Morning Folks!!
The most common question I field about leasing domains is 'Why now?' 'What do you see Now?' I am now prepared to answer that. First of all this was a business that caught both Danny and Myself off-guard. Danny did not even know about it until it evolved right here after a few days. So I had to explain what and why to Danny first and that was not the easiest job I ever had. I just kept saying we had 'Lightning in a bottle'.
So now back to the question. Why now? Now because 18 YEARS of headwinds SUDDENLY turned into tail winds. For the first time there was more resistance in selling a domain then there was in leasing a domain. The resistance level changed and it changed virtually overnight. Here was the MOMENT and I shared it right here to some laughter. But something happened during that post and this moments.
Anyone can easily read what I started writing starting in November. It will have taken 90 days to paint as vivid a picture as I could so it would always be on record. Folks can read the evolution first hand. An evolution that is not new bit the time is t=right to revolutionize what we all do.
Look what has happened since. The industry is starting to follow our lead. We have bent the direction of where we are all heading in a significant way and fear has turned into optimism and confidence. If I counted right, 3 companies announced Leasing programs this WEEK. We have articulated a message over the last 12 weeks that you have been witness to. It's STUNNING the impact IDEAS have! The power a well thought out argument makes. This is pretty sensational.
Even folks that did not send domains or we turned down their domains are rooting for our success. The best way to insure our success, your success, is have the best domains in the world to go to market with. There is no other way to do this and be successful. I looked at a list of some 100 six and seven figure domains. Each and every one. But only 2 made it over the 'Leasing' threshold. The lens I use may not be understandable to all domainers, but it is understandable to an end user in the field we target. It is understandable to those that are following our lead and see what we see. It is understandable to domainers that already lease domains and have been doing it fir years. Now it is about to be industry wide!
You folks have 2 more weeks of this as we completely articulate what we are about to do. Then we are going underground and the real work begins. Pretty cool to have moved a mountain like this in front of everyone. But this is just the start. I think we have demonstrated this is a serious effort with serious folks that are looking for a seriously INSANE outcome. A long overdue outcome. An outcome that you will all be witness to and in the front row of the future.
Have a GREAT day!
Rick Schwartz
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Uzoma
I’m listening. I did give you and Danny a tacit endorsement earlier on Shane’s blog. The synopsis: some folks were arguing that renting and leasing have been around for a while, and that the numbers don’t lie etc, I stated that it’s different when the king does it.
So, good luck to all of us.
There’s a post I would request from you and Danny: could you do a post here where your readers can post their top 5 domains, and you grade them: pigeon shit, lease-able, or salable? It will be busy traffic here, and helpful at the same time. Thanks.
kedo
Hmmmm it is self explanatory to see all these premium domain names undeveloped, not being needed. It is not easy to come up with a business idea that can be successful. Once you have that then you can use any name and you will be successful. Business idea that can be successful is what matters, not a domain name. Youtube, Godaddy, Pinterest, instagram, plentyoffish, alexa, google, Yahoo, techcrunch,facebook, myspace, just to name few, are good examples.
Those people investing in new gtlds are clueless. What the world is lacking are business ideas, not names or domain names and there will always be plenty of names and domains available for anybody to register to start their business
Rick Schwartz
Ideas ARE the key.
But ideas are built on OTHER ideas.
So we are at the first stages of that,
Rick Schwartz
I would rate domains, but I would make a lot MORE enemies.
I don’t like to rate domains publicly because sometimes there is more than meets the eye.
Uzoma
Ten-four, Rick.
@Kedo
You make an excellent point, quite vividly, however, success could be modular; in essence, you can have a great idea, and then double your success with a great name; one does not abrogate the other.
Lawrence
Rick, You sure started something! Suddenly, over the last two weeks I have been receiving offers to lease from SELLERS. A lot of them. Some names are actually quite good. However, nothing good enough to make me move..yet.
Some very savvy sellers have even come back to me, with offers to lease domains that I was unsuccessful in buying from them. Some dead deals from over a year ago.
Suddenly everybody wants to lease, however leasing can be more dangerous than buying, unless you have a built in convert to buyout at a fixed preset price. Otherwise you could be held to ransom at a latter date.
BullS
Yo- Is there a lease agreement I can use ?? or I need to hire some hot shot lawyer who charge exorbitant rates…..
I need one ASAP!!! because someone wants to lease one of my hot-s*hit domains.
Again, the wordings got to be in my favor and covers my ass(MBA) in any lawsuit.
Patrick Hipskind
Hi Rick,
This post explains how a domain name lease can add Shareholder Equity to the balance sheet, and adding Shareholder Equity to the balance sheet should be the foremost objective when deciding to lease or purchase an asset. For anyone who has a limited knowledge of balance sheets it is important to understand the following: On the balance sheet, Total Assets – Total Liabilities = Shareholder’s Equity. On the balance sheet, Shareholder’s Equity + Total Liabilities = Total Assets.
