Comments for eBay Startup Sales - Going, going, gone...to the geek in the back!

eBay Startup Sales - Going, going, gone...to the geek in the back!

2007-05-21T21:37:16Z

USAToday has an article today discussing the recent trend for startups to sell themselves on eBay. USAToday starts off with a joke:

"What do Beanie Babies, Pez Dispensers and troubled Internet companies have in common? They're all for sale on eBay."

eBay has become known as a quick and easy way to sell your startup, should you need to. Techcrunch has a nice phrase for this - the "eBay exit". USAToday notes that "more than 10 dot-coms" have recently put themselves up for auction on eBay. The paper says that Search engine DigForIt.com sold for $25,400 this month and SynapseLife, an online calendar and organizational site which Techcrunch wrote about, sold for $60,000 (it opened at $50k). Also Read/WriteWeb covered the eBay sale of Talkr in February this year, which sold for $50k all up. There are many more instances of ebay exits we could list. And there are other places where startups can sell themselves too, like SitePoint Marketplace (Josh Catone noted in January that Blogster went that route).

]]> An interesting question is: have the startups that sold on the likes of eBay or SitePoint had satisfactory outcomes? Most of the startups that sell on such sites go for less than $100k. The highest price we're aware of was YCombinator's online calendar Kiko, which as USAToday noted eventually went for $250,100 - including a price increase of $100k in the last two minutes of the auction. Kiko apparently sold on eBay because they wanted "a fast, simple separation". And by most accounts, that was a good return for YCombinator. But remember that many startups spend months and months of bootstrapped time building up their labors of love, so a return of less than $100k is probably more often than not a loss for those entrepreneurs.

Indeed USAToday also recounts the tale of CrispAds auction, which unsuccessfully tried to sell on eBay. It had a minimum price of $90,000, but ended up without any bids. According to USAToday, months later the company sold via a broker for "a few hundred thousand dollars".

If you're one of the many companies recently to have sold on eBay, let us know in the comments how you felt the process went. Should other entrepreneurs look to eBay, or is a private brokerage sale the best bet?

Comment from Eric Willis on 2007-05-21

2007-05-21T22:36:02Z

Hello Richard,

Digforit.com actually sold for a bit over 42,000 about a year ago. Some of the bidders were unaware they needed to complete another process to actually bid above $15,000 on Ebay so I had to relist again (the next 3 day auction closed 17 higher than the previous auction). This really was a mistake of mine. I should have made that very clear in the auction description about this issue. However, that was not yesterday as your post reads. It was well over a year ago. Ebay is fine IF you can gain exposure in the blogging community about your auction. Buyers for sites that have some value typically are not browsing ebay for sites or companies to buy. So if you can get the word out with other means. it will suffice. Unlike Sitepoint, the fees are a real consideration with Ebay. Sitepoint does not take a percentage of the overall transaction. So you do save there. Also, sitepoint seems to be a very strong value for sellers who already have revenue streams for their sites. If your site has revenue, you can get some high bids on sitepoint. I've seen auctions go over 200k on sitepoint. There is a site on there now that was bid up to 45k within a few hours.

Overall, I think Ebay or Sitepoint can be good exit strategies for this range: $xx,xxx to low xxx,xxx. The experience was pleasant enough. I think Sitepoint is a better experience though. The userbase is much more informed and professional. You get all type of scammers on ebay. Scammers were phishing the losers of my auction in an attempt to get them to wire money: saying the site was available for "second chance offer at their bid price".... they actually emailed the entire bidding list. When I did the auction the second time, I did a "private listing" to avoid that problem.

Comment from Eric Willis on 2007-05-21

2007-05-21T22:42:41Z

Btw.

Great Blog.

I have been a reader for quite some time. I think you can tell from my quick response to this post!

Of all the blogs I read, I think your blog has the most analytical articles. From many of the tech blogs, I feel like I'm just getting tech rumors or a bland and regurgitated synopsis about new startups. However here, I walk away from many articles having learned something new. You really provide great insights. I also love the polls... it's great feedback for us readers to know what's on the minds of other readers as well.

Best Regards

Comment from Gary Reid on 2007-05-21

2007-05-21T23:11:02Z

Eric makes a very good point about SitePoint, don't even try to sell anything on there unless there is a profit stream, those guys will kill you.

Having sold 4 start-ups privately, 3 through SitePoint and one through ebay in the last 7 years I have to say private is the best option. Ebay is good if, like Eric wrote, you can get exposure, SitePoint is great for quick painless sales of lower value start-ups with a profit stream.

One thing I learned from selling my first start-up is be ready for the sale from day one, plan for it, just like a VC plans for an exit. Unlike Dogs, start-ups are just for Christmas.

As for entrepreneurs making a loss, I can only say I've earned many times more in the last 7 years than I would have if I was working for someone else, even if you factor in the long hours.

But commentary on the sale of start-ups is just that, not all Internet companies for sale are 'troubled' in fact the second start-up I sold is still market leader in it's segment. Start-ups change hands for many reasons, most of which never get into the public domain.

Comment from Servaas on 2007-05-22

2007-05-22T09:47:39Z

Interesting trend. Ebay might be a good place to shop for a startup, then ?

Comment from Chris Schultz on 2007-05-22

2007-05-22T14:40:59Z

Great article -

This is actually an interesting trend that we identified last August after the Kiko sale on eBay.

Soon after this ">">http://www.voodooventures.com/2006/10/16/the-adventures-of-huckabuck-on-vitamin/> we attempted to sell our project at the time, a search engine called Huckabuck.com, on eBay. We ultimately were unsuccessful on the eBay auction, but sold it soon after for what we were seeking through the eBay sale.

We learned several lessons about the startup marketplace through this. What eBay provided us was access to liquidity with Huckabuck. Posting our startup on eBay drove a tremendous amount of awareness for us. However, completing a transaction through eBay has its challenges based on the amount of due diligence that is required on a transactions like this. Simply put, many buyers will shy away from an auction process like this without extensive contact with and information from the company founders. In this sense beanie babies and pez dispensers are a much easier sale.

One of the reasons that we went for the eBay exit was that we are "off the radar" of Silicon Valley. We are a company based in New Orleans, and we are self funded, so we operate outside of the traditional close knit circle. This is the double edged sword of Web 2.0, it is cheaper and easier to start an internet company, and you can do it non-traditionally, but when it comes to seeking an exit, most options are very decidedly in the Valley. So, for this reason we sought the eBay exit.

In the end, we were very pleased with the result. The eBay exit allowed us to transfer the development of Huckabuck to someone else who has taken it forward with a new business model. We were able to move on to our current project, ">">http://www.sitemighty.com> siteMighty.com . Who knows where we'll go from here, but I wouldn't count an eBay exit out!

Chris Schultz

Comment from BillyG on 2007-05-22

2007-05-22T15:03:46Z

"But remember that many startups spend months and months of bootstrapped time building up their labors of love, so a return of less than $100k is probably more often than not a loss for those entrepreneurs."

I think that statement is absurd. Even if it took a year, I'd still be worth it to me! Perhaps you're talking about several people, something that is not always the case at all.

btw: why do you (or any blogs/forums) need an email address when readers leave comments? It's not like you're gonna write me a love letter is it? SPAM sucks, but so does multiple email addresses or just giving you a fake one - which gets me back to the original question...

Comment from Josh Catone on 2007-05-22

2007-05-22T17:31:44Z

@#4: I think the signal-to-noise ratio at eBay is so bad that it is hard to shop for a startup there. Most of the startups that go the eBay exit route get the sale publicized elsewhere (i.e., on blogs like this one and Techcrunch, etc.)