Last week, I kiddingly posted a tweet illustrating what happens when a domain investor shares a sale publicly. Many people reply with congratulatory messages, but there are almost always people who reply pitching their (typically less good) domain name they seem to think would be comparable to what sold:
Domain investor 1: “I sold https://t.co/teAKVWiv9i for $50,000!”
Domain investors 2 – 10: “Congratulations, that’s great!”
Domain investor 11: “I am selling DomainNameAwesum.garbage for $5,000. HMU if u want to buy it.”
— Elliot Silver (@DInvesting) August 14, 2020
On Sunday, SquadHelp founder Darpan Munjal posted a tweet with some good advice for investors who learn about one-off sales. They may either go through their portfolio to try and share something they believe is similar, or worse, they may begin registering or buying domain names that appear to be similar with the hope of replicating success:
If you see a reported sale of “GoodName/com”, don’t rush to buy “NameGood/com” or “GoodNames/com”.
A sample size of one is an anecdote, not an insight. Don’t invest based on anecdotes
Investment based upon broader trends & core branding principles can deliver far better results
— Darpan (@darpanmunjal) August 16, 2020
A person or company bought a specific domain name for a specific reason, and “similar” domain names do not make sense for them – regardless of the price. Registering or buying a domain name simply because of one other comparable sale is probably not a foos strategy.
Another thing to really think about is whether a domain name actually makes sense. “knock it off” is a common phrase, but “it knock off” doesn’t really make any sense. Maybe a name spinning tool would recommend the alternative phrase because it is available to register in .com, but I think that domain name would be worthless.
Part of the job of a domain investor is to understand why a domain name sold and determine what insight can be gleaned from the sale. Sometimes, the intel can be helpful because it is part of a trend or it can help uncover an overlooked area of value, but sometimes it can be little more than an anomaly that was great for the seller but not really useful for someone else.