business?

jwcooke63 karma

That's a great question - appreciate it.

Managing growth has been tricky with a fast-growing business. This has been especially true the last year or so.

A unique advantage we have is that we live/work in SE Asia. (Most of the time...we're "location independent" so we travel a bit to the US, Europe, etc.) The costs of living are awfully low. Entrepreneurs here in Saigon are bootstrapping their new businesses out here and paying themselves $2K a month in some cases.

At this point, we pay ourselves a reasonable salary ($100K) and then take profit share distributions. It makes a ton of sense for us to reinvest as much back into the business as we can, but only where we're pretty certain we'll get real value.

wavecrasher5921 karma

Wow thats an extremely modest salary compared to your profits, i commend you! And your insight through this thread is worth alot to me as well!

Addicted_to_chips84 karma

The USA taxes worldwide income, but $100,000 is exempt if you make your money in another country and are outside America for 330 days per year. I'm assuming that's the reason for that particular salary.

jwcooke83 karma

Bingo!

onemansbrand37 karma

How do you deal with multiple currency deals? For example, if a US based company is selling a website for $1 million and a UK based company decides to purchase this.

Do you have solutions to counter in the best exchange rates/less fees e.t.c also from a tax perspective what is generally the best solution?

I know its a bit of a wide question, I guess what I am trying to say is...how does the sale work with international customers, multiple currencies and multiple tax regions.

jwcooke50 karma

We regularly deal with international clients on both sides of the deal. (American living in HK selling a business to a Chinese national in Italy, for example)

I hate to chump out on this one, but "consult a tax professional" is the best advice here.

For listing businesses, we convert to USD as it makes it easier to compare one listing to another.

benthejammin34 karma

What do you actually create for the world, other than capital?

jwcooke43 karma

We don't actually create much ourselves, but our services allow others to do so.

We support makers by giving them a liquidity option, hire others to move halfway around the world and experience a much different lifestyle, and help others sell their websites so that they can adopt children, buy houses, etc.

matt_diggity32 karma

Any experience selling packages of sites that are all generating money for the same niche? ;)

jwcooke29 karma

Of course! Packaging sites is an interesting way to put together a larger listing. (And, sometimes, getting a larger multiple in the sale!)

We generally advise, though, that the seller be open to breaking those up if we get a good buyer for one or more of those sites.

arbooe30 karma

What percentage of businesses you sell doesn't go belly up in the next year?

jwcooke38 karma

This is a tough question to answer. Buyers really don't have a lot of self-interest in promoting how good the business they bought is doing (unless they have an authority website targeted towards entrepreneurs). This IS something we are looking to explore though as we do more buyer-based case studies.

What I can say is that we have several portfolio buyers that have bought businesses from us over and over again, some at an "institutional" level of investing. We have a few other smaller entrepreneurs that come in and buy a business from us multiple times over the years as well. From time to time a client emails or joins an event and let's us know how the business has gone - sometimes positive sometimes negative.

Buying an online business is a RISKY endeavor, but it can obviously be a high ROI. If you are curious about businesses that did actually flop, we did a podcast with a client of ours that actually did buy a business from us that didn't go too well for him. You can check it out here:

https://empireflippers.com/flop/

PodcastPals26 karma

Justin, I recently got a 'thanks for being a customer' package from you. Full of swag. Bonus! Thanks.

My Q - I notice you've abandoned the lower end of the market and I wonder if that's a permanent deal or if you'd reconsider? Selling sites for under 10k might be a pain in the ass but they are 'entry drugs' to the higher value sites (for people like me anyway).

jwcooke51 karma

Awesome! Glad you dug it. We call it "Swig Swag" as the guy who put that together is named Mike Swigunski, hehe.

We're not reconsidering our $10K minimum, unfortunately. We looked closely at the numbers and it just wasn't worth it.

