A year ago we put Sortfolio up for sale.
We entertained a variety of offers, met with a few potential suitors in person, and negotiated numbers. Ultimately nothing came together. Then we shelved the process so we could focus all of our efforts on designing and building the new Basecamp.
Sortfolio continued to run itself for another year, generating over $200,000 in profit for us during that time.
Our paying customer count continues to hover consistently in the 170s, each paying $99/month to be listed as a premium member.
The price
We’ve put Sortfolio on the clock: We either sell it by July 1, or we close it down. And we’ll make it easier this time so there’s no guessing: The price is $480,000, cash. No special deals, no partial payments now the rest later, no equity in your company, etc. $480,000 cash and it’s yours. Considering how much hands-off free cash flow it generates, we think that’s a very fair price. We just want it to go to a good home.
We’ve put next to no effort into it over the last year… If you put some effort in you should see significantly higher sales. With over 10,000 free accounts, there’s tons of untapped opportunity here in the existing customer base. And of course plenty more on the outside or in entirely different industries.
What you get
You get the design, the branding, the code (it’s a Rails app), the customers, and the steady cash flow. Since Sortfolio is hooked up to our centralized billing system, you’ll need to write your own code to charge customers. Also, since Sortfolio is hosted on our server cluster, no hardware is included (but you can run it on a cheap server or two – the hardware requirements are next to nothing). We’ll also be happy to announce the sale here on SvN and on our very well subscribed email newsletter.
Interested?
If you’re interested at $480,000, please email me direct at jason@37signals… Thanks.
pep
on 07 May 12$10 + un pancho y una coca
rdo
on 08 May 12You really want that Berlinetta, don’t you? Although $500K will prolly get you the floor mats. But a start is a start.
Nathan
on 08 May 12No no Jason, you’re doing this all wrong! Using the right math, (TechCrunch Math?) Sortfolio is easily worth $300M – $400M.
Tony
on 08 May 12how about a slightly used kidney?
Brian Jones
on 08 May 12I question whether this site it worth $480,000 cash, and here’s why:
1. How much of the site is tied into the 37 Signals brand, and is the reason people pay to be listed on the site because of it’s affiliation with 37 Signals and the Ruby on Rails community?
2. What’s preventing competition from making their own similar service? Is there some barrier to entry or an unfair advantage?
So if this site is sold to someone else, will people still be interested in it now that it’s no longer a part of 37 Signals? And what would prevent a competitor from creating a similar site for less than $480,000?
Zuck
on 08 May 12Keep dreamin’ brah!
Rudy
on 08 May 12I’ll give you tree fiddy.
Bill
on 08 May 12Why would you just shut it down if you don’t find a buyer??
Chris
on 08 May 12As a paying customer, I’m so happy to hear you’ve put “no effort into it in the last year. I can confirm this by the total absence of leads from Sortfolio, despite the health of our other initiatives.
Account cancelled.
Mike
on 08 May 12I agree Brian, I don’t see the $480,000 unless 37S agreed to keep the links from their site to sortfolio. Also If you factor in the cost of paying someone (or paying yourself) to setup/maintain/patch the software the profit is nowhere near $200K.
The value here is the connection to 37S, if that is lost then so is the value.
a
on 08 May 12adfdsfd
Connor
on 08 May 12confused as to why you would shut down a business that (1) runs it self, and (2) generated $200K profit/year
Bill
on 08 May 12I agree Connor.
Andrew
on 08 May 12no way its worth 480k. 400k of that “worth” is the fact that 37signals owns it. laughable.
JF
on 08 May 12Connor: Because it’s not our focus. We want to get back to focusing on our main business. Helping people find web design firms isn’t part of that focus.
Jeff
on 08 May 12Traffic is down 50% in the last two years, according to Alexa. Admittedly at this low traffic, that isn’t incredibly accurate source, but directionally, it is off 50%.
Bob
on 08 May 12The real problem with this deal is that the current customer base is hooked in via recurring credit card payments. The new owner would need to get every single customer to renew their paid account.
In addition to the folks who just weren’t paying attention to the $100/month going to 37s (maybe they got it confused with their Basecamp subscription?) there will be a bunch of people who see the only value in the service as being associated with 37s – and when that goes away they won’t renew.
My guess is that a new owner would get 50 of the paid subscribers to renew – if they’re lucky.
Ryan Evans
on 08 May 12How many monthly uniques?
Neil Hamilton
on 08 May 12@bob, that’s why it’s at $480,000 and not $4,800,800.
If I had the money, I’d buy it. DON’T SLEEP.
Joe
on 08 May 12@Neil – just curious why you would buy it if you had the money. If you’re interested in owning and operating such a site, why aren’t you investing your own time and building one for considerably less cost? Or is it the customer list that you value at $40+ per free user? Or something else – the fun of owning a previously 37signals’ product? Just curious, truly.
Anonymous
on 08 May 12@Jeff:
lol alexa
Ryan
on 08 May 12When I hear someone quote figures from Alexa, my eyes roll into the back on my head.
Anonymous
on 08 May 12Alexa—by idiots, for idiots.
Victor
on 08 May 12@37signals
Wow, what a horrible way to insult your current customer base.
