Advice for risk-averse online business newbies with Spencer Haws
Spencer is the founder of NichePursuits, where he chronicles his journey building niche online businesses. Over the years, he’s tried out all kinds of different online business ideas like: creating niche websites, buying and selling websites, running a software company, selling physical products through Amazon FBA, and more.
He also loves the outdoors, and sports, and has been married since 2002 with four kids.
Covered In This Episode
- Spencer’s background.
- Building over 100 niche websites.
- Spencer’s life as a website guinea pig.
- Spencer’s advice to risk-averse people who want to buy their first web asset.
- Overview of online business models and which is best for newbies.
- Bolt-on acquisitions.
- Spencer talks about recent acquisitions he has made.
- What Spencer looks for during due diligence prior to the acquisition of a website.
- How easy would it be for a competing website to usurp your rankings?
- This is not a passive business. Be proactive.
- Why Spencer loves online business.
- Spencer’s worst entrepreneurial moment.
- Parting advice for people who haven’t acquired a website.
- Parting advice for people who have acquired a website.
I’m your host Kylon Gienger. Join us as we explore and unlock the secrets to successful business acquisition, growth, and exiting strategies.
Hey guys, so if you’re enjoying the podcast and you wanna take the next step in your business buying journey. There’s a couple of different ways that you can do this.
First, check out our business buying workshop. The Kingmakers workshop will give you a backstage pass to a private equity firm that acquires and operates six plus new businesses per year. This is an opportunity for you to peek behind the curtain and understand the entire process of finding, buying, and growing an online business. The workshop is limited to a small amount of serious business buyers so you can count on it being intimate and you can plan on spending plenty of one-on-one time with some of the best and brightest entrepreneurs in the M&A space. So go to kingmakers.co/workshop. Again, that’s kingmakers.co/workshop to get more information and to apply.
Second, if you are serious about buying a business. I would love to have a quick chat with you and see how we can help. Go to kingmakers.co/call. Tell us a little more about yourself. And then you can schedule a free consultation call and we’ll see what we can do. Again, that’s kingmakers.co/call. Talk to you soon.
Kylon: What is up business buyers? Get stoked because today on the show we have Spencer Hawes. Spencer is the founder of Niche Pursuits where he chronicles his journey building niche online businesses. Over the years he’s tried out all kinds of different online business ideas like creating niche websites, buying and selling websites, running a software company, selling physical products through Amazon FBA, and much more. He also loves the outdoors and sports. He’s been married since 2002 with four kids. I really enjoyed this conversation I had with Spencer. The guy has a wealth of knowledge and so I really hope you enjoy it. He’s also a strategic partner of ours at Kingmakers and yeah without further ado let’s get to it.
Kylon: That’s who you’re talking to and I’m sure a lot of people listening are already familiar with who you are even just a little bit. But I would love to have you talk a little bit more about your background and your general story and we’ll just go from there.
Spencer: Okay that sounds good. I’ll maybe give my two minute story here real quick and feel free to dive into any more details that you think the listeners want to hear.
Kylon: Let’s do it.
Spencer: But you know I had a pretty traditional background in terms of schooling. You know went to college, graduated with a degree in Business Finance, went into the corporate world—worked in banking and finance for a couple of years, then went and got an MBA at good old Arizona State University. That was back in two thousand and seven. I was working at Wells Fargo Bank and you know just wasn’t generally happy with the corporate life. I don’t think I need to explain to the listeners why. It is just you know Monday and then working for somebody else isn’t the most fun thing to do on the world and so I started dabbling just online you know figuring out what’s this online thing. People are building websites, how does that work? And that began a whole journey I think two thousand and six is when I started my very first blog that was extremely unsuccessful but it got my feet wet and got me started with learning this whole online world. And so you know from two thousand and six to now I guess I’ve been building and learning how to build websites and it wasn’t until two thousand and eleven that I was able to quit my corporate job—quit the banking world.
