Business Opportunities Weblog

July 31, 2008 by Rich Whittle | 2 Comments

The New York Times:

Dave Hermansen did not own a bird or a cage when he bought bird-cage.com, an online store, for $1,800 three years ago. He simply saw a Web site that was “very, very poorly done,” and begged the owners to sell it to him. He then redesigned the site, added advertising and drove up traffic. Last December, he sold it for $173,000.

Mr. Hermansen, 30, is among the latest wave of entrepreneurs who, like the day traders and real estate investors before them, are looking to make a lot of money without much effort.

They use little more than home computers and free software to buy Web sites that appeal to a small and specific niche. Then they fix up the sites with hopes of reselling them for far more than they paid.

But while their dreams are fueled by high-profile Internet deals — Condé Nast’s $25 million purchase of Wired News, People.com’s acquisition of Celebrity Baby Blog and, most recently, a deal this month between Guardian News and Media and the owner of PaidContent for a reported $30 million — these entrepreneurs have smaller ambitions for their sites. Many end up settling for just hundreds, sometimes thousands of dollars.

“Everyone with a site is saying, ‘If I can get it to the right value, I’m out,’ ” said Gene Alvarez, vice president for research at Gartner, a technology consulting firm. “I call it the burger-flipping model: You build up volume, you build a community and then you try to sell it while it’s still hot.”

Photo by Paul Hosefros.

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Tags: Internet, Strategy, Value