I Agree With Morgan, But…

Elliot Silver
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22

Morgan Linton had a very good post today about finding a mentor in the domain industry. There are a few people who invest in domain names who have given me advice over the years, and it’s always been appreciated.

There is one thing you really should take to heart in Morgan’s article, “Of course not all Domainers will have the bandwidth to be a mentor, many of us are busy people so be respectful and ask early in the relationship about your interest in having a mentor.”

Many of the most visible domain investors are people with blogs. Frankly, for some people, having a blog is like a second job in addition to our domain businesses. Some bloggers have “real” jobs in addition to their blogs and domain investments. There aren’t a whole lot of people that are happy to share insight that also have the time to spare, and you can be sure that most of the bloggers are busy with their own businesses.

If you ask someone for some advice or for a favor and they don’t return your email promptly, don’t answer your question thoroughly, or don’t return your email at all, don’t be a jerk in return. Nobody is obligated to give you free advice, and nobody is obligated to return an email to you if they don’t choose to do so. Whatever the case is, a rude reply will not do you any good and will probably kill any chance of that person ever helping you or working with you.

I’ve always tried to reply to people and be helpful when I receive emails. In fact, I started DomainQuestions.com to help a larger audience of people when someone asked me a question. After not providing answers to a couple of people several months ago, I received a couple of nasty replies. Sadly, that got my guard up, and I don’t really offer advice to anyone I don’t know. There are many good domain consultants that would be happy to help, but I operate a private business and don’t do consulting.

I agree with Morgan that having a mentor can be helpful. I recommend only asking people you know for help and advice. After all, most of us are competing with each other when it comes to buying and selling domain names. If you want to meet people in the industry, you should probably make a point of attending a conference.

5 Reasons to Hire a Domain Buyer’s Broker

Elliot Silver
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15

You’ve probably heard that huge companies like Microsoft and Google buy domain names using intermediaries at companies like Mark Monitor and Corporation Service Company. They do this to get a better price and to stay stealthy with their acquisitions. Although most domain investors don’t have the budget to make ultra expensive domain acquisitions, I do think it can be beneficial to use a buyer’s broker to acquire a domain name, and several companies offer this type of service at reasonable costs.

Here are five reasons a domain investor might wish to hire a buyer’s broker:

1) Stay Stealthy – If a domain owner knows you are a domain investor, you might not even get the courtesy of a reply to open a discussion.

2) Depersonalize Negotiations – Many things can be said during the course of a serious negotiation, and it can be frustrating. With a buyer’s broker, you don’t have to take things personally.

3) Eliminate Negotiations – If you tell your buyer’s broker a price, it’s that company’s job to negotiate to get you that price. If you don’t like negotiations, let a broker handle them for you and you won’t have to worry about negotiating.

4) Seamlessly Close Deals – Many companies will handle just about all aspects of the transaction. You don’t have to worry about transfer or payment issues. It can be frustrating to deal with people who don’t have much knowledge about how to sell or transfer a domain name.

5) Get a Second Opinion – A buyer’s broker likely knows the market value and can let you know whether your offer is reasonable and/or has a good chance of being accepted. Recently, I’ve been using a buyer’s brokers to try and negotiate great prices on domain name acquisitions. If I can improve my buy rate just a bit, it’s worth the added cost. It certainly saves time and effort telling someone the names you want and the prices you’ll pay to get them.

Have you used a buyer’s broker service before, and if so, what are your experiences?

Daily Morning Email Newsletters

Elliot Silver
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11

I want to share a list of the morning email newsletters related to the domain industry I receive on a daily basis. Some of these may come at different times for you depending on your time zone, but they arrive in the morning for me for the most part.

If you subscribe to a list or newsletter that I should be getting but don’t please let me know so I can add it.

  • NameJet saved searches (wish they came as one email)
  • NameJet – 100 Most Active Pre-Release Backorders
  • NameJet – 50 Most Active Pending Delete Backorders
  • Media Options brokerage newsletter
  • TobyClements.com brokerage newsletter.com
  • Domaining.com Headlines
  • WIPO UDRP Decisions
  • National Arbitration Forum UDRP Decisions
  • Elliot’s Blog Articles from Yesterday

What other newsletters or lists do you receive in the morning that help you with your domain business?

Sunday Updates & Tips

Elliot Silver
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3

Hope you’re having a nice weekend! Here are some brief updates and a tip on buying domain names.

