Dynadot

interviews Expert Exchange: Heritage Auctions and XF.com's Aron Meystedt

Spaceship Spaceship
Our guest on this edition of Expert Exchange started his domain investing journey in 2005 with an initial investment of less than $1,000. Since then he has acquired some of the rarest domain names in existence, including XF.com and VE.com. He is also the owner of the oldest .COM domain name, Symbolics.com, which is now 31 years old.

Aside from his own personal domain investments, Aron has become the Director of Intellectual Property at Heritage Auctions. In this role, Aron is responsible for overseeing auctions with high value inventory. In the past, his auctions have produced sales such as Digital.com for $373,000 and Luxe.com for $173,000.

In this interview, Aron discusses many aspects of domain investing, including he views on China, new gTLDs and his thoughts on what will happen with in domain investing within the next 12 months. We also discuss Heritage Auctions' upcoming domain name auction that includes domains such as Balloon.com, Quick.com and Blaze.com.


NP: How did you get started in domain name investing?

Aron: The decision to buy and sell domain names came out of small businesses that I started during undergraduate college back around 2001. I had been registering domain names since right around 2000 for the little operations I ran out of my house.

I dabbled in selling shoes, audio equipment, car accessories and watches. It was a great learning experience, as I setup my own e-commerce operations and handled inventory and customer orders. The funny thing is, shipping was the one aspect of the business I couldn’t stand. So, my products kept shrinking in size: first heavy car audio equipment and vehicle accessories, to shoes and then watches.

I wanted to maximize the little space I had for my “shipping department”. Eventually, a light bulb went off; why don’t I just buy and sell domain names? I’m know what makes a name valuable and I’m familiar with domain registrations and the aftermarket. They are easy to ship and require no storage as well.

So, out of necessity to take back space in my house (where product inventory was held) I began buying domain names on the aftermarket and reselling them. It would be fair to say that I stumbled upon the opportunity.

However, I feel that being involved in e-commerce and dabbling in entrepreneurial ventures helped lead me to the next evolution of my small business.


NP: What are the five best domain names that you own?

Aron:
  • XF.com: This has been my company name for 8 or 10 years. I’ve been offered well over $1MM for the names on a few occasions. I’m probably making the mistake of becoming emotionally attached to a domain name, though. But, I’m very happy with this name and I plan to hold it until a “no brainer” offer comes across.
  • VE.com: I really like the two letter .com names. There are only 676 combinations and many are in the hands of major corporations. This was a recent acquisition, within the last year. So, I paid a hefty sum for it. I’ve personally owned 6 or 8 two letter .com names over the past few years, but I sold almost all of them. Live and learn – I should have kept them – but I needed the cash flow to continue operating.
  • Symbolics.com: This was a fun acquisition about 7 years ago. It’s the first and oldest .com ever registered on the Internet. I purchased it from the original owners who needed a bit of cash. I certainly can’t take credit for being an Internet pioneer, but I enjoy owning this name. It has received a lot of media coverage from CNN, to Fox News, MSNBC, Mashable.com, BBC and the Discovery Channel. Oddly, the 31st anniversary of this domain name was yesterday! The current site isn’t the highest and best use for the name. I’m working on other ideas right now.
  • March.com: I absolutely love short one word .com names. Generic words for branding ANY type of business are really gaining momentum and value. At Heritage we’ve sold many generic words like Digital.com ($373,000), Luxe.com ($173,000) and Tie.com. Most of the domains in our auctions are short and generic .com names that would be suitable for branding like: Jolt.com, Balloon.com, Blaze.com and Quick.com.
  • Copier.com and Tablets.com are tied! Copier.com has been a great name for lead generation for me over the past 6 or 7 years. It has generated passive revenue through lead generation, and I bought the name at a great price. Tablets.com is one of the few category-defining domain names I have. I think someone with e-commerce connections and some motivation could do great things with the name. It’s one of the names I own that I’m probably not the best fit for.


NP: You’ve been the Director of Intellectual Property at Heritage Auctions since 2013. Why did you opt to make that move, and has it been a successful one?