I discovered at least back then that I was able to do much better when I built very small focused websites that were targeting very specific keywords and phrases that could rank quickly and easily and Google. So I mean it was an SEO play and I built lots of these little niche websites that were monetized with Google AdSense or Amazon Associates. You know many of them would only make a hundred dollars a month but I built out over a hundred of these. And so anyways it was enough money to allow me to quit my job. I was making more from my side business that I was from my day job and so in early two thousand and eleven, I quit my job. And about the same time is when I started nichepursuits.com, which at the time was documenting my journey of just exactly that what I explained—building websites quitting my job, and SEO. Sharing strategies and things that were working well for me and I still do the same to this day. I also have started a couple of software companies. I started Long Tail Pro back in two thousand eleven. And then which over five years while I owned it maybe a little over five years, it grew into one of the most popular keyword research tools out there on the market and I sold that company three years ago back in early twenty sixteen for a nice exit. And have since been still building some websites. I’ve made some acquisitions in the last year and yeah just that’s kind of me in a nut shell doing a few different things but all online building or buying or recently been selling a few things as well. All online, so…
Kylon: So I kind of look at you (maybe I’m wrong), but the way I view this is sort of this guinea pig just going around and trying all these different things related to online business and you’re posting the results. I’ve read some of your stuff. You’re very transparent with—okay here’s the mistakes I made. Here’s what I learned from them. Here’s a screenshot of the financials. Is that pretty accurate? Is that what you’re still doing to this day ongoing? Is that the plan moving forward?
Spencer: Yeah that is still what I’m doing and for good or bad I have had the blog now (Niche Pursuits) for like I said it’s been what is that nine years or something close to that. And I’ve always just tried to be very transparent about—yes this is what I’m doing and this is what I’m working on and sometimes all the projects don’t work out well and so I’ve had some some failures along with the successes. And at the same time part of it’s just being an entrepreneur for me. I have in the past like to work on a lot of different things like beyond just building out niche websites I’ve also gone into Amazon FBA, right? And started a pretty successful Amazon FBA business and recently sold that one as well. So that’s good for the reader, but now more recently I found that having too many projects, you know Amazon FBA, several niche websites, a couple of software projects that I’m working on, etcetera can be overwhelming. It can be difficult to focus. And so I tried to scale that back a little bit, but overall on the blog I continue to share what I’m working on and what those projects are. So it’s been cool to be able to connect with readers and sort of document my experience along the way as well.
Kylon: Are you—would you consider yourself pretty risk averse?
Spencer: I think it’s all relative. I would consider myself pretty risk averse, yes—because I really only put significant money or time and effort into projects now that I feel like I either have experience with or have a pretty good idea that I can make it successful. So in that regard I do consider myself pretty risk averse. Probably from sort of an outsider looking in, you know maybe I’m not. I mean I’m out here and you know in the last year I made a couple of six figure acquisitions of online businesses. People outside our world might look at that and think, boy that’s that’s crazy, right? Like that’s not a safe mutual fund, what are you doing?
Kylon: Well yeah, that’s exactly the reason I asked. It is because we are talking to a lot of individuals now who have invested in some of these I guess more risk averse—is more traditional assets I guess and now they’re looking at web assets and you know these are risk averse people by nature yet they see there could be some great ROI. And so, in terms of that and these people are looking at at least six figure acquisitions, I guess it’d be interesting to hear you speak to that. Just thinking from the perspective of an outsider. What are some of the things they can do to make themselves feel more comfortable or what are some of the things that you could say that might reassure somebody there? Maybe pull the trigger on buying their first web asset.
Spencer: Yeah, I know, I think that’s a good subject to kind of explore here. You know if I were thinking about somebody. Look, let’s take might my dad for example. You might be somebody that you know he’s got money to invest and he’s looking at different options. I would probably tell him to not invest in a web asset unless he had or was able to get somebody in place that was knowledgeable in the space, right? I think that’s the way. The risk here is… what I’m getting at is somebody like me I feel like I understand how you know these web properties work. I have a good strong SEO background. There’s a lot of things that I feel like levers that I can pull to make these businesses grow and do better and I know how to operate them myself. And so that that takes away a lot of that risk because I understand the whole picture. I can come in and go, okay you know I get it.
