Just Some Strong and Rambling Opinions on a Saturday Morning

Morning Folks!!


Capitalism is about taking a risk and being rewarded if it works out. That is why so many take risks every single day. The risk/reward level is huge. You never know how big the upside can be while knowing exactly what the risk might be if you do your due diligence.


So we are entering a period in which you are going to have to defend owning large quantities of domain names. Let’s define “Large” as anything over 250 domain names. May not be large to us, but will be to those looking in.


If you look at my posts from 15 years ago you will see that the thing that concerned me the most would be over reaching government intervention. They would target valuable domains and assist those that decided they had more of a right to that domain name than you do.


The defense to all this is the risk we have all taken to get whatever degree of success we can harness by the system that they invented. They set the rules. They set the standards. They set the boundaries. They set the entire playing field.


Given that playing field we all invested in this medium. We did our job by making new business and trailblazing new paths. Personally I invested $500k in renewal fees and in excess of $5 Million acquiring my portfolio. We took risks when nobody else stepped up to do it because they did not see what we saw.


THEY STILL DON’T SEE IT!!


Sure, they see what happened in the last 15 years but they still have not figured out what happens in the next 5 years. THE 5 years. The 5 years that changes how we look and value domain names. All the silly formulas will finally look as silly to you as they do to me.


Domains valued on PPC. Now that is funny!! But as funny as that is, that is the standard the industry adopted. What PPC and a domain have in common in value is way beyond me. Why?? For one reason PPC did not come into play until about 5 years after I started. So was I supposed to wait for PPC to be invented so I could put a value on a domain name? See how SILLY that is??


These were VC formulas that everyone swallowed but NEVER had a true bearing in relation to a domain name. I say this over and over again to be on record and for those that disagreed before now can see what I see and why I see it.


EVERY domain is unique. You can not value a domain on a set of guidelines or ratios or payouts or formulas. That is a false system based on nothing.


Comparative sales? Way over used imo. There is very little relation from one domain to another unless it is the same keyword with different extensions or a plural or some other DIRECT relationship.


The value of a domain is not what it is, it is what it can become. Not 5 years ago, 5 years from now. When you chase yesterday you need formulas. When you chase the future you need vision and gut. You need to see things as they will be not as they are and not as they were.


There is an endless supply of domain names. There is not an endless supply of ideas. So to extract the value of the domain it always will and always did come to the idea. The vision. The profitability of that idea and the size of the audience.


Folks in this business have single domains that get more traffic that some of the cable channels. That’s pretty powerful. That’s just one of the many mediums we compete with while having things in common. Both able to grow and have more power based on the idea and content and the ability to attract others.


I have more projects on my plate today than at anytime in 15 years. It’s hard to keep track of to be honest. Partners, joint ventures, equity stakes, development, new businesses, boards, etc.


There is a time to mine and a time to take your booty to town to sort out and see which nuggets are the ones to keep, collect, build on and which to bury for the future. Which you thought were gold and find out was mineral rock. Until now there was no time to do that. There was a “Unique Opportunity in Time” in play.


Now don’t get me wrong. That unique time is not over. It is just spread out. Mining is more specific. The aftermarket is more targeted. You can take your time and be more deliberate of your selections.


Take a deep breath. We are entering the GOLDEN AGE of domaining. Corporate America may be on the slow boat. But they are on the boat.


Have a GREAT Day!

Rick Schwartz


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25 thoughts on “Just Some Strong and Rambling Opinions on a Saturday Morning

  1. american

    It is going to be hard to convince the lawyers and accountants who are representing the big corporate endusers that your asking price is based on what the domain could become. You obviously have been successful at it. Maybe you can tell us how you negotiate with them and get them to accept a valuation based on that. I just can’t see myself going to buy a plot of land only to hear the seller say that his asking priced is based on what the land would be worth AFTER i build my hotel/building on it. I agree that most of the valuation metrics are crap but this”vision valuation” is just hard to swallow if you put yourself in the endusers shoes. I think that so far there is NO WAY to accurately value a domain name that does not currently have a business built on it. Therefore, I think the next best thing is to pluck a number out of thin air and bring it to the bargaining table and , at the same time, tell them why the domain is”special” etc etc. In the end, if the end user really wants it, he/she will pay somewhere close to your price if you fail to get the full price.

