The Value of Websites

Posted by admin

“The value of websites” - and I mean that literally. Since the .com bubble burst (or should that be “went broke”) some years ago, the venture capital money just hasnt been in selling dot coms the way it used to be.

We all read stories about online businesses that had never turned a profit going for ridiculous sums of money, or raising mammoth amounts from VC firms on the assumption that they would turn a profit one day. The best example that comes to mind would be govworks.com which was owned by Kaleil Tuzman and Tom Herman - this site was burgeoning at the very peak of the dot com bubble, and the aforementioned Kaleil was so revered by the finance industry as a whole that he accompanied Bill Clinton (then president) on several financial ecenomic missions. Eventually both founders ended up with nothing, after raising over 60,000,000 (thats Sixty Million!) dollars of other peoples money, and losing it in a tale of mismanagement, woe and strife.

If only it were that easy now to raise funds! A good example would be my current site thats up for sale. Five years ago it would be worth over a half million dollars based on the turnover its had in the first year, and what is it going for? Well, I cant say yet because the sale isn’t finalised but a realistic estimate would be 20, maybe 30% of what it would have been worth then.

Why is this important? Well - it proves that the internet market is at least maturing. We have moved past the days of the wild e-west, and into a more sustainable era of company valuation. Would I love to be in the old days? Ofcourse, but then Im the one selling the sites, not expecting to take a profit on them long term.

In short, the new internet savvy VC firms are a godsend to us, because of the now much more realistic values that they are attributing to online businesses - if the “good ‘ol days” had persisted much longer, nobody would trust the online business world, much less readily invest in it.

So it remains our task to create, manage, promote and eventually sell innovative web products - more of a challenge now perhaps, but again, a good thing in light of the fact that we now see the consumate professionals standing head and shoulders above the rest of the field.

Anyway, enough of my musings, Im off for my calimocho (and its the wife’s birthday tomorrow so I have to be up to make the breakfast.)

Buenas Tardes Muchachos!

MM.