Somebody else you know that doesn’t have the online experience, I would tell them—yes it’s risky if you expect to come in here and run it all yourself and just make it work. Expect that you’re going to invest you know close to a million dollars or whatever it is and that this thing’s just gonna run itself. You have to put all the pieces in place to make it run itself. If you hire the right contractors or the right managers, right to run this business for you. So that would be the big thing is if you’re going to invest in something that you don’t have personal knowledge in the space, make sure you either partner with somebody that does or are able to feel comfortable that you’re hiring a manager that is you know has experience in the space.
Kylon: Yeah I would to concur with that. I think that’s part of the reason why Kingmakers specifically has found a great product market. It is our ability to come in and partner with people. So yeah… I remember what it was like as well coming from the offline world into the online space and even just initially starting to read some of your stuff. It’s like it takes a certain level of education just to understand even the things that you’re talking about. It is this whole new world of like what are all these acronyms? What is CRO? What is SEO? Okay, search engine optimization. What are all these rules that you have to pay attention to with Google? And how can you possibly keep all this in your… it’s like there’s so much to dive into. Where do you even start? So I completely agree with that, finding somebody who’s got the experience.
Speaking of that, you sort of alluded to these different niche sites and Amazon FBA. I’d love to hear you talk about some of the different business models out there within online business. Some of these templates for business I guess? What are some of the ones that you know obviously Long Tail Pro was SaaS…Amazon FBA is just e-com. I’d love to hear you talk about those and maybe some of the pros and cons to each and what you found to be your favorite and what you might suggest for I guess more of a newbie to get their feet wet with?
Spencer: Okay yeah absolutely. So there’s you know probably three or four here that I can throw out at least. You mentioned a couple there already. You know SaaS is a great business model, right? I started Long Tail Pro and I’ve started a couple other little software tools as well. They’re great because there’s so much growth potential. If you can sell a widget that doesn’t cost you anything else to sell. You know there’s no additional cost of goods to sell more digital units, right? And so it’s a great business to be in because it can scale infinitely potentially, right? But having said that, even though it’s a great business model, there’s a lot of difficulties involved there especially if you’re not a programmer. You need to make sure you’re hiring good programmers, updating software code, etcetera. So there’s a lot of challenges that can be associated with that, but you know SaaS is a great model if you have a great idea and if you feel like you can get in front of the right audience. And that’s an advantage that I had because I’ve been blogging for so long. I’ve already got a built in audience so I know I can launch a product at least and get it in front of a certain number of people. Whereas, if you’re starting from scratch which is what a lot of start ups do, even get VC funding. They can often end up spinning their wheels for a really long time just trying to get in front of an audience and acquisition costs can be extremely high. So there’s a lot of challenges there.
And then Amazon FBA. and maybe couple that with just e-commerce. Again, is a great business model to get involved with. The thing that I find challenging about selling on Amazon is that there’s more and more Amazon sellers, so the competition is certainly increasing. Back in the day, I used to be able to launch a product that was very similar to other products that were already there. And there would only be you know three or four sellers there and you’d be getting a piece of the pie. Nowadays, there’s already thirty or forty sellers selling just about everything under the sun and so it becomes more and more difficult to differentiate yourself, stand out from the crowd. And there’s just more and more sellers that are jumping onboard. And so I think there’s a lot of potential on Amazon. Amazon’s a great marketplace. It’s growing as we know. I think it’s something like fifty percent of all online sales take place on Amazon. So if you’re selling a physical product that’s where you want to be. But the downside is sort of the opposite of SaaS in that your cost of goods sold can be quite higher because you’re creating these physical products, shipping them from China or elsewhere. You’ve got Amazon referral fees. Your margins are probably a lot lower so that’s some of the pluses and minuses there.
And then I’ll sort of lump in blogging and niche sites into one business model. Essentially, creating content based websites where you writers are producing content with the hopes that generally at least that you will rank in Google get some free traffic and then visitors will either click on your ads or buy something through your affiliate links. This is probably my favorite business model just because it’s something that I’ve been doing so long and more and more people are searching on Google and that’s not going to go down. Just meaning that there’s more and more traffic coming online especially as just more more areas getting internet coverage and I’m especially thinking about other countries that maybe didn’t have as much internet coverage as before. More people are searching more things online and so even though it may feel like for those of us that have been in the industry, like oh man for ten years now we’ve been doing this and this, we’re still really at the infancy of the internet still. And so building these content-based websites is a great model because you produce content. Ideally again, you can start getting this recurring free traffic from Google or other sources and there is no cost of goods sold. There’s no customer service. They just click your ads or they go buy a product somewhere else.
