Monday, August 7, 2017

The Website Design Revolution

An Opinion page piece in today's WSJ* discusses changes in the design of consumer tech products over the last twenty-some years. The writer made some points that got me thinking...

Contrasting the role of engineers with designers he made the point that "engineers tend to focus on sheer technical limits: what can be done. But designers are focused on what should be done... building things that solve actual problems or fulfill real wants." With the advances in computing power over the last two decades he sees design as a "key differentiator and driving force behind billion dollar companies."

We see a parallel in the world of website design. While many web developers have long been entranced by what's technically possible, our focus has moved toward design that provides users with compelling solutions to real problems. Using a defined, business model based design process we've seen firsthand how design works as a powerful source of differentiation (and growth) for clients in multiple industries.

In terms of look and feel, this approach supports a leaner, less cluttered, more elegant design. But, elegance isn't an end in itself. (Apple products notwithstanding.)

Effective web design must also resonate with the target customer through messaging that convincingly answers the (universal) "what's in it for me" question. More than that, effective web design must clearly explain the client's value proposition while building trust in the offer and the client company.

At the same time, effective design positions the company's brand and clarifies the brand's attributes while providing intuitive navigation to guide the visitor to the next click in the path to conversion. (According to Google, all of this has to happen within six seconds; the time the average visitor spends evaluating a website before they decide to explore further or "bounce" out.)

Clearly, effective web design is hard, but well worth the effort. We think the WSJ piece summarized the principle nicely: "Design is the key to building the next great wave of companies."

Well said.

*See The Design Revolution in Consumer Tech by Steve Vassallo; The Wall Street Journal; August 7, 2017  

Wednesday, August 2, 2017

How Much is an Internet Business Worth?

How much is an Internet business worth?

The obvious answer is, "it depends". While PE ratios, enterprise value or another financial ratio are typical valuation methods, in the final analysis, it comes down to the number a qualified buyer is willing to pay. And that number is ultimately based on the value creation potential of the business or its underlying assets.

One of our clients is about to get that ultimate answer to the valuation question in a silent, absolute auction for their Internet business. (The founders have suspended operations for personal reasons so the transaction is being structured as an asset sale.)

Assets up for auction include a seasoned web address; a search optimized, enterprise level e-commerce website; related IP including registered trademarks, patterns, social media accounts, customer lists, and more.

The business generated about $250K in cumulative revenue with good gross margins demonstrating solid customer acceptance, well beyond a simple "proof of concept".

As the company's website developers we see significant value creation potential in these assets as a turn-key brand and marketing channel applicable to a wide range of performance oriented products. (Happy to share details if you're interested; just drop us a line.)

Precept is managing the auction process for the owners. The bidding closes at 4:00 pm EST on Friday August 11, 2017. By 4:01 pm that day, we'll have a definitive answer to the question: "How much is this Internet business worth?"