Lessons in Website Investing to Learn from Mayweather-Pacquiao Fight
The hugely-publicized “fight of the century” between Floyd Mayweather and Manny Pacquiao ended last night with a victory by unanimous decision for Mayweather.
A lot of boxing fans were underwhelmed by the quality of the fight and many even felt that Pacquiao should have won the fight. Some fans were expecting a brawl after all the hype built up leading up to the fight. As in investing, it is important to remember that in boxing the objective is not always to knock out your opponent. It’s great if you can achieve that. But a knockout is not necessary to win the game. The objective is to land more punches and accumulate more points than your opponent.
Most people will agree that Manny Pacquiao was the more aggressive fighter during the bout. However, his aggressive style landed fewer punches and therefore earned him fewer points than Floyd Mayweather. For this reason, according to the rules of boxing, Mayweather won the fight because he landed and connected more punches and therefore racked up more points. Mayweather had a higher conversion rate.
How does this apply to investing?
Well, many website owners looking to sell their websites do not understand the difference between website activity and website cash-flow. The fact that a website has a lot of activity is good but it’s not the objective of owning a commercial website. The objective is to produce cash-flow.
Not traffic. Not followers. Not friends. Pure cash-flow.
Very many website sellers promote the potential of their website to produce cash-flow. They point to current or future potential traffic as a selling point of the website if it doesn’t produce any cash yet.
As in boxing, a website receives points, that is, value, by generating revenues for its owners. It doesn’t matter how much work the owner puts in or how much activity the website generates or how popular the website is if it does not produce cash.
Cash is King
At the end of the day, the value in a website comes from the cash-flow it produces. Never forget this.
There are a lot of websites that have horrible-looking designs and average levels of traffic but because of their high conversion rates and quality products, they produce a lot of revenues. These websites will always sell much faster and for higher value than flashy websites with inferior products that produce no money.
Floyd Mayweather had a higher Conversion Rate than Manny Pacquiao
Floyd Mayweather won the fight on May 2 because he played according to the rules of the game. He engaged in his defensive style to prevent his opponent from landing many punches and he only threw a punch when he felt he had a high chance of landing that punch. As such, his conversion rate was significantly higher than Manny Pacquiao’s.
For this reason, according to the rules of boxing, which is a sport like any other sport that depends on a measurable point system, Floyd Mayweather won the fight.
In the sport of website investing, the website owner who produces the most cash from his business will win the game. He will sell his website for maximum value. He will win.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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