These aren't exact, but they're close....we were spending 30% of our time in a range that was bringing in less than 5% of our total take. That's just bad man-hour management, IMO.

totalgaz8 karma

I agree. I know the commission on the bigger sales is better, but maybe EF could still help broker sites in the $5k+ valuation range as the EF brand seems more reputable for vetting sellers than going to Flippa for these kind of sales.

jwcooke12 karma

Yes, the commissions are bigger on bigger deals, but the bad part is that it's just not worth it for us to do the smaller deals.

We had an internal argument about this, so we looked at the data over a few months. A very small percentage of our revenue was taking up a much larger percentage of our time and it just didn't make sense.

harmlessrich20 karma

When's next apprenticeship coming up?

jwcooke28 karma

We just hired 3 apprentices for our Customer Service team and ended up adding another for Marketing. We need to get them trained and up-to-speed before we bring anyone else on.

I think it might be sooner rather than later, though. I'm guessing we'll be bringing on a couple more by Q3, at least.

TomMorrow29 karma

I don't know if you're still answering questions. Where do you get your leads/What kind of people are looking at buying websites? If a website is netting x amount each month...how is it not more profitable to just keep it?

In terms of sales and marketing I've got it down...How hard is this computer stuff to learn--is it coding, building from templates, etc?

I also just want to be clear on the service you provide-I get a business site going, market it around, etc and then I can use you to broker a sale OR I can invest large up front for a quasi successful website and continue to market until the passive income makes me profitable?

jwcooke15 karma

We've been blogging and podcasting in this industry for years and that content marketing drives the bulk of our leads. (For buyers and for sellers)

Some potential sellers DO keep their sites when they realize what they'd get for them. Maybe they keep them for another year or two and then decide to sell. We can help them out then.

Our service is as follows: You build a profitable online business with a track record of earnings/growth. You're looking to sell it, we connect you with a buyer in our network, and we negotiate the deal and get the business over to the buyer and get you paid.

Endless_Vanity19 karma

[deleted]

jwcooke31 karma

With nothing more to go on, the range is going to vary pretty wildly.

With a 90% profit margin, you're looking at $1.8M per year. You're likely to get somewhere between $3M - $6M depending on:

  • How long the business has been around
  • What your trajectory looks like
  • Diversity of your earnings/traffic
  • Recurring (or not) income

cubiclehoudini18 karma

2 Questions: 1. In your experience, what site model seems to be the most successful for new guys to get off the ground and make money with? 2. What site type tends to sell for the highest multiple and largest sums of monies? (I wanna be a millionaire).

Bonus 3. How do you think augmented reality will change the face of the internet?

jwcooke20 karma

  1. Amazon Associate sites.

  2. Recurring SaaS businesses, currently.

Bonus: Think it's going to change more than the internet. I'm currently more interested in self-driving cars...that seems to be coming quickly and with MASSIVE impact.

totalgaz17 karma

The multiples seem to be going up to 35x on some sales. Does EF try test the market by pushing multiples up slowly to see at what level they are willing to buy or do you follow what multiples other brokers are doing?

jwcooke16 karma

We have a pretty wide audience in the buying/selling online business space and so we do our best to "reflect" the market.

That means we DO have to test the low/high end a bit, of course.

We're different than our competitors in quite a few ways, so I don't think we follow them very closely in terms of multiples. We do keep up on what they're up to, though. If they ever come out with something cool we think we could improve we'd be all over it! :-)

dandada016 karma

What level of experience, in online business, do you require from potential apprentices before considering them for the position?

jwcooke25 karma

They don't have to be entrepreneurs themselves, necessarily, but they to know their way around the internet.

Have they dabbled with an Amazon affiliate site? Have they setup hosting for their own travel blog? These are helpful skills when working with us, for sure!

MyPersonalAccount110 karma

What's the best way to find great apprentices? What personality or experience traits do you look for?

jwcooke15 karma

The best way we've found is to build a wide audience of potential candidates! Recruiting from our blog readers and podcast listeners has been fantastic for us.