This fires sale of your just rubs me way the wrong way. I just lost a huge amount of respect for you guys.
Just say’n (as now someone who will unsubscribe from this rss feed).
Dylan Bland
on 08 May 12What a great business. This may be a small mini-business in the scheme of the 37signals empire, but a business generating 200k profit per year is nothing to be sniffed at.
Like others here, I can appreciate why you don’t want to give it away, but I’m confused why you wouldn’t just keep it running. 200k is 200k. You said yourself it doesn’t take much time to work on. Keep it going for another year or two…donate all proceeds to a charity if you don’t need the cash.
Good luck with the sale!
Luis Salazar
on 08 May 12Wow. Ok, 37signals is a nice brand. Jason is well respected on the internet. David is without a doubt, a great hacker (im not a ruby dev). You guys have a strong position regarding to your opinion on the web. But I must say this is an insult indirect perhaps on your current costumer base -as said before. Yes, Basecamp is a pretty damn good product, nothing fancy, just works, and it does it well. But many people use Sortfolio (I would assume), not because of how much revenue they make as a result of being there, but to trust and respect over the 37s brand. IMHO, the focus argument is solid, but 37s brand shouldnt affort such a naive post. Dont underappreciate the people that like, trust and follow you. Best regards from Costa Rica :)
Austin Schneider
on 08 May 12I’d like to go against the grain here and say thank you 37s for wanting to focus on your main business. I wish more companies would do this.
JF
on 08 May 12Luis, where’s the insult? We’re selling a service that we’ve decided doesn’t fit within our overall focus anymore. We’re being straightforward about everything – the revenue, our profit, the price. And we’re saying if we can’t get what we consider a fair price, we’ll be closing down the site. We would be closing it down anyway – at least this gives someone a fair shot at keeping it going by becoming the new owner.
Neil Hamilton
on 08 May 12@joe It’s a beautiful product. I just think that’s a steal for that price.
JF
on 08 May 12Like others here, I can appreciate why you don’t want to give it away, but I’m confused why you wouldn’t just keep it running. 200k is 200k.
Sortfolio just isn’t core to our business. It’s time to move on and focus on the things that are.
It’s tempting to continue to do something that makes you money. It’s a lot harder to step back and ask yourself why you’re doing it. Is it just for the money? “Just for the money” isn’t a response I’ve ever been comfortable with.
Overall, Sortfolio represents a very small portion of our revenue. Yes, if we shut it down we’ll take a slight short-term financial hit, but this is a long term decision. It’s the right one.
Justin
on 08 May 12So the 200 premium accounts on Sortfolio just basically found out they’ve been paying 99/month for an app 1. the company doesnt care about and 2. hasn’t been updating
how now to update your customers / how to initiate chargebacks
Victor
on 08 May 12@JF
If Sortfolio was making more money, like $2M per year, would it then be “core to your business”?
Also, what about the Job Board?
Job board is effectively the same as Sortfolio, yet it makes millions per year. Why not shut down Job Board as well?
Lastly, what about Deck Network? This is yet another million dollar per year generating site that is a pure advertisement property. There’s no way you can claim the Deck is core to 37signals.
So why don’t you just admit what is truly happening here. You are unhappy with the relatively low revenue, and don’t want the buried of the services anymore.
Neil Hamilton
on 08 May 12I don’t understand why people are getting so bent out of shape.
The new Basecamp just dropped, and a lot of work was, and will continue to be put into it. It’s obvious it is taking precedence and other apps will just not get the attention they deserve… FROM THEM.
They’re giving this shit away for pennies and you’re complaining about it?
Jeff
on 08 May 12Would love to pick up the property. I would work hard to develop strong relationships with the existing customer base. Take a few months to get to know the customers, while developing the billing system. Talk to every 171 paying customers to see what they like, need want, and then start iterating.
If it makes $200K/year, you can pay it off in two and a bit years. Maybe even sooner if you are intentional about building relationships. Then expand into different segments of the freelance market. Lots of possibilities.
Christopher Hawkins
on 08 May 12@Neil: That’s kind of an interesting comment. On what do you base the assertion that “They’re giving this shit away for pennies”?
Neil Hamilton
on 08 May 12@Christopher Hawkins… In an age where photo stream apps get bought for * billions, 500k is pennies.
Christopher Hawkins
on 08 May 12That Sortfolio is relatively inexpensive compared to the latest billion-dollar acquisition has nothing to do with whether or not Sortfolio is actually worth $500K though. Surely you understand this?
So again I ask, on what are you basing your assertion that “They’re giving this shit away for pennies”? You clearly believe it’s worth an even higher price. What is that price, and how are you arriving at it?
Lance Walley
on 08 May 12Definitely interesting.
If it largely runs itself and IF it can do well/okay once severed from 37s (those are valid IFs), then the ROI is quite good.
I just did a back-of-the-hand calculation where I assume $17K/mo minus $10K/mo in costs to really keep it going (people, servers, stuff we don’t know right now, mistakes that will be made, etc). That leaves $7K/mo, or $84K/year. And that works out to 17.5% ROI. That’s very good. Of course there is clear risk, which has been alluded to.