Any firm that wishes to be listed on the NASDAQ capital market needs to have Shareholder’s Equity of $5 million using the equity standard, or $4 million using the net income standard.
If a domain name is leased as an operating lease it is not recorded on the balance sheet. It is only reported on the income statement as an operating expense. The Lessee does not show anything on the balance sheet as a result of their payments for the domain name, except revenue that was earned using the domain name and reported on the balance sheet through Cash And Cash Equivalents, Current Assets, PPE (property, plant, & equipment), or Other Assets that were purchased with those revenues.
If, however, the lease agreement meets certain terms and conditions it is considered to be a Capital Lease. A capital lease is reported on the balance sheet. A lease is treated as a capital lease if it meets any one of the following four conditions:
(a) if the lease life exceeds 75% of the life of the asset
(b) if there is a transfer of ownership to the lessee at the end of the lease term
(c) if there is an option to purchase the asset at a”bargain price” at the end of the lease term.
(d) if the present value of the lease payments, discounted at an appropriate discount rate, exceeds 90% of the fair market value of the asset.
If the firm leasing the domain name agrees to payments over time that exceeds 90% of the fair market value of the domain name, then under rule four established by the Financial Accounting Standards Board the lease would be classified as a Capital Lease. It would be difficult to meet any of the other conditions of a Capital Lease established by the Financial Accounting Standards Board for the following reasons: the life of a domain name is an indefinite-life intangible asset, the domain name owner does not wish to transfer ownership to the Lessee at the end of the lease, and the domain name owner does not wish to sell the domain name at a bargain price at the end of the lease.
If, however, the firm leasing the domain name agrees to payments that total more than 90% of the fair market value for the domain name then it meets Rule 4 and the asset can be listed on the balance sheet as a Capital Lease. Its value as an asset would not change on the balance sheet, it would be recorded as the total amount of the payments to be made. Over time though, as payments are made its liability on the balance sheet decreases and Shareholder’s Equity increases. And for companies already listed on a stock exchange, as Shareholder’s Equity increases so does Market Capitalization as the price per share usually goes up.
There is no depreciation of the domain name as an asset, because the Salvage Value of the domain name remains the same. The domain name can be leased again for the same amount at the end of the lease agreement. The formula for annual depreciation is Cost – Salvage / Life.
It becomes a Win-Win for both the domain name owner and the firm that needs a premium domain name but can only afford to make payments over time, and needs to build Shareholder Equity so that it can meet the listing requirements for NASDAQ or another stock exchange.
Anunt
Patrick…what the fuck are u talking about man???
You talk more than a fucking female…STFU
You got Diarrhea of the mouth…
Rick is gonna run out of bandwidth…
K.I.S.S. — Keep It Simple Stupid
BullS
Forgive Patrick..he has the MBA-My Big ASS degree
passing through
Sounds to me like patrick gave you the perfect pitch that would be music to public companies Ears!:)
Anunt You can’t go into a boardroom and keep it Simple Stupid.
@BullS – Really?! Gung ho as you are about domains I was surprised by your post.., you should welcome any input with the intentions of being helpful to you and others in the industry.
passing through
Patrick Hipskind
Do you guys know who your target market is for a domain name lease that costs thousands of dollars a month?
It is high growth start-ups, it is companies who need the next round of financing so they don’t have a solvency crisis.
Do you really think they are going to sign a lease deal with you just for the hell of it? What are the executives going to say,”Let’s pay this guy $10,000 a month for his domain name. If it doesn’t benefit us, we had fun doing it?”
They are going to have objections, and plenty of them. You have to show them how your domain name will improve their financial position and help them grow their business. That means you may have to show them how you can improve their balance sheet, improve their shareholder’s equity, and how you can help them grow.
You will need to know about operating leases versus capital leases on the balance sheet to do million dollar lease deals. A lot of companies won’t want to do a lease deal with you if it doesn’t help their financial position. They will just go purchase a domain name for $5k to $10k and use it for their Internet marketing.
He who despairs of morons
‘You talk more than a fucking female’ – ???
Such a hateful and violent statement about women is not welcome in a place that is about Domains.
Get help or get lost.
Aslan
Thanks for the information Patrick. I appreciate it.
Jeff Schneider
Hi Rick,
Over the years I have always considered your Blog a valuable resource for professionals looking for truthful answers. Now you are translating that trusted following to front row seats, on a prmer of how to crush it when it comes to launching an Internet business.
I gotta admit it this is a great movie,with a happy ending,Please pass the popcorn.
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)