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by sixtypoundhound 2380 days ago
I'm sorry. NO. Just No.

Speaking as someone who not only invests in websites but authored some early studies on the fair value of micro-sites (back in 2012) that deal is utterly bogus.

The value of the business is in the traffic and audience, not the code. To be honest, getting rid of the legacy code and moving the site onto my standard platform is a major goal of the early integration process. I do not pay for code (sorry).

What you have been handed is the back-end of a potential product, the market value of which is unproven (since you haven't been given the customers). While I'm sure the technical quality of the work is excellent, there are multiple strikes against it from a business valuation perspective. Fight for your share of the store profits.
1 comments
gkoberger 2380 days ago
It doesn't seem like there are any customers? And it definitely doesn't seem like their cofounder "gets" the customers... if the site is being shut down and the code is being given away, then there aren't really customers anymore. And nothing said above makes me think there are any customers or revenue currently.
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sixtypoundhound 2380 days ago
Indeed. From what I can tell, it sounds like an e-commerce company is bifurcating into:

- A B2C Shopify store, with the former traffic / audience

- Some kind of e-commerce platform (not yet a business)

To your point, if they were not already actively trying to market the code as a platform, this is an EXTREMELY hard reset for the second project and your best hope (if you're going to continue this path) is negotiate an acqui-hire.

Speaking as an investor again, the commercial side of the second project sounds like a potential goat rodeo. You're basically dealing with the sales cycle for selling a B2B infrastructure product (specialty e-commerce backbone) to small companies...

Guessing at the market size, you would need an average installed price north of $5 K to make a business viable which means you need a B2B outside sales team. Given that you're selling to startups, suspect getting above $100 K ticket price is a challenge. Strong likelihood of issues with customer acquisition costs > contribution margin.

Again... hand waving BS about the business I haven't seen, but much caution would be advised. The other guy definitely grabbed the crown jewels of the remaining business.

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