A buyer would need to think hard about how things will change when it’s no longer part of 37s. That could change the ROI a lot. But, then again, 37s said there’s work ahead. I’m sure they’d help in the transition, and whatever marketing bridge could be maintained for awhile would be an important variable.
Now, as co-founder of Engine Yard and Chargify, I have to give a little plug :)... host at EY and bill with Chargify. Seriously, assuming the billing model for Sortfolio is remotely mainstream, no one in his right mind (and with $480K to spend) would write their own billing system… use Chargify. We exist to make that problem go away for $99/mo. No-brainer :)
Paul Montwill
on 08 May 12I can’t understand this whole rant. Jason made it straight orward – here is the revenue, here is the price. Do you want to go with it?
It is about the focus. Maybe because of the revenue level, maybe because they want to focus on the software that rocks. Doesn’t matter. They have guts to get rid of this project. Great for them.
Even if 50% people will go away, there is still potential to grow the business based on the customer base. It is a great opportunity for a company that can offer cross-selling with the product they alreay own – something for this target group (services for designers and freelancers).
Devan
on 08 May 12Interesting – at that price and current turnover levels, it will take about 3 years to break even on the purchase, once costs are factored in.
In most business buying/selling I’ve done in the past, the general sale price of a going concern has been one year’s turnover. That gives the seller 12 months of usual earning, which generally covers a 12 month ‘non compete’ clause that comes with the sale, and it give the buyer 12 months to work at it, become familiar with the business and break even.
With that reference, I would say that $200K, perhaps $250K would be a more realistic sale price for the IP and assets?
But it is a free marketplace after all. I’d be interested to hear if the $480K figure proposed here is an average, or perhaps the top offer received to date for the site?
Mike
on 08 May 12Setting the price at 480k or else shutting it down effectively means that 37S is willing to sell Sortfolio for $0. It gives them the same desired outcome (not having to deal with Sortfolio anymore in order to focus on core business). It seems counter-intuitive to sell it for $0 if you can’t hit some arbitrary price.
Lets say when I graduated from college, I quit delivering Pizzas and started programming. Focusing on Programming would mean no more Pizza delivery. It would be silly to demand that car buyers give me X dollars or else scrap the car. In reality, I just wouldn’t want to deal with the car anymore. If it’s still running, then I’d sell it for what it’s worth.
I completely understand, and fully agree with, focusing on the main business. It’s what’s made 37S so great/profitable/innovative/lovable. But I would think that a business would want to sell Sortfolio for something. If it was worth 480K, I would think someone would have offered it before this post even went up.
GeeIWonder
on 08 May 12No mystery here.
No bidding war, so they put a reserve on it. Some interested parties might need a guarantee to get financing lined up (or bother mortgaging their house) so they put a ‘buy it now’ price on it. They put a time limit on it which again is standard selling.
This is all stuff you find on ebay, people.
I suspect they may have intelligence a (single) party is interested at just below the half-a-million mark.
GeeIWonder
on 08 May 12Here’s a business model for someone who believes in Sortfolio and/or that ownership of it holds wide interest.
Mortgage your house. Buy Sortfolio. Then sell private 0.5% shares in it to 96 investors at 5K each. That leaves you with majority ownership, and you can unmortgage your house. There seems to be an abundance of people above who would buy these, although possibly only from 37s directly. 20% ROI might even draw interest from non-37s devotees.
PhilippeJ
on 08 May 12This is simply the last post I will read from you. I take the time to post this comment to tell you that this kind of post is just too much. Too much marketing mess, empty advices and all sort of empty advices.
Show more respect for your audience.
Yipekaye
on 08 May 12@All, Guys, If you don’t have money, don’t talk too much… don’t act like you are rich people.. said that’s too expensive, that’s.. bla.. bla.. bla…
It’s funny for the people who has less money even for living their life is lack of money and now.. they talk like experience business man..
Patrick
on 08 May 12Guys must be scared about the competition www.listed.pl ;) Good luck!
Andrei Potorac
on 08 May 12Jason, I see how Sortfolio can easily be integrated into the current line of products you have.
You account for millions of customers, many of them needing precisely what you offer with Sortfolio. Integrate it into Basecamp as a feature, for free.
This would make more users benefit of it, and indirectly Basecamp, as all projects happen there. I guess the more projects one needs to handle, the more growth Basecamp has. Just a thought.
About the offer: I would not buy Sortfolio for that kind of money, because I don’t have them. But I would love to get it and build on top of it into what it can become. So if you can’t sell it, give it away. :)
Dave
on 08 May 12you’ve shown 12 months of revenue, will you be willing to show the traffic for the last 12 months ? I know companies tend to cherry pick their stats, not saying you are but still.
cbmeeks
on 08 May 12I understand that it’s not your core business. But does anyone else get the impression that you guys are bragging that you can make $200k/year with “no effort”?
Anyway, either you’re crazy to ditch “free” money or 37S is worth so much more than 200k that you won’t loose any sleep.
Why not keep it running and donate the proceeds to a charity or something like a KickStarter project that benefits Rails/Ruby?
Anyway, think about this. 37S is a large site with millions of visitors. Yet, you can ONLY get 170-ish people to pay $99/month for a portfolio service. How many people do you think I will be able to get to pay with my puny 500/visitors per month site?