And the other upside to content-based websites or blogging is that you can sort of bolt on additional businesses on to that. And so nichepursuits.com is a perfect example of that. I’ve been blogging on their and building an audience for several years and now I’ve built a large email list. I’ve got you know thousands and thousands of people coming every month for free that I don’t pay for. Now I can bolt on other businesses. I can start selling my own products. I can start selling you know software tools. I can start selling training products or other things. And so that’s the great thing about these content businesses is really you can capture an audience and once you do that, you can start selling them additional products. After that, really build out other businesses.
So those are three business models. Let me think here what else. Just trying to…
Kylon: Lead gen…is that something you have experience with?
Spencer: I don’t have a ton of experience with lead gen, so I can’t really speak to that a whole lot, but certainly that is a business model that a lot of people employ with either you know their own content based sites. But a lot of the sort of lead gen companies will do a lot of paid traffic either Facebook or Google ads. Sort of drive people to a landing page where you know they opt-in or send them to another lead generation website, right? But I haven’t done a ton of that.
Kylon: There’s also, productized services. Some sites like that. Like there’s designpickle.com. It’s probably one of the best examples. If you’re familiar, there’s some stuff like that out there. There’s a couple others I think you touched on probably the top three there. I do like what you said with publishers and kind of combining different models or businesses with the publisher. Case in point, we have a client right now who we’re looking for a publisher site for them or one of these content-based sites and he had a lot of experience and his partner with e-commerce. And so we’re actually looking for a site that would be very compatible with an e-commerce store in the future. You know not really as a primary monetization strategy right off the bat. More as something secondary that we would kind of bolt on maybe in a year to post-acquisition. But again that is something you can do. And so I’m glad you brought that up.
Spencer: Yeah absolutely and I mean sort of side note I mean that’s that’s what’s so cool about acquisitions. Once you go into one market, say you’re going into the sort of pet niche. Potentially, maybe you’re starting with one blog, but you can make additional acquisitions that at some point are all generating leads or generating sales. If you have it end up with an e-commerce store—launching your own product. You can sort of become a dominant player in the space just through multiple acquisitions if you wanted to. And that’s something that I’ve looked at from the outside but never actually done. But I mean it’s a pretty clear path. You just generating a large audience is yeah…just go out and buy the leads. You know by the traffic, right? Buy the established blog that’s already there.
Kylon: And combine them in interesting ways it just never seems to fascinate me personally. You did mention that you… I forgot if you mentioned you already made a couple of acquisitions or you were looking at that. Is that something you can tell us a little bit more about?
Spencer: Sure yeah in about the last twelve months I’ve made two acquisitions. Both of them you know, blogs content-based websites. One of them is in sort of the…I call it a mom blog I mean that sort of explains it. I mean it’s crafting. You know food recipes and then just sort of you know other mom products I guess is what the blog talks about. But it was kind of an interesting one. It was a blog that had been run for ten years by an individual and she you know grew it significantly. It’s done particularly well on Pinterest but she just got tired of blogging after ten years and wanted to sell. And so I looked at it and thought, you know it’s got a great Pinterest-based social media base. It does okay with organic traffic but it’s really never been dialed in as far as you know SEO and that type of content so I felt like that was something I could add to that. And so my partner and I actually acquired that. It’s been just about a year ago and I’ve been working on on growing that.
And then the other acquisition that I made I can actually share the URL here. That’s one I’ve shared on my site before. It’s fbamaster.com. And so it’s a blog again started by a couple of friends that they were selling on Amazon and so they started sharing what they were learning selling through the Amazon FBA program but they were ready to sell so I bought it. Yeah it’s over at fbamaster.com and currently actually working on doing the strategy I just mentioned sort of bolting on a product there. They never had a training course to sell to their audience and so in about a week actually we’re gonna be launching an Amazon FBA training course to that audience.