Aron: Good question. The way the job came about was through a connection I made in graduate school at SMU in Dallas. I was actually helping a friend (law student at SMU) get his Internet venture off the ground and he introduced me to the executives at Heritage Auctions. It was a total “God thing” that Heritage and I came together. Right place, right time – I can’t take credit for it at all.

Heritage and I had the same vision of bringing very high value domain names to their affluent client base. I knew that it would take repeat marketing before the clients jumped on board – as was the case with the other
40 categories that Heritage has launched. But, eventually, the clients start inquiring and buying, once they see continued marketing and successful auctions.

I do think the category has been a success so far. In two years, we’ve had over 8 figures in sales – much of it coming to new buyers. The category remains profitable as I am focused on bringing in revenue while keeping expenses (other than marketing) to a minimum.

I feel the decision for a large mainstream auction house to jump into domain sales has great potential. Heritage is the third-largest auction house in the world, and we have right around 1MM high net worth clients.

I continually send marketing materials to these wealthy clients, describing trends in the domain industry and explaining what makes domain names great investments. Again, it’s a process and the influx of new buyers won’t happen overnight. But, slowly, our buyers are coming on board – which was expected.

My big vision isn’t for eye popping auction listings. My goal is to bring new buyers and investors into the domain space, and that’s already happening. I am working with our marketing team, now, on another round of direct mail marketing. I have 15,000 recipients lined up.


NP: In Heritage Auctions’ latest domain auction, you have premium domains such as Sit.com and Balloon.com. How do you go about finding and choosing which domains to sell in your auctions?

Aron: My favorite names in the current auction, located at www.HA.com/1230 are:
  • Balloon.com
  • Quick.com (the 85th name ever registered, dating back to 1987)
  • Blaze.com
  • Jolt.com
  • Snowboard.com (no reserve)
  • WCM.com and GMK.com are at low reserves
  • Timeless.com
  • Sex.co (one of the best non .com names on the web).
Many of the consignors find Heritage and I, as a result of our marketing. Balloon.com is owned by the Apollo Group, who owns the University of Phoenix. They reached out to us because lawyers familiar with the Apollo Group received marketing materials from us.

I would say half of the consignments are people that have heard we can help them sell domain names (inbound leads). Another 25% of the domains come as a result of relationships I have built in my 10+ years of domain investing. The resulting 25% are names that I seek out – knowing that these domains would be well received by our buyers.


NP: Have you changed any strategies at Heritage Auctions to accommodate more Chinese buyers?

Aron: In 2015, Heritage Auctions opened an office in Hong Kong to cater to the growing number of Chinese clients. We’ve held a coin and currency auction in Hong Kong with great success. We also hold live wine auctions in Hong Kong. I am working with the Hong Kong office to reach out to our clients in China and they are helping me with marketing in those areas as well.

This current auction has a few great three letter.com names, a two letter.com name and several LLLL lots. One of those LLLL lots is a portfolio. However, my strategy isn’t to put all my eggs in the Chinese basket. My goal is to reach new buyers, new entrepreneurs and our high net worth clients. So, reaching the Chinese audience is just a part of the overall marketing goal.


NP: Have you changed your personal investment strategy since the influx of Chinese investment into the market?

Aron: I’ve always been a proponent of the LL.com names. I should have kept my mouth shut and bought them all myself. I have a few friends that have done well in this market – probably because we discussed how well I was doing!

I’m trying not to buy many LL and LLL names “on the way up” – but there’s no doubt that China and much of the rest of the world has realized what I have known for a while. LL and LLL names are underpriced. I think the values are now catching up to reality.

There’s no reason why a two letter .com shouldn’t be $1MM and up. Heritage made the move to HA.com several years ago and it’s been a major asset for the company. Short domain names are incredibly valuable to a business, we just need to keep echoing that.

I’ve bought and sold several two letter .com names in the past 2 years. Looking back, I sold too cheap/early.

So, now I have a few good names left like KCM.com, XF.com etc. As with Heritage, I try not to put everything I have into the current trend. The Chinese boost has been tremendous for the domain industry,
but it’s a bit inflated right now.