  2. Dick Smith

    Very well said. I also agree that government is probably the biggest threat to domains just as they are in so many other areas of our lives. They are taking away our freedoms in many areas and why should they treat domains any different? I’m also flat out with many projects and understand your analogy of the mining very well.

  3. Altaf

    @ american
    May be you are right with development & barndin, but if that was the case then Rick couldn’t have sold so many domains with so high value. Of course, his ones are type-ins & he advocated for type-ins all the time.

  4. Trico

    “…the seller say that his asking priced is based on what the land would be worth AFTER i build my hotel/building on it”
    American,
    I interpreted Rick’s comments differently.
    I don’t believe Rick is saying the worth is established after putting a”hotel/building on it”.
    I believe he is saying the value of the plot of land (domain) increases when there is someone that wants to put a”hotel/building on it”.

  5. Rick Schwartz

    american…..but why value based on PPC?? Why not real estate? Why not newspaper ad rates? Why not TV ad rates? Why not the cost of having a presence in every corner of the world? Why not values on things we don’t even know about yet? Why not need, want and desire? Why not location? Why not future demand and future need? And why not based on their idea?
    I want to sell ONLY when I find someone that has the highest and best use because that is what makes it valuable to begin with.

  6. Domain Lords

    we came up with a 10 tier appraisal method over 10 years ago, from reg fees to 10M
    when no one was saying a domain was worth 10M we were saying, there’s certain keywords worth over 10M
    bottom line, it now takes a lot of dough to get in the main playing floor, and there’s still plenty of dough to make in high end stuff, but it all keys on one thing
    BUSINESS
    is the keyword something a BILLION buck industry is known as
    casino
    travel
    hotels
    insurance
    cars
    autos
    money
    bank
    etc
    10+ years ago we said all these root level keywords are BILLION BUCK INDUSTRY KEYWORDS everyone is worth well over 10M
    Then we said, some GEO keywords are huge
    newyork
    california
    newyorkcity
    losangeles
    GEO portals, way before anyone said you could control a region with a GEO keyword and create GEO portals
    most of them were 2nd tier 5M keywords
    then you had ok keywords
    1M to 2M
    minor industry keywords
    big million buck companies but not billions of bucks
    then professional terms
    lawyer
    doctor
    mechanic
    carrepair
    autorepair
    1M to 2M keywords
    then you had geo+keyword combos
    then you had tld valuations
    all based on .com slotting
    .net X% .org y%
    but the whole time the bottom line was
    IS IT A KEYWORD for any major BUSINESS or profession
    that was ALWAYS the formula
    now, when ppc came along, guess what, right away certain business terms and geo’s agreed with the formula
    the issue has always been
    short term selling or develop and get rental income
    rental income was always the ‘choice’
    so now the net has ‘matured’ to see real hard core ‘development’
    there’s more opportunity on the net than anyone can really imagine
    it’s the absolute ULTIMATE for marketing
    it’s all NEED driven on the SE’s
    other than yellow pages for decades, name any advertising where people went en mass to look for a produce or service?
    there are none other than SE’s and for now google is the monopoly
    so once you realize how valuable google is to almost EVERY BUSINESS today, you realize, they’re the new yellow pages they own the net as to DIRECT NEED leads, exactly how yellow pages owned local and some national advertising for years
    so you have to understand ppc to the degree that the real equation is revenue to google and how to get a large piece of that revenue from having the keywords people are BUYING
    so that’s the ‘formula’ today
    X buyers willing to pay Y dollars for KEYWORD or geo+keyword
    you acquire those keywords and geo combos now you own what many go to google to BUY EVERY DAY
    in ‘professions’ it’s like shooting fish in a barrel
    you can see 20 or 30 pages of lawyers lining up for 20 to 150 buck cpc terms
    terms you can buy CHEAP
    so then you develop and find the sharp professional that understands the facts of life
    you will be paying google like yellow pages IF you want leads
    you sit on our keyword and it has power, reduced cpc costs and high QS value
    we’re pros at one thing
    RESPONSE RATIOS
    call this whatever (lawyer doctor mechanic) as him about our success
    25% to 50% response ratios are our reality
    so we land clients easily
    and once you create an account with google with an end user BUYING ppc with quality content on a keyword
    that account is GOLD and usually #1 at google
    in other words IT IS EXACTLY WHAT GOOGLE THINKS IS QUALITY
    a business paying them to buy traffic to quality content on an exact match keyword
    so that’s the BOTTOM LINE FORMULA
    now more guessing, no more maybes
    YOU DO THIS WE GUARANTEE PAGE ONE and FIRST VIEW
    when you hit it and the phone rings, there’s plenty of money for the client to pay google and pay domain lords
    that is the ultimate ‘value’ of this in the end
    can a business use it to make money
    if yes, the name has value
    the ultimate value is when developed the net throws off X revenue, then it’s simple business valuations
    3 times gross was old world, when I learned business 101 valuations for general level cpa stuff
    and 10 times P/E
    so if you have a developed property with end user paying you monthly income
    it’s very simple to figure out what the asset is worth
    120 times monthly income
    10 years of profit
    cha ching
    we guy stuff or aquire it all day
    here’s an asset similar to this asset
    that asset has 5K a month income on it
    so the new asset has a book value of 120 times 5K
    600K in asset value growth with ONE minor domain
    that’s how we do the books now
    huge daily gains in asset wealth
    usually MILLIONS per day
    all based on a proven formula, where we can point to similar domains already developed already with end users paying 1K to 50K a month for the ‘use’ of our assets
    funny thing is banks still don’t get
    you show them this stuff and huge income streams
    they ask
    ok
    let’s see x years of this or that
    x years
    this model is NEW you moron
    that’s why banks are broken
    they have no way to judge the new wealth and even use it to collateralize loans today
    so it’s all being done with VC money
    VC’s understand one thing, new business model with net MAKING BIG MONEY
    that’s what I want to be on
    so there it is
    the FUTURE of domains
    domain owners that can develop and land end users
    end result
    huge income streams and a way to say a domain is worth X dollars
    the old way was to park and make peanuts on huge assets
    well the old days are gone
    DOMAIN LORDS is the way to monetize domains, then you can sell to investors for 60 months or whatever you want of income
    real income, not chump change from parking
    my 4 cents