Aside from that, you can reach out to others in your space that have similar audiences (For us, Tropical MBA, Authority Hackers, etc.) and ask them if they'd be willing to promote your position.

We actually have a blog post on our site where we list/promote other apprenticeship opportunities you can check out here.

Cotterbot9 karma

I have no experience, live paycheck to paycheck and no ideas. Where do I start to be able to make any progress towards being a successful entrepreneur?

jwcooke14 karma

I'm really sorry to hear that. :-(

The best and most straightforward skills I think you should learn:

  • Web hosting (Buying a domain, setting up hosting, setting up WordPress, etc.)
  • Keyword Research + Niche Selection
  • Content Marketing
  • SEO (onsite/offsite)

If you can learn the basics there you can get started building MOST sites. From there you can branch out and start learning about paid traffic, driving traffic via social media, etc.

There are plenty of resources (paid and unpaid) out there. With what I've laid out above and no paid resources, you could get started for under $200, for sure.

bpbxw38 karma

What path or course of actions would you recommend to someone who wants to make a living investing in websites but doesn't have the capital to buy into 10K+ sites immediately? By investing in websites I mean growing a portfolio of profitable diversified websites.

I am currently bootstrapping my first large content site. The money is slowing starting to trickle in from a combination of amazon, lead gen, and other programs. I plan to grow it to $4k-5k and month and then sell to buy a couple to a few smaller sites that are already making money and then grow them. Rinse. Repeat.

Am I on the right track and do you have any suggestions to speed up progress?

While building my own site has allowed me to start with just a few hundred dollars of monetary investment, it's a painfully slow process of finally getting traffic and earning a sizable profit. It would seem to me that buying established sites and growing them could provide a more efficient return on both monetary and time investment. Also, as I stated, I want to be in the business of diversified website investing, not simply be an affiliate marketer.

jwcooke16 karma

If you don't have (at a minimum) $10K to start buying, you're MUCH better off building yourself from scratch.

Don't worry - those skills you'll learn in bootstrapping some profitable websites will be very helpful when you start to buy your portfolio of sites.

I think you're on the right track, actually. Some good friends of mine started with that plan, but ended up realizing that their ability to rinse/repeat on building lower 6-figure websites was HUGELY valuable. They instead decided to just repeat and scale THAT process. They brought in around $500K in 2016 building from scratch and selling off 2-3 years down the road.

Hope that helps!

MyPersonalAccount18 karma

Do service businesses ever sell? Say - an SEO agency?

jwcooke8 karma

They do, but we see them much less often than business models like Amazon Associate, eCommerce, etc.

One thing with any type of agency - have a well-diversified customer base. If any client is adding more than 7-10% of your total revenue, that's too much.

Long-term contracts helps as well...

sidwelldesign8 karma

I heard that Empire Flippers was only listing sites/businesses with $100K valuation of higher - is that correct?

jwcooke20 karma

Hey there! Here are our minimums, currently. (Keep in mind these change over time)

$500/month in earnings for an AdSense/Amazon/Affiliate site

$1,000/month in earnings for other types of business (That are typically more complicated)

jwcooke9 karma

We wrote a post that helps explain the 11 most popular business models:

https://empireflippers.com/11-popular-business-models-online/

Each of them are linked and explains the model and how it works in more depth.

Hope that helps!

geordilaforge6 karma

Are the "AdSense/Amazon/Affiliate" sites just advertising for other companies or what kind of business is this?

jwcooke6 karma

We wrote a post that helps explain the 11 most popular business models:

https://empireflippers.com/11-popular-business-models-online/

Each of them are linked and explains the model and how it works in more depth.

Hope that helps!

