Frank Schilling posted this gem on Today: “Take risks, and don’t be afraid. You’ve got to speculate to accumulate”
Take risks, and don't be afraid. You've got to speculate to accumulate
— Frank Schilling (@Frank_Schilling) September 3, 2015
As a domain investor, I live by this quote. I am always taking risks on purchases with the hope that they pay off. With each acquisition and sale I make, I increase my knowledge to help guide me on future deals.
If you invest in domain names, you need to continue to buy domain names that you believe you can either monetize or sell for more than you paid. There is a lot of risk when it comes to buying domain names, especially when you are paying more than the annual registration fee. Being fearful is harmful to your business. Taking calculated risks is essential in making deals.
Every day, I am taking risks when I make offers, bid on auctions, and negotiate deals. You can’t be afraid to pull the trigger on a big deal, even if it is out of your comfort zone. This is great words of wisdom from someone whose big risks have been greatly rewarded.
Another good one from a while back: When you sell a premium domain name for a lot of money, the buyer always thinks it’s worth more, and the buyer is almost always right.
It should be noted there is a difference between taking calculated risks and gambling. Investing entails the possibility of loss whereas gambling involves the likelihood of loss. With domains the potential upside can be multiples of the initial investment. However, one cannot deny that certain types of domain registrations (particularly new TLDs) are much closer to expensive lottery tickets with very limited upside than “investments.”
Thanks for sharing your thoughts.
“You can’t be afraid to pull the trigger on a big deal, even if it is out of your comfort zone.”
Actually, you can’t just pull a trigger without performing due diligence, it’s like saying you can’t be afraid to place $1,000 on 13 at the roulette table.
Due diligence has nothing to do with one’s comfort zone.
Maybe my illustrating my point would provide some clarity:
Let’s say I typically privately buy names in the $5-25k range. If I see an amazing name for $200k that I think is worth $500k, I should step out of my comfort zone and spend more than usual to secure this valuable domain name.
A domain buyer should always perform due diligence regardless of price and comfort zone.
Jumping from $25k to $200k introduces a lot of assumptions:
1. That you can spend $200k on a $500k valuation.
2. That you are willing to freeze that much capital for an unknown period of time.
3. That you have an exit plan, if things went south and you needed to liquidate your investment.
Some phrases can’t be taken literally, or cannot be combined easily with numbers. They are meant to be used as a motivation against one’s fears or to push one’s self-imposed limitations. I don’t disagree on that part.
Would I take a second mortgage to buy a killer generic that became available? Quick answer: Nope. Longer answer: I would do a lot of research, hence my reference to ‘due diligence.’
I wouldn’t recommend that someone takes a second mortgage to speculate on the domain name either. Different people have different comfort levels with their domain acquisitions. I presume this would be correlated to the amount of money they have available to spend on domain investments. Some people wouldn’t be comfortable spending $1k on a domain name and some people spend $500k without flinching.
Arco, you hit the nail on the head.
Great post, all the right things a person should think about when investing.
Elliot, I’m using the numbers you quoted, going from $25k on average, to $200k with a valuation of $500k.
That means somehow nailing a domain that it’s listed at 50% below its worth.
In that sense, perhaps the domain has some bad history? Maybe it’s stolen? Is there a lawsuit? Etc.
Due diligence means making an intelligent and thorough research before opening your wallet.
So the way I perceive Frank’s quote is as a general motto in life. One can take risks daily that involve decisions unrelated to money – or domains – and step outside of their comfort zone at the same time.
Here are some examples:
> Adopt a pet that’s aged and not a purebred. Its gratitude will be rewarding.
> Donate time and effort – and money – to improve the life of those in need. Many in underdeveloped countries want $50 – $200 to start or improve a business that would be life-changing.
> Visit places that don’t make the 5 star catalogs for comfort or amenities. The raw beauty of nature can pay back multi-fold.
