This week's Inside Interview puts the spotlight on Jon Yau's $250,000 purchase of StockPhoto.com. This purchase was completed using Flippa, and it is the largest domain sale on the marketplace's website (according to NameBio).
In the eleven questions below, Jon (@Stockphoto.com) provides excellent insight into his business approach, his reasons for acquiring StockPhoto.com and why he chose to buy a premium domain name in the first place.
1. Can you give us a brief description of your company StockPhoto.com?
Stock photos are images used in websites, apps, brochures, and other promotional materials. They are usually generic in nature and can cover diverse subject areas (e.g. from people, locations, flora, fauna to illustrations).
Stockphoto.com is an online image marketplace where photographers sell stock photos (or more accurately, usage rights to the photos) to buyers for a one-time fee. For each photo that Stockphoto.com sells, we pass this revenue on to the photographer (i.e. the owner of the image) and keep a small commission as our fee. The buyer downloads the ‘un-watermarked’ photo(s) immediately upon payment. Everyone's happy!
2. I've read a little about your background as a consultant, having also developed a few domains and websites. At no point did I see anything related to photography! So why did you acquire StockPhoto.com?
James, it was a $250,000 midlife crisis! After a very happy career in consulting (and some hobbyist web development and domaining on the side), I hadn't scratched my itch.
I felt I had one web startup (of a decent size) that I had to do. I am in my mid-40s and I didn't want to die without knowing. But why stock photos? I like stock photos because:
3. How did you determine that StockPhoto.com was worth $250,000 to you?
I always figured I would acquire and develop a generic domain name but when ‘Stockphoto.com’ came up for sale – the asking price was a lot more than I had in mind.
My view on valuation for any asset (not just domain names) is that you need to get a couple of estimates using different methodologies. The more ‘educated’ darts you throw at the board, the better you get at arriving at a workable figure.
The questions I asked were:
4. Did you use any tools, services or data to determine that $250,000 was an acceptable price to pay for StockPhoto.com?
I used Compete.com predominantly to assess how much traffic I could draw from the domain name. From there I could apply some assumptions on conversion rates, revenue per click, etc. to arrive at some revenue estimates. Once I had some revenue estimates for each of the above questions, then I could figure out how much the going concern might be worth.
However, after all that I still relied on gut feel. No matter how many scenarios you’ve modelled, if the venture falls over – no one will ever go back to those spreadsheets to find out where you went wrong.
You will have no-one else to blame. And only one person can make it work.
5. You acquired StockPhoto.com for a "buy it now" price of $250,000 on Flippa. Would you have considered paying more than you did for the domain?
No – I don’t think my wife will ever let me buy another domain name, let alone one worth more than $250k! It was already over my original (modest) five-figure budget.
6. How did you find Flippa's platform for acquiring such a high value domain - was it easy to close the transaction?
Very easy. I’ve used all of the major domain platforms at some point in time over the last ten years. Flippa is by far the best now that it has an integrated escrow service. I’ve had the opportunity (since the purchase) to tour the company’s Melbourne (Australia) offices.
I was fortunate to have recruited Nick Kenn (Flippa’s General Manager) to my Stockphoto.com advisory board. Nick and his team run a very professional operation, and I hope to emulate them.
7. For you, what is the advantage of developing a premium domain name such as StockPhoto.com over buying a "brandable domain" (such as Shutterstock.com)?
When someone types “stock photo” into Google and they see my domain name in the top few search listings, my bet is that they would trust my domain name enough to click on it. And when they come to my website and see a relevant, high-quality stock photo at a comparable price then my guess is that THEY WILL BUY.
So instead of hand registering some other domain name and then spending money on building links and SEO for the website, I’m going to spend that money upfront. Get all the marketing wrapped-up and front-end loaded into the business before I launch by getting a generic, exact-match domain name.
The idea is then that, for a given level of quality, I can market stock photos more efficiently than some of my competitors (especially those that have to invest continuously on marketing and SEO to draw visitors).
The other advantage is that I have that traffic immediately. One commentator (who didn’t think much of my purchase) suggested that he would have hand registered a brandable name and spent the remainder on building links.
I have no qualms with this approach. The only issue I had was that it would take time that I didn’t have. Time that I would require sourcing inventory, organising infrastructure, and building a platform.
With a reliable source of traffic from the get-go, I could build incrementally and sell incrementally. If I had my original 57,000 image inventory but had to wait six months before my link building/SEO kicked in, I wouldn’t have the revenue. I also suspect attracting inventory would not be as easy if you didn’t have a generic domain – photographers want to know you can provide buyers in greater numbers than they could if they’d built their own website. So I guess you have to be sure where along the value chain your business sits.
I’m saying to my competitors as well as my suppliers (photographers) – “I bet I can attract stock photo buyers more efficiently than you.” That’s where I think I can add value.
8. Where does the majority of your traffic come from now? (Direct traffic, search engines, social media?)
Over half is organic search (though the bulk of these are people typing “stockphoto.com” into search) and 35% is direct navigation. So in my opinion, there is a case to say direct navigation account for three-quarters of our traffic.
