We recently sold MacBlogz.com. At times the process was daunting, but the knowledge we gained was priceless. This entry hopes to shed some light on what it’s really like to have a piece of software acquired.
MacBlogz.com was one of our first products. During its first two years the site grew rapidly and a vibrant community emerged around it. Through writing for the site we got to know some incredible people, attend some great events and make some lifelong connections. For this, we’ll be eternally grateful.
Parting with MacBlogz was difficult on a nostalgic and sentimental level. Saying goodbye to a product that we lovingly cared for was tough. On the flip side, the knowledge that we gained by going through the process is priceless. We successfully had an application acquired, and to us, at any level, that’s a big deal.
Revenue comes first
Buyers care about revenue first. Every potential buyer we spoke with (and there were many), inquired about revenue within the first few minutes of our initial conversation. Generally, the going rule is applied like so: Add up all revenue the application has generated over the most recent two year period, subtract costs, add traffic value, and be thankful to get an offer valued at 50% of your final “calculated” price. Revenue doesn’t lie, and there’s no revenue/stat manipulation that will help you seem more desirable to any potential buyers.
Traffic is transparent
Be prepared to share your traffic statistics with people you don’t know. Make sure you can easily grant permission to third parties. Organize all of your analytics into a cohesive and presentable package. No matter what service you use to track web traffic and measure performance statistics/analytics, if someone asks for numbers, be prepared to dish them out. Most potential buyers (the smart ones) investigate trends, ask questions about performance and do their best to simulate running the application from behind the driver’s seat.
Technology is the foundation
Keep your technology clean and secure. Prior to putting MacBlogz on the market, we made sure the technology and underlying infrastructure was in pristine working condition. Configurations were further cleaned up and triple-checked, we optimized our code, secured the databases, bullet-proofed some of the custom functions of the site, and generally got it all ready to be handed off. You should be doing all of this regularly, however, prior to an acquisition, it is absolutely critical that all of the necessary steps are taken to ensure the integrity (and appearance) of your technology. Any potential buyers will either be investigating your technology themselves, or they’ll have developers nearby that can analyze your code and setup. Make sure they walk away impressed.
Good brokers are rare
If your product makes money, finding a variety of buyers is relatively easy — finding a good buyer is tough. Early on in acquisition talks, we made it very clear that in terms of offers, we would lean heavily towards a startup or one-man shop, instead of a corporation that would simply pump ads through the domain. We wanted to keep the integrity of MacBlogz in tact, and we didn’t want to see it get tossed into an endless bucket of news aggregators on some overseas servers. Connecting with a broker that knew the types of people we were seeking was critical.
Honesty is gold
Whether you’re a startup that needs to rearrange its resources, or a one-man shop that’s in need of some cash, be honest about why you’re selling your product. Help any potential buyers get inside your mind. Help them understand the ups and downs of your product, the areas that could be improved, and the channels that generate the most revenue. They will better understand your position and appreciate knowing about all the nooks and crannies up front. Fundamentally, it is your job to effectively communicate what it’s like to run the show.
The folks who bought MacBlogz.com wasted no time in redesigning the site. It used to look like this. Now, not so much. For a small software startup like ours, this has been one of our greatest achievements. Thank you to the devoted MacBlogz community, and thank you for all the support Think Brilliant has received over the years. We hope to continue building great products and making meaningful contributions with our software.
Some facts about MacBlogz.com
Saying goodbye to a product that we lovingly cared for was tough. On the flip side, the knowledge that we gained by going through the process is priceless.