Afternoon Folks!!
Today my partner in JointVentures.com, Danny Welsh, wants to explore the parallel of commercial real estate property valuation and income as it relates to the absolute best of the best MOST VALUABLE domain name properties, AKA “internet real estate”, and how he sees things being from the Physical Real Estate world.
This series of posts Danny will be making will crystalize what I see and he does a much better job explaining it than I do. I’ll let him take it away. What I can promise you, neither of us will waste a minute of your time. We hope you will see exactly what we see and exactly how it plays out into the future and why selling your unique assets without a residual could be the single biggest mistake a domainer can make going forward.
Rick Schwartz
By Danny Welsh
Let’s follow the thread from that oft-told story about a $24 purchase of the entire Manhattan Island to a world of today where we see a $2000 per square FOOT cost to buy a “luxury” 2000 square ft home in Manhattan…
I want to follow the thread even further than a residential use of prime land to the small niche of the “highest and best use” of the most valuable properties in the physical real estate world….
I’m talking about a small niche where numbers of $1.00+ per square INCH per MONTH just to LEASE— not buy— the most premier retail properties on Manhattan’s Fifth Avenue or Times Square is now the norm….
Those numbers are not “made up” like 77.2% of all statistics you see on the internet…
Those numbers are taken straight from my notebook of notes from real phone calls made to real residential and commercial real estate brokers in New York City while I was up there for the Macy’s Day Parade just a few weeks ago. Of course, they didn’t exactly tell me the price per inch. I had to do the math and reduce the prices to the extreme absurd of “per inch” to get the numbers I wanted to make the analogy I knew would be possible...and powerful…when applied to domain name properties.
The point is that the difference between a 2013 PRICE of $1.00+ per square INCH per MONTH just to LEASE— not buy— in the same area where HUNDREDS OF BILLIONS of square inches once had a TOTAL PRICE of $24….that difference has NOTHING to do with the PRICE of those square inches then, and everything to do with their VALUE now and in the future.
Price and value are NOT the same, are they?
Let’s continue to follow that thread from a PRICE of a premium keyword category domain such as Property.com (or one YOU may own), for what you bought it for in 1993…through its VALUE in 2013, all the way to its PRICE if you were to sell it in 2033.
A hundred bucks to the new norm in 20 years:
http://www.dnjournal.com/ytd-sales-charts.htm
Is that a LINEAR progression by any definition of the word?
Or does it parallel Manhattan’s real estate prices?
A + B = Conclusion: The biggest profitable upside for top valued domains will not happen in my lifetime or the lifetime of anyone reading this in 2013, and this parallel proves it.
In my inaugural guest post on RicksBlog I said I’d be posting in the future to answer this question:
What are the past historical asset parallels to domain names that give me confidence in stating that my prediction that one or more 'pure' domain name investors— (i.e. pure NOT referring to those owners of domain names that developed a business on it themselves— will be profiled in the future as members of the Forbes List of Billionaires must and will come true?
There are many historical parallels that show us the path of value increasing for top domain names, and Rick Schwartz has talked about a number of the best most relevant ones on this blog...as I see it, evangelizing domain names to an audience mostly of other evangelists…and from time to time an end user businessman comes along and finds a gem of value too.
Just like I did.
The premium domain valuation parallel that struck me as most powerful reading thru RicksBlog.com is the topic of “highest and best use” development of any given property in any given area in the world of physical real estate.
Vacant land in a prime area sold as land or developed. When and if developed, something small vs. a shopping center or skyscraper. Same land underneath, same potential advantages. Most squandered with anything NOT “highest and best use”, and in domains only a FEW of the top-value landowners seemed to see any of that future money— Rick himself chief among them with Candy.com style deals.
Why?
Is it because he’s Rick Schwartz, nice guy?
Nope.com.
It’s because he looks and filters for just ONE buyer for his best properties.
It’s because he looks at a domain name as vacant land in a prime area, and judges inquiries through a lens of “highest and best use” of that property.
I also see that the real estate parallel has maybe the best possibility of making inroads in showing NON-domain investors in the commercial world the power of the “category domain names” in THEIR niche industry, and that the true VALUE of the very best dot com domains in 2013 and 2033 and beyond has NOTHING to do with the PRICE of domains in 1993…a persuasive argument domain investors have been making for almost 2 decades to “end users” in business, with varying success.