NP: What do you think will happen with regards to the Chinese market in the next 12 months?

Aron: Wealthy Chinese investors jumped into the LL and LLL market and drove up the prices.
This excitement trickled down to non-traditional investors, who wanted to jump into the domain industry, thereby buying random combinations of 5 and 6 letters and numbers. I think the bulk registration of domain names that weren’t valuable 2 years ago doesn’t make them more valuable today.

It just means you made a bad investment on a larger scale. I’m talking registrations of 7 and 8 numbers and letters and gobbling up LLLL and NNNN names in new gTLDs. Any market that’s driven by 100% speculation and hype really scares me. While I have enjoyed the appreciation of my short .com names over the past 24 months, one can almost justify the price increases based on limited supply and increased demand.

However, when the speculation moved to non-premium assets, I started to
operate cautiously. It’s starting to feel a lot like the south Florida housing market in the early 2000s. Entire neighborhoods were bought by individuals and investment groups, then resold 2 and 3 times over.

Everyone in the area (and I lived there for a short time during this boom) justified the price increases in much the same way we are justifying the increases in domain values. “It’s because the baby boomers are retiring and they all want to move south” was the biggest rationale I heard.

It came crashing down because any market driven entirely by hype and speculation will drop. It’s the same thing that happened with Beanie Babies. All hype, all speculation, and people buying large quantities of beanies to suppress supply. Ty Inc. was feeding the fire as well – printing “checklists” so people could track which beanies they still needed. That came crashing down as well.

One might argue that domain names are different than beanies – domains have a utility that businesses actually need and use. True. Houses serve a purpose too – but I just gave a prime example of what can happen when prices are quickly inflated.

My advice is to be careful. I’d love to stand up and say this price appreciation will last forever – but I want to be 100% honest and transparent. This run up of prices is starting to look familiar, so I would proceed with caution. As always, only invest money in domains that you’d be willing to sit on for a long time if the market turns.


NP: What are your views on new gTLDs?

Aron: I like many of them. I think left and right of the dot pairs make for interesting marketing initiatives. However, I also believe that good names are limited to left/right combinations that actually make sense.

Dallas.Lawyer, Night.Club and Find.Love make sense. In my opinion, if a name doesn’t flow in this way, it’s not worth building a brand on. With that said, I own zero gTLD names and likely won’t buy any. One thing I don’t like is that the word “dot” is now part of your brand name. “Dallas Dot Lawyer” is now your brand name, when before, attaching the “dot com” was more of an afterthought.

My main concerns with the new G’s are:
  • The general public having no idea what they are looking at when they see Dallas.Lawyer. Many won’t know it’s a URL. So, businesses need to add www. to be beginning, but that sets us back 10 years. We’ve been able to drop the www. in marketing because people know that ebay.com is (a URL). Having to add the www. for the public to recognize these names to be URLs hurts their perceived value IMO. It will take time, and money, for the public to get it.
  • The new gTLD release was pitched as offering affordable new choices to consumers since all good .com names are taken.The problem, however, has been that all meaningful left/right domain combinations are sold at premium prices. I understand the registries need to make revenue, but holding back meaningful names as premium priced assets isn’t giving the consumer affordable choices. They may as well buy a .com on the aftermarket if they are going to spend $10,000 or $20,000 on a new gTLD.
I do think the gTLD names have a place in the naming business. I think it has taken longer to catch on (with the public) than the registries had hoped. I think several will be wild successes and a good number will be absorbed (for pennies on the dollar) by companies like Donuts who operate on economies of scale.


NP: What is the domain industry missing?

Aron: It’s missing the investment of new wealthy buyers and funds. This is something I’m working on, but it is taking a bit of time. We can’t just trade among ourselves. We need new buyers and more end user sales.

It’s missing transparency as well. There isn’t a set valuation model for domain names, but I am not sure there ever will be.

There’s also a lot of puffery from people who claim to be able to sell names for domain owners. Anyone can act like a successful broker, pretend to have active buyers, and rack up a list of valuable names for sale. It’s hard to know who to trust and who has legitimate buyers on hand.


