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The Inside Story of a Small Startup Acquisition (softwarebyrob.com)
207 points by aaronbrethorst on Jan 25, 2012 | hide | past | web | favorite | 51 comments

I'd like to see a marketplace for small acquisitions like this, flippa is full of turnkey crap and i'd be more than willing to spend up to low 5 figures for a decent small SaaS app or even buy one of the thousands of half finished apps i know you guys all have.

So, if anyone's selling, email me. contact@myusername.com

@tamdenholm - I am creating a company called Apptopia - we will be almost exactly that. A marketplace to broker the sale of mobile app (micro business acquisitions).

Have fantastic traction so far, and I have a handful of apps already for sale if you were interested I am @jonathanckay.

I would also be very interested in this list, for myself and others. Email in profile.

Hi guys. You can use the Flippa search tools quickly drill into different website facets (site age, traffic or revenue). Otherwise check out the advanced search options at https://flippa.com/search

We also allow tags which can help you find more application-oriented websites for sale. A few examples include https://flippa.com/buy/sitetype/application (where sellers have tagged the website as an application) or https://flippa.com/buy/implementation/ruby (where the sellers have tagged the implementation of the site as ruby).

If none of the open listings are what you are interested in, you can hit the Watch this Tag or Save this Search link and we'll let you know if any new sites that meet this criteria are put up for sale.

Hope that helps.

Hey Tam, I'm creating AuthenticStartups to solve this very problem. I conceived this idea when selling a small startup of my own and thinking that there's got to be a better way.

More info here on the latest TechZing podcast - http://techzinglive.com/page/921/165-tz-interview-rob-wallin...

Ha, I had to lol at:

It's 3 o'clock in the morning and you get a call...


"yes, your server has gone"

Well worth a listen, there's plenty of juicy stuff and insights on the whole process and decisions made that aren't mentioned in the blog post (yet, at least).

All the details you could want are in that podcast except the actual purchase price and there are enough clues to have a good guess.

Sadly, this glosses over the actual acquisition process and details.

What else do you want to know? This is a multi-part series so I can go into more detail.

Personally, I'm interested in numbers. What was your opening offer, what did the seller come back with? What did you settle on? (Totally understandable if you're not comfortable sharing that information).

Also, user information would be great. # of users prior to purchase, # since, changes in conversion rates, changes in revenue, etc.

Yes, if you can go over the valuation methods each side used, that would be very helpful to know, even if you don't share the cash figures involved.

What both parent comments said. Plus terms, etc. I see a lot of acquisitions but they're all SV style so I am curious what it's like.

For a look at valuation methods, check out this post from a couple years back...it's where I typically start from:


Where the owner of HitTail started from is anyone's guess, but I'm sure it was "as much as I can get" :-)

Good suggestions - I'll cover these as much as possible in the next 2 parts of the series.

Some of these infos are in the podcast, but I agree it will be nice to see them in the next parts

Interesting, I feel like HitTail's previous condition is a bit like a site of mine that has kind of been accumulating technical debt for a while: http://bitbuffet.com/

There are users, they pay my rent, they use the service. Its just... flat. A few bugs, various problems not worth the effort to rectify as a quick 1 minute Django admin tweak solves the problem.

Maybe its time to finally visit Flippa or suck it up and revamp the damn thing, any advice on going down this route?

Flippa - Focus on net profit. So reduce expenses and increase revenue if at all possible. Automate everything possible; the less monthly time investment the better. Then price it reasonably and gather inspiration from the posts that have done well on Flippa in the past.

Revamp - Very similar to the above: focus on net profit :-) Invest in one-time costs but reduce recurring expenses and increase revenue if you can. Find out who's getting a lot of value from your product and focus on making them happy; ignore the people who say the app costs too much. You can see a 10x or more difference in the amount someone will pay for your app based on whether it really does the job for them. Find out who's on the top of that 10x stack and make them love the app. Then find others like them.

Hi Bryanh. Interesting site. Drop a line to our support team if you do decide to sell on Flippa as we'd be happy to come to the party and cover your listing fee in this instance.

Wicked! Thanks guys!

Why aren't you taking a cut on every transaction?

A large reason is because I'd rather the money go straight into their account, I don't want to be responsible for floating money in between collecting and payout...

Speaking of taking something and rebuilding it, I'd like to see LangPop.com sold to someone who will do something cool with it, and won't trash it. The big caveat is that programmers are completely ad-blind, so I don't think that site'll ever make any money on plain old advertisements. Better to use it as an ad or bait for something else.

Is there a way to send private messages on HN? I wasn't able to figure that out.

I might be interested to acquire the domain from you. I may be happy to keep it online without advertising as a public resource, depending on the total traffic volume.