You see, I’ve had my successes in physical real estate and so I think along those lines.
Because I see the best dot com domain names in the world as a vacant plot of land, waiting for a skyscraper or a shopping mall, and I see it as inevitable that those will be built in my lifetime so I may as well help make it happen and earn a lot of money.
For those of you among “the 500” who own the very best internet real estate, Rick Schwartz believes (and I totally concur) that doing NOTHING with the few in your portfolio that meet that criteria in 2013-2015 is much better than selling for cash only.
Confucius say: “Sometimes, wisdom knows that doing nothing is better than doing the wrong thing for the wrong reasons at the wrong time.”
Translation?
When you KNOW your property is right for a skyscraper or shopping mall, don’t settle for less
and don’t accept not having a piece of the developed “highest and best use” of your land.
That’s what the vision for JointVentures.com is all about.
So go ahead, and sell any of your ‘good’ properties like Rick’s recent 3 word domain for $150,000 that I don’t even think has even been publicly reported. Most good domain names have a “magic number” that might be on the low end if you had complete future vision but there’s nothing wrong with taking the money and doing that straight-cash sale deal when you have better properties for your “hold” strategy anyway.
But if you believe you have one or more Property.com-value domain names, Rick’s advice I believe too is to hold onto those BEST internet real estate properties for the BEST long-term deal…or kick yourself in a few years when deals like Rick’s Candy.com get negotiated more and more frequently…deals that create cash now, cash ongoing, and cash for generations to the smart domain investor who kept the Golden Goose until it was the right time to sell anything but the Golden Eggs.
In coming posts— with Rick’s blessing— I’d like to answer more of the who/what/when/where/why/how much questions I posed in my inaugural guest post...and go more in-depth on our ever-evolving but already proven formula to attract and execute a deal with that ONE right 3rd party end user company who will see the VALUE in a long-term domain lease arrangement or even a full-blown Candy.com style sale-with-royalties joint venture deal as a WIN-WIN to get their hands on that very best of your very best domain names they covet at a PRICE that far exceeds the domain owner’s current income, with nothing but more upside and mitigated risks for all parties involved down the road.
Until then,
Danny Welsh
JointVentures.com
Ron
You guys are selling this to hard, and into the wrong market, try the wallstreet journal or something.
Trust me I am a fan, but the same spiel everyday is getting very old, and people are just shutting you guys out.
Rick Schwartz
ok Ron, fair enough. Let’s ask.
Do you folks want more of the vision we see or less?
Do you want us on record or not?
Do you want to see what we see so transparency is actually transparent?
Remember, the end users are reading this as well. What we are doing is in the light of day and wide open because it is a win/win and I think we need the time to really start to share what we see and why we are doing this NOW.
So readers, the floor is yours. I would just say that Danny Welsh has a 5 part series (This is #2) and when it is all said and done, together, they are quite good. Especially the next one!
Acro
More is always better than less.
Transparency wins over cryptic mumbo-jumbo.
Keep the series going; the problem is that inherently, domainers that don’t want to read, won’t – they just want to skim headlines. Those that want to learn, will spend time perusing the series. To understand something, one needs to take some time away from distractions. Just like when reading a book.
Great stuff!
Gene Downs
Nice work Rick ~
Tony
This is good stuff and I look forward to reading more from Danny.
AHEAD OF TIME
I have seen more domainers put Buy – Lease – Joint Venture
on their landing pages now after Rick has launched Joint Ventures.
So slowly things are starting to change and I love all the information
about Joint Ventures. It’s going to happen just a matter of time.
Krishna
Rick and Danny, please continue the series and share your vision. But, I agree with Ron on one thing – unless we spread awareness through mainstream business publications, several business owners do not believe in what we are seeing. That’s the way their brains are tuned.
For Joint ventures, you need not need several just one who knows how to use a premium domain. Go ahead.
UFO
Let’s face it; the future is lease, JV or sale.
Given that buyers of domains at the top end have a natural resistance to paying the sort of monies required…. then leasing and JV makes sense, especially where the sweet spot of high value names is the SME’s looking for that leverage up.
