Another Startup on eBay: Is This The Best We Can Do?

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Another Startup on eBay: Is This The Best We Can Do?

 


Seems the trend to auction startups up on eBay is increasing.

The latest is the GoldenFeed listing on eBay.  This is a “Web 2.0” startup that does some type of bidding based RSS feed. 

Thanks to Marc Nathan who passed along the news about GoldenFeed.  He wrote a brief  post about it here.

As far as I can tell, this particular startup hasn’t even gotten off the ground yet (other than the fact that they have a Google PageRank of 5).  [Side note:  If anyone can explain how they managed to get a PR5 when there seem to be zero links to the site from anywhere else, that would be helpful].

Now, I’ve written about prior startups that were auctioned on eBay (Kiko, HuckABuck), and there were several others that I didn’t write about.

This got  me to thinking.  Similar to how there are “vertical” job boards popping up all over the place (37signals, Spolsky, etc.), would there be value to having a site specifically focused on startup auctions – as an alternative to eBay?

Do We Need StartupAuction.com?
 
So, what would the benefits of such a site be?
  1. Vertically focused:  it could build an audience of buyers and sellers that are exclusively focused on startups.

  1. Listing fee:  One of the issues with eBay is that it doesn’t really cost anything to put a startup up for sale there.  As such, we’re going to see a lot of crap.

  1. Commissions:  Since the price tag for startups can (possibly) go into the hundreds of thousands, it might be beneficial to have a “flatter” pricing model that was not tied to the purchase price.

  1. Community Due Diligence:  The community could have discussions around the pros and cons of the given startup (this would b ea virtual “vetting” process that is just not possible on eBay.

  1. Traffic Generation:  Part of the value would be that StartupAuction.com would invest in building the right type of traffic for its site (ensuring that buyers and sellers were coming together).


There are a ton of “feature” ideas I have on how this might be a useful approach for selling startups (instead of eBay, which is really too generic and doesn’t quite “fit” right).  

I’m already preoccupied with my own startup, so do not have the energy to pursue this.  If there are any “takers” for this idea, let me know.  Or, perhaps I should list the idea itself on eBay and sell it.  J

Of course, there’s nothing stopping you from doing this yourself.  The upside to working with me on this is that I have a cool domain name, an existing readership that could be used to “seed” some of the early traffic and a wee bit of experience in startup-land.

So, what’s the verdict?  Lamest idea you’ve heard this week, or so obvious that someone’s going to do it?

Posted by Dharmesh Shah on Sat, Sep 16, 2006

COMMENTS

I'm in for assisting with this concept. This idea could either be the smallest niche that the internet has ever seen, which I highly doubt or it can gather the low quantity, but high quality traffic and end users that most of the Web 2.0 companies we see (and their advertisers) dream of. It's worth a shot and it certainly fits in with my larger strategy of "outsourcing" the business development and financial structure of Web 2.0-type companies that I've been toying with myself.

posted on Saturday, September 16, 2006 at 3:44 PM by Marc Nathan


The downside is that if this doesn't take off, you'll be forced to liquidate by selling on eBay.

But in all seriousness, I think it might work, assuming you keep costs low enough. I remember after the first dot-com implosion there was a company that would buy all of a failed company's equipment (computers, furniture, etc) and sell it to other eager startups. Sort of like how a vulture works.

posted on Saturday, September 16, 2006 at 4:04 PM by Christopher Aycock


Christopher: With due respect to vultures, I don't know that I want to be one. :)

My thinking here is to create an efficient market (much like eBay does for niche market goods) but make it more focused so that it delivers additional value to buyer and seller (more than just providing the listing and bringing buyer and seller together).

posted on Saturday, September 16, 2006 at 4:09 PM by


I like this. I hear about a lot of student projects with some promising ideas but no way in hell to contact Sand Hill road. Sounds like a level playing-field at any rate.

posted on Saturday, September 16, 2006 at 8:52 PM by Ian Delaney


Dharmesh, if someone decides to go with this idea would you transfer the domain over to them? (Not sure how its supposed to work)

posted on Saturday, September 16, 2006 at 9:53 PM by Ali


Ali: Yes, I'd expect to transfer the domain over to whoever was pursuing the idea.