What kind of price are you looking for? Providing value to the community is what I'm interested in; I'd be happy to operate it in a not-for-profit way.

If you click on "davidw", it takes you to a page about me. If you click on the links, it'll take you to pages where you can find out how to get in touch with me.

I'm doing my own startup now and I would gladly buy my next startup. It just saves a huge bunch of time as long as the code is in decent shape.

Again this is a story of someone seeing value where no one else does. That seems to be key skill of successful entrepreneurs.

I met the founder of HitTail about 5 years ago. He seemed pretty bright and they seemed be doing pretty well given the number of people they employed.

The inventor of HitTail is very sharp - we're in touch every week or two as he continues to have insights into this space.

Traffic graph looks impressive:


Maybe I'm missing something, but why is this a subscription app? Couldn't I run this on my site for a month, find the long tail keywords I need to improve, and then cancel? For most sites wouldn't the keywords generally stay the same?

No, they vary pretty widely, even week to week. I have several years of suggestions now and new ones continue to come up every week as I add new content and my rankings shift in the engines.

From what I know about SEO, it takes time. Why is the data useful if the results are wildly changing from week to week?

The results are not changing wildly week to week, but you do receive new suggestions frequently (depending on how much traffic you receive). And with this kind of SEO (long tail), the point is that if you write a single blog post or article focusing on the suggestion, you will rank on the first page of the search engine within a few days. That's the point of HitTail - it picks out terms you will very easily (and quickly) rank well for.

Interesting. I'm going to take the trial for a run shortly, may write a review about it in the future.

Great article, thanks for sharing. I would have loved more information about the acquisition process (maybe even including your initial email) because this is the most interesting part to me. I would also like to know where the final price settled between your initial offer and the 5x rebuttal (no need for actual price, just a reference).

On a side note, amazing job with the redesign. The new hittail landing page looks great. One thing I noticed however was that you have an extra checkmark on the last row of the pricing page that doesn't seem to correlate with anything. Done on purpose?

Cool; I'll try to cover the things you raised in part 2 or 3.

>>On a side note, amazing job with the redesign. The new hittail landing page looks great.


>>One thing I noticed however was that you have an extra checkmark on the last row of the pricing page that doesn't seem to correlate with anything. Done on purpose?

LOL...that's awesome. I'm not sure how no one else (including me) has noticed that. Removing it now; thanks for pointing it out :-)

Thanks for sharing this story. I think it speaks to the commonly overlooked notion that you should set out to build a business, not just a web product. Details on which costs you chose to attack first (technical debt vs. free subscriptions vs. UX) is something all web businesses should think about.

How does the original owner feel about the revamped HitTail?

>>Details on which costs you chose to attack first (technical debt vs. free subscriptions vs. UX) is something all web businesses should think about.

Good point. I'll try to cover that in more depth in parts 2 or 3.

>>How does the original owner feel about the revamped HitTail?

Positive feedback all around, both from the original owner and developer (they are different people). They've also made helpful suggestions along the way since they know this space quite well. I think they are happy that HitTail is getting a chance at a second life.

How is this a startup? Isn't this a failing product from a firm that got acquired and turned around?

If you define a startup as a business that has the capability of scaling well, but hasn't scaled yet, then this fits.

Interesting story; definitely differs from the conventional wisdom regarding building it yourself. Reuse of a previously built codebase is something I can approve of... especially if your competitors are constantly reinventing the wheel.

Also, existing customer base and established brand identity are nice bonuses.

Rob - how do you make the decision between going to oDesk vs doing it yourself?

A very interesting post. I'm a product manager that isn't great at coding, but I'm really good at dealing with remote teams / contractors. I've often wondered if this is a route I could take, it looks promising.

How does this deal with small sample sizes? The monthly visit numbers at each payment level are fairly small, so I wonder what sort of conclusions can be drawn from the sample sizes available.

The algorithm has analyzed 1.2 billion keywords and been optimized to work well. If you get 1200-1500 uniques per month, HitTail will likely provide enough value to make it worth the cost.

Interesting, what data does the JS send back to HitTail (interested in scope / privacy here)? Does it have any dependencies?

It sends back the referrer URL from the search engine that contains info like what keyword was searched on, whether it was paid or organic, which search engine, etc...

The JS doesn't have dependencies in terms of external libraries - self-contained but it obviously depends on our server since it makes an async call back to save the keyword data.

How does hittail work? Do you have to insert a piece of js into your site template like for google analytics?

Exactly. Asynchronous JS snippet on your site (so doesn't affect page speed) that sends analytics info back to our database, where our algorithm is able to analyze it and make recommendations.

Cool story. I'm looking forward to part 2!!

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