Kylon: That’s great man and I appreciate you talking us through sort of your process for why you’re looking to buy these sites. I think that’s important as well. And maybe you could speak a little bit more to…What are the types of things that you’re looking at. Okay this would be a good buy. It would work well with your current portfolio, but then actually digging into the business and I know we could spend hours on this topic, it can go way into depth, but just high level. What are some of the main things that you’re looking at and in terms of judging like is this really going to be…is the business healthy? I guess, does it have a good diligence score if you will.
Spencer: Right, yeah so if I look at FBA Master. First I just look at the big picture, you know. Does this fit into something that I would be comfortable doing? Can I bring something to the table there? That’s something that I certainly look at. And with FBA Master, it meshes quite well with what I’ve done on Niche Pursuits because I have done some selling on Amazon and I blogged about that. So I understand that market and that audience really well and so I felt like there were some ways that I might be able to leverage my Niche Pursuits audience. And case in point being you know I’m going to launch this Amazon FBA course on FBA Master, but I can also be my own affiliate. You know Niche Pursuits can send a bunch of traffic to that course as well.
Kylon: Love it.
Spencer: So I’ve sort of got that. That was one thing that I looked at that kind of made it a no brainer for me to acquire. Yeah just what sort of leverage do I already have that I can apply to the business. Other big picture things is I want to see you know earnings history and traffic history and are they stable. And so with FBA Master most of the revenue before was all just affiliate income and they had one particular affiliate revenue source that was a recurring software product and so they make monthly recurring revenue. And it had been pretty stable and been ongoing and that was great to see. So that I knew that it wasn’t every single month I needed to sell a new widget. I could rely on this recurring revenue that they had built up over the last few years. So recurring revenue is always great if you can find that. And the other thing related to that is just the recurring traffic. How stable is the traffic. And so I would look at Google Analytics. The history there and kind of see you know where are things ranking in Google. Where’s the traffic coming from. And do I feel like that’s gonna be ongoing for the foreseeable future. There’s no red flags there. The other nice thing that I saw with FBA master is outside of just Google traffic. And those things was a large Facebook group. FBA master has about twenty eight/twenty nine thousand members in a private Facebook group which is a nice little leverage point you know that’s twenty nine or thirty thousand people that I can reach outside of just you know cold traffic or outside my email list. So those are some of the things that I looked at for this particular deal.
Just trying to think if there was anything else that you asked about that I can touch on. I mean there’s like you said there’s a ton that we could cover here but those were some of the quick due diligence points that I looked at.
Kylon: No I think that’s perfect. Spencer, one question I would be curious to get your opinion on. This is a question that I’ve gotten a few times now when people are especially people that are not as experienced with these types of websites. When they’re looking at a content site and you know it ranks well. There’s decent organic traffic. It’s monetized well. One of the questions they have and let’s say it’s been around for somewhere between five years and a decade. One of the questions they have is how easy would it be for a competitor to come in and like usurp my rankings and you know we see this massive drop in traffic and maybe monetization as a result. I guess, how…maybe I’d be curious to hear you speak to that a little bit more in terms of looking at a content site like that. What would you say to somebody to maybe reassure them or give them ways to mitigate that sort of risk of a competitor starting a competing blog in the same niche with some of the same types of content that maybe just knocks them out of that position instantly?
Spencer: Right, yeah so you know I can kind of speak to both sides. There are risks that are involved. If you’re gonna be buying a content website, I don’t think you should expect that you can do nothing and that nothing will ever change. Google is constantly changing. Rankings do change. And so if you expect that your website’s going to rank forever without you ever putting any effort into it, that’s probably not going to happen. So it is important to realize there is some risk there. Like you can lose rankings. That’s a very real possibility and that does happen to websites. So that’s sort of the scary part, right? It’s that yes you can absolutely rank lower and competitors can overtake you.
The the flip side of the coin there especially if you have a well established website is that it’s not likely that overnight or very quickly things are gonna change all of the sudden. It can take a really long time to build up the authority to build up the links to build up sort of the SEO power to rank where your website is currently ranking. And so as far as a newcomer coming in, it’s probably gonna take them a little while to overtake you. So there is that, but if you can understand and realize that there are certain things that you can do to stay on top of any Google changes, that you’re updating your content that you’re just refreshing content or continuing to work on your site, you can not only maintain but improve rankings.
