Interview With Rick Latona

Rick Latona is one of those people that isn’t afraid to try new things and innovate in spaces that few people have entered. From building one of the top brokerage companies in the domain space to creating a number of successful businesses in other niches, Rick is always looking for great opportunities. Now, Rick has embarked on a new adventure that is seeing some incredible success.

Rick left the world of domain sales behind and has pioneered a service that truly is the first of it’s kind. Latonas has turned-into a full-scale platform for buying and selling web properties. Of course when Rick does something, he goes big, these aren’t mini-sites brining in a few bucks a month, these are real businesses bringing in passive income.

Last week Rick and I had a quick call to catch-up and after a few minutes I realized that I had to interview him for the blog. Since so many of my readers are interested in developing their own names or buying income-generating property themselves this seemed like a perfect fit. As you know, I don’t do interviews on here often so when I do I make sure they are highly valuable and relevant to you, my readers! And with that let’s take a step-into Rick’s world:

(Morgan) How does selling websites differ from selling domains?

(Rick)They have little in common. The differences are so many that they would be impossible to list but I’ll highlight the biggest ones.

Most domain brokers would agree that there are a few buyers that make up a majority of their business. It isn’t even fair to say there’s an 80:20 rule. It’s more like a 98:2 rule where 2 percent of the buyers make up 98% of the sales.

With developed revenue generating websites, it’s the other way around. We deal with new buyers on a daily basis. This makes the management of relationships more intricate but it’s a wonderful problem to have. I get so excited when over and over again we sell a site to a “new” customer. That rarely happens in domains.

The closing cycles are long. Due diligence is everything. Latona’s offers a dedicated broker service and we walk the buyers and sellers through every step of the process. Sometimes coming to agreement on price and terms is easy, often it can be very complicated. The offers are rarely straightforward (e.g. I’ll pay $x for the site). More often than not, there are terms and conditions that both parties have to agree to (e.g. seller providing support for x months).

Likewise, sometimes it’s easy to transfer and move the sites, affiliate accounts and other assets but other times it can be a long and drawn out affair.

In summary, the reason I’m telling you about the closing cycles and the large pool of active buyers is that it all comes down to high quality salespeople and sales management.

With domains, anyone can have a newsletter. Just send out an email and people reply saying they’ll buy the domains. With websites, it’s much more complicated.

Our brokers have to use every tool available to them and be very organized and efficient. We use salesforce.com’s enterprise edition as well as Chatter which is sort of an internal facebook which is used to keep track of deals and activities. So, when someone is talking to a buyer or seller, it updates their “wall” and the other brokers as well as management can “like” the activity to follow the progress.

(Morgan) Is your typical buyer also a Domain Investor or someone completely different?

(Rick) More often than not it’s someone completely different but I hope to bring more domain investors over to our side. There’s a lot of opportunity. Buy cash flow!

I understand that most domain investors are worried about the risks associated with buying a developed site that relies on Google search results. I have mathematical formulas that can help them make the right decisions on what to offer to mitigate that risk. I encourage both the curious and the interested to contact us. I’d be happy to do a one on one conference call with any one of your readers to explain our spreadsheets that we use to calculate values.

To give you a little more insight into our pool of buyers I can share this list. Internally, we classify buyers into three categories:

  • Strategic
    • These are what domainers would call “end-users”. They are the companies in the Insurance business that would be interested in buying sites in the Insurance vertical. The sites are a “strategic” fit.
  • Cash Flow Investors
    • These buyers are assembling cash flow. They are focused primarily on their internal rate of return and the ease of management of the website.
  • Network Players
    • These are primarily SEO firms but can take on many different personalities. They are companies that have huge networks of sites that all support each other. So they’ll have an insurance site, a mortgage site, a weight-loss site, etc.

(Morgan) What category/niche are you finding to sell the best?

(Rick) You’ve just identified another difference between domains and websites. There are two ways to look at categories. Is Insurance a category or is lead gen?

At Latona’s we break them down by revenue streams or verticals. The latter is what you are used to in the domain business. For example, insurance is a vertical. Mortgages are a vertical.

Most of our buyers are focused on the nature of the revenue stream. For instance, cash flow investors are often looking for AdSense sites or sites that operate on clicks alone. There are many companies besides Google in the space. Insurance sites use SureHits, etc. Network sites are often looking for ecommerce or lead generation sites, etc.