OB1-knob5 karma

What about people that just have an Etsy store but sell over $1000 a month?

jwcooke9 karma

I dig Etsy! Unfortunately, their ToS don't (yet) allow for them businesses to be sold. That may change in the future, though!

iwas99x7 karma

Mr. Cooke, have you ever had any of guys or ladies from the Shark Tank TV show want to buy into your company?

jwcooke15 karma

We haven't! We've had a couple of entrepreneurs that were on Shark Tank that were looking to sell their businesses, though. :-)

standardlogin7 karma

I'm always very curious about the background and lead-up story to people who have found success in unique ways. What were you doing before this and what exactly led you to where you are today?

jwcooke12 karma

Tons of comments, so going to make this short and dirty:

Was in the Navy for 6 years.

Got out and went to school.

Left school to join my buddy who was making good money in mortgage industry.

Started mortgage company. Failed. Sucked...bad.

Got a job at an SEO company. Got promoted a few times. Got a "seat at the table".

My mentor and COO mentioned Joe and I should put a proposal to scale our outsourced Philippines team.

We pitched CEO/CFO on plan to "outsource ourselves" to the Philippines to run/scale this crew. They agreed.

We left to Philippines to start outsourcing company.

Moderate success. Previous employer bailed, but we kept afloat and paid bills with new clients.

Started building niche sites. They made a little money. Started selling them so we could recoup and reinvest/scale. It worked.

Started allowing others to list/sell with us. This blew up. Focused on this full time.

Here we are!

the_real_gorrik6 karma

Can i has monies?

jwcooke6 karma

Hehe. We actually have a blog post titled, "I Want Your Monies" Check it out!

briankidwell6 karma

Congrats on all the success! As a business owner, what was the most challenging growing-pain you experienced along the way?

jwcooke11 karma

For me - we had to shut down our office in the Philippines at one point. Sucked - thought we weren't a "real" business any more. Bounced back, of course...and I'm actually SO glad to not have an office now, hehe.

iwas99x6 karma

Mr. Cooke, how often do you browse Reddit and what are your favorite subreddits?

jwcooke18 karma

More often than I SHOULD, definitely.

I like: Digital Nomad, Entrepreneur, IAmA, Neutral Politics, etc.

Every once in a while I'll look at one of those very popular reddit posts about the "strange" subreddits and can't help myself and have to dig a bit, heh.

storko6 karma

What business sold on your platform has grown into the largest?

jwcooke14 karma

I can't give you the exact business as it's confidential, but we had a customer buy a dropshipping business doing $1,500/month in profit 2 years ago.

We spoke to him around a month ago and he's closing in on $100K per month.

That's a pretty ridiculous example, though, and not typical.

We don't actually get much feedback from buyer post-sale. They don't have much incentive to share how they're doing unless we happen to know them or talk outside of just our transactional relationship, you know?

Warrior777776 karma

What is your average sale time, and close rate? What percent of listings sell vs. not sell?

jwcooke20 karma

All-time, we've closed more than 95% of the businesses we've listed.

Of the businesses sold, 80% or more were closed within 60 days.

AppFritz5 karma

You've already answered some of the parts of your hiring process for things such as apprentice. Every good company needs a good bit of background staff. What does your support structure look like? Do you use third parties to do your back-end stuff, or do you have your own internal team to help your business run smoothly? Infrastructure, support desk, etc.

jwcooke10 karma

Here's a really in-depth podcast interview I did about apprentices that I think you might like:

https://www.authorityhacker.com/apprenticepodcast/

We have our own team running our back-end. We primarily use Hubspot, Zendesk, and Slack with our support staff. (And a shit-ton of spreadsheets, heh)

Spartra5 karma

Any thoughts on changing your policy to accepting Bitcoin? I have spoken to you guys in the chat on your page before and asked why you won't accept Bitcoin as a down payment to view a site. The response I got was that the price moves too much. Is there any chance or thought to just increasing the deposit amount to view a website in Bitcoin to a higher %. I would be happy to pay double the %, but I hate the idea of having to deal with banks paying for a deposit in a different currency, and having it held up for so long + the fees.

jwcooke5 karma

We accept Bitcoin for purchases, just not deposits. That isn't likely to change, unfortunately. It just didn't make much sense. A VERY small percentage of our customers were using bitcoin anyway so it's not much of a loss, overall.