  • I recently bought a domain name that I had been trying to buy since 2007. Since I use Gmail, all of my sent and received emails are archived, so I can easily search for an email from the past and can rekindle the thread. Every year, I followed up with the owner and finally got him to sell the name. Persistence pays off, and if you catch the owner at the right time with the right offer, you might get lucky.
  • No matter what email service you use, make sure it automatically archives ALL of your email  permanently  unless deleted by hand. I am pretty sure AOL and some other services expunge email after a certain amount of time, but if you have an archive of all mail, you can email people who made offers years back and keep track of inquiries. I use Gmail and it keeps everything, allowing me to rekindle old threads and see if a new inquiry matches and old one.
  • You have a few hours to nominate your favorite account manager/executive for my $500 cash award. Many great reps have already been nominated already, but I am sure there are a few who haven’t been recognized yet, despite being great at what they do. I will be posting the poll for open voting some time tomorrow.
  • I am sure you’ve seen the .CO banners and other marketing materials that use the “big ideas” branding, including a banner that’s running on my blog that says “it’s where big ideas belong.” It looks like the folks at .net have   decided to use that line, too. According to the Internet Week NY sponsors page,  “.net. is a place for big ideas.” Ironically,  .CO sponsored the event last year.
  • Being a dad is pretty f-ing cool.

Keep This in Mind When Judging a Registry’s Success

Elliot Silver
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27

I often hear and read critical and/or snide comments about various non-.com domain registries and how many are presumed to be failures. Some people seem to think that if a registry doesn’t have millions of domain names registered and/or if the aftermarket for a particular registry’s domain names is weak, that the registry is a failure.

One thing we all need to keep in mind is that a registry does not necessarily need millions of domain names to be a successful business, and a successful business should be all of our goals. They do not need to have a strong aftermarket or frequent large sales either. If a registry covers its expenses and makes any profit at all, by most business accounts, it should be considered a success (especially if the founder’s pay is part of the covered expenses).

Let’s think about the new gTLDs for a second.

Let’s say I operate the .xyz registry and sell 25,000 domain names a year at $20 a pop. That’s half a million dollars in annual revenue. Let’s do some back of the napkin math and say I paid my one-time $185,000 application fee and another $200,000 for annual operations expenses and commissions so I don’t have to worry about managing the registry. If I pay myself $200,000 for being fat, dumb, and happy, my registry would be profitable in its second year, after all costs are paid, assuming a strong renewal rate (likely if many are defensive registrations). Again, this is some sloppy math, but you can imagine how it would be profitable.

To the average Joe, 25k domain registrations sounds like a failing domain registry, especially if the aftermarket isn’t churning big sales. However, having a half a million dollar revenue stream with low overhead is a damn good business venture in my opinion. It might not be glitzy, and the general domain investor public may look down upon a small registry, but it can be lucrative, especially when you consider that many companies would happily buy strong revenue stream businesses at decent multiples.

That is one reason why there are so many gTLD applications, and it’s another reason domain investors need to look at the big picture to see that there are many ways to get rich in the domain industry. There are of course lots of risks and expenses, but we should all look at the big picture sometimes and see that there are many ways to make money in the domain industry.

Close a Deal By Suggesting Financing Options

Elliot Silver
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10

I was negotiating a domain sale with an end user buyer a couple of weeks ago, and when it came time to discuss payment, he mentioned a potential hardship in paying the full amount at one time. I didn’t want to lose this sale, so I mentioned that there are financing alternatives since banks don’t generally lend to purchase domain names.

In order to close the deal, I arranged an introduction to Domain Capital, and fortunately, the buyer and Domain Capital were able to come to terms, and the deal closed yesterday. When I think of Domain Capital, I generally think of domain investors and others with domain industry connections who use the company as a means of financing an acquisition or getting liquidity for domain names they own. I am glad I thought of them when I was dealing with this end user buyer.

Of course, there are other financing alternatives to consider (a couple of which I considered), although two of these are not really “financing” per se. You might consider these options when closing a deal with an end user, even if it’s not mentioned. I would imagine some people wouldn’t discuss a payment hardship, so unless you suggest the financing options, they might balk at paying your asking price.

Here are a few domain financing options:

  • Domain Capital – I mentioned it above.
  • Self financing – Offer the buyer the option to pay with a payment plan and keep the name until payment is made in full. It’s the least expensive option but it can get hairy if something goes wrong. Be sure to have a solid contract with the buyer and don’t risk this on a valuable name.
  • Escrow.com payment plan – It’s not cheap, but it may make a buyer more comfortable to have the name held in escrow while payments are made. You can also step away from the transaction and let them collect your payment on your behalf. Escrow.com offers this on deals valued at $75,000 or higher.
  • Attorney escrow – Work with an attorney like John Berryhill (who I know offers this on some transactions). You can work out the legal agreement and his firm will hold the domain name in escrow while payments are being made.
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