Advice

It seems obvious, but it’s never a good idea to use the same passwords for different email accounts, domain registrar accounts, bank accounts…etc. Whenever you need to log on to an account online, it’s best to have different complicated login passwords. If you use the same password and that is stolen by a thief, they will have access to all of your private information and can easily log into your account and take control of everything:
From the Boston Globe,

“Using the same password for multiple Web pages is the Internet-era equivalent of having the same key for your home, car and bank safe-deposit box.”

Whenever it is offered, I strongly advise that you get a security fob to add an extra layer of protection to your accounts. I have a Paypal security key (which costs just $5.00), and I have recommended that at least one domain registrar implement this level of security to protect our digital assets.

I want to clear up a couple of misconceptions that I’ve seen pointed to me and my blog recently. The purpose of my blog is to give an inside view of what I am doing with my domain names and how I am generating revenue or trying to generate revenue. Some of what I am doing will make me money while some of what I am doing will end with me spinning my wheels. This is my first experience with starting a business, and it has been an evolving process. I enjoy chatting about the domain industry, and I am happy to share an inside view of my business model and plans.
I have been buying and selling domain names for a few years, and I’ve been fortunate enough to have the opportunity to work on my business full time. As my life and business progresses, I have to make certain business decisions to put me in a strong financial position for years to come. I see buying and selling domain names as a great opportunity (and one I have been successful at for a little while), but I also see it becoming more difficult. As a result, I have started to develop a few of my better domain names using various strategies I have been happy to share (mini-sites, affiliate websites, full businesses…etc).
While I don’t think development is for everyone nor is it for every domain name, I do see it as a way to grow constant revenue streams. While domain parking can be a source of passive income if your domain names get type-in traffic, I haven’t been fortunate enough to own many great domain names that generate a ton of PPC revenue – enough that I wouldn’t sell. Since I have dedicated 100% of my energy to growing my business, I am focusing more on development. I have the time, I have the resources and I have the energy to create businesses around logical domain names – starting with Lowell.com.
As I said, I do not think development is for everyone nor is it for every domain name. It takes an extraordinary amount of time to develop a domain name, it’s expensive, and it may be unproven. While I have slowly begun to reap the rewards of development – 12 hotel reservations on Salinas.com last month and some revenue from the job board, I have a long way to go to be profitable. Fortunately, I am able to leverage some of my domain name assets to buy other names for development down the road, including Burbank.com.
I read somewhere that I am selling all my domain assets to focus on development. This is entirely inaccurate. I have always bought and sold domain names, but with the expense of Burbank.com (I bought it from a person who had a functioning newspaper and didn’t have it for sale), I had been selling more rapidly lately – although that is slowing down. I have also been buying domain names even as I am selling. Some of the names are for development (Oenophiles.com) and some are for sale (Metabolizers.com and UnemploymentLine.com).
I still believe the domain market is soft due to worldwide economic conditions, but I am bullish on the domain industry for the long term. In order to sustain my business, I have decided to build businesses around some of my domain names, which I highlighted in my post about the perfect portfolio for me. As the industry evolves, I am evolving as well, and I am happy to share my plans as they evolve.

A few days ago I acquired a great product-related domain name using Sedo. I saw the name at a good price, and I bought it after doing some due diligence, including a Whois History search and a quick search of the USPTO database. All of this came back without any problems, so I bought the name. As I’ve mentioned, I have been selling some domain names lately to pay off the cost of the Burbank.com acquisition, so I emailed a few clients and acquaintances offering this name for a good price.
Several hours after I sent the email, one of my acquaintances emailed me back with a listing from the USPTO. Unfortunately when I was searching for “this product” in the USPTO database, there were no listings; however, a search of “thisproduct” as a single word would have yielded the result. The product is similar to “Band Aids” in that other products in this category are often called “this product,” although it is less common than Band Aids, and the product has only been around for 5-6 years – about the same time as the industry. I emailed the original owner of the domain name (since 2003) and he told me

I was having a philosophical domain discussion last night about the future of the domain industry and where domain investors stand. This got me thinking about “my perfect domain portfolio” and my plans for the future. While we all tend to focus on the short-term, I think it’s important to think further out and set some long-term goals. I know this well help me stay focused on the bigger picture when dealing with present issues.
With that in mind, I would like to share what I think is “my perfect domain portfolio” in 5 years time. I cannot say whether this will still hold true in 5 years, but it is what I am visualizing at the moment.
I will have 2 fully developed city .com geographic domain names that are benefiting each community and the advertisers. I would like both domain names to be cities of between 100-150,000 people, as I believe a city of this size will benefit from a well-developed website. I think it would be much more difficult for a website to have an impact on a larger city, and as much as money is important, I believe a nice living can be made in the mid-size cities. I want to establish strong relationships in both cities, and I want each website to be well-received and beneficial to each city. I believe I have started this with my Lowell.com website, which is still being developed.
I will have 2 developed product/service based websites. They won’t necessarily be full businesses, but they will be in a niche that I find particularly interesting. Perhaps a wine or travel related website would be one of these. I hope this could be a fun website I will enjoy managing and be able to work on as more of a hobby than financial endeavor. Hopefully the geo-domain names will generate enough revenue to be able to do this without worrying about generating revenue on these pet projects!
I will have 15-20 domain names of friends and family. Some of my friends don’t really understand domain management, but they know they need (or will need) their domain names in the future. I am holding a few domain names for friends at the moment, and I imagine I will hold more in the next few years as friends get married or take on new challenges in life. For example, my brother is a law student, so I own a domain name that could be relevant to his law firm down the road.
I will want to own 10-20 speculative .com domain names. These are pure speculation that the topic would be of interest to someone or me down the road. These could all be names I keep in the hopper for my own development needs if I wish. They will all be in areas of interest, and I won’t be inclined to sell them.
As some people have seen, I have been selling names from my portfolio more quickly than usual. One reason I am selling them is because I acquired a large geographic domain name a few days ago (that I have been looking to acquire for over 2 months). This new name fits into my 5 year plan, and I need the funds to offset the high acquisition cost. A second reason I am selling is because I know I won’t ever get to develop the names. It’s not a matter of not wanting to develop them, but rather the time it would take.
The opportunity cost of keeping these domain names is greater than if I sell them and use the funds to pay for other expenses. Sure, I am probably getting much less than I could get down the road, but I know the funds I use from the proceeds of the sale will be more beneficial today to help position me to reach my goals in 5 years than they would be if I held on to them. As domain owners, we need to look at the costs of selling vs. the cost of not selling and see how that will affect our 5 year plan.

Rick Latona makes some good points about why domain owners should consider selling some of their domain names:

“I think that many domainers out there have only paper wealth. I’m not speaking of Frank who has both. A good deal of domainers are sitting on names that are worth a pretty penny but generate little income and they refuse to sell the name. I just don’t see the sense in that.“

When I was in college, I opted to not apply for financial aid, as my father’s business inventory would have been counted as assets, and we probably would have been denied. Unfortunately, we couldn’t pay for my college education with curtains, just like you can’t pay for a home or a car with a domain name. Sure, he could sell the curtains and pay for college with the proceeds, but if nobody is buying a particular type of curtain, it’s just worth its value on paper.
I am not telling you to go out and sell your domain names, but I have said before, the importance of having cash on hand is immeasurable. Check Rick’s Blog out when you get a chance.