Reflections on a WordPress Acquisition Marketplace

Themes & Plugins

There's a new WordPress acquisition marketplace: FlipWP

The other day Iain Poulson sent me a DM on Twitter telling me about a new WordPress acquisition marketplace called FlipWP. You can see the announcement here:

Already there's been a good amount of buzz about it – mostly because of three things (in my opinion):

  1. The increasing number of acquisitions in the space
  2. The recent introduction of a similar site without any sense of who was behind it
  3. The fact that the two guys behind FlipWP are stand-up, all-around good guys.

With all that said, it raises multiple questions, the first being….

How will this be different than Flippa?

I'm positive that people have successfully bought and sold websites on Flippa. So we need to start there. It has had success and people I know have used it and walked away happy.

But more than anything, my overall impression is that people who post on Flippa often have unreasonable expectations of what their site is worth.

And that makes you wonder what the role of any new WordPress acquisition marketplace has in helping manage expectations around value.

Personally, I've had hundreds of conversations with WordPress plugin and theme companies about their worth and most of the time the conversations start with valuations that need managing.

What's essential when creating a WordPress acquisition marketplace?

There are several things that FlipWP gets right.

  • They are clear about who is paying, and what they're paying.
  • They are clear on who is behind this.
  • They are clear that the communication is direct between buyers and sellers.

All of that is spot on, well done, and essential when creating an acquisition marketplace.

But I think there may be one or two additional things you have to get right to make the marketplace really powerful.

I'm not saying their doing this, or not doing it, because it's still early. But one thing I don't notice is that they're not suggesting that they're going to create filters for looking at the listings, and they're not telling sellers that you'll get to see that data.

In other words, if a seller could discover that most people are looking for companies with 2 or more founders, who hope to say with the business post-purchase, then they'll never know they're missing out by being a single founder with an expectation to take their check and run.

How do you get this kind of feedback without knowing what people are searching for. And that's a simplistic example.

Imagine I could see that most people are searching for companies making more than $400,000 in revenue, with a profit margin over 34%. That would help me shape my next steps as a business owner.

Imagine I could see that most buyers are looking for companies with automated renewals, where the renewal rate was over 60%.

You see where I'm going, right?

The point of a marketplace isn't simply to help a buyer and seller have a chat (which is where most acquisition marketplaces focus their initial features). I can have a chat via Twitter DM.

One of the most essential parts of a marketplace is to help me filter the myriad opportunities down to those where I'm not wasting my time as a buyer, and where I get data about what people are looking for as a seller.

Here's where I would focus

So as I reflect on FlipWP (or any other up and coming competitor), I would focus on the business profile and the search filters.

Every company that creates a listing should need to tell me far more than just the revenue side of the business. I'm glad that acquisition marketplaces capture stuff like years in business and traffic. But I want more in the profile.

And I don't mind if it's not exact. That's the nature of this initial dance. I just want to know what buckets your numbers land in.

  • How would you characterize your profit margin? (<15%, 15-30%, 30%+)
  • How would you characterize your staffing count? (<5, 5-10, 10-25, 25+)
  • How would you characterize your revenue growth? (double digit YoY, etc.)
  • How would you characterize your total revenue this year? (<250k, 250-500k, etc.)
  • How would you characterize your renewals? (manual, automatic, etc.)
  • How would you characterize your revenue profile? (90% new, 10% renewals, etc.)
  • How would you characterize your future intentions? (stay, transition, leave)

Hopefully this makes sense. It's the data in a profile that I would want to see and filter by as a buyer, and the data that a seller would love to know (about the buying audience).

Here's another note – a lot of times when I start having conversations with owners, I discover that they don't know all of these numbers. So putting it into the profile will force some people to do a little bit more work to know their own numbers.

Lastly, today FlipWP has buyers paying a low ($299) registration fee. The challenge? I am not sure I would sign up if I couldn't do a filtered search to see how many listings meet my target criteria. After all, if none of the listings meet my criteria, I'm not sure I'd spend any money at all.

Final Thoughts

In the end, I'm positive FlipWP will be a success – mostly because I think the folks behind it are sharp and will make it work.

The biggest challenge for an acquisition marketplace, and especially for a WordPress acquisition marketplace, will be to help sellers understand what they're worth, and what they might want to do to increase their value.

Done right, this could be very helpful for the WordPress ecosystem.

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