Once you sever the 37S recognition and links, Sortfolio will tank and some poor sap would have just wasted $480k.
You know what…forget it…just close it down is what I think. Doesn’t seem like you care about it anyway.
If it wasn’t just about the money, then you wouldn’t have provided revenue numbers. Hell, sell it for $500. It’s not your focus anyway.
cbmeeks
on 08 May 12@GeeIWonder sounds like a great way to loose your house. lol
cbmeeks
on 08 May 12Also, how does the Job Board fit into your focus on core products?
Bob
on 08 May 12@GeeIWonder your comparison to eBay is interesting but I doubt many people listing things on eBay are saying that they’re going to throw the thing in the trash if their reserve price isn’t met.
JF says they’re doing this because Sortfolio isn’t part of their core business but they want to give someone a chance to run it… but only for a certain price? And then he says “Just for the money” isn’t a response he’s ever been comfortable with. So why the specific price tag? Sounds like money is an issue in this case. I can appreciate wanting to keep the transaction simple – but like most of their kool aid this is just another 37s gimmick to get the fanboys riled up. So, if it doesn’t sell at this price then on July 1 when JF’s about to flip the switch and someone offers him $200k he’s not going to take it? That would be pretty funny.
Also, you all have been quoting the $200k/year profit number – but notice that JF’s data covers a 13 month span. Not a huge deal but a nice little sleight of hand to get people focused on the wrong number.
Again, I think this whole thing falls apart as soon as you have to go hit up those 170 paying clients to re-enter their credit card info into a new billing system. If 37s would be willing to set a price based on the percentage of paying customers that renewed with a new owner then maybe it would be a smart purchase – but of course 37s would never do that.
shahrukh khan
on 08 May 12Your blog looks really famous and why not you share very good information out there. keep it up
Nick
on 08 May 12I agree with alot of the commenters here. Most of the value is in the tie to 37Signals. Without that it is going to be much more expensive to acquire and retain customers.
Throw in the apparent down trend on the site and the fact that the purchaser needs to write a new billing system. I think your valuation is closer to 1x if even that.
But hey, good luck, I am sure someone will bite!
Noah Harlan
on 08 May 12Jason,
To be fair, you’re doing a little slight of hand above that is misleading. You say:
But that’s probably not really right. Sortfolio made over $200k in revenue ($211k to be precise), not profit. Profit would be revenue minus server costs (for you those approach zero since it probably sits on the same boxes that are running everything else) and, more importantly, labor & overhead. Clearly you’re getting rid of it because it takes up some of your time & attention (you meaning 37S, not necessarily you personally) and whatever time that is costs money. For your statement about profit to be accurate that would mean that the amount of developer/support/admin time & money spent on the product is less than $800/month and that this product is running at a 95% margin which would be pretty great. You’re spending $10k/year to clear $200k of profit. If that is the case, and you still want to be done with it, then I would agree that giving it to a charity would be amazing. Personally, I suspect that’s not entirely accurate though. You keep reiterating that it’s not your core focus and I suspect, given the size of your company, that it’s taking more than $10k/year of time & focus.
To the people discussing the valuation (and specifically @Devan), let’s try to add some rigor to the analysis (and some insight into possibly why Jason et al are looking to get rid of it).
The most common way of handling a valuation is as a multiple of EBITDA. EBITDA is, in essence, profit (ex interest, taxes, depreciation, & amortization). So, now the question becomes, what is that number. Let’s say you have a competent but not outrageously expensive Ruby dev/server admin to keep things up and running (this might be you but the cost should still be accounted for since you could theoretically be making the same amount elsewhere if this is you so) – and let’s put this conservatively at $85k + employer-side costs that could put this as roughly $100k. You’ll need a little design work here are there so let’s throw in another $15k for that. We’ll add in some general admin costs for bookkeeping & taxes & basic communications & office admin stuff – let’s call that another $5k to be generous. We’re now in need of some servers and let’s throw that number in at $2500.
Adding all that up, your basic nut to run this operation is looking like something on the order of $122,500. That puts the trailing 12-month EBITDA at about $85k. You then want to put a multiple on that to come up with a valuation and a reasonable multiple might be 5x-8x. That would put a valuation on this of $425k-$680k. So far, so good. It’s at the low end of that valuation range (5.65x) based on trailing EBITDA. But, while trailing value is useful, we care about forward-looking EBITDA. What’s the pro-forma look like?
As people have noted above, the relationship to 37S and the traffic generated from 37S can’t be overestimated. So, while some are saying that you’d lose 50%, let’s be conservative and say you’d lose 25%. That puts the forward looking 12-month revenue at more like $155,000. If we then run that against the cost estimate we have a forward-looking EBITDA of $32,500 and the $480k number has gone from a 5.65x valuation to 14.77x. That’s starting to feel a bit aggressive.
There are a few more factors we can consider here as well. One way to offset the loss of users & revenue could be to boost advertising but that would also boost cost. So maybe we’d get some new users but what would our costs be? Really that’s a wide open question so I’ll just leave growth at zero and new users at zero. We can assume that we’ll get very little organic growth since, with a 25% decline we would be down to well less than 150 users which doesn’t make much of a “community” to evangelize.