Sucks, though, because I love the idea of using bitcoin in our industry. At least you can still purchase (and get paid out) in Bitcoin. :-)

PaulbunyanIND5 karma

How many hours do you work? What's your work life balance like? Is it hard to find good wifi by the beach in some of those countries?

jwcooke10 karma

I work quite a bit. Some weeks it's 60+ hours, but others it's less than 20.

I was just married last month, so I ended up working very little for around a month. I had to catch up quickly as we were bringing our management team to Vietnam for a month's worth of intense work.

I'm happy with the balance at this point, but it wasn't always that way. Earlier in my career I was working CRAZY hours, but I loved it at the time. (For the most part, anyway)

iwas99x4 karma

Mr. Cooke, what is your favorite beer?

jwcooke8 karma

I'm in Saigon, currently, and I don't dig the beer out here all that much. I was in Hong Kong last week and had this craft IPA that was pretty good!

I used to love Sam Adams Boston Lager WAY back in the day...

worldgame014 karma

Did you have any setbacks? if so, how did you recover?

jwcooke10 karma

We did. Our outsourcing company had one major client (our previous employer) who ended up canceling our contract. That left many of our employees out of work. We ended up having to close the office down and it was definitely a low point.

My business partner dealt with that blow better than I did. The upside was we saved the office costs. Months later we pulled out of it and, in the end, I'm VERY glad we figured out how to run a company that didn't require a physical office!

A good lesson - it's never THAT bad. Even when it feels really shitty in your entrepreneurial career, it will likely get better. Doesn't feel like it at the time, but you'll probably be laughing about it years later.

McLyan4 karma

god everytime i read something like this all I can think is... SCAM/FRAUD.. So Op, what are you trying to sell me?

jwcooke2 karma

Got a slick $47 ebook that will BLOW YOUR MIND. If you're particularly gullible, I've got a $1,997 mastermind that's even better.

Then, just join my downline and...bingo!

NotaSandwich123 karma

Hey! Congrats on the business. Which kind of businesses are the most successful??

jwcooke9 karma

Thanks for the question!

It's hard to say. Each business model has a lot of pros and cons, and it really depends on your specific skillsets. We've seen Adsense and Amazon Associate sites doing well over $10k per month, drop shipping businesses doing over $20k per month and more. It is worth noting each business model will demand a different sort of work schedule from you and commitment. For example, an affiliate site will take far less work to maintain once it is up and going than an ecommerce business where you have to control the entire sales funnel from start to finish.

Our content manager recently wrote a 12-part blog series covering the 11 most popular online business models, it could help educate you on what is the right fit for you (whether you're in the market to buy a business or just wanting ideas on where to start to build one from scratch)

https://empireflippers.com/11-popular-business-models-online/

Hope that helps!

Benjaminjetpack2 karma

You seem to be running a pretty amazing operation and you sound like a great guy to work for! I'm currently in college studying logistics and marketing. How can I apply for an internship?

PS: I'm not an asshole and love to travel

jwcooke3 karma

We announce new apprentice positions on our blog and send out an email, so that's a great place to start!

If you're looking right now, check out this post about other apprenticeships that are currently available:

https://empireflippers.com/apprentice-jobs/

iwas99x0 karma

Mr. Cooke, what are the newest and oldest types of online businesses?

jwcooke1 karma

As far as our marketplace is concerned, the oldest form of online business we sell may be Amazon Associate businesses. Amazon Associates has been around for quite a while. It is a super solid affiliate program and a great place for someone to start out with as its a trusted retailer.

A trusted retailer is very important with affiliate programs, because you won't have to spend as much time convincing your traffic into actually purchasing something - millions of people buy from Amazon every month and so Amazon already has that trust factor going for it.

werewolfsister-1 karma

Why don't you hire women?

jwcooke7 karma

We have - and do! We have several women working for us in the Philippines - a few of them are here now with us in Saigon training.

We have a few teams of contracts that are made up of women as well.