Australian startup snapshot: Flippa

Four-year-old spinoff to SetPoint aims to be eBay for websites.

Flippa managing director, Dave Slutzkin. Credit: Flippa

Flippa managing director, Dave Slutzkin. Credit: Flippa

Flippa is a Melbourne-based online marketplace for buying and selling websites and Web domains around the world.

The pitch

At parties, Flippa managing director Dave Slutzkin likes to describe his business as “eBay for websites.”

More than selling just a .com address, Flippa users exchange the entire website, including design, content, advertising, customer lists and search ranking. “It becomes a business, and that’s what people trade on Flippa,” said Slutzkin.

The price of a website can range from a few hundred dollars for a basic, recently developed site to as much as $300,000 for an established website with high search engine rankings and an existing revenue stream, he said.

The biggest sale Slutzkin could disclose was $330,000 for a Melbourne media website, The Inquisitr (inquisitor.com). “We’ve had some bigger sales than that,” but they are subject to confidentiality agreements, he said.

Flippa takes a listing fee upfront of $29. After the website is posted for sale, Flippa offers upgrades to sellers to improve visibility of the site. When the site is sold, Flippa takes 5 per cent of the sale price, up to a maximum $3,000.

Funding it

Flippa has bootstrapped itself since launching four years ago in June 2009 as a spinoff to web development education forum, SitePoint.

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After customers began buying and selling websites using the forums, SitePoint formalised the practice into the SitePoint marketplace in 2006. Three years later, the market was spun out into Flippa.

“It was kind of cheating in some ways when you look at startups because from day one we were profitable, we had good revenue [and] a good customer base,” said Slutzkin. “We haven’t had to go to the market at all.”

Selling it

Over the last six months, more than 10,000 people bought a website on Flippa and nearly 5,000 sold a website, estimated Slutzkin.

While Flippa is based in Australia, only about 5 per cent of customers are located here, he said. The rest come from about 200 countries around the world, with a particularly high presence in the US, UK and Canada, he said.

At least in the short term, Flippa plans to stay in Australia, said Slutzkin. “We have a really good [development] team and we know this scene.” However, the company may seek to expand its presence to overseas markets so that it can for example have more localised sales, marketing and customer support, he said.

New top-level domains being released by ICANN should be good for business, Slutzkin said. He predicted the rollout will further commoditise web domains, decreasing the value of an address but at increasing value of a complete website sold through companies like Flippa.

Dealing with copyright

Slutzkin rejected the idea that Flippa facilitates so-called cybersquatting, in which someone buys a trademarked domain with the intention of selling it at an inflated price to make a profit.

“We provide the marketplace; we don’t attempt to make a judgment on what people use it for,” he said. “We think we have savvy buyers and savvy sellers ... and we do as much as we can to help people educate themselves and use the marketplace for some very useful purposes.”

Flippa has received inquiries from copyright holders, but the company “is very open to helping out anyone who feels that their trademark has been violated,” said Slutzkin. “We do our best to help protect the interests of copyright holders and at the same time help protect an open and free market.”

However, a challenge for the business can be dealing with the many different copyright laws across different countries, he said. “We attempt to be very willing to oblige whenever any police force or court approaches us.”

Melbourne IT, a major web domain services company in Australia, has no problem with Flippa’s model for flipping websites, according to the company’s chief strategy officer, Bruce Tonkin.

“What they’re doing is a perfectly a legitimate business,” he said. However, Tonkin cautioned that buyers should properly research sellers before agreeing to a transaction.

Startup scene

Slutzkin said he sees improvement in Australia’s startup scene. Starting a new business has become “more of an option” for university graduates and others in Australia, he said.

He pointed to a range of new startup programs in Melbourne, including an accelerator program by Melbourne University, incubator AngelCube, and co-working spaces Inspire9 and the York Butter Factory.

“It’s a really exciting space to be in,” he said. “Some of them are wild and crazy and aren’t going to come to anything, but some of them just might be the next Facebook or at least the next 99Designs or Atlassian.”

Australian startup snapshots:

NexPay
Airtasker
Roamz / Local Measure
Tap-To
Tapestry
Mathspace
Ollo Mobile
CryptoPhoto
OneConfig

If you’ve got a startup or know about a cool new Australian business, please email Adam Bender at adam_bender@idg.com.au or on Twitter (@WatchAdam).

Follow Adam Bender on Twitter: @WatchAdam

Follow Techworld Australia on Twitter: @Techworld_AU

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