Lastly, we have to look at whether or not this is an rising or falling asset. If you plot the data on a chart you’ll see that usage has been falling steadily since last August. Average users are down nearly 7% and, if we look at August through February (to avoid what hopefully was an anomalous March figure) it was down roughly 5%. That type of directional info would tend to push a valuation down.
So, is $480k the right number? Can you stop the apparent slide? Is there growth to be had? Only a buyer can know but if you’re going to consider buying this, I submit this as a coherent way to evaluate it.
Justin Reese
on 08 May 12I have an apple tree in my front yard. I hung a sign on it: “Apples, 50¢ each”. There’s a jar on a table next to the tree, and people drop money in. Not a lot of people come by, but those who do come by regularly. Every so often someone buys a wormy apple and knocks on my door to complain, and I have to deal with it. Every few weeks I check the tree for bugs and disease, and every year I have to prune it.
With very little effort on my part, the tree makes me a couple of hundred dollars a year. But I make six figures working my pine tree farm next door. While a couple hundred dollars is nice, I’m just not an apple tree guy. I’m bonkers for pine trees and really want to pour my time into them.
So I put my apple tree up for sale. If nobody wants to buy it, I’ll just take away the sign and jar and let the tree go to seed. I’d feel bad that my customers would need to find a new apple tree, but they don’t have an inherent right to my apples. It’s a transaction, and if one side wants to stop transacting, the transaction ends.
I fail to see why this scenario should bother anyone.
Fred
on 08 May 12@Justin Reese
Because according to 37signals logic of Sortfolio “not being core to their business” – they should also then divest Job Board and The Deck Network, yet they wont.
Reason why they wont, is because both Job Board and The Deck Network makes LOTS of money.
Jeffrey Henderson
on 08 May 12Why don’t you put it on eBay, that’d be a lot more fun to watch.
Bryan
on 08 May 12@Jeffrey Henderson Now THAT is the best idea I have heard in a long time.
Carlos
on 08 May 12It’s up to 37signals to decide what their core business is. No need to try hang them with their words.
Their business is making valuable products that make them money. Clearly Sortfolio doesn’t have as much potential as their other concerns, thus it gets offered for sale.
Current customers shouldn’t get insulted that the site hasn’t gotten any attention from 37signals development in the past year. Was that part of what they were buying? No, and they can cancel at any time. If having the listing on the site is proving the $99/month worth, customers should be grateful that 37signals is trying to transition this to someone else, rather than shut it down altogether.
Gurpreet
on 08 May 12Its telling how the usually upright Jason is simply not responding to the several allusions to the job board and the deck not being the core of 37S business. I think this discussion is pointless without that response from Jason.
Chad
on 08 May 12All
Does anyone else find it strange that come July 1st, 37signals is effectively selling the product for $0 by selling it.
If that’s the case, and given that they have already had prior offers for the site – why the hard stance on the $480k figure then?
If you truly are ready to take $0, why not just sell it to ANYONE who has already made you an offer > $0?
Bob
on 08 May 12Another interesting analogy, this time by @Justin Reese, but again not quite right. Unlike an apple tree, it is presumably easy to move Sortfolio to another person’s server so the notion that they would throw it away rather than sell it for less than an arbitrary price is just strange – a gimmick.
If JF wants to make a case that it will cost him hundreds of thousands of dollars to move the site then that might make sense – not worth it to him to go through that process and turning it off would be easier.
Look, if 37s wants to shut this thing down I don’t think anyone is going to care (even the existing customers… who probably don’t even realize they’re still paying for it).
Bob
on 08 May 12@Chad – because it’s a gimmick, trying to get someone to over pay for the site. It will be interesting to see if they actually shut it down on July 1. I’d love for them to be transparent about turning down sub $480k offers on July 1.
David Andersen
on 08 May 12Apparently there is no shortage of people with nothing better to do than bitch about things that have absolutely no effect on their lives.
Michael
on 08 May 12David, it’s frustrating to see them willing to shut down something that would become something really great in the hands of many small companies/entrepreneurs. There are people who don’t have $480k but who love doing the kinds of things Sortfolio does.
dylan
on 08 May 12I think it’s a good buy. It would make sense for an AOL, Yahoo or Wash Post type of new media company.
What about taking Sortfolio, the Job Board, and the Deck and spinning them off into their own company. An online ad empire with a conscious
Yipekaye
on 08 May 12@Michael, What if you’re in their position ? do you want to give it for FREE ? 4 Years of work ? Do you want give it for FREE ?
Come one man, use your brain, It’s better to SHUT DOWN rather than give it to the man who don’t have any effort other than:
“PLEASE… Give it to me for FREE!” I promise, I will take care of it.
so funny!
Michael
on 08 May 12Yipekaye, who said free? There are 47,999,998 sales figures between $0.00 and $480,000.00. And who said promise? Jason alone probably knows 10 people who would kick ass with that site and have proved it, like Ryan Carson. I’m not saying RC wants it but there are a lot more groups like Carsonified out there.
LB
on 08 May 12Wow, really? I guess it’s easy to say that if you already have a well padded bank account. No, nobody does anything for money…cause you know, who needs money to buy food and pay a mortgage. In adapting the title from your first book, I say: “Get Real.”
