Hybrid Domainer

Is there an optimal portfolio size?

By: Raymond Hackney

Is There an Optimal Portfolio Size ?

There is a very good thread on Namepros today that should prove helpful for those new to domain investing and pondering their optimal portfolio size.

The best post so far imo is from Kate from Sds Inc:

"It's difficult to answer your question, because there are different business models. People like Federer move inventory fast. Others hold out for the best end user offer. Some buy domains for resale, others make money from PPC.

The very large domain portfolios like Frank or Buydomains may be viable only because of their critical mass. The overall quality may be average or low, but they make enough end user sales to sustain their operations.

As for the so-called successful, full-time domainers, I think we may be surprised if we knew the actual figures. I'm sure some are not that successful

The majority of domainers are individuals, not businesses. Individuals are not subject to the same pressure as corporations and tend to be less realistic and more laid back when it comes to decision making...

There are many ways to skin a cat, and the ability to make good decisions is more important than the size of the portfolio. Answer: that depends "

There are many other good posts and the thread is just getting started with over 30 posts. This question goes back to something I have written about before, you cannot define the indefinable.

There is no perfect formula because everyone will have different levels of:

• start up capital
• risk tolerance
• niches they want to register in
• ROI demands
• experience

I think the thread starter had a very insightful line that affects many new domainers and some with some experience as well. Thread starter Havela said, "I still don't understand why some domains sell for such a high price at Sedo. As far as I can tell they have no commercial value. As long as I don't understand this, I won't take the chance on buying really expensive domains."

This sentiment is strong with many new domain investors imo, they will not buy one domain in the secondary market for say, $1500. They would rather buy 150 domains for $8 each. Even though the batting average for 150 handregs is probably going to be very low, many still would rather chance that then to make a big purchase they are afraid to get stuck with.

That's why experience, sticking to niches you know and doing a lot of research are very important for everyone, but especially new domain investors.

Domaining is a unique endeavor and it is very hard to model your portfolio size after someone else, no matter how successful they are.

Here is the link to the thread.

Thanks Again Ron

By: RH

January is closing out and this January marked the 10 year anniversary of DN Journal. In the Woody Allen movie "Midnight In Paris", Ernest Hemingway asks Owen Wilson if he liked Mark Twain ? Wilson's character replied back,"I'm a huge Mark Twain fan. I think you can make the case that all modern American literature comes from Huckleberry Finn."

In that same vain I am of the opinion that the seeds of all domain publishing comes from Ron Jackson, without Dn Journal a spark probably would not have been ignited to get into domaining. Many who were involved in domaining would have had a lot less info to go on.

No one has put together the kind of content that Ron does, when we did our Women in Domaining series last year, I said it was Jacksonesque a homage to the inspiring work that Ron has done in the industry.

So as you close out your anniversary month thanks for everything Ron, I know I would not have cared as much about this industry if it was not for you.

What kind of domainer do you want to be ?

By: RH

Knowing what you are trying to accomplish and what kind of domain investor you are is certainly helpful in becoming successful. Having a business plan the same way any business would will help in the long run.

There are certainly differences of opinion on whether there are certain classifications of domainers, since anyone can purchase any domain if they have the budget for any domain.

I tend to agree with Toronto Domainer on his classification of a "reg fee" domainer. A lot of these guys are not looking to trade up, they are not going to reg a name for $8, sell for $500 and then buy a $500 domain and look to sell that for $2500 to purchase two $1250 domains.  The reason being that there are many that do not want to take that risk, one certainly can say owning 200 reg fee names that may have a limited resell market is riskier and that's fine.

I think its more psychological for a lot of reg fee domainers to not have that much invested in one domain. Some really don't believe in high valuations and while they certainly would not mind getting lucky on a reg fee domain as a seller, they don't share that same enthusiasm as a buyer.

The point that Toronto Domainer made about buy low, sell low is a good one and I have shared that opinion for many small domainers who are mostly hobbyists. Many sales do not get done that would get done if the pricing was realistic. There are many people interested in buying a decent domain for their business. A small and even mid sized business does not need the category killer domain, nor do they have the budget. They would buy a domain for $500, and if you purchased that domain for $8 that is a great return. You have to know what you own and be realistic. Of course there are outlier sales, a name that any domain forum would appraise at reg fee that sells for $5000.