  7. UFO

    If you did the right partnership J/V on property.com you could end up with a big slice of a very big business.
    Just as business.com went through the process and exit so could property. It has all the hallmarks for that. The biggest problem you’d have is chosing the right partner that could actually deliver.

  8. Kevin

    A domain, like any other asset, is only worth what someone is willing to pay you to acquire it from you on any given day.
    Nothing more. Nothing less.
    It doesn’t matter what valuation factors you use to claim the value of a domain you’re selling, be it ppc, length, natural traffic, etc. If the guy on the other side of the table doesn’t it see value in your speel the way you do, you’re gonna be talking to yourself at the end of the day.
    The majority of sellers in this industry are living in dream land with the valuations of their domains.
    Fortunately so are the majority of buyers (living in dream land too.)
    And it’s that grand”dream” in every domaining entrepreneur’s heart and soul that keeps the perception of values intact and the domain game going. :)
    But to be perfectly candid, it’s quite proven now that you don’t need what domainers would call a”great” domain to create a”great” online business. In fact 99% of the most successful Internet businesses have funky sounding domains that had they not had such businesses built upon them, would have little value as a domain in the eyes of domainers.
    Before the Internet became what it is would you have invested $1 Million in the domain Search.com or $1 Million in the domain Google.com? And that is the great irony of valuations. Two kids at Stanford went with the funky domain and the rest is history.

