

Sortfolio for sale - wlll
http://37signals.com/svn/posts/2899-sortfolio-deserves-a-better-home-make-us-an-offer

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DanBlake
I wonder how much of a decline in revenue it will have when its no longer
owned/linked/shown on 37signals. I bet alot of the revenue comes from internal
links and just being owned by 37s in the first place.

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notJim
I'd guess that they're not just going to jettison it to the highest bidder. I
imagine there will be some kind of arrangement between them and the eventual
buyer that 37signals will help promote it in some way. (Obviously this is
purely speculation on my part, but it would make sense.)

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ssharp
I'd have to think there would be some aid provided by 37s in the changeover
process. If nothing else, the service will still reflect 37s in some way in
the periods following the change in ownership.

I also think the value that 37s is giving SF is being somewhat overestimated.
The revenues are going to be tied in with the amount of people looking for
designers. As long as the stream of good customers does not dry out, the site
will continue to do very well. At this point, how many customers are being
brought in because of 37s? I don't know, but that would be something I'd have
to get a better idea of before considering a purchase. I think SF has already
gotten all the value from the 37s name that it can, or at least is close to
that point. Early on, being a 37s product had tremendous SEO, linking, social
news, etc. value. That stuff is already built into the product, so the 37s
value is mostly limited to drawing in new customers. I couldn't imagine that
value being so high that it's going to significantly effect revenues on it's
own.

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atacrawl
So let me get this straight -- Sortfolio pulls in $17-20k per month of
(relatively) easy revenue, and they want to sell it? That tells me they must
be making an absolute _killing_ from their other products.

EDIT: And I'd be remiss if I didn't point out that I got my current job (I'm a
web designer/developer) when my boss found me on Sortfolio, so I'm a little
sad about this announcement.

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pauldisneyiv
37Signals is not selling Sortfolio to make money - clearly they have enough -
but because they believe the product deserves a better home.

I believe they won't accept the highest bid as much as the most interesting
offer. I don't mean to say they'll give it away to a small, poor startup
group; but I do think their preference would be that the next owner take it to
the next level both in terms of direction and financial success.

I'm actually more interested in Sortfolio now than I was before. 37Signals is
in a position to be as choosy as they'd like with the future buyer. I wonder
who they will choose....

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famousactress
_37Signals is not selling Sortfolio to make money - clearly they have enough_

That's a strange statement. It's also countered by the fact that they're
selling the company, for money.. and that they're not interested in equity as
part of the sale.

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run4yourlives
I think the OP is saying the 37s will measure the "success" of this deal on
what Sortfolio becomes, not on how much they can make on the transaction.
Ergo, if they believe a buyer has the chops to purchase Sortfolio and build it
out different markets, they may select that buyer over one that (for example)
wants to purchase it for more money and simply shut it down.

I'm not taking an opinion personally, but that's my take on the comment.

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limedaring
"Futher, the Sortfolio model could expand into a variety of other verticals
including photographers, wedding planning, catering, illustrators, artists,
etc. I’d love to see a Sortfolio for calligraphy or hand lettering."

Hrm, maybe it's obvious now that <http://weddinginvitelove.com> (directory of
wedding invitation designers) was very influenced by Sortfolio. It was the
best example of a directory website that put the emphasis on the work as well
as shuttling customers to the designer's websites rather than being a
middleman. Great to know that Sortfolio was doing so well, gives me hope for
WeddingInviteLove!

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rebelidealist
Jason & DHH, how about a inject of $10 million series A funding to propel
sortfolio to be the twitter of directories?!

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jasonfried
Done!

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leftnode
What I'd give to have my _side project_ generate 20k a month. Working in that
direction, but still...

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petervandijck
I think the question is _exactly_ that: what would you give?

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rokhayakebe
But the keyword is _my_.

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petervandijck
Exactly.

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mgrouchy
I'm unsure how well sortfolio will/can do outside the 37signals brand because
I'm sure this is part fo the draw for people to use it.