I made quite an important point the other day when I said the biggest of corporates didn’t buy domain names and take entrepreneurial risks, they in fact preferred to buy SME’s with sufficient scale that was worthy of their mid tier millions (50m+ etc). Hence, the domain industry needs to work on SME’s to take up domains and domain holders as part of the equitable element could take a JV or lease. Plenty of start ups will like this model. In the next expansion phase I think it will feature big in business case models of start ups.
Rick and everyone else have pretty much covered to death PPC, type in’s etc etc. But the real revenue growth in domaining is leases and JVs, that’s the future.
While people think there are lots of domains around. The real numbers of succinct, brandable and commercial orientated domains that are bang on the button are quite limited. Especially when a number are already being used in businesses.
Alexander, Mr. Autopilot
Keep it coming … glad to discover and learn all the gems you can share, thank you.
Joao
I want more.
Matt
Keep the spiel coming!!! :)
I love what you are doing and fleshing out the thought process, details, framework in front of us is not tiresome in the least.
In fact, I love it.
Bud
Great posts please keep the info flowin
RK
I am spreading the awareness via 1000s of our domains.
I have the sale, lease and J-V banner of all our domains as you can see in the domain in my name link.
It can’t hurt….I have few JV inquiries already but no deal so far.
Rick and Danny are on the right path and it will take some time before the awareness spreads.
Scott Neuman
Reality is perception. I’ll take more of Ricks perceptions.
BullS
I want more—give me all you got…and make it fast before the end of the world comes.
Jeff Schneider
Hello Rick,
” When you KNOW your property is right for a skyscraper or shopping mall, don’t settle for less
and don’t accept not having a piece of the developed “highest and best use” of your land.”
What are the typical Equity sharing arrangements % and other equity arrangements that you personally have made ?
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)
Anunt
Good Luck to you guys…but i disagree about the future of domain name values being so sooooo great.
With the 1000’s of new gTLDs, with all the new ways people search the net with voice, apps, etc…internet is changing very fast and dot com values are already going down…numbers don’t lie, people do.
You can not sit there and compare dot com domains with real estate….the Internet is changing soooooo fast.
My advice…keep a close eye on Google…they are going to change the future of the internet within 2 years!!!
Good Luck!!!
Danny Welsh
RE:”I have seen more domainers put Buy – Lease – Joint Venture
on their landing pages now after Rick has launched Joint Ventures. So slowly things are starting to change and I love all the information about Joint Ventures. It’s going to happen just a matter of time.”
Agreed! This is like steering a ship with a bow the size of the equator. It takes time for the ship to turn, but once it’s moving there will be no force on the high seas that can stop it. It’s not even our intent to LEAD that change, just to point out how the winds are blowing and say what WE are doing and WHY.
EVERY non-client of ours that follows suit and wants to do something with their best domain properties that’s outside the box including lease/royalty/JV and publicly advertises that fact…and privately STICKS TO THEIR GUNS when”How much to buy that domain name?” inquiries come in…every single one will pave public acceptance for us all to succeed more and more to extract the MOST value long-term of our BEST .com domain properties.
Danny Welsh
JointVentures.com
Danny Welsh
GREAT!
To answer all the questions about”spreading the message via mainstream” there is much more of that coming. Before you load the wagon and take it to market, though, always you check to make sure the axle is not broken and grease the wheels.
This community RIGHT HERE that reads this blog and attends the TRAFFIC conference and contains some of the most visionary business thinkers of the last 2 decades…this is where it starts.
If a new start up looking for a fantastic short and catchy brandable or generic matching .com domain name…or an already successful business looking to”upgrade” to a premium generic domain name that matches their product/service category, get the .com version of the alternative extension domain they’ve been using… or a company looking to”truncate” from MyPunchbowl.com style names to become Punchbowl.com…
If they see the options are ALL inferior among domains that are for sale in the aftermarket or can be hand-registered…what then is their best choice? Grab the one they want in the way it is being offered, and be thankful they could get a $1,000,000 asset for $1500/month.
Danny Welsh
JointVentures.com
RD
I really enjoy the discussion, but I think all of us understand the importance of squeezing the fruit for all the juice you can get. Since I will probably never own a name like Property.com I would prefer to see how these deals are born from beginning to end. Maybe a 5 part series (aka case study) on Nope.com would be extremely educational and would show everyone how a deal gets executed.
Uzoma
To: Welsh,
One or two leased deals, made public, transparently, will convince everybody. There’s no need to keep selling us. That is the first or second rule in sales: once you sell your customer, quit, stop selling!! Or you risk overselling and losing the deal.