You have to realize these sales are unique, you more than likely don't know how the sale took place, the sales ability of the seller and how motivated they were to sell. Never underestimate the advantage someone who does not need to sell has over someone who does need to sell.

You want to keep buying and selling and making your money on volume. You can probably have a higher sell through rate if you are willing to move domains at a lower price and keep cash flowing. The average sell through rate from most of the bigger domainers comes in at somewhere in the 1 to 2 percent range.

If you are not going to own thousands of domains you are most likely not going to get many offers each month. You need to be more active in selling as opposed to being passive. You should have a budget for what you are going to spend each month, and always stay on top of what renewals will be each year. You want to look at what you have done with your sales tactics at the the 6 month mark, reassess what you think of the names 6 months into the registration. The names you realize you don't care for you can look to liquidate in a wholesale fashion. You can run auctions or sales threads on Namepros or DN Forum. Also if you are not looking for much try selling them to Buy Domains, they may not pay a lot but getting $20 for $8 is much better than getting 0. Most importantly it keeps sales churning and that one name can now buy you 2, maybe 3 with a coupon deal.

There will be plenty of people that will say that focusing on reg fee domains is foolish and that you need to buy better domains to really make it in the domain business. There certainly are greater opportunities and taking the next step can become much more fruitful. But it is a big world and not all domainers are from first world countries, on top of that success is defined differently by everyone. Most don't want to be full time domainers, they just want to make some money in their spare time and have a little fun doing it with something that interests them. That's the beauty of domaining, you can register domains as broad or as specific as you like, your knowledge of some specific topic or field may bring you some money while expanding your mind and staying relevant on a topic that interests you.

The next level brings the potential for a lot more money and also requires adding things to your tool belt that requires spending a little money. The domainer that wants to move from being a reg fee domainer to being active in the drop market and selling names for four and five figures consistently is going to spend a lot more time going through data. The toolbox will include a paid membership to domain tools, dropping.com is certainly another tool to have and at $150 a month one needs to be sure they are ready to move up the domaining ladder.

The buying budget needs to be larger as this domainer will be competing with many established domainers on NameJet, Snapnames and Go Daddy. The ability to pick off the names that fly under the radar is key here. While everyone is looking at the top 20 most active on NameJet they need to be finding the name that has 0 to 5 bidders on NameJet or sub $200 on Go Daddy.

Knowing what kind of domainer you want to be and having a plan and sticking to it should increase your level of success in the industry.

Best of luck to everyone.

Can Money Buy Happiness ?

By: RH

Since so much of what is talked about daily is making money with domains and websites, the thought is more money more happiness or more problems.

An interesting look at money and what it does to the brain from a scientific standpoint. You feel happier spending money on others.  The video is only 3 min long and is worth a look.

 

Again, We Are Not All On The Same Team

By: RH

Seems like there is a lot of heat in the cottage industry of domaining lately. Personally I can see both sides of the coin. I understand where Toronto Domainer and TLD.org are coming from and I can see where Acro is coming from in his rebuttal.

Make no mistake that both sides have many supporters, a lot of times they fall along socio-economic lines and years spent in the business.

There are divides in this business between large domainers and small domainers, I remember Michael Berkens talking about the ICA and why the small domainer needed to join. I did a poll on Namepros where some said they would not join if it was FREE. They did not believe the ICA stood for the small domainer.

The very first post on this blog was "We are all on the same team, Yeah Right." There are those that believe that someone who has registered many domains like they have, shares a common bond. There are others that think those below their income level or sales volume are undesirable.  Maybe they think their opinion resonates stronger.

This is a business of a lot of intrigue and mystery. For the most part someone coming to domaining fresh can read about Rick Schwartz or Frank Schilling and see the success they have had. They can check the whois and see who owns what.