  9. Gazzip

    That’s a great way of putting it, a 2 minute TV ad on TV can cost a fortune to produce and they have no idea if anyones even in the room.
    I think the SEO benefits of exact match keyword domains is HUGE but rarely mentioned.
    (SydneyHotels.com, VisitStockholm.com etc)
    I just hope when the big corps do get on the right boat they don’t have an eyepatch, parrot and a cutlass ;)

  10. Domain Lords

    A domain name is not ‘worth like any other asset’, other assets aren’t so limited and have direct value to a businesses bottom line.
    If you are a casino, there’s one casino.com and then about 5 other tlds’ that can get you deals with google to buy CASINO ads, period. So unlike real estate, or stock, or whatever, you an asset that can aid you in getting users to a site that have a ‘need’ by looking for ‘casino’ at google.
    You have any idea of the money caesars or mgm or bally puts into BRANDING their casino names, so if someone isn’t looking for bally casino, or another brand, they’re looking for CASINO.
    Bally gets in line to buy the ads with 100 other buyers without CASINO.com or .net or a few other global tld’s, google YAWNS, oh, another ‘casino’ with the same old stuff wanting generic ‘casino’ surfers.
    Bally acquires casino.com, instantly their exact match keyword rotation on top of google ppc for CASINO, in front of everyone else as an EXACT KEYWORD buyer.
    Now, that’s a FACT and once you explain that to a few potential big money buyers for CASINO .com or net or a few other tlds, they’re tripping over each other to BUY IT.
    Well hold on, this isn’t for sale, you will be paying google, we manage the account, you use our asset, we develop the content to make it convert, we track results.
    The monthly price is X to google y% to us to manage your wholesale ppc with this gem and z to us to rent our content and name
    Now if you don’t want that deal, then I got caesars on the phone, and stevie wynn is calling and so is the Donald.
    CHA CHING
    The problem is, most major execs are still CLUELESS as to how google views exact match keywords.
    Now scale it down, GEO lawyer. Any major city
    You can buy CHEAP now most of the top cities
    Now how many lawyers in each city are LINING UP over 100 deep to BUY the term
    TONS
    That GEO keyword.com or .net or a few other tlds’ puts that lawyer in front of everyone else
    That REALITY folks.
    So anyone saying a domain is just another asset
    WRONG
    ITS THE ASSET TODAY
    It gets you in the VIP line at google
    That’s why when I tool up to a club in a lambo I’m right in front of the crowd. I don’t wait in lines
    Same with google, you have the right car and MONEY, you go to the head of the line, the lambo in that line (google) is not a car, it’s a KEYWORD relevant to what you are buying.
    Now if you want to show me another asset that can do that, ok, you can’t.
    So case closed. DOMAINS are the key asset today, and DK hit on it to some degree, the powers that be are realizing, yeah, these .com’s and few other tld’s are MONEY. THEY MAKE US MONEY

  11. Domain Michael

    great post Rick, I think we’re slowly getting there though. As we see more big brands launch on category killer domains, corporate will catch-up soon enough.

  12. Mike

    @Kevin…..you don’t see McDonalds buying second rate land just because they can build a successful business on it.
    Truth is, McDonalds could be successful and profitable on probably almost any piece of land in America, but they will be much more wildy successful on a great piece of land. This is why McDonalds is known for owning the most valuable property in the world.
    It’s not to say you can’t go build another extremely successful business like”Google” on a domain like Bongbado.com, but out of 10,000 attempts on domains like Bongbado.com, how many will be successful? How many out of 10,000 will be successful on domains like Candy.com, Casino.com, Love.com, Dating.com, Insurance.com, etc…..
    Funny, I see none of them going out of biz, but the Bongbado.com’s of the Internet are dropping like flies every day.
    Kevin, you need to rethink your entrepreneurial strategies. Your notion is the flawed, jealous notion many developers have. They are either just bad businessmen or jealous. Period!