Yipekaye
on 08 May 12@Michael, the guy you have said before is very small tiny company. This is not suitable for them. what’s the price they will pay for it ? 50k ????
@LB, I think you should increase the ability to understand people words, so you will know what’s jason really going to say,
Michael
on 08 May 12Yipekaye, that’s my point. There are plenty of cool people Jason knows who have less than $480k and have proven themselves to qualify as “a good home.” That’s why it’s frustrating to see them willing to throw away a perfectly good website.
atrandafir
on 09 May 12Hi there,
It’s a good thing to admit that you “can’t take care anymore” of Sortfolio as you should.
Sometimes one idea just doesn’t give motivation anymore. So you stick to the ones that you like more. But from the few things I’ve noticed about ideas is that the longer you think about something, the more you’ll start to love it. It’s like watching a bad movie series that you finally start to like. Maybe that is what is happening to you now.
It’s not about the idea, it’s about your faith in it.
I don’t know who’s original idea Sortfolio was in the beginning, but maybe instead of selling it, you should find someone who’s passionate about it and willing to rebuild it with your support, under your brand.
I have read both of your books and other material to try to make my own web business, I had lots of ideas, many started and abandoned. So I’ve got a lot to learn yet.
But.. I wish I had 20k income/month from my own business!
LB
on 09 May 12@Yipekaye I’m trying to understand your words.
Noah Hendrix
on 09 May 12If you can’t sell it consider doing what thoughtbot did with Copycopter and open source it. At the very least you could contribute an interesting codebase to the community for study.
http://robots.thoughtbot.com/post/19388751626/copycopter-is-now-open-source
Mike
on 09 May 12Why don’t you just donate the 200K a year to a local food bank or charity? This could also be a selling point for the app: “all proceeds go to help kids with cancer” or something to that effect. Not many people have a chance to do some good in the world, this is good way to do jut that and you never know it may save someone’s life!
Joe J
on 09 May 12Give it to one of your amazing employees. If not, they’ll think you’re a dick.
Luis Salazar
on 09 May 12@JF
I guess the insult (if any) is on precisely creating a product using your brand (lets be honest, Sortfolio worked as a result of people following 37s) and then saying: We don’t care anymore. Someone come buy it or we will be closing it.
Don’t get me wrong, following the (as said) good argument of ‘focus’, I would have done the same.
Perhaps, the same thing, said differently, could have a better result.
At the end, we don’t always mean what we say in the way we say it.
David Andersen
on 09 May 12@ Michael – then those people can roll their own if they want for less than $480k. This is the beauty of free enterprise. 37s doesn’t have to sell it for less than they want and no one has to buy it for more than they want. And fortunately for most of the people commenting here, there isn’t (currently) a tax on bitching.
Henry P
on 09 May 12@David Andersen
You’re missing the point.
37signals said come July 1st, if they don’t have a $480k offer – they will shut it down (effectively selling Sortfolio for $0).
If that’s the case, that 37signals is willing to take $0 for it on July 1st … then why haven’t they already sold it to one of the “many potential buyers” who have already made an offer?
It makes no sense and this notion of give me $480k or we’ll shut it down smells of a sleezy sales scheme.
Anonymous Coward
on 09 May 12@Henry: “It makes no sense and this notion of give me $480k or we’ll shut it down smells of a sleezy sales scheme.”
Or a much less sinister simple reserve price. If someone hits the reserve it sells, otherwise it doesn’t. It’s an auction with a public reserve price. Nothing sleazy about that. It’s anti-sleaze since it’s all public and the intentions are completely clear.
Joe
on 09 May 12@Anonymous Coward: Except in most auctions you don’t burn down the house when it doesn’t sell.
Justin
on 09 May 12Jason,
You lost focus. That easy $200,000 “profit” afforded you to pay for one or two more developers to solely focus on your main business… what ever that is (which most businesses focus on making money).
Justin
on 09 May 12@Herny P
Touche!
Justin
on 09 May 12How about sell it for less, or spin off a [non-profit] subsidiary… use the profits from that company to fund a charitable foundation or donate to charities?
Justin
on 09 May 12Last comment, as others have stated the major value is in the ties to 37 Signals. Just spin off/start a [non-profit] company or foundation and donate Sortfolio to it so that its profits can be used for good.
Michael
on 09 May 12David, they could, but that would be a waste of effort. At minimum they could sit down and calculate the engineer/designer time they’d have to spend, and pay 37signals that money instead. Not to mention the lost time making new profiles at thousands of agencies.
Gary Bury
on 09 May 12Just a thought:
If you don’t get an offer by 1st July, rather than shut it down, we’ll take it on and pay all profits to charity.
It’d be a shame to shut down something that could benefit so many.
Beau
on 09 May 12In truth: Things are worth exactly what someone is willing to pay for them.
—
That said, if you do not get an offer you are comfortable taking – it would be a shame not find a way to keep the site up and donate the profits to charity.
If Sortfolio is spinning off $100,000 + in real profit, that could be over a million dollars in a decade that would improve the lives of people that are significantly disadvantaged. There are so many wonderful and well run non-profit organizations in Chicago alone.