And so I’m a huge fan of updating old content. Going through and kind of doing a content audit. You know looking at those articles that are maybe ranking on the bottom of the first page or top of the second page and going through. And either writing more content to add to that article. You know at a hundred words or two hundred words and optimize it a little bit better. And then re-publishing that, but also going back and looking at your own website and seeing how can I interlink this article a little bit better? Maybe there’s two or three articles that I’ve written that can link to this old article that weren’t linking before and that can help. And so I found that as I go through and I am doing this with Niche Pursuits all the time. That as I go and just update some of the content and again it’s not a complete rewrite. I might just add one hundred or two hundred words to make it a little fresher. And then add a couple of my internal links from my own website, it can actually improve the rankings quite a bit.
And so, if you as an active business owner are doing that, I would say you’re probably doing more than ninety percent of the other websites out there. Most websites they have published on their content and they never look at it again. And so if you can be you know sort of one out of ten business owners that actually is reviewing your old content trying to update it and prove it, chances are that you’re going to rank better than those competitors.
Kylon: That’s a huge point actually. I don’t think it’s been brought out in this podcast yet. It’s retroactively going back and optimizing your content and so for people listening let’s pull that out and meditate on that for two seconds. But I guess it’s a very similar fear to like in the offline world, I own a juice bar. And case in point, we had a competitor come in right across the street, Jamba Juice. And ours is you know it’s a very well built brand. It’s very professional. We could probably franchise it if we wanted to. It’s far from like a mom and pop hole in the wall place, but you know we’re talking about Jamba Juice which is sort of a behemoth in the industry, right? So we knew that was coming months in advance. We did things like update the exterior of the building and the drive thru and added more signs and made things generally more attractive and we updated our menu and we you know put out more educational sort of content on what sets our drinks in our products apart from the other guys. You know, it’s all fresh, it’s made there in front of you that’s why it’s also a little more expensive. But versus from concentrate, that makes things cheaper, sure, but maybe not quite as healthy. And so these are the types of things that we were working through and thinking about. And yeah you can’t just sit there and let it happen. But I think if you’re just proactive on just a few different key levels, point of view those levers that you just talked about, you’re probably pretty solid.
Spencer: Yeah, you know I agree. I think probably when I first got started building websites and a lot of other people a long time ago, we looked at it as more of just a very passive income model. I would build this website and then I’d never look at it again and hope that it made me a hundred dollars a month for the rest of my life. Right? Obviously that you know it lasted for a little while but I think that’s crazy to think that something’s gonna just earn money forever without you ever doing anything. And so I certainly come around now to the fact that you know it’s not passive in the regard that you have to put some work into it. And so if you’re willing to put a little effort or at least put some systems in place you know is that hiring a couple authors that you assigned to, hey, couple times a month, go through and update old content. I mean it could be as simple as that, right? Just assign somebody to do that, but if you’re a little more proactive like we’ve said and not expecting things to never change then now I think that’s a good way to sort of de-risk the business.
Kylon: Yeah it’s sort of the four hour work week mentality that I think people are getting into, which I don’t think was the actual intention beyond the book. But man it did spur on when it first came out. This whole group of individuals with this mentality, that oh I can build a website or buy a website and yeah you make a hundred thousand dollars a minute for the next decade while I’m sitting in a hammock.
Spencer: That’s right.
Kylon: But no there’s some very real tactics and methods out there. But another thing I am curious to hear about though just from like a…I don’t like to use the word passion as much but you’re obviously very interested and just naturally curious about these types of businesses. And I’d be interested to hear you speak a little more to like besides the typical like okay you were in the corporate world and this gives you know some more time and financial freedom, what else gets you out of bed every day and makes you want to like try all these different things, but specifically online and want to write and take the time to write about it and teach people about it and what really has you so fired up about these websites and online businesses?
