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Why I Almost Bought Blog Herald for $72,000 » Three:Twenty Interactive

Why I Almost Bought Blog Herald for $72,000

I was the original high bidder for Blog Herald and came this close to buying it. I’ve heard lots of people ask how it could possibly be worth that much money, and others have thrown out their own theories about what I was going to do to the site, so now that it has sold and closed, I wanted to give my perspective on the sale and why I thought it was worth every bit of $72,000.

The Value

One of the things I do is buy sites and renovate them—much like real estate investors who buy properties and rehab them to bring out more of the home’s value. Like them, I’m always looking for good prospects.

Reading through on January 12, I came across Darren’s post about a Top 100 Blog for Sale and was immediately interested. I emailed Jeremy right away, and he responded within minutes. We emailed back and forth several times, and he was more than forthcoming with any information I requested—even going so far as to give me the login for the Blog Herald stats so I could poke around for myself.

After doing my initial investigation, I saw great value in several places:

800,000 Page Views/$2,000 Revenue
The site was seeing 800,000 page views and $2,000 in revenue every month, and was growing at a significant pace. The revenue alone made the site worth at least $36,000, and the consistent growth quite possibly warranted an even higher multiple. Additionally, $2,000/month for 800,000 page views seemed low, so there was the possibility of growth there as well.

Small Percentage of Traffic from Search Engines
The site was only getting a small percentage of its traffic from search engines—an amount I felt was incredibly low for a site with that kind of prominence—and I felt like I could easily double that. This was the area of greatest growth potential.

PageRank 7
PageRank is vastly overrated. There are so many other things that go into a page ranking well, but so many see PR as the end-all-be-all of ranking well. It’s not.

That said, I knew from experience that a PR7 was throwing around a lot of weight. Pages like that can make other pages rise and fall significantly with just a single text link, so there was a lot of potential here as well.

The Bid

So what I was looking at was a site that was very high regarded in the eyes of its readers, blog-industry observers and search engines, and also had room for additional growth. I felt that it was easily worth $36,000 but I wanted to avoid a public auction so I went as high as I was comfortable going: $72,000. At $72K, my absolute worst-case projections showed it returning a 30% ROI after two years based on a very conservative valuation, so I felt good there.

I did end up being the high bidder, and Jeremy announced the following Monday that the auction was over. Then the due diligence process began for me. I needed to be very sure about all the factors that went into my bid before the deal closed.

Changing My Mind

During the due diligence process, I found some statistics that varied from the ones we had been working with just enough that, in the end, it was enough to make me unsettled about my bid.

Now, statistics are often very subject to interpretation. (That’s why there are so many great quotes about them.) So, not suprisingly, Jeremy and Duncan didnít fully agree with my analysis. Even so, they did agree to accept the withdrawal of my bid.

Now Duncan has found a new buyer, and it sounds like he got a good price for it. Better yet, it looks like the new buyer will be an even better fit than I would have been. That’s outstanding. I wish them, and b5, the best of success.


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