But then there are the forums and blog comments where people espouse opinions that never say what they have accomplished in domain sales, website development or ecommerce. It is hard to make conclusions about the expertise of these people. Of course some will post that they have done a lot but its all under NDA. Most have little respect for that and believe without some documented sales that the line is nonsense. In other fields you have a lot more to go on, someone could be lying but it usually comes out and they are at least known by their real name. 

Jealousy is another factor that cannot be ignored when consuming opinions in the domain space. There are people I know who think they are anonymous, I have had others tell me they were so enraged by these people that they spent as much time as it took to track them down and find out their real name.

There are some who come onto domain forums and ridicule others but own a similar portfolio of those they are criticizing. They have no success in the domaining industry and this is how they self medicate.

There are those where it seems like it is their job to go into sections of a forum where they have no interest, just to ridicule others invested in that extension.

I think when looking at certain issues you have to try to understand all sides. The issue that Toronto Domainer raised about Internet Traffic and their $100 payout is one that will always be debated from all sides. TD makes a compelling arguement, but IT was an exclusive club 240 members. Someone making $20 a month which I will not scoff at because it is a big world and everyone has different living standards. I also think those who got in should have some level of gratitude and realize what they received.

There are those on the other side who do not like that Frank opened the platform and they have suspicion that if someone has reg fee domains with little to no traffic, how are they generating clicks ?

This is a private business, Frank can do what he likes. Its the same when it comes to forums, Namepros and DNF are different in a lot of ways and DomainBoardroom is a forum that is private and not just anyone can get in because they sign up for the forum.

At the end of the day there are many issues that will never be resovled, like everything else in the world, there are people in domaining that just plain don't like one another. Do what you can to be successful, do what you can to help others, but know there is always going to be someone or many individuals that are not wishing you luck and want to see you fail.

Domaining is not a team sport, sure everyone will rally together to be against a Verising price increase or Go Daddy supporting SOPA but that is coming from personal interest. I remember talking to two guys I know who got out of domaining about the Verisign contract and that they could not raise prices. Neither cared.

Best of luck to everyone.

Happy New Year

By: RH

Happy New Year to all our readers and thank you for reading, commenting and giving input in 2012. I hope you and your family all had a great holiday season.

I would like to thank our sponsors in 2012 who have all been great to work with, we hope that 2013 is an even better year and can help promote their products, services and people.

For the new year we hope to implement some new feature posts and make sure they are stuck too. Sometimes it becomes difficult to stick to certain themes when you are working on so many other things and that may make the reader think what is going on ? The goal is to not let that happen and make sure the things people want to read about are read.

I would like to ask you what things you feel there are a need for more coverage in the domaining industry ? Not just here at Hybrid Domainer but as an industry on the whole ?

Is there something you need that no one addresses from a content standpoint ?

The Best Comment on A Domain Blog for 2012 ?

By: RH

Best Comment on a Domain Blog 2012 ?

Eric Borgos wrote a very detailed and honest piece on what his 2012 was like, if you have not read it you should. Eric is one of the most humble and straightforward people in the space in my opinion. Personally I think Eric is too hard on himself.  The link to the article is here

The post contained a comment from Troy that I thought was the best I have read all year. I asked Troy if it could be presented in a post and he approved.

"Wow! You are so honest. I really respect that!

It sounds like you have been drinking the domainer “kool aid” that says having a premium domains is one of the most important parts to building a successful online business. This is bull. The most important things in online business is passion.

Do you love watching movies? Do you have a deep abiding passion for it? Do you LOVE sharing that passion with others? If no, then you have no business building out “WatchMovies.com”. Trying to do so without a passion will at best result in a website that is not embarrassing to you, at worst it will result in thousands of wasted dollars and no profit to be seen.

Do you love “Local Guides”? Is guiding a hobby of yours? Do you read guide books in your spare time? Do you spend time on guide forums? If not, then what business do you have building our LocalArea.com? Just because you happen to own the domain and can pay people to write few hundred mediocre articles at best does not mean doing so is a good idea. You built a website at LocalArea.com that is a mile wide and a foot deep. Why would anyone want to go there for information? There are a hundred better resources for each area you have on LocalArea.com so what value does LocalArea.com actually provide anyone? Why did LocalArea.com turn out so shitty? Because you don’t care about local areas, you just want to make some cash.