Over 75% of our visitors are first-timers though this is slowly inching down as we grow our ‘repeat customer’ base.
9. In September 2013, you launched with 57,000 stock images. How well has the website progressed since then?
We’ve just reached our 10 million image milestone and hope to double that by early 2016. There have been lots of changes in the backend to make that sort of growth possible. We’ve had a lot of development work to put our infrastructure on the cloud.
We still hold the dubious distinction of the ugliest stock photo site on the planet. I hope to address this in the next three months.
10. Have you spent money on advertising, or do you rely on your domain name's direct traffic and search traffic?
Not a penny on advertising. We’ve just dipped our toe in for the first time using email marketing, and I’m making an effort with content marketing. We’ll trial and measure the results to see what works.
11. In 2013, StockPhotos.com (plural) was also up for sale on Flippa. Did you ever consider acquiring this domain, too?
LOL, no, it never crossed my mind. It’s also a fantastic property, but I’m happy that we have all we need to grow this business now that the main pieces of the jigsaw are in place.
Additional comments from Jon:
Thanks for having me on Namepros! I’m very approachable and have a special place in my heart for domainers and bloggers (having come from that world). Please feel free to link up with me on:
If you’re interested to hear more about how Stockphoto.com started, here are some related articles:
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Thanks to Jon for taking the time to participate in our Inside Interviews. It's very interesting to read such an honest and open account of the acquisition and development of a six-figure domain name. If you have any comments for Jon, you can connect with him on social media (using the links above) or leave a comment below.
Inside Interviews is a blog series profiling the buyers of high-value domain names. Find out their motives, negotiation tactics, and their opinions on popular domaining topics only on the NamePros Blog.
In the eleven questions below, Jon (@Stockphoto.com) provides excellent insight into his business approach, his reasons for acquiring StockPhoto.com and why he chose to buy a premium domain name in the first place.
1. Can you give us a brief description of your company StockPhoto.com?
Stock photos are images used in websites, apps, brochures, and other promotional materials. They are usually generic in nature and can cover diverse subject areas (e.g. from people, locations, flora, fauna to illustrations).
Stockphoto.com is an online image marketplace where photographers sell stock photos (or more accurately, usage rights to the photos) to buyers for a one-time fee. For each photo that Stockphoto.com sells, we pass this revenue on to the photographer (i.e. the owner of the image) and keep a small commission as our fee. The buyer downloads the ‘un-watermarked’ photo(s) immediately upon payment. Everyone's happy!
2. I've read a little about your background as a consultant, having also developed a few domains and websites. At no point did I see anything related to photography! So why did you acquire StockPhoto.com?
James, it was a $250,000 midlife crisis! After a very happy career in consulting (and some hobbyist web development and domaining on the side), I hadn't scratched my itch.
I felt I had one web startup (of a decent size) that I had to do. I am in my mid-40s and I didn't want to die without knowing. But why stock photos? I like stock photos because:
- It’s a profitable industry. Google ads estimates that my competitors pay about $10 for each visitor. That’s definitely the high-end of the spectrum. They’re obviously making more than that per customer. Interesting fact: it’s estimated that Shutterstock spends over $100k per month on paid search for the term “stock photo” alone.
- Stock photos are a simple product. Obviously there are product and industry subtleties but…you search, you find, you pay, you download. No quotes, no negotiating, no revisions, no variations, no physical logistics (like warehouses, delivery, returns, etc). This was an important consideration. If I am to get away with bootstrapping this one, then being able to minimize these manual functions and then automating the rest meant that I could work on other priorities.
- Stock photos are a basic building block of the internet. The World Wide Web was made up of websites, apps, and other digital goods that required coding, design, and other content like videos, audio, typography, icons, and of course, stock photos. These were the bricks, light fixtures, paint, and kitchen bench-tops of the web. With these products, a homeowner could build, renovate, and maintain their internet residence. With the growth of the internet, user penetration rates, faster transfer speeds, and the rise of mobile, it was an attractive wave to paddle out for.
3. How did you determine that StockPhoto.com was worth $250,000 to you?
I always figured I would acquire and develop a generic domain name but when ‘Stockphoto.com’ came up for sale – the asking price was a lot more than I had in mind.
My view on valuation for any asset (not just domain names) is that you need to get a couple of estimates using different methodologies. The more ‘educated’ darts you throw at the board, the better you get at arriving at a workable figure.
The questions I asked were:
- How much profit could I generate using this domain name:
- If I did nothing, e.g. domain parking, affiliate, selling leads
- If I developed it, e.g. as a marketplace (factoring in cost to develop and ongoing operating costs, industry/product risk)
- Would this profit be an acceptable return on investment? (If I invested the same amount in a comparable asset would I receive a better return for the same risk?)
- How much would I be able to sell it for:
- If I did nothing
- If I developed it
- Would this capital gain/loss be an acceptable return on investment? (If I invested the same amount in a comparable asset would I receive a better return for the same risk?)
- Lots of assumptions, obviously, including funding, interest rates, exchange rates (I live in Australia but purchased the domain name in USD and my ongoing sales are in USD), etc.