If you go to Latona’s, you can filter by both revenue stream and vertical. This image below shows the active filters as both “insurance” and “lead gen”:

 

(Morgan) How do your sale prices compare to Flippa sales?

(Rick) Flippa is a great company and we work closely with them. I have nothing bad to say about them but we are in two different businesses. They are a marketplace, much like eBay. Latona’s is a brokerage firm. We provide dedicated brokers, we review and verify stats, we ensure a secure transaction and we provide transfer guidance.

Our total sales numbers are probably very similar but they do far more deals. We prefer to do fewer deals but bigger deals.

The only other thing I’ll say on the matter is that Latona’s has an average sales price of $87,600. We feel that is high.

(Morgan) What is the best piece of advice you have for someone that wants to build a revenue-generating site?

(Rick) Don’t build. Buy. Ha! I know that sounds self serving but honestly, if you don’t know what you are doing already or how to build a site, it’s probably better to buy one. More than anything, it takes time for a site to get established. Buy an established site and arrange for the seller to stay on as a consultant if necessary.

(Morgan) You’re always on the cutting-edge, anything to share as far as trends we should all look for in 2012?

(Rick) Thank you for what I will take as a compliment. Unfortunately, I don’t have all the answers. Sometimes I’m on the bleeding edge which is worse than being on the cutting edge. I’ve been wrong often but with the trend towards buyer, selling and trading in developed sites, it looks so far like I was right on this one. Being that it’s all still in its infancy, it’s hard for me to say the trend is any different than what I’m currently focused on.

(Photo Credit: DNJournal)

{ 7 comments… add one }

  • tom thurman April 25, 2012, 11:08 am

    Have you ever seen the asking price multiples in the Latonas newsletters?  On Flippa you can buy a site for 12-18 months of revenue, Latonas newsletter asks usually for 24-48 months.  And on Flippa you get much more verified insight/stats into the websites.  If you’re trying to beat Flippa while offering less information and asking higher prices I don’t see how this is successful.

    Reply
    • ricklatona April 25, 2012, 1:59 pm

      Tom, if it’s a site that is new with recent rankings and it’s being “flipped” it probably is only worth 12 months revenue. We have sites at those multiples as well. 

      However, we also have very established sites that are full internet business that can and do sell for much more. In fact, we find it easier to sell a great site for 4 years than a crappy site for 1 year. Good sites get bought and bad sites get sold. 

      In regards to stats and information, that’s why we have dedicated brokers. Our buyers ask for whatever information they need and the brokers hunt it down. It happens every day. I fail to see how Flippa could verify stats. I’m not saying anything bad about them because they are a fine option. However, they are a network and can’t verify anything. 

      I’m not asking anyone to avoid them anyway. Just give us a shot next time you see a site you think is interesting. Hit me up directly. I’ll get you the information you need.

      Reply
    • Danny April 26, 2012, 8:16 am

       There’s really so much deception in the Flippa marketplace.  I think it brings the average sales price of websites listed there down, because the good websites get hidden among the crap websites that have a long sales page with supposedly ‘legitimate’ stats.  There’s definitely room for a brokerage service that can present great websites with cash flow to interested buyers.

      Reply
  • i Multiscreen April 25, 2012, 1:50 pm

    It’s a mystery to me how people can buy and sell websites, from an SEO point of view, considering it is difficult to even transfer hosts within the same company! I guess if the buyer stays with the same host, it stays more consistent with search engines . . . More power to Rick! I read the Latonas newsletter with interest!

    Reply
    • ricklatona April 25, 2012, 1:55 pm

      We do have clients ask to take over the existing hosting accounts. It can be arranged.

      Reply
    • Morgan Linton April 25, 2012, 7:28 pm

      Thanks for the comment @i MultiScreen – the transfer process can go very smoothly and shouldn’t impact SEO.

      I’ve found that when people buy sites for a few thousand dollars they don’t put much time into the transfer process and that’s where things can get ugly.

      If you’re spending five or six-figures on a web business, you’re definitely taking the time to make sure the transfer goes right.

      Of course, if you buy from Latonas, they make sure the transfer goes right so you don’t even have to worry about it, that’s their expertise!

      Reply
  • Ricky Martin December 26, 2014, 6:35 am

    Latona is just worried about their brokerage. They have brokers who are car dealers in past. Expert in time waste. They mass mail people and search for people who can sell.

    They never present 100% facts. Suppressing facts is the art and one should learn from them. All they care if about their 15% cut.

    Reply

Leave a Comment