
Sortfolio auction ends with no bidders - DanBlake
https://flippa.com/2739829-sortfolio-com-web-design-marketplace-w-220k-annual-revenue?nodupe2
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dangrossman
The listing had no information with which to value the site. Nothing about the
traffic sources. Nothing about the handover process. Nothing about billing the
customers. 37Signals did not answer a single question posted to the auction.

It's no surprise nobody bid. Actually, someone did bid but nobody at 37Signals
approved it, so the bid expired. You have to wonder why they spent money
listing it at all; and, since the auction was essentially abandoned, whether
they would've honored a sale if someone had offered the asking price.

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muellerwolfram
maybe the site got so much traffic due to all this media attention now, that
they decided to actually keep it.

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loceng
They said they'd be shutting it down if they didn't sell it. Did they say now
they're keeping it? That would look even worse for their credibility, honesty,
integrity, etc..

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ericingram
The way they approached this sale feels amateurish for such a successful
company

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highace
Perhaps there was an ulterior motive, like publicity. After all, they're
37signals and they can do whatever they please.

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stephengillie
For those of us who have no idea what this is all about or why it's important:
[http://thenextweb.com/insider/2012/05/10/37signals-lists-
web...](http://thenextweb.com/insider/2012/05/10/37signals-lists-web-designer-
directory-sortfolio-on-flippa-buy-it-now-for-480000/)

The sale price ($480k) is just greater than twice 1 year of income ($212k).
Why does this seem low enough to be a red flag?

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jurre
The problem is that the site will lose affiliation with 37signals (which
probably drives a lot of their traffic) and existing customers will have to
renew their membership. It's safe to say that when buying it revenue will be
significantly lower than what it's doing right now.

~~~
stephengillie
So the vast majority of this site's value is actually its relationship with
37signals? And 37signals wants to sell the site and dissolve that
relationship?

o_O

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mikek
It has good revenue, but it relies upon 37 signals to promote it. Without
their support, revenues could tank. Its a big risk for many potential buyers.

~~~
robryan
Also you need to reengage every customer to change the payment method. Giving
everyone a good opportunity to end their subscription or at least reevaluate
whether they have gained from the subscription.

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kondro
I doubt this would be required.

37signals uses Braintree and probably stores credit card numbers themselves.
Besides, I'm sure for a transfer like this Braintree would transfer these
existing accounts to a new Braintree account.

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pbreit
It's at least unclear. 37s indicated previously that the buyer would need to
build a new billing system and my impression was that customers would need to
re-enroll in a new billing relationship. 37s has not clarified one way or the
other.

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nateberkopec
I emailed Jason, and he said Braintree would transfer all the data over.

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chawkins
I wonder why he didn't just say as much in either the blog post or the Flippa
auction?

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raheemm
What they ought to do instead of selling it, is pick an entrepreneur from
their community and give him/her a go at running Sortfolio for a year or two
with some kind of incentive based equity sharing deal.

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rscale
I don't have any special knowledge about Sortfolio or 37Signals, but it seems
like Sortfolio is really inconvenient to divest.

It's big enough that shooting it in the head seems wasteful (and potentially
disappointing to existing customers). It's small enough that the opportunity
cost of dealing with a sale quickly exceed the proceeds, and that sell-side
advisors aren't going to be clamoring for the opportunity to help. And on top
of that it's an unusual business, so traditional small business brokers don't
know what to do with it.

The demand side has similar size issues, where it's big enough to be a large
purchase for a random individual, small enough that it's unlikely to attract
attention from strategic buyers with an eye out for acquisition targets, and
unusual enough that a purely financial acquisition is unlikely.

I feel like you're on the right track, but again it goes back to value. The
expected value from finding somebody to take over sortfolio, spin it into a
separate entity, and then get 37s out of their ownership position probably
isn't that much higher than the value they'd get from spending the time
working on and marketing their key products and simply shooting sortfolio in
the head at some pre-determined date.

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raheemm
It would also be a good way to invest in the Rework philosophy.

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DodgyEggplant
I wait for the "where we did wrong" blog post.

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tferris
What really surprises me is that the same people who did the revolutionary
Rails years ago came up with rather mediocre products afterwards.

I don't know anybody who is using Basecamp nowadays (and that's their best
known product), the same with obscure Highrise and Backpack. Campfire is the
only one which is quite popular and well used. But Campfire is just a chat
server, really no rocket science and could be substituted by tons of similar
services (but I still like it because of the hooks).

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mtgentry
I too thought the old basecamp was terrible but the new one is quite nice.

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wilfra
I used it back in the day and liked it. Other than being used to Basecamp, I
don't really see why anybody would choose it over Asana in 2012 though. Given
the choice between a free Basecamp and Asana it would still be an easy
decision.

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1123581321
I get more done in new Basecamp than in Asana. Basecamp is better designed and
better engineered.

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kvnn
I think that everyone who is assuming that 37 Signals is being neglectful or
unprofessional here, may be missing the possibility that they let the auction
fail with intent.

It is possible that private negotiations have been in process.

I'm ignorant to the rules of posting an auction on sortfolio, and to the fees,
but I'd bet that there would be plenty of reasons for a buyer to prefer a
different process, and once said buyer approached 37 Signals with a serious
offer, they may have changed their mind about it "not being worth their time"
[1].

Or, someone they respect and trust could have shown interest and taken
initiative to run the site.

[1] I read an unsourced claim in another thread that 37 Signals felt that
Sortfolio was not worth their time.

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relix
How is putting it on an auction site and then ignoring it because you got a
private offer _not_ neglectful or unprofessional? That's exactly what it is.

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graiz
It's not clear if this was a legit auction. I had some interest and contacted
Jason from 37signals and he indicated that he was still looking for $480K, no
less.

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cynusx
It would be a good buy if they give the potential buyer a time window of 18
months to work out an alternative customer acquisition channel.

Immediate separation will hurt it significantly and sortfolio will not be able
to recover when the only growth driver is killed off.

In fact, Why not hire a typical founding team to find a second growth driver
under the 37signals brand and then try to sell it? 212k annually should be
enough for such a team.

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marknutter
I briefly had a paid sortfolio account right around the time it first
launched. I got one good lead which more than paid for my investment, but
every other person who contacted me from that point on was an overseas
developer trying to sell _me_ their services. I cancelled the account a month
later. I see the biggest challenge with this site being coming up with a
strategy to reduce spam.

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danielhellier
Interesting to see if he closes Sortfolio down, as quoted:
<http://news.ycombinator.com/item?id=3941504>

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tharri
No surprise here. Sortfolio's value comes from its association with 37
Signals. Without it, I'd be surprise if more than 10% of the clients renew
their annual listing.

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cmer
What are the alternatives to Sortfolio now that it's dying any day?

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mnicole
Dribbble, Behance Network, Coroflot, Fiftytwo, Cargo Collective, Zerply, the
list goes on.

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bond
This was expected...

