An eye opening meeting with a CEO
This morning I had a meeting with the CEO of a large media company that runs multiple gaming websites/brands.
It was a meeting about potentially acquiring Retro Dodo, a brand that I have been growing for almost four years.
Out of respect I can’t name who the meeting was with, but I personally class them as one of the “big dogs” in the industry.
This meeting had been scheduled for a long while, and at the time of booking I was interested in seeing what media companies would offer, but since the recent holiday with my partner (where we spoke about our future plans deeply) the path of holding and growing the brand has been cemented in my head.
I am still a small fish in a big pond, but I want to change that.
So I went into the meeting confident that I wouldn’t sell, and confident that this CEO wouldn’t match my frankly confident asking price.
The meeting was filled with an insane amount of insight into the world of gaming publishers, and how the industry is and will be struggling, and that’s what I want to share with you in this post.
I want to share the knowledge of what I learnt in this 45 minute long meeting, comments about the gaming industry, how the big dogs are performing, and what offer was made for Retro Dodo.
The future of gaming publishers.
Straight off the bat, we discussed the history of Retro Dodo, how I built it from scratch, where I plan to take it and its year on year growth.
The story and stats was immediately met with high praises, this CEO was incredibly bright, emotionally intelligent and open to sharing advice for someone on my path. I hadn’t met a CEO so willing to stay on a call to share industry information, I took every word I could and wrote it down, it’s not often I get to sit with entrepreneurs of this calibre, so I listened with deep concentration, taking it all in like a sponge.
I felt like a goldfish talking to a wise manta ray, all while my microphone was playing up, I was muting myself accidentally, my headphones ran out of battery and basically being me… an idiot.
According to let’s name them “Ray”, the industry is being beaten to a pulp, the recent redundancies of many media companies across the globe has impacted the gaming industry drastically, lowering valuations of sites, making talent easier to come by and average ad-rates shrinking.
Ray said: many sites will crumble, and throughout 2023 only strong sites will prevail making it a smart decision to hold off from acquiring sites while they are still floating. If you are building a truly strong site you need to hold onto the asset for dear life, as once the storm has passed it will have compounded traffic and when ad rates return to normal that’s when you can enjoy the sun, so to speak.
The storm is likely to last 12 – 18 months according to Ray.
Get through that, and you’re laughing. Grow though that, and you know you are building something truly great.
Power of the niche.
Ray spoke highly of Retro Dodo, mentioning that the power is in the niche.
“Google likes websites in a specific niche, solidifying their data that you are an authority on a subject/area, Retro Dodo does that incredibly well.”
Ray then goes on to mention that many gaming websites do not do this, and are far too broad to inform Google what they are an authority in.
Broad gaming websites just don’t cut it anymore, Google is stricter than ever, so being broad makes it harder for Google to understand exactly what you are an authority in, you have to make it easy for them.
For example, gaming categories that I think are personally too broad: gaming guides, PC gaming, console gaming.
Gaming categories that I think would work well: covering single game franchises (Zelda, Battlefield, World of Warcraft), specific game genres (flying games, racing games, RPG games), specific developers (Infinity Ward, Blizzard, Rockstar etc), specific gaming accessories (gaming chairs, gaming controllers, headsets etc).
You can see the differences between the categories. Google wants to know what you are good at, covering too many subjects, games or genres complicates it for Google, and more importantly the reader.
As the years go by, brands who own a certain niche will become more and more valuable.
Be unique or be left behind.
As a small publisher Ray informed that sites of my size need to be unique, or they will be left behind.
Ray: “How many articles does your team publish a month?”
Me: “50 – 100”
Ray: “We post 15,000 articles a month, with a goal of hitting 30,000 by the end of the year”.
Me: “F**king hell”.
Ray: “In a time when media companies dominate you need to create content that we don’t and make it unique to your brand”.
This stuck with me because I feel like Retro Dodo does create unique content, but in reality, we probably don’t.
The best way for smaller websites to be unique is by doing things big dogs don’t, and as someone who has worked for Future Publishing in the past, in my opinion these big dogs miss “community”.
They are simply traffic drivers.
Here’s how I think you can be unique by building community, products and good content:
- Reply to every comment possible.
- Make your video content personal by getting a producer (videos need a face to build a trusted connection).
- Be active on social media through engaging posts, updates, voice recordings and personal videos of you and your team.
- Build a product that your audience truly love that is of incredibly high quality. We built A Handheld History, a premium coffee table book for our niche, far better quality than anything large media companies have every produced. We even got some of our community to write in it.
- Produce news in your niche. Being the source of fast, and reliable news is an incredibly valuable resource for consumers, so why not build your brand to become that valuable resource? Stop targeting keywords and build real valuable content too.
Ride the storm.
Ray kept mentioning that we are riding a storm, we haven’t been in it long, and it’s going to last likely until 2024. This storm impacts ad-rates and customer spend, which is primarily what publishers rely on to drive revenue.
Ray mentioned that many sites/brands can’t even take a hit of a 30% traffic/revenue reduction of revenue before begging for help, don’t be that guy.
“Do you know how many sites we can take advantage of if we see a 30% reduction in revenue? Lots. We can squeeze them to sell under value, or offer a investment to keep them afloat for large % of their business”.
You need to be resilient to 30% drops over night, or you are fragile, fragile enough for media companies and entrepreneurs to make small offers that you cannot unfortunately refuse.
Build a resilient site that can withstand hits like that, while growing and you will be greatly rewarded when ad-rates get back to normal.
The offer, should you choose to accept it.
This part of the conversation changed the way I think about Retro Dodo. Unfortunately i still see it as a blog, but in reality it’s actually an incredibly impressed brand that can and will turn into something bigger than I can imagine, and Ray even mentioned that.
After discussing stats, growth, strategies and insights into the brand a number was said, it was below my “asking” price (even though I know i wasn’t looking to sell it), and it was lower for two reasons according to Ray.
One, because the market has very low valuations at the top. Yes, typically really good “small sites” can sell for a 40x – 50x multiple, but at this scale, and on this level that’s not the case.
Large gaming sites according to Ray sell for around 30x, some even as low as 12x monthly multiple. The bigger the brand gets, the smaller the multiple is due to risk.
Which I was surprised about, but that could be Ray trying to wangle a smaller price. That was until Ray made an offer.
“But I don’t want you to take it, this is the worst time to sell. What you are building can be easily double that in a couple of years”.
The price offered didn’t interest me at all, as much as that price is big, it’s not life changing, especially after the tax-man comes knocking. Not that it isn’t eye opening, i still get all fuzzy when I realise that I have built something worth so much.
The comment after is what struck me. Double? Holy shiznit, now that’s a life changing amount of money.
I said that I wouldn’t sell for that price which Ray expected, and we spoke even more about where I need to take the business, how to get there and advice on doing so.
It was advice I was already implementing but it’s always nice to hear that from someone “at the top”.
What did I learn?
- That consistency is king. Keep going, even through storms and it will eventually pay off.
- Mixing a loveable brand, with great content, SEO and E-E-A-T friendly tactics, high end video and consistent output will take Retro Dodo to another level.
- Pricing multiples decrease the bigger the asset gets and so does the pool of potential buyers.
- You can negotiate sell structure. For example, instead of selling for $800k, I could negotiate $700k upfront and $200k after 12 months if site grows at X%.
- Only you know the true value of your brand. Buyers simply go off math, not future growth.
- Keep moving forward, not matter what.