A couple of weeks ago, I sold my largest money maker, PokerForums.org.
I haven’t blogged about it until now as I didn’t want to publicly declare anything until the escrow was received in my bank account and the site was fully transferred to the new owner.
The selling of this site is a major event in my life as an internet entrepreneur. Not only does it mark the single largest transaction I’ve ever received, but rather, and more importantly, it represents a major shift in the evolution of Merendi Networks Inc, my corporation.
A Brief History of PokerForums.org
Many years ago, I was an active member of a Starcraft forum. Some of the members started getting into online poker, which in turn got me interested as well.
There started to be a lot of new poker discussion bubbling on the forums, but we were limited to one single thread to discuss everything related to poker. This made sense, considering it was, after all, a Starcraft forum, but there were a lot of us who were really interested in discussing the topic.
And so, on 17th Apr, 2004, I made PokerForums.org. Its genesis was made purely out of the desire to create a forum completely dedicated to poker. I told some of the other members on the Starcraft forum, and a bunch of them immediately (and happily) joined.
This was all just prior to the huge poker boom that occurred due to the World Poker Tour and Chris Moneymaker winning the WSOP from a freeroll. PokerForums.org, almost entirely due to its domain name, consistently ranked in the top 3 (usually #1) for the term “poker forums”, which helped to drive new traffic to the site.
The online poker boom was so fierce that advertisers were contacting me left and right to advertise on the site. In 2005, just one year after creating the site, PFO already made 10x more than it did the year before. In 2006, it made 3x what it made in 2005, which is more than most people make full-time.
Life was good.
Then, on September 30th, 2006, the republicans sneakily snuck an “anti-online gambling’” section into the port security bill, known as the Unlawful Internet Gambling Enforcement Act, or UIGEA. Two weeks later, George Bush signed the Act into law.
What followed was immediate turmoil. PartyPoker.com, which was the largest online poker site at the time, had its publicly-traded stock drop almost 60% in 24 hours as a result of this bill being passed.
A couple days after the bill was announced, one advertiser, who was paying me $4,500 in ads each month, cancelled their campaign. That was the biggest immediate effect I felt from UIGEA, and it sucked. That was $54,000 a year lost right then and there.
Not too long after, online e-Wallets such as Neteller refused to allow online poker-related transactions. Credit card companies banned the use of online gambling-related transactions as well. This made it very difficult for people to deposit online, which in turn meant less advertising dollars for me.
At the time, I wasn’t worried. I saw so much demand from advertisers that I just couldn’t see how it would affect me dramatically. In turns out that I was mostly correct, as the site’s income didn’t see a dramatic drop until 2009.
However, I actually believe that was not so much due to the UIGEA as it was for the following two reasons:
1. I became too busy with other projects.
Out of concern for having all my eggs in one basket, I decided early on once I started making good money online that I wanted to diversify my portfolio in case one of my sites quickly died.
While I still believe this to be a good business move, what I didn’t see myself getting into was going overboard with this mentality. I kept making more and more websites. I was using the shotgun approach – making and buying a bunch of websites, with the hope that one in a dozen takes off.
Having so many projects eventually caught up to me and wore me down to the point where I was completely neglecting some of my sites, PFO being one of them.
2. My interest in poker waned.
While I was very interested in poker for a long time, playing in private home games, multi-tabling 24 tables at once online, reading books, and watching TV, my passion slowly diminished over the years. By 2009, I had already stopped playing poker altogether.
I do not like to work on projects that I am not passionate about (unless it bring in good coin, then I’ll be passionate about anything).
And so a year ago I decided to put it up for auction on Flippa. I ended up listed it three times, with no sale going through. I had received a number of private offers, but I turned them all down as I was looking to get more for the site.
I actually received a higher offer at that time from the person who ended up buying it a couple of weeks ago. I ended up selling it to him for less, a year later, as the site’s income dropped dramatically, making only half of what it did the year before.
He had contacted me after the 3rd listing on Flippa ended with an offer, and after some back and forth negotiating, we agreed on a price.
I spent an entire day considering whether or not to accept what I felt was his final offer, and made my decision to accept the following day after “sleeping on it”.
The price I received was lower than I had wanted, but when you look at the income the site was making right before I sold it, it was actually a good decision to sell.
At the same time, it was a fair price to the buyer. He already owns a large poker website and is familiar with the industry. He is also still passionate about poker and doesn’t have as many sites as I do to bog him down.
Part of the sales agreement was that I couldn’t publicly disclose the exact amount of the transaction, since I know that pretty much every one of you are dying to know. I’ll just say that it was definitely not a fortune, but at the same time, based on the last 3 months income prior to sale, it would take me 30 years to make that amount from the site (assuming income stayed at that same level).
That particular fact is what ultimately lead me to accept his offer.
PFO does have potential though, which is why I originally wanted a higher price for it. I had made $220,000 from the site during my ownership of it, and the income dropped mainly due to my complete and blatant neglect of the site.
Right before selling, I had commissioned for a complete redesign of the site and had big improvements in line, including upgrading and converting the site to vBulletin Suite, allowing our members to have their own blogs, etc. I passed this onto the new owner and he is going to continue with that route, so I think he will do well. I certainly wish him the best of luck.
It was just time for me to let the site go and let somebody else take care of it.
So now I have a lot of extra cash in my pocket, and I bet a lot of you are wondering what I’m going to do with it.
Can you say, “Mercedes-Benz”?
Obviously the absence of PFO will now create a void in my monthly income, so I can’t just go out and spend the money on candy. And after taxes and the exchange rate, it’s really not all that much.
No, my plans are to reinvest that money into purchasing a new website. I know that I wrote above that one of my mistakes was having too many projects (websites), but I also wrote that I started to lose my passion as well. If I find a new website that interests me, it should help compensate for the fact of replacing the site.
I’ve been looking on Flippa nearly everyday, looking for a nice site to buy. Unfortunately, 99% of the listings there are complete crap (literally… around 99%. I’ll see maybe 1 in 100 listings that look half decent).
There is one listing there currently that I’m interested in, and might possibly purchase if the price is right.
Other than being on the lookout for a nice established site to come on the market and acquire, I’m thinking about using a bit of the sales cash to put towards my mortgage. However, my new mortgage interest rate, which I renewed just 1 month ago, is very low, so it may be smarter for me to use that money to invest online instead.
Anyhow, goodbye PokerForums.org. You’ve certainly served me well.