  13. Theo

    What sorta irritates me are these commercial agencies.
    They don’t fork out any cash to get a good domain name. They rather spend 8 usd on a flipping domain name that is almost 63 chars. And then they throw alot of money. Radio , TV , show the client the numbers and everyone is flipping happy %$%#^%
    And 6 months later no one can type in the friggen domain correctly….
    Sure enuff people helps them with their suggestion tool if you manage to type it in half right….
    What waste what a waste… forget about the resell value of the domain name..2 years later you see it dropped…

  14. Uzoma

    I hand registered 4 domains yesterday that I believe are killer domains. They may not be Property.com, but they are mine.
    1.) BESTINSURANCEOFFEREVER.COM
    2.) BOLDER.ME
    3.) COURTROOMDEPUTY.COM
    4.) AVOIDHASSLE.COM
    5.) iEBITDA.COM
    6.) DBONLY.COM

  15. UFO

    Mike said…
    Truth is, McDonalds could be successful and profitable on probably almost any piece of land in America,
    Actually I think you’ll find they have closed outlets in a few places. I know of instances in the UK, NZ etc…
    Even Starbucks is getting squeezed by the likes of Costa Coffee etc that just pitch up where ever starbucks is.
    Fact is nothing is business is a dead cert. Even with the best land, the footfall can change, and if you don’t own it the rents rise to match the increases in footfall.
    If business is easy, then expect a competitor to come along.

  16. prosper

    Uzoma – You should re-read Rick’s older posts on picking domains.
    DomainL- You have to much time on your hands to write that much.

  17. wayne

    I agree but the real problem is getting it together enough to get the vision, the vision and the get up and go to get there.

  18. Dave Wrixon

    Brilliant logic. Just unfortunate you are too blinkered to apply it to the IDN market where today’s real opportunities lie. Doesn’t really matter what a keyword looks like as long as it brings eyeballs with money. Most of mine is coming from Saudi these days.

  19. Dave Wrixon

    Yeah, you can kind of see what Rick was on about.

  20. Dave Wrixon

    Funny, I thought MacDonald’s was a Franchise.
    How much land do they actually own?
    And how big a role do they have in the location decision?

  21. BullShitwebsites

    Uzoma–
    I have been making lots of money and saving money too because I read my own ‘BullS” blog on saving money.
    ***
    Save Money-Stop buying Junk Online.
    Spend time with your Family.
    EatDinnerTogether.com.
    Turn Off the TV and Internet.
    Use what domains I have to develop and make more money.
    Plain and simple
    KISS!!!keep it simple Stupid

  22. Emma

    I knew one day Rick would talk like I do about the domain business. That’s very interesting. Rick changed considerably in his way of seeing the domain business. I could not believe that.

  23. George

    George said in reply to Rick Schwartz…
    “If you look at my posts from 15 years ago you will see that the thing that concerned me the most would be over reaching government intervention. They would target valuable domains and assist those that decided they had more of a right to that domain name than you do.”
    I think you couls have included Big Corporations…
    Walt Disney is trying to Trademark”SealTeam6″.
    http://www.mediabistro.com/fishbowlny/disney-trademarks-seal-team-6_b35689
    I hope you can get first and bit them.
    Good post. I did learn from it.

  24. steve cheatham

    Value a domain name based on PPC? I guess that would work if Google owned the name. But advertising is a fickle market and Google changes the algo too often for using PPC for anything concrete.

  25. patrick

    Domain valuation is all over the map i use the actual industry as a guide line then how much would it cost to advertise in traditional media, you will see a much higher value if you use this method see business insider for how far a 100,000 will take you in traditional/web advertising, rick has talked about this, the value is in the industry the domain is the advertising medium they go together like ham and cheese (sorry vegetarians)the big boy’s see the money and they steal it from us the se’s steal from us the parking companies steal they have a vested interest in making sure domainer’s do not succeed just like the banking system or any other billion dollar industry greed has no bounds there are sharks everywhere even those (trusted) companies we all love to worship as the leading edge are all just thieves in moral clothing so hold on to what you have if it’s good, do not use type in as any valuation tool as that traffic has been manipulated by parking companies for years(thieves)if it is a industry product or service domain that you own hold it do not sell it to thieves unless you need to they have made many of us desperate for sales why would you sell prime real estate for cheap just because the banker told you it wasn’t worth much would you trust him? it’s almost enough to make me pull all my names off the market until it is honest stable transparent and valued properly it is hard but my guess is it will pay off. Ps Rick keep up the good fight as there are very few honest blogger/domainers like you.

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