Accumulating diverse experiences is what life is all about. 🙂
That is a very interesting example you give, because a few years ago I did just that. I always had just bought domains in the $1,000-$40,000 price range, but then I saw Adventure.com for sale in the MediaOptions.com newsletter, and the price kept going down week after week so eventually I made an offer and bought it for $200,000. I had no particular plan for the domain, I just thought it seemed like a good deal. In no way was I looking to “gamble” this much money on a domain, especially one that was not in my area of expertise (I am a very unadventeruous person offline). I can’t disclose what I sold it for 6 months later, but I would not have sold it that fast had I not made at least some profit.
My point is I bought it somewhat on a whim. I was not afraid to speculate, to take a risk, and it paid off. I have taken risks other times though, and it has not paid off. You can’t win them all.
I am not saying you’re wrong at all… but my point is more simple and aligns with what Eric Borgos wrote.
Thanks for sharing. Frank has a ton of great sayings… never heard that one before. Another favorite is “Attitude equals altitude.”
They’re not actually his sayings.
“speculate to accumulate” is some proverb, Google it.
“Take risks, and don’t be afraid.”
Many people have said that, in many different ways.
yep best $$ producing domain I own cost me the most
That Frank guy is a genius! The wisest saying I have ever heard him write or say is that gtld stands for “great to lose dollars”. Er, no wait, on second thought that must have been a different Frank. Never mind. Carry on. Sorry.
Elliot . You better take that risk bro. What are you waiting for ? 🙂 Your example is spot on to my experiences in the last year or so. My average was about 5k per name when I dropped 300k my immediate family about shit. I had to make some sacrifices but maintained my lifestyle and biz. It paid off later and I decided I liked those sort of high dollar risks much better 🙂 Much higher rewards.
I’d take out a second mortgage all day long on the right deal.
Great quote and excellent advice. I agree in the importance of being consistent in buying domain names. The way I see it you will succeed or learn you will not just simply fail. The more you buy and the more you analyze the better you will get at buying quality and valuable domain names.
Then of course comes the next part, consistently reaching and putting names up for sale. You will have to develop a balance between buying and selling and this will only come with time.
Anyone take 3rd mortgage to speculate to accumulate? I have to have a go!
With all due respect to Frank, times have changed. He started his domain portfolio more than 15 years ago when you could register a one dictionary word .com domain for $10.00. He is one of the pioneer domain portfolio owners. For those who are paying $50,000 for a domain name now, thinking it will be worth $100,000, this valuation is only hypothetical, so unless you are really sure that you are getting a good deal, don’t gamble, you may lose the farm. Frank will never lose his because he bought his farm from the Indians.
You’re right, it’s easy for early pioneers to say these types of things now after they’ve built a huge portfolio of premium domains, without having paid premium prices. For newcomers, it’s not the same game.
It will never the “same game” but there’s still very successful people who’ve come after Frank. It’s no excuse frankly. The “game” changes every day.
For example : Did you buy any numerics a year or two ago ? Did you take a risk and the advice of some of the guys like Shane who said to buy these numerics. If so, you’re probably sitting on a truck-load of money. Same with LLL . . . you could have doubled your money in a year I reckon. That’s a change in the game that those people invested in and took risk in and were rewarded.
BTW. . . it’s easy to say Frank is just luck because he was first or because he’s sitting on years of accumulated wealth. How do you think he got those names ? Registration fee ? Frank also has spent a great deal of money on domains in the early days. If you were around at an auction you’d recognize him under the name “benfranklin”. Let’s not pretend that he walked in to this and didn’t invest or pay any sort of premium years ago.
speculate to accumulate
“A phrase used by potential profiteers to remind prospective investors that returns can only come from good investment. Really a buzzword (or buzzphrase) to get money from others to squander on fruitless and flowerly ideas”
according to the proverb dictionary
My mantra: Create value to accumulate
While FS is one of the most successful domain investors, this quote is very general and can be applied to all industries and even life choices that have nothing to do with commerce and business.
Lots of good comments here – thanks.
Frank hopes you all “speculate to accumulate” domains in his gTLDs while he uses your money to acquire the tried and true .com’s all day.