Spender: So… I mean part of it is sort of the cliche answer that you referred to in that I really do want to have more autonomy over my own time and freedom to do what I want. So a big part of it is that, you know I didn’t enjoy and probably it’s just partially my own personality is that you know I don’t like working in an office with a ton of co-workers and having a boss and everybody sitting in a cubicle, right? Like that’s just not my ideal work environment. I genuinely enjoy working from home. You know sort of having my quiet space where I again can work on the projects that I want to. So having that autonomy is a huge thing for me. And then also just by nature, I’m a creative person. And when I say creative you know I’m not artistic in any way. I can barely draw a stick figure, but I’m creative in ideas at least I like to think that I am. My mind is constantly racing and I think it’s just the way that I’m wired as an entrepreneur thinking of different ways that I can find value or make money from a different avenue or different project. And so that’s kind of just what excites me. It’s finding a new way to sort of be able to work online and to be able to hopefully provide value. And that’s I think why I do Niche Pursuits and why I blog there so much is because I’ve seen what being able to work from home has been able to do for me. Being able to pursue any online venture that I want and kind of how it’s changed my family life. And so blogging about that, I’m able to influence others to be able to enjoy the same sort of freedom and pursue their passions that they want to.
And then just the reason online. Again it just works really well for my personality you know being more of an introvert I guess and being able to sit and think about what I want to do rather than being put in front of a bunch of people and having to react. I think just works really well for me be able being able to strategically think and then execute a plan and the internet provides just an endless source of opportunity, customers. And so it’s it’s just sort of a win-win for me both personality-wise and opportunity-wise.
Kylon: I like that point because again having the majority of my experience so far with offline business, it’s very tangible obviously and the customers are right there. Like you’re serving them a product or service. Like face to face and you can immediately tell if they’re pleased or displeased and they’ll let you know and you having to deal with. It’s a very tangible way that I guess learn about business and build and combine businesses, which is nice on one hand. I think like for some people it might make them feel a little bit more secure. Like okay this is something I can touch and feel. I feel like it has more value where the values are more solid or whatever. But what I love about the online space is you just have so much more at your fingertips. You can be so powerful and do so much and be so creative like you said with just a skinny laptop, you know from anywhere.
Spencer: Yeah, I mean, it still boggles my mind. I mean, you talk about owning a retail location, right? And I don’t know what the foot traffic would be, you know, in one day, right? But retail location it gets a few hundred visitors a day, it’s like doing really well. Where as you know I have websites that get several thousand people a day that are looking at my content. They’re looking at things that we’re putting out. Like ten thousand people in one day is not like a crazy good day, right? It’s just an average day. So the amount of influence that you can have potentially in the eyeballs, you can get in front of online is just enormous.
Kylon: Yeah there’s just something innately deep down I get very excited about that.
Spencer: Yeah absolutely.
Kylon: It’s a great thing. Well, I have a few more questions for you. One would be if you feel comfortable I’m sure you’ve probably shared it some on your blog but I’d be curious to hear what you consider to be your worst entrepreneurial moment and the lesson that you learned from that because you strike me as the kind of person that always learns from their mistakes.
Spencer: Oh boy I’ve made a couple doozies before for sure. I can think of well at least one that I’ll share. It was sort of a difficult situation. I don’t know if it’s a mistake but sort of a difficult decision I had to make.
So when I was developing Long Tail Pro, I had hired a developer and it was my first software project ever and I had hired a developer really cheap. You know that’s what I was going for—is the cheapest I could find. So I hired a guy out of I don’t think it was India but anyways, he was cheap, he got the first version up and it worked you know bare bones. And within about you know I started selling the product. I had not a ton of customers, but about two weeks later the software broke. It had some bug, Google changed something and the software broke. So I went back to him and asked him to fix it and he did. And with any software projects like this it just happens, right. We kinda would fix it and it would break. Fix it, it would break. And it started getting slower and slower and I had these customers sort of waiting for these updates. Eventually, I decided, you know what, I need to hire a better more responsive programmer to you know work on Long Tail Pro.
And so I went to him and I said you know when I initially hired you for the job you know of course I was paying for not just your time but also the source code so I’d like the source code so I can go hire another developer. And he basically said no I’m not gonna give you the source code. And he said if you want the source code, you’re gonna have to pay me another fifteen thousand dollars. And to give you an idea, I had paid like twenty five hundred dollars to get the initial version of the software. I was like you got to be kidding me. And here’s this guy located on the other end of the world. So I was like my big mistake is like not securing in the contract that I get the source code when you know I hire you. So that was a big lesson learned there and so I debated. I don’t remember how long but it had been a couple of weeks. I can’t get the guy to give me the source code, what do I do? Do I just shut down? I was on the edge of just like I’m calling it quits. Long Tail Pro is no more. Like I don’t have fifteen thousand dollars like I just… I’m done. Or I can keep arguing with this guy and it was getting nowhere.
