As you know, I’m big on exit strategies. I found an excellent example of one in the Reed Hastings and Erin Meyer book, No Rules Rules: Netflix and the Culture of Reinvention.
Except this time, it was a failed exit strategy that made Netflix successful.
In the year 2000, Netflix was a tiny two-year-old startup that delivered movie DVDs to subscribers via the mail. That year, they had 100 employees, 300,000 subscribers and lost $57 million dollars.
They were desperate to sell.
The Netflix founders approached the CEO of Blockbuster, a $6 billion dollar movie-rental chain with 9,000 locations, about a possible acquisition. Netflix asked for $50 million dollars from Blockbuster in exchange for the company.
Blockbuster said no, so Netflix decided to take the company public.
Today Netflix is valued at approximately $250 billion dollars. In Bend, Oregon stands the last remaining Blockbuster store.
I actually don’t think it was a failed exit strategy. The Netflix founders wanted to sell because they ran out of patience and were scared they’d have nothing left if they continued. So they tried to cut their original exit short (going big) by selling out to Blockbuster. I bet the CEO of Blockbuster wishes he said yes.
The Art of Website Investing
While researching for Content Inc. the book (new edition), I’ve been studying the art of website investing (acquiring websites as assets). Why? Because I added a new step to the Content Inc. model that involves valuing a content property for sale. I know a few things about traditional media site acquisitions, but not a lot about website investing. It’s fascinating…and it plays to my passion for real estate.
Think of it like buying a home. One option is to purchase an existing home and fix it up. Another option is to buy land and build on the land. Another option would be to go to an auction and find a fixer upper.
The exact same goes for website investing. You can buy a website that’s in pretty good shape and touch it up. Or you could buy a brand new domain and build something new. Or you can check out the auctions and take a flyer.
An example from 10 years ago is makeup brand L’Oreal buying Makeup.com for one million dollars. They gave that site a face lift and today it generates millions in product sales for L’Oreal.
A few years back, marketing automation company Hubspot purchased an agency blog called Agency Post and integrated it in with their other blogs.
Sure, I know of examples, but I had no idea how big this industry is.
Here’s some things I’ve found.
First, if you want to get educated on website investing, subscribe to Juliet Lyall’s newsletter, appropriately called Website Investing. I get something out of every issue.
Second, check out auction sites like Flippa or Quiet Light Brokerage. Prices range from a few thousand to a few million, but depending on your goal, you might find something interesting.
Third, evaluate sites at ahrefs.com. I fell in love with this resource. You can do deep dive checks on web properties, find competitive domains and uncover authority rankings. Specifically, if you find one site you like, and want to discover more like it, clicking on competing domains is eye opening.
Why is this so important and why right now?
Folks, the global economy is going to get worse before it gets better. More and more media companies are going belly up. That means there are more web properties and content initiatives that need cash and are willing to sell.
It’s a buyer’s market now. Just wait nine to 12 months…it’s going to get crazy. While I feel horrible for these businesses, it presents a golden opportunity for those companies (and marketers) with budget to acquire.
Please Don’t Stop
According to the Q4 2020 Morningstar Investment newsletter, 27% of United States adults have lowered or stopped their retirement contributions (survey taken on July 11, 2020).
Look, I get it. If you stop your contributions, that means things are really bad. But from my experience, once people stop, they don’t restart.
A Follow Up on Exit Strategy
In responding to Why You Need An Exit Strategy, Juliet Lyall emailed me these wise words:
Is it not logical to consider how you will extract yourself from a venture before you invest time, energy and money into it?
Recently, I wrote about Ramon Van Meer and his approach to exits.
This was his sage advice:
“I like to have an exit strategy when I start something, because then it’s for me easier to reverse engineer.
I’m already talking even though I don’t have an exit date in mind. I start talking with bankers and private equity. I reach out to people that work at my kill list companies and just try to pick their brains. So you can basically steer the universe to that outcome.”
Juliet and I are both entrepreneurs, so we are baffled that some people don’t start things with some kind of exit strategy in mind. As Stephen Covey preaches, begin with the end in mind.
My friend Brian Stehle (a RANDOM reader and author of a great holiday book One Day Off) has a more “holistic” view of an exit strategy. He says:
“All of us will have exactly one exit from this world and have no say in when, where, why, or how it happens. I do, however, have 100% say in my actions while I’m here. My ‘here’ is the holistic life I have, not the current job or endeavor I take. I prefer to think of it as the journey, the way of life, or even the ikigai.”
Brian’s words remind me of A Beautiful Day in the Neighborhood, the Fred Rogers movie portrayed by actor Tom Hanks. Everyday Mr. Rogers woke up with the goal of making life better for other people (excellent movie by the way).
So, who’s right? I believe both perspectives. Because they both revolve around purpose. Why are you here? Why did you take that job?
If you know the answers to those questions, then you know what the next step will be (part of the exit strategy).
Thanks to Juliet and Brian for sending in your thoughts.
The following was an excerpt from Joe’s newsletter. Only subscribers receive the full version.