I must say, I think your success (Which is fantastic by the way!) may be impacting your judgement here. This is serious money to most people, not something anyone I know would just toss in the garbage.
By all means try selling Sortfolio for as much as you can. But please don’t throw away REAL money that so many could benefit from.
I can see it now. The “37 foundation” :)
Dave
on 09 May 12Why was the link from the main 37s page to sortfolio removed?
Anonymous Coward
on 09 May 12Lots of people out there with lots of ideas on how someone else should spend their money. If you have great ideas, buy it (or start something yourself) and then do what you want with your own money.
David Andersen
on 09 May 12Michael, the 480k isn’t just for the code, it’s for the name, the customer base, etc.. If you don’t like paying for all that, roll your own. If you don’t want to do that, you’ve got nothing left to complain about other than ‘waaah, it’s not the way I think it should be.’
Henry P – you’re addressing something completely different than what I was talking about. But since you brought it up, no, they aren’t willing to take zero for it on July 1. They are willing to take what they think it’s actually worth. If no one else is willing to pay that, why should they give value away? They should only do that if they absolutely want something vs. nothing. But at this point they want what they consider to be full value or they don’t want anyone to have it. I’m sorry if that seems cosmically unfair but it’s their property.
Michael
on 09 May 12David, just to be clear, I have no interest. :P I’d probably run it into the ground. I’m just about avoiding waste.
Antony
on 09 May 12good luck with the sale Jason. I also saw the site for sale on Flippa: https://flippa.com/2739829-sortfolio-com-web-design-marketplace-w-220k-annual-revenue
JF
on 09 May 12Thanks Antony. Just got the listing up on Flippa this afternoon.
M
on 10 May 12I agree 100% with Beau.. good points
warambil
on 10 May 12Best wishes with your sale.
Personally, I don’t clearly see that you will get buyers before July therefore it is a pity we lose this great resource of web design providers. It was a great reference for all of us.
Other than that, I or anybody else, are not the ones to judge your company decisions since you may have your reasons to do this so I guess this whole argument is pointless since it is not our call.
Best wishes and let us hope this site continues up and running
Steve
on 10 May 12Here’s an idea that takes advantage of the gaming model and could build some suspense and get this thing sold.
Start at your $480,000 price tag, then every month lower it by say $20-25,000. Lower it every month until someone pulls the trigger and buys it. You might get $400,000 you might get $20,000. Come on, it will be fun, and maybe it will generate some publicity to help the buyer’s momentum.
Then, of course, send me 10% consulting fee for this brilliant idea.
Jack9
on 10 May 12$200,000 profit is $200,000 profit. Period.
If a company with zero profit and can be sold for 10B, $480,000 is such a great deal.
Seriously.
mb
on 10 May 12Jason,
Not completely agreeing with the “not our core business” argument. Agreed, it’s not your core business, but many very successful companies put resources towards ancillary projects (or businesses) that compliment or enhance their brand. Sortfolio certainly enhances your brand by providing yet another avenue to increase 37s’ internet footprint and standing in the “community” by providing a service that is widely viewed as beneficial and (somewhat) unique.
*People want to be involved with 37s, leverage that and continue to build upon it.
Hire two creative and intelligent new staffers to solely focus on Sortfolio, continue to develop its possibilities, and multiply its reach.
Minimal distraction to JF while positively contributing to 37s’ bottom line, high quality offerings, and general brand health.
Simple (just like you like it!). :)
Anon
on 10 May 12As someone who is currently paying for one 37Signals product and trying out (and was planning to pay for at the end of the trial period) another I have to say this post is discouraging – at any time you might just shut down one of these services as being non-central to your goals if you can’t sell it for whatever price you deem fair?
I count on continuity – I will now not be signing up for the full version of the latter service knowing it could be next up for the chopping block. Don’t get me wrong – I understand trimming the fat and keeping focus, but I don’t understand hosing your customers by ceasing a service rather than selling it to the highest bidder.
d2 diesel
on 10 May 12If they can`t sell it, it will be sad to see Sortfolio go down. It`s a very good website with a great potential. Hopefully, someone will buy it and make it work better.
JF
on 10 May 12Hire two creative and intelligent new staffers to solely focus on Sortfolio, continue to develop its possibilities, and multiply its reach. Simple (just like you like it!). :)
Ah, but that is the opposite of simple. Hiring people to keep something going just because it’s already going is not simple. It’s how organizations get more and more bloated over time. We don’t have people at 37signals who are dedicated to one product – we all work on everything. So adding people dedicated just to one thing complicates our structure and creates different classes of people within the organization. Not simple, not good.
Anon
on 11 May 12Like the saying goes, its only worth what someone is willing to pay. The risk that subscribers will cancel is fairly high, you have around 170 subscribers paying $1200 a year each, so the loss of ten subscribers is not insignificant. I don’t doubt that the price you are asking for is fair, but think you should be more flexible about the payment structure in order to provide the purchaser with some peace of mind. The initial outlay is far too high in my opinion for something that the purchaser will have little guarantee of success, I do appreciate the way you are trying to sell the site to someone who will treat it well.
pb
on 11 May 12Can 37s clarify on whether or not it expects that existing customers are going to have to be re-enrolled into a billing agreement? Writing a new billing system is easy but I would expect drop-off if customers need to re-authorize billing.