Lease some domains, and everybody will be pounding on the door to get in.
From your first pitch, I decided to expand my VacanyTV.com to include both Real Estate Apartments and condos for rent, and premium domains.
Let the JV begin.
Danny Welsh
“My advice…keep a close eye on Google…they are going to change the future of the internet within 2 years!!!”
Google has more power than you, me, or Rick Schwartz. True enough. BUT if you believe any one company, however powerful, has more influence than a group of highly committed, passionate entrepreneurs that are aligned in vision and working for their own best interests…I am truly sorry.
That company and every other big company is made up of EMPLOYEES sitting in a cubicle, and no employee sitting in a cubicle under buzzing fluorescent lights listening to Muzak and hoping to clock out soon ANYWHERE in the world will EVER determine the destiny of THIS entrepreneur.
Danny Welsh
JointVentures.com
Danny Welsh
OK, prepare to be convinced. ;)
I’m heading out of town tomorrow for a 5 day rest after this crazy couple of weeks…but I’ve got some inside info that Rick Rick will be sharing some results from the model in the coming days on this blog.
Regarding your plans for domain JVs etc, welcome to the movement. Just so you know, my series is not about selling JointVentures.com. It’s about giving oxygen to a spark and fanning a flame that can set the business world afire with passion to own what we are telling them they can no longer buy.
As the main man Billy Joel said in that song:
“We didn’t start the fire /
But when we are gone /
Will it still burn on, and on, and on, and on”
Danny Welsh
JointVentures.com
Brandon
Keep this stuff coming! I don’t see this content as selling, the opportunity you’re offering is amazing. I’m brand spanking new to this game and I see this as likely biggest thing that has happened to the domain industry so far. I love seeing this stuff and I am excited to see how this unfolds. I’m really thinking that this is going to have an effect even on my less than premium domain portfolio as a trickle down. I really think this is going to create an impact on even local level domain deals, which is what I’m focusing on as a beginner so that I can build my way up.
LM
First off I’d like to say I pretty much agree with 99% of this post, and perhaps 95% of the rest of rick’s posts so really Im on board there is no doubt there. Just yeah – I agree with the first commenter, you;re one of the ones that perhaps the WSJ will listen to and give some column inches. I guarantee I (we?) would totally dig it if your passion appeared there I mean oh man, we get it – *they dont* – thats your whole point isnt it, and the fact that *one day* they will. Noone speaks louder than you really so lets hear it outside our bubble.
Best wishes to all for 2013 :D
Danny Welsh
“Keep this stuff coming! I don’t see this content as selling, the opportunity you’re offering is amazing. I’m brand spanking new to this game and I see this as likely biggest thing that has happened to the domain industry so far. I love seeing this stuff and I am excited to see how this unfolds. I’m really thinking that this is going to have an effect even on my less than premium domain portfolio as a trickle down.”
Thanks Brandon. Wish us luck. EVERY non-client of ours that follows suit and wants to do something with their best domain properties that’s outside the box including lease/royalty/JV and publicly advertises that fact…and privately STICKS TO THEIR GUNS when”How much to buy that domain name?” inquiries come in…every single one will pave public acceptance for us all to succeed more and more to extract the MOST value long-term of our BEST .com domain properties.
Now and in the future, one success just makes the resistance easier for the next guy.
Danny Welsh
JointVentures.com
Danny Welsh
RE:”First off I’d like to say I pretty much agree with 99% of this post, and perhaps 95% of the rest of rick’s posts so really Im on board there is no doubt there. Just yeah – I agree with the first commenter, you;re one of the ones that perhaps the WSJ will listen to and give some column inches. I guarantee I (we?) would totally dig it if your passion appeared there I mean oh man, we get it – *they dont* – thats your whole point isnt it, and the fact that *one day* they will. Noone speaks louder than you really so lets hear it outside our bubble.”
Starting 2/1 when Rick gives me the greenlight to take the show on the road with our 300 listings under signed agreement, you’ll hear it. So will they. Time will tell how well they respond. I am optimistic. You really cannot MAKE someone listen…but I can make someone HEAR. Sometimes that’s half the battle. Thanks for the luck wishes.
Danny Welsh
JointVentures.com
peterborough
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