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samtp
And it will be interesting to see if there is any change in the monthly
revenue because of this post. As you're saying, the 37signals brand adds
credibility to being seen on Sortfolio.

~~~
mgrouchy
Exactly. I think this could still be a good opportunity for a buyer, but I
don't think I would base my offer to purchase based on current revenues.

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nanoanderson
If they paid a single developer/designer/salesperson around $80k/yr to
maintain it, even after all the perks and insurance and taxes and whatnot,
they'd still end up on top if that developer did nothing other than maintain
the current number of paid customers.

What could hosting an app like this cost? Very little, I imagine. I'd
personally find a service like Happy Cog Hosting
(<http://happycoghosting.com/>) to manage it for me.

Makes it feel like a steal for anything under $1mm (that's approximately 5x
revenue), even without the promotion through association w/ 37signals.

I haven't read anything convincing me that this isn't a great deal for an
eager entrepreneur.

EDIT: "They" in the first paragraph refers to any owner of Sortfolio. If you
take it to mean 37signals, that's fine, but I doubt that Sortfolio has the
sort of growth potential that 37signals' other apps still have, and so is not
worth the effort to maintain.

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callmeed
_"Futher, the Sortfolio model could expand into a variety of other verticals
including photographers, wedding planning, catering, illustrators, artists,
etc. I’d love to see a Sortfolio for calligraphy or hand lettering."_

My thinking exactly ... In fact, I'm pretty confident I could fork SF for
weddings and commercial photographers and 3x-5x the revenue within a year (I
say that because it's the areas I work in and have connections in).

I also love that SF appears to have some good SEO juice. I googled a couple
companies in their directory and their SF profile came up on page 1. I know
SEO is a divisive topic on HN, but I think this is a benefit any serious buyer
should consider.

From my POV, it comes down to a "build vs buy" question.

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petervandijck
So what would be a good offer? If they just run it for another two, three
years without spending time on it and then close it down they'd probably make
about 600,000$. So the offer should be minimum 500,000$, including perhaps
some ongoing traffic/links from them?

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michaeldhopkins
That's not bad. If that was the case ($200k/yr profit for three years), the
worth would be about $550,000 depending on what you think inflation is. Here's
a primer article for you on calculating things like this:
<http://wiki.fool.com/Net_present_value>

However, the market value of the domain plus links plus announcement/traffic
from 37signals for the relaunch make it worth much more than that. The price
in cash ought to be equivalent to selling a modestly successful startup right
now. I don't know what would be appropriate and would welcome additional
thoughts from the community.

P.S. The other reply to your post is really lame. Thanks for starting this
discussion.

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petervandijck
I find <http://dribbble.com/> works much better to find freelance designers,
although it's not even aimed directly at that.

It does go to show. With only 200 paying customers, they're making
20,000$/month!

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brianbreslin
they have just under 2% conversion rate from free to paid.

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bonzoesc
If you think you can get a better conversion rate and get more profit from
that, round up some money and take over :)

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brianbreslin
Bryce, you need to get WAY higher to make this a worthwhile deal. assume you
lose half your traffic once they stop promoting it. you still have a decent
sized mailing list, so you can sell to those guys, but they might not upgrade
once the traffic dies off.

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eibrahim
This would be a dream come true for me. I can finally work from home 100% of
the time without a boss or anyone to answer to. I can dedicate all my love and
passion for web development to Sortfolio.

The only problem is, what is considered a "serious" offer for Jason???
Hmmmm... What if I offer something a lot higher than what he had in mind? (I
doubt it)...

Would you take a home equity loan to buy Sortfolio? I am considering it :)

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pixeloution
It's generating $240,000 a year in revenue. Unless your house is worth a ton,
I don't think a home equity loan is gonna cut it :)

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AndrewWarner
Jason is coming to Mixergy to talk about it. Any suggestions on what I should
ask?

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lazy_nerd
What's their CAC, LTV and any other interesting metrics he is willing to share

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pbreit
This sounds like a job posting in disguise.

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ssebro
I think they're selling because they're not trying to do everything that makes
money, but to concentrate on the things that are the most profitable. For
example, you could make money washing dishes, but for most people, there's
more profitable work that they could do, so they don't work as a dish washer.

To prospective buyers- would you rather be a dishwasher or try for something
that's even more profitable?

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jcampbell1
I think $1M would be a reasonable offer. I just don't have any ideas how to
grow the business. Traffic has been on a steady decline:

<http://siteanalytics.compete.com/sortfolio.com/>

And without a steady stream of traffic from 37signals properties, it could go
bust.

Maybe it would be smart to evolve it into a portfolio site.

If I were interested, I'd offer 15k + 50% of the rest each month, and sell
them on my vision. Too bad I don't have one.

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cheez
$1M is nowhere near a reasonable offer. You're talking 4-5 years to break even
just on that sale providing you don't have any competitors. I wouldn't give
them more than 1-2x revenue. Of course, I'd have to have 1-2x revenue to begin
with ;-)