I am not making fun of you. You are VERY successful in many ways online, but the cheese has moved and you haven’t seemed to adjust to that change. You can’t make money online anymore with shitty websites on good domains (don’t get the wrong idea, shitty websites can be very expensive to build). On the other hand, you can make money (fistfulls of it) with great websites on shitty domains. This is the way it should be. Money should always follow passion and knowledge and never arbitrary limited items grabbed by “investors” like domain names or real estate.

In the past, if you wanted to make money online you just had to show up for the party. The internet was new then and the real business models for websites were new and continually changing. People that were just willing to jump in and try it could do very well. You showed this with many of your websites. You made a lot of money in the past. But that is changing.

The internet is evolving (as it should). Gone are the days of made for adsense sites bringing in big money. Over the last 5 years the internet entrepreneur has had to evolve to a legitimate businessman, with a legitimate knowledge of a legitimate business. You cant be a legitimate businessman that runs a hundred websites. If you try it they will all gradually fail. You need to FOCUS on that thing that you most enjoy and give it all your time. Build something that is powered by passion, your passion. Remove the idea from your head that developing domains is a business. It is not. It is a cash sucking nightmare when done incorrectly, and a less than profitable option when done right.

Follow your passion and you will do fine. If you don’t have a passion online then perhaps you should look somewhere else. At the very least you will still have a ton of valuable domains to sell off one at a time.

This response is not just for you, it is for all of us “domainers” that have failed to evolve.

Troy"

I loved the comment because it was so many thoughts I have had myself with regards to developing my own domains. I have had some niches that got traffic that I was just not passionate about, but I kept trying to force myself to get passionate. It was not only passion that was missing, but it was also an expertise on the topics or access to content that would stand out.

Still I spent the last two years kidding myself because of the traffic. I felt like that if I developed something that it would make a lot more than parking. I had a built in audience with the traffic but that traffic was from all over the world.

I ended up selling the domains so that I can focus on developing domains where I am passionate and want to spend hours working on.

You also cannot develop 100 domains at once, was another point Troy made, I agree and have said that its about building a business and you cannot build 20 at one time. It really is about finding the focus and having a domain about a topic you have knowledge, passion and energy for.

Thank you Eric for such an excellent post and thank you Troy for such an excellent comment.

Check out Thorstonewell.com and explore Troy's passion

There Has To Be A Business Model

By: RH

I have friends who know that I work with domains and websites run ideas by me all the time. They think the Internet is magic. Just by putting up a website they are going to make money because all they read about are the successful websites.

They are asking me about domain names and where they can get free hosting but have spent no time on a business plan, what their business model will be, and how much money they need to get started.

They all have done no market research, they have no idea the cost of advertising and how to compete.

One guy tells me his new girlfriend is artistic and can make beautiful gift baskets. I asked him if he was aware of the big companies in that business and how much it would cost to compete from a marketing standpoint ?  He just repeats that she is really artistic and has a great eye. I told him that she may be the greatest gift basket maker in the world, but how are you going to compete ? What makes you stand out ? Have you looked at sites like Harry and David, Wine Country or Edible Arrangements ? He had never heard of two of the three.

He just wanted me to help with the website and the domain and just wanted to get something up fast. First off, why fast ? If you are looking for a venture to be successful you don't rush. You should not over analyze and never do anything, but you don't rush it either.

Another friend of mine wanted to start a video site. I asked have you ever heard of You Tube ? He said he was going to be different and was only going to focus on videos that he made. I told him that's fine but how are you going to make money ? Hosting a lot of videos is not cheap, why is someone coming to and what is their incentive to come back to the site ?

He said he was going to charge people to watch videos. I told him people don't want to pay for Hollywood Movies, music or porn. I told him its not impossible but that the content better be quality and unique and that it would still be hard to change viewing habits.

Look in no way am I saying that someone should not go for their dreams of a successful website or business. Absolutely go for it, but go for it with logic, a business model that can work, and knowledge of your competition and the market.

