I want to re-share a post I wrote in November of 2009 with details about how I got started in the domain investment business. There are two reasons why I want to share this article with you again.

The first reason is that it’s a question I am frequently asked, and I often send people to this post when they do ask. Secondly (and quite sadly), the person who I credit with pushing me to start my own business was diagnosed with  Creutzfeldt–Jakob disease, an incurable and fatal disease.

My parents are visiting with him in California this week, and I want to give a special thanks again to him. If it wasn’t for his advice, I would probably still be a Marketing Manager in corporate America.

How I Became a Domain Investor

I feel like I’ve probably told the story a bunch of times (which I am sure I have), but since a number of people have asked me recently, I want to share the story of how I became a domain investor.

When I was a NYU in 2002-03, I went to help a family friend clean the movie ride curtains at the Empire State Building since I lived less than a block away. For two days, we talked about how expensive the City was – especially for a grad student. My Dad’s friend recommended that I find some sort of product to sell and that I should sell it easily on Ebay. I looked around for a number of things – custom pencils (no margin), art (did some buying and selling) and finally I saw people selling domain names.

I would see names selling for a few hundred dollars, and when I went to Network Solutions, I saw that similar names were available for just $35.00. I bought my first name, and for the life of me I can’t remember what it was. I think it was a legal name with a hyphen. I remember I sold it after two auctions and broke even. Shortly thereafter… Read More

When I heard about the devastating tornados and storms that tore through Birmingham, Alabama earlier this week, I was particularly concerned about domain investor Gregg Ostrick, who resides in Birmingham. When I called him to check in the day after, the phone lines weren’t working.

Gregg was able to get online later on in the day, and he responded to my email to let me know he is okay. According to Gregg, “the storms hit very close, but no major damage to our property.” He was one of the fortunate people, and I am very glad to hear that he made it through with limited damage.

I guess this type of disaster is another reason why intangible domain assets can be better investments than physical investments.

Gregg sent me a link to some photos he took of the aftermath, and I wanted to share them with you to show you an example of how bad the storms were. There are organizations like the American Red Cross that are helping people with the recovery, and I am sure they could use donations if you are able to help.

Fred Wilson is one of the most well known and successful venture capitalists, and he is currently a partner at Union Square Ventures in New York City. Some of the best known investments his company has made include Foursquare, Etsy, Meetup, Zynga, and Twitter, among many others.

On Wilson’s blog today, he discusses domain names and their importance to a startup. Although a domain name is not on “The 10 Golden Principles for Successful Web Apps” he wrote, he believes it’s something that could be listed.

In the article, Wilson makes an interesting observation about prices of domain names:

“We’ve noticed the average price of a good domain has risen fairly dramatically in the past year. We used to advise companies to spend $10k or less on a domain, then we upped that recommendation to $25k. We recently upped it again to $50k. I suspect domain prices and pre-money valuations of newly launched startups are highly corrrelated <sic>.”

If a startup builds its brand on a confusing domain name, they are actually building value on someone else’s domain name. For instance, when Del.icio.us was launched, it made the already valuable Delicious.com even more valuable (and expensive) due to the lost traffic and likely revenue generation for the previous owner. Had the startup bought Delicious.com earlier, the cost would likely have been significantly less, although it still may have made a big dent in its budget.

For domain owners who own a name coveted by a startup, they should realize that perhaps taking equity in a company is a good idea in addition to the cash. This is especially true when a startup is backed by a guy like Fred Wilson or his team at Union Square Ventures.

Perhaps if more startups are upfront about who they are and what their plans are, domain owners would be more amenable to working out mutually beneficial deals.  In fact, here’s a piece of advice for operators of startup companies looking to get a good domain name without spending a lot of cash up front: telling a domain owner you’re a poor student or a single mom trying to buy a domain name doesn’t work).

Whether you’re a domain investor or you are operating a vc-funded startup, Wilson’s article is a good one to read.

Contrary to what some may think after reading my blog, I don’t really enjoy being in the spotlight. I like being able to help others, and since I became serious about domain investing relatively late, I think I can provide some helpful insight that might be beneficial.

I met Mike Cyger at DomainFest and enjoyed our conversation. I’ve been following what he has been doing on Domain Sherpa, and I think the information he is sharing is especially helpful to people who are looking to learn about the domain industry and know how to successfully invest in domain names.

Mike asked me to do a video interview with him and I agreed. The interview is now posted on DomainSherpa.com. I think he and I covered quite a bit of ground, and I hope I was able to answer some of your questions. I appreciate Mike’s interest in interviewing me, and I hope it’s helpful to you.

Unfortunately, Lucy will not be able to answer any follow up questions.

I saw a well-writen article about domain names on The Business Insider today, and I want to share it with you. The article is titled, “Why $10,000 For A Domain Name Is Still Cheap,” and it was written by marketer and domain investor/advisor, Alan Dunn.

Dunn provided strong arguments for paying a significant sum of money for the right domain name. He dispels two common arguments about why domain names shouldn’t be worth a lot of money – some people hesitate paying a great deal of money when the domain owners were able to acquire them cheaply, and that some people believe a domain name isn’t actually a valuable item.  Dunn’s real world comparisons are pretty strong.

To drive the point home (that domain names are cheap) Dunn compared the cost of traditional media like billboards, radio advertising, and mobile advertising to the cost of domain acquisitions. Expensive marketing campaigns can be fleeting, but a domain name can be used indefinitely.

If you haven’t read the article yet, I recommend checking it out. The next time someone balks at purchasing one of your domain names for your asking price, you might want to send them a link to the article.

If you couldn’t watch last night’s episode of Secret Millionaire on ABC featuring Domain Holdings’ John Ferber, it’s embedded above. As you might imagine, it’s quite a moving show, and I think I can speak for most people who know John to say were all proud of what he did.

I posted an interview with John Ferber last week in case you haven’t read it yet. It will give you additional insight into how John earned his fortune and what he’s been doing since becoming wealthy.

Watch the entire video to see how John helped many people in the notorious Skid Row neighborhood in Los Angeles, California.