Nico Oud
on 11 May 12Why would you sell such a great concept? You need a great business developer! Anyway… good luck!
Ian
on 11 May 12I agree with Mike above – make it a charitable thing, and donate the profits to a worthy cause.
Taking all philanthropy out of the equation, the resulting PR can only do 37S good.
There’s a bunch of charities who would be delighted with 20k per month…..
mb
on 11 May 12Jason,
All respect but I just disagree. IMHO, a it’s simple solution yet a difficult task. I didn’t say “just to keep it going”, I said, “continue to develop its possibilities, and multiply its reach”. The difference being, putting a value on the continued growth of a very viable asset. Definitely a challenge but one that 37s has proven it is up to. Is it worth the commitment? Apparently you don’t feel it is.
There is also an important difference between a company getting bloated and a company keeping itself relevant and growing. Imagine if Apple decided to only focus on its core business. No iPod, no iTunes, no iPhone, no iPad, no Apple TV…
Another HUGE difference here, one of us has built an incredibly successful business out of nothing and one of us is a middling corporate stiff. :)
Recomatic
on 12 May 12@mb, you’re wrong about Apple. They’ve been facing the exact same situation in the late 90’s : as Steve Jobs was returning as CEO, he decided to remove the growing clutter on their product line. At the time they were selling a zillion of different product with so many variations (quite like Dell is doing right now) and he juste decided to focus only on 4 different products represented as a quadrant: Pro vs Perso and Laptop vs Desktop. This helped Apple renew with success, and probably made it possible to free time to develop new products: 5 years later the iPod came out and became a massive hit. At the time mobile devices were not where the focus was at Apple, but it became a growing part in their revenue, shuffling their priorities in the process.
Google just did the same thing a few months ago: with Brin replacing Schmidt as CEO, they took the very controversial decision to shut down most of their side projects to focus on ads and social. It’s far too early to see if this decision was smart, but the bottom line is that you need to constantly cut the parts of your business that are not developping, or worse, that prevent you from developing others. But priorities change over time, it’s not enough to decide on what you should put focus on -your job as a business owner is also to cut where it hurts if you need to.
What I think is a bit sad about this, is that people who are able do pay $480,000 in cash for Sortfolio are probably not the best ones to run it -but the ones that are willing to have it for free aren’t as well, because it’ll be a lot of work to make it grow. Sortfolio could be one thing that just couldn’t exist if it’s not part of 37Signals anymore.
I also found two kinds of reactions to this post particulary funny:
It’s like people saying that it you sum up all the profits made on stock market by big banks, it’ll solve the world hunger problem. The figures are big enough to solve the problem, but the second you start giving this money away, you stop making a profit. The $200,000 a year in profits are not to take for granted, no matter what happens.
As a matter of a fact it’s not. $200,000 in cash is $200,000. But in that case, it’s the average income (not profit, I insist on this) that this product made on the past year, while it was still 37Signal’s property. If 37Signals keep it for another year and still spend almost no time on it, this figure will probably keep decreasing.
Nobody, especially here, should underestimate the changes, induced over time, by action or inaction.
That’s why a company that would really want to make Sortfolio work would totally benefit from the transaction, but someone just buying it, thinking that it will be a steady $200,000 income per year without doing anything should really reconsider their decision making skills.
Don Schenck
on 12 May 12I must admit, I’m VERY tempted. I have the means, and the expertise needed.
Hmmmmm…lemme run this by my Mastermind group…
Mike
on 12 May 12Sorry Recomatic:
“I also found two kinds of reactions to this post particulary funny:
You should keep it and give the money to charity
It’s like people saying that it you sum up all the profits made on stock market by big banks, it’ll solve the world hunger problem. The figures are big enough to solve the problem, but the second you start giving this money away, you stop making a profit. The $200,000 a year in profits are not to take for granted, no matter what happens.”
This makes no sense, how are these 2 situations simmular? In this situation 37S is willing to give away $200K (which by their own words cost them next to nothing to maintain) and just let it go for $0. If it truly cost them nothing and they do not want the money then what harm does it do to donate it to charity. Even if the next year they only make $100K on it, it is still $100K that the charity didn’t have before.
Marko
on 12 May 12Why all this fuss?
As a CEO (or a product manager or whatever the role) you have to know what product to build and what product to kill. The question “Does it follow our strategic direction and vision” is one of the most important factors when making a decision. Too many people/business ignore it or worse, they don’t have a vision.
Thumbs up for doing the right thing and being so open about it.
Anon
on 13 May 12Why all this fuss? Because the offer to sell has been presented really badly and people have to guess at traffic, costs, subscriber transfer risks and acceptable business valuation. Like any business or investment past performance may not correlate to future performance. Especially in the case where an established website is being transferred from its well respected owner.
When you say that $200k income is profit or free cash flow when it isn’t that at all due to other costs you are misstating the basic accounts which causes confusion among interested parties.
So to repeat yes cut the slack from your product line but do it professionally.
There is a further problem here, that only small players will be interested at this price and revenue stream, meaning it is harder to find a reliable buyer who won’t mess you about. So in the end it may be a better idea to shut the site down completely or wind it down.
This discussion is closed.