There are a lot of people who get into the domain business with this same attitude. One guy tells me I just want to be the next Frank Schilling, he has $250 and thinks brandables with numbers substituing for letters is great. That is not a good business model and that's not how Frank made it.

I know personally I have looked at a domain on a drop list and envision an idea for a website quick. After thinking about it for a few hours a lot of them are not practical.

Its easy to see a name and say "That name could be used to do this and people will pay this for the product or service" Will they ? You don't know until you try and I know for myself there have been times where I thought that it would not be hard to do this and that. I then thought about competitors and realized I don't have the budget to secure the content they have on their site. I have an idea with no way of competing against other players in the market.

Shane Cultra does a good job on his blog of explaining what its like running a brick and mortar business. I think people need to read articles like his and some of the business blogs out there to get a better picture before starting an online business.

As always when I am writing an article its from the point of view of someone wanting to run a business and not a hobbyist.  If its a hobby you can try everything and anything as fast as you like,just so long as you are not putting yourself in a financial hole. The person looking to build a business has to really scout their industry landscape and really love the industry they want to get into, its just too competitve too not have passion for what you will spend a lot of time and money on.

Shouldn't Sales Commissions Be Coming Down ?

By: RH

We see more and more partnerships between Aftermarket sites and Registrars. On September 26 Sedo announced they were expanding their partnership with Go Daddy.

They wrote in their press release, "Go Daddy customers will now be able to purchase previously owned premium domains names Sedo users have listed as “Make Offer.” Previously, only names listed as “Buy Now” were available for purchase at Go Daddy. By offering the option to purchase both “Buy Now” and “Make Offer” listings, Sedo and Go Daddy are ensuring that buyers have the widest possible selection of premium names."

Did domainers need this partnership at the expense of a 20 % commission ?

I would say no as most domainers already have a Go Daddy account and can sell their for 10 %. The fact that there was no opt out to this program expansion has had some domainers pulling their names from Sedo.

I think sales commissions should be coming down in this business as there are more companies involved in selling aftermarket names. Competition should push prices lower.

There has been a lot written over the years on how Verisign should run the .com and .net registry for less. People believe prices should come down because there is competition to run the registry.

I think that should play out the same for aftermarket sites. I mean I have nothing against Sedo, I use them and think they are good people, but why would you get a commission for putting my names on Go Daddy when I already have an account there ? I did not ask you to do that.

Go Daddy is certainly more well known than any aftermarket site, an end user more than likely knows Go Daddy over any other company in the space. If they are charging 10 % you should be less imo.

If someone finds my name on Sedo.com and submits a $60 offer and I get them to $3000, why should Sedo get 15 % off my negotiating skill ? 5 % seems more fair. If you are going to broker or run a special promotion well sure that deserves more because you are actively working for the sale.

These high commissions lead domain investors to just tack it on to the asking price. It is not so easy to pass along 10,20 or even 30 % price increases.

What do you think ? Leave a comment below.

Aged Domains are nice if there is some other value to go with it

By: RH

I have new domainers ask about age and domains, they put a bunch of myths together like, Google favors aged domains and it has to be valuable if its been regged for 14 years.

First off if you are not developing a name the Google footnote does not mean as much if the name does not make sense for development.

Secondly, maybe the person who renewed for 14 years had a fondness for the domain, maybe it meant something to he or she that was unique only to them. Maybe they are just clueless, because they renewed it for so long does not mean they knew what they were doing in domaining.

I look for aged domains absolutely, but there has to be more than the age, the age is a bonus. XZ8q.com regged for 14 years does not mean much. No commercial value, pretty hard to develop. It was probably the old owners nickname on forums or something.Those names do not have value, leading with that in a sales thread means very little.

You want products, services, short 3 letter domains, a cool sounding made up word something like sello.com to have age as an extra bonus.

There are always aged domains on Go Daddy closeouts, sometimes you find a winner, many times you find one almost good enough but not quite, and there are many that are just plain not worth $1.

Ask yourself this question, "If it was not aged would I still be interested ?  If the answer is no then don't buy it just for age.