Or I could hire another US based developer or hire a US based developer and just you know pay what I needed to pay to build a new version of Long Tail Pro. And long story short that’s what I did. I ended up biting the bullet, I completely scrapped the old version. I hired a new developer and started from scratch without any of the original source code. It ended up costing me fifteen thousand dollars, but it was a really good decision because I ended up with better source code, a much better working version that had several more bells and whistles than the original version. But it was a huge lesson learned right. I look at it as a pivot point of my business because I really was looking at like I’m done with this whole business idea I’m not gonna pursue Long Tail Pro. I’m gonna be done. But I made the decision to do that and I’m really glad that I did because well you know the story. It made lots of money for five years that I ran it in and had a great exit and yeah it’s life changing amount of money for sure.
Kylon: Yeah. That’s an incredible story man I love hearing stuff like that. Well I’ve got a couple more questions for you before I let you go. Kind of a two part question here. I would love to hear any parting advice that you have for people listening who want to buy a website but they haven’t made that step yet. And then part two of that would be any parting advice for people that have already bought a website.
Spencer: Yeah, so people that are looking to buy a website, you know, in addition to a lot of the advice that I already shared in terms of you know doing due diligence. That sort of thing is just realizing the opportunity. I don’t know that there’s another you know investment or business opportunity like a website where you can get outside’s returns like we do on the online space. I mean you can go and make an acquisition for something like you know three times annual earnings and that’s just you can’t really do that anywhere else. So even if a website didn’t increase in monthly earnings at all, even if it just stayed stable or even decreased a little bit, your returns are gonna still be probably significantly more than you can make investing in the stock market or in the S&P five hundred. If it stays stable, you’re essentially making a thirty percent plus return year over year. And if it drops even half you’re still making probably a fifteen percent return year over year which is more than you’re gonna make in the S&P probably. But if you grow it, it’s not insane to sometimes and again this depends on the size of the asset and opportunity but to double the monthly earnings of a website is not crazy talk. That can happen. And so just to realize the my advice is to kind of realize the opportunity that is here but on the flip side certainly do your due diligence. There are really great opportunities that are much safer investments, they’re more stable and have opportunity for growth. But there are a lot of sort of websites that are being sold on Flippa or other just marketplaces that aren’t just not worth anything. So you know do your due diligence make a smart acquisition and the opportunity is huge.
And then advice for people that have already made an acquisition. And I’m kind of in this boat, you know just made some in the last year is to not rest on your laurels. To be able to put a good system you know have standard operating procedures in place. Get the right people in place. And if you’re doing everything yourself, you’re probably shooting yourself in the foot. And that’s something that I personally still look at all the time for the websites I’m working on because I still will jump in and do a lot for the websites that I’ve acquired. But if I get you know just one part time virtual assistant to do a lot of these day to day Monday and things, like that can free up a lot of my time and probably run the website better. And so I’m even constantly improving all the time but make sure you have the standard operating procedures in place for everything that’s related to the website. How it operates, how it runs. And don’t forget the little things like going back and updating content, refreshing that. You know, looking at what your competitors are doing and seeing if you can replicate that or do it better. And they’re just always looking for new opportunities that can make huge improvements in the business. Right and so if the existing business is always just gotten traffic from Google and always just referred people through your Amazon Associates link and that’s going well. Maybe think about how you can fundamentally change or grow the business. Can you change it into a way that you can sell your own product? Can you build an email list and you know have a much higher premium affiliate program that you joined? What are some big jumps some big leap some things that you can do to fundamentally change and improve the business. So that would be my advice
Kylon: Love it. Well folks, you are the average of the five people you hang around the most and today you’ve been hanging out with Spencer and Kylon learning how to build your business empire. For more information or to get in touch, head over to kingmakers.co and always remember to build beyond business.
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