$250,000 in cash and Looking to Start in the Domain Industry
Robert writes:
“”Hi Frank,
I’m brand new to the Domain industry, having recently sold my software company earlier this year. I’ve been reading the blogs to learn and will be attending DomainFest and TRAFFIC next year to learn more.
I think the domain industry will keep me engaged, and my instincts say that even for a newbie like myself there is still money to be made and fun to be had in this industry. Many have told me that I’m too late to the dance and missed the boat, but my gut tells me otherwise.
So, my question for you: If you were to start over today with $250k to invest and the goal of being as successful as you are now, what would you do?
Regards,
RM”"
***FS*** Firstly you’re absolutely right.. there is still lots of money to be made and fun to be had in the domain industry. Historically this business has been the compulsive’s best friend.. the more impulsive and expedient you were the better you did.. ADHD was actually a benefit!.. If you didn’t act to secure those valuable domains “now”, somebody else would. Today is different.. we are at an interesting point in the evolution of the space where the primary namespace is fairly mined out. Domain tasting has vacuumed many longer-tail type-in names out of the available pool and most of the good type-in traffic names are held by existing registrants.
In the next 2-3 months we’re going into many company’s financial year end, so people will be spending money on domains giving the overall space a lift.. That isn’t a great time to acquire names. I would attend Domainfest in LA.. go easy on the booze at the parties and listen to anyone who will talk about their story.. Take it all in.. speak with the exhibitors and ask smart questions about their specific niches to get an idea of where the lowest hanging fruit is.
I’d look at putting some of your money to work in Feb or March after holiday credit card bills start to bite individual name-holders. Buty names for a few thousand or tens of thousands depending on the value of the name and traffic.. don’t spend too much on any specific name in order to spread risk.. I would try to spend 10k a name but really look for prime stuff.. Names with treal trafic and obvious break-up value.
When I started buying domain names you could register large tracts of traffic producing names across many different verticals.. Today, I think it’s smart to focus on two or three niche’s depending on your interests (ie. auto sales leads, car wheels, car insurance) The names you choose will help lead you to industry specific conventions, you’ll learn about the industries that interest you.. it will be a great journey.
If you just want to flip names the buying season is March through September .. by October everyone is talking about growth in Internet traffic and Tax related purchases pretty much end in Late February, so that’s a good time for sales.
The wild-card in all this is the US dollar and credit markets. If things keep going badly, there will come a time when it will be great to have cash and you’ll be able to secure some outstanding name deals if you have that cash. The key is keeping your nerve and cash in pocket while your instinct tells you to “spend the money” before the dollar falls further..
Hope you can apply something from this.
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Frank,
Great info! Your optimism is most encouraging. Thanks so much for taking the time to reply.
RM
Great advice Frank - especially about focusing on two or three niches. You can easily go buck-wild buying domains in many different categories - such categories in which you have no real expertise in. Based on my experience, I would recommend sticking to niches you are familiar with and have some sort of background in.
If you have a real estate background - you probably want to focus on real estate, mortgage, for sale by owner, vacation rental domains spread out over multiple geographic locations. If you have a software background - maybe focus on technology, antivirus, and other various internet related domains.
By doing this, you have an easier time leveraging your knowledge, connections, and other resources to eventually monetize your domains when it comes time to develop (if you have ambitions in developing).
Early on - you are going to make some bad domain buys - it’s only going to come with some time and experience (could be a $$$ experience) that you will learn which domains will be good investments.
Best of Luck!
RM
I think I can help you out, come see me at IntangibleProperties.com. I have Plenty of names for sale.
Frank, sorry if this is too forward.
Eric
I have a couple of thoughts. I think two or three really great names could be a better investment than 25 good ones. or 250 weak ones. or 2500 lame ones.
This is not necessarily a game where volume helps, if it lowers the quality of the names you are buying. Its really about having the instinct for knowing a really great name, for a price that is less than you believe it will be worth in the future. That means some homework..
The temptation will be to try spread your risk.
My advice would be to buy QUALITY in whatever niche you chose. Take your time to figure out what QUALITY actual means and what the options are in terms of niches then focus on a small number of good domains.
Don’t let anyone sell you the dot Mobi story or dot Asia come to that.
[…] Frank makes a nice post on what he would do if he was starting today with a bankroll of $250k […]
My recommendation would be to put 10% of your investment into PREMIUM generic and city International Domain Names in major languages…Chinese, Japanese, Russian. They are still very affordable on the secondary market but that is likely to change in the next 1 to 2 years.
The “risk” for IDNs has diminished greatly now that the move to implement is well underway. This is evident with ICANN testing them in the root, ICANN meetings directly on IDN rollout, and most importantly Microsofts roll out of IE7 in Asia, etc. in 2008 so browers will resolve the various foreign langugages.
Just a note that IDNs are “live and working” today. Verisign has been registering .com, .net etc. since 2000′. There are tens of thousand of active IDN websites…but lack of browser support has held up mainstream use. This will change as MS rolls out IE-7 auto-update in China, Japan, Korea, etc.
Charts of prominent IDN sales can be found at idntools.net to give you an idea of what some have sold for. IMO this is not a market or opportunity to overlook.
Bill was a newbie that asked my opinion a couple of years back. He has had a long wait, but he obviously feels it has been worth it. I am 100% committed to IDN and have returned my investment selling a tiny fraction of my portfolio, but Traffic has still yet to throw most cashflows positive.
IDN is definitely something you should consider, but like everything else in life, don’t do it without doing your homework first. As with ASCII, it is getting more difficult to find no brainer investments. The only place on the web where you will find adequate information relating to IDN, at this time, is IDNForums.com.
I would circle back to your areas of interest and expertise. You were in software in the past, your better prepared to know keywords, trends and future growth prospects for business that you are familiar with.
Also, dont rule out buying only a handful of sites and developing these out, domaining can open the door to a nice biz, but there is also great monies to be made thru affiliate earnings and functional sites that dont require a ton of product knowledge and time…
Last suggestion would be to search out a biz partner
Many thanks to all of you for your great input and suggestions. It was very helpful. Hopefully, I will meet some of you at DomainFest and Traffic next year.
Regards,
Rob
Wise to listen to Frank’s advice, Robert.
And like many of the others have already suggested; and especially so given your software background so you’d be able to build the app/s yourself; I’d also recommend buying not more than 1-3 worthwhile (.com only; especially if you’re US based) names.
While we’d of course welcome such a purchase/ investment from our portfolio at GetRichSlowly.com; since the collection includes .com’s across a very wide and varied number of specific product and service categories; you could at the least use it to generate ideas and possibilities.
It’s never too late for someone with a little cash, some smarts, and who’s willing to work hard to learn the ropes.
Good luck.
Interesting post, thanks Frank.
Frank - by following your advice, what sort of return would you expect someone to achieve with the 250k? And would this return be in the form of ongoing ppc/traffic related revenue or from gradually re-selling the names over time?