4. Did you use any tools, services or data to determine that $250,000 was an acceptable price to pay for StockPhoto.com?
I used Compete.com predominantly to assess how much traffic I could draw from the domain name. From there I could apply some assumptions on conversion rates, revenue per click, etc. to arrive at some revenue estimates. Once I had some revenue estimates for each of the above questions, then I could figure out how much the going concern might be worth.
However, after all that I still relied on gut feel. No matter how many scenarios you’ve modelled, if the venture falls over – no one will ever go back to those spreadsheets to find out where you went wrong.
You will have no-one else to blame. And only one person can make it work.
5. You acquired StockPhoto.com for a "buy it now" price of $250,000 on Flippa. Would you have considered paying more than you did for the domain?
No – I don’t think my wife will ever let me buy another domain name, let alone one worth more than $250k! It was already over my original (modest) five-figure budget.
6. How did you find Flippa's platform for acquiring such a high value domain - was it easy to close the transaction?
Very easy. I’ve used all of the major domain platforms at some point in time over the last ten years. Flippa is by far the best now that it has an integrated escrow service. I’ve had the opportunity (since the purchase) to tour the company’s Melbourne (Australia) offices.
I was fortunate to have recruited Nick Kenn (Flippa’s General Manager) to my Stockphoto.com advisory board. Nick and his team run a very professional operation, and I hope to emulate them.
7. For you, what is the advantage of developing a premium domain name such as StockPhoto.com over buying a "brandable domain" (such as Shutterstock.com)?
When someone types “stock photo” into Google and they see my domain name in the top few search listings, my bet is that they would trust my domain name enough to click on it. And when they come to my website and see a relevant, high-quality stock photo at a comparable price then my guess is that THEY WILL BUY.
So instead of hand registering some other domain name and then spending money on building links and SEO for the website, I’m going to spend that money upfront. Get all the marketing wrapped-up and front-end loaded into the business before I launch by getting a generic, exact-match domain name.
The idea is then that, for a given level of quality, I can market stock photos more efficiently than some of my competitors (especially those that have to invest continuously on marketing and SEO to draw visitors).
The other advantage is that I have that traffic immediately. One commentator (who didn’t think much of my purchase) suggested that he would have hand registered a brandable name and spent the remainder on building links.
I have no qualms with this approach. The only issue I had was that it would take time that I didn’t have. Time that I would require sourcing inventory, organising infrastructure, and building a platform.
With a reliable source of traffic from the get-go, I could build incrementally and sell incrementally. If I had my original 57,000 image inventory but had to wait six months before my link building/SEO kicked in, I wouldn’t have the revenue. I also suspect attracting inventory would not be as easy if you didn’t have a generic domain – photographers want to know you can provide buyers in greater numbers than they could if they’d built their own website. So I guess you have to be sure where along the value chain your business sits.
I’m saying to my competitors as well as my suppliers (photographers) – “I bet I can attract stock photo buyers more efficiently than you.” That’s where I think I can add value.
8. Where does the majority of your traffic come from now? (Direct traffic, search engines, social media?)
Over half is organic search (though the bulk of these are people typing “stockphoto.com” into search) and 35% is direct navigation. So in my opinion, there is a case to say direct navigation account for three-quarters of our traffic.
Over 75% of our visitors are first-timers though this is slowly inching down as we grow our ‘repeat customer’ base.
9. In September 2013, you launched with 57,000 stock images. How well has the website progressed since then?
We’ve just reached our 10 million image milestone and hope to double that by early 2016. There have been lots of changes in the backend to make that sort of growth possible. We’ve had a lot of development work to put our infrastructure on the cloud.
We still hold the dubious distinction of the ugliest stock photo site on the planet. I hope to address this in the next three months.
10. Have you spent money on advertising, or do you rely on your domain name's direct traffic and search traffic?
Not a penny on advertising. We’ve just dipped our toe in for the first time using email marketing, and I’m making an effort with content marketing. We’ll trial and measure the results to see what works.
11. In 2013, StockPhotos.com (plural) was also up for sale on Flippa. Did you ever consider acquiring this domain, too?
LOL, no, it never crossed my mind. It’s also a fantastic property, but I’m happy that we have all we need to grow this business now that the main pieces of the jigsaw are in place.
Additional comments from Jon:
Thanks for having me on Namepros! I’m very approachable and have a special place in my heart for domainers and bloggers (having come from that world). Please feel free to link up with me on:
If you’re interested to hear more about how Stockphoto.com started, here are some related articles:
- How to ask your wife for permission to spend $250,000 on a domain name
- How I started Stockphoto.com
- DomainSherpa interview
- Rhodium weekend interview
--
Thanks to Jon for taking the time to participate in our Inside Interviews. It's very interesting to read such an honest and open account of the acquisition and development of a six-figure domain name. If you have any comments for Jon, you can connect with him on social media (using the links above) or leave a comment below.
Inside Interviews is a blog series profiling the buyers of high-value domain names. Find out their motives, negotiation tactics, and their opinions on popular domaining topics only on the NamePros Blog.
The three of us (and our advisory board of one, Nick Kenn) can attest that while it's possibly one of the more unconventional journeys we've embarked on - it's certainly one of the most fun.