However, candidly, I don't know that the domain name is worth all that much. The real value is in the execution of the idea, not the name. There are tons of other naming possibilities.

posted on Saturday, September 16, 2006 at 10:06 PM by


I'm very interested -- and I just started as an EIR at Kodiak Venture Partners -- so we're in the same city. Maybe we could meet up and talk about it.

posted on Saturday, September 16, 2006 at 10:46 PM by Scott Hurff


interesting idea, but i'd be skeptical if really solid businesses routinely chose to exit via this route. it seems it would create even more of an incentive for an entrepreneur to "build-to-flip"; taking egregious shortcuts/technology debt to get to market faster, build some hype and put up a good facade. even the kiko guys decided to ditch and sell via ebay because they wanted to work on something else and they didn't want to fight a long uphill battle against google et al. i can't imagine that the recent rash of me-too auctions would be successful.

on the other hand, there may be a market for entrepreneurs who have profitable but modest businesses (e.g. "lifestyle" businesses) that are too small to be of interest to the usual cohort of large acquirers.

still, i wonder how much value these small businesses have, or at least the software, brand, and user base, when separated from the founders and their passion, intimate knowledge of the market and personal relationships with key partners/suppliers/etc.

posted on Sunday, September 17, 2006 at 1:13 AM by Drew Houston


It would be ironic if you were to sell StartupAuction on StartupAuction if StartupAuction is not successful.

posted on Sunday, September 17, 2006 at 2:51 AM by Hermann Klinke


I think the idea certainly has its merits. Yet personally, I'm cautious on those match-making ideas that rely on network effect to succeed. They require much more resources to bootstrap that I can reasonably provide.

posted on Sunday, September 17, 2006 at 4:59 AM by Max Ischenko


Why limit to startup? Guess it would be a good idea if this can be extended to all kind of technology company or any company for that matter.

All sort of companies running out of cash, or wanting to sell out can come and auction it off.

posted on Sunday, September 17, 2006 at 9:57 AM by Muthu Ramadoss


GoldenFeed is such a joke that I don't think you can really use it as a datapoint to say that this is a trend.

I do think it's a trend, but that isn't valid supporting data since the site isn't even relevant and looks like a weekend project.

posted on Monday, September 18, 2006 at 5:21 AM by Richard White


I like Muthu' idea.

Expand the coverage to any small business in any industry that can't afford to spend much to sell themselves.

Think of it, why help to sell, maybe they can also ask for funding/resources to survive.
Build the "wisdom of the crowds" into the site and help the startup.

posted on Monday, September 18, 2006 at 11:48 AM by Hari Rajagopal


The crux is how much are startups worth and what is the difference in value between what people currently sell startups for and what people could potentially sell for if the right people knew about them. Kiku seemed to have a lot of value and ebay+blogging gave them an avenue to quickly get the word out. They made more money then they would have by marketing to the world.

My intuition is that this is the exception and most startups are worth nothing. They have a product that doesn't work, doesn't do anything useful, or no one knows about it. If this is the case then an online auction to sell worthless products won't do well. If on the other hand startups, even failed unknown ones, are worth something, then it is an interesting idea that could pan out in the right hands.

posted on Monday, September 18, 2006 at 4:18 PM by Evan


What about a small stock market for startup companies?

This way outsiders could invest in promising ideas instead of having to go through a startup fund.

posted on Monday, September 18, 2006 at 7:12 PM by Akle


Experimental phase:
Step 1: talk to bloggers, entrepreneurs, communities to gather feedback(part 1)
Step 2: post notice note on blog, wiki, Enterpreneurial clubs, sites with the intention of gathering information/getting feedback on the site's purpose(part 2)
(once worthiness is confirmed in terms of traffic)
Step 3: seek help on who would be interested in this project

posted on Saturday, September 23, 2006 at 3:21 AM by sian


I would be interested in helping out with the coding. The idea intrigues me, because I have contemplated auctioning off my new site... but I think you are right about being a slate of imitators and it's hard being in a pack of me too's (been there at a couple of startups!).

I am bootstrapping and it costs virtually nothing to run, so I am keeping it. Bootstrapping is making my mistakes pretty cheap :)

But I suspect there may be an emerging market for a new type of entrepreneur, one who develops an idea into a working site who then sells that site to a company that can do business development and marketing.

The developer takes the development and technical risks up front and moves the challenge of developing the market around that site to a company that presumably has experience doing that.

This would provide value and reduce risk for both parties and should be worth something.

There are a few sites that do auctioning of domain names, but these are more than just a domain.

I am also intrerested by the idea of a startup stock market!

posted on Monday, October 02, 2006 at 8:56 AM by Vince Hodges


Not an auction site, but a place where people can post companies for sale: http://www.venturebeat.com/ventureboard/

posted on Thursday, October 12, 2006 at 8:46 AM by Ellen


The idea of a start-up stock market sounds great to me. It would be great for start-ups, as they could raise finance quite easily if they have a sound idea and action plan without risking their house. If a startup needed say $200,000, this investment could be spread over hundreds of investors, although one person could invest the whole amount if they wanted. Ideas could be thoroughly discussed and rated by the community before being 'floated', changes could be made by the entrepreneur in response to feedback. Interesting ideas, would be great if someone started it (I'm busy with another start up at the moment though).

posted on Thursday, May 03, 2007 at 8:52 AM by David McNaught


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