NP: What do you expect to see happen within the domain industry in 2016?

Aron: I expect to see short one word .com names to hold steady in value or even rise. Short words are hot branding assets right now, and that should continue. I expect to see a lot of the bulk Chinese registrations (of non-premium names) drop.

I think the LL and LLL markets will hold steady or slightly drop, due to the quick appreciation that happened. More and more buyers who bought large amounts of LLL names are realizing that supply is outpacing demand. I still love the LL and LLL domains – but the values rose incredibly fast. An LL name that was worth $100,000 2 or 3 years ago is now worth $500,000 to $1,000,000.

King Solomon once said “There is nothing new under the sun.” Open Google Maps and type in “Dallas”. Here in Dallas, there is a shortage of land for building. Supply is limited so development in Plano and Frisco (20 minutes to the north) is exploding. Due to this rapid development, cities adjacent to Frisco are enjoying a tremendous boom, like McKinney and The Colony. However, people have started to speculate what the
next “boom towns” might be, so land is being bought up in places further to the north. Now, there is a tremendous amount of acreage for sale at ridiculous prices in these outlying towns.

Does this sound familiar? Short .com names (Dallas) are in short supply and have increased in value. This led to people moving to LLL and LLLL domain names (Frisco and Plano) for speculation and business use. Outsiders realized they missed the boat and started registering anything similar they could find
(McKinney and The Colony) and many people will do well. Then, people became reckless and started buying up large amounts of new gTLD names and random NNNNNN and LLLLLLL names (the further outlying towns) hoping to strike gold and some may do well and some may lose everything.


NP: What are your tips for a new domain investor?

Aron: Do NOT hand register 1000 names hoping to make it rich. Please continue to read and learn first, but make your moves one at a time.

You wouldn’t believe the thousands of domain submissions I see at Heritage each week and month. A majority of the names listed for sale are new registrations or complete junk. Value is about supply and demand. Buy something that is short in supply but could have high demand.

That is why I started buying LL names years ago. Low supply and solid demand. I understand a new investor can’t start here. I used to suggest buying a name with revenue – because those names are liquid with ready buyers. But, since parking has limped along, that strategy may not work.

Buy something that you could pitch to an investor or entrepreneur and easily sell. I wouldn’t jump into domain investing until you have a solid amount to spend. And, please take inbound offers and inquiries seriously. Those are gold! People love to brag about significant unsolicited offers that come across – that they decline.

I’m guilty as well. I’ve done it. Please take those offers seriously. Check the top 100 all-time sales. Not many of those came from outbound marketing. Many significant sales come when a motivated buyer meets an unmotivated seller. When those buyers find you, don’t let them go. It might be years until someone else sees the vision that you have for your domain name.

Thank you for giving me the opportunity to share my thoughts!

--

Thanks to Aron (@XF.com) for taking the time to participate in our Expert Exchange; there is a lot of valuable information within this interview. The latest Heritage Domain Auction will take place on April 19th, 2016. If you are interested in looking at the auction's inventory, it is available on the Heritage Auctions website.
 
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The views expressed on this page by users and staff are their own, not those of NamePros.
Thank you for the opportunity to share my input on the naming space.
Aron
 
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Always good to hear from Aron. Nice interview thanks for sharing your insight.
 
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Great interview and really great insight!
 
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Thank you James for sharing this interview. And thank you Aron for the interesting and insightful info. Your experience and knowledge is a benefit to both new and seasoned domainers. I'm looking forward to HA's April auction.
 
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Thank you James for sharing this interview. And thank you Aron for the interesting and insightful info. Your experience and knowledge is a benefit to both new and seasoned domainers. I'm looking forward to HA's April auction.
thank you!
 
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Excellent article and very inspiring too. Aron is helping himself with sales while bringing new investors into the space which will benefit the industry as a whole. It doesn't get much better than that.
 
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thx
but i still see here only .com ( the King )
nobody need a King ( specially not in America i guess )

i dont like .com

it is boring for me
it is complicated

where are all the new extensions ?

take a look on your keyboard
people live in habit

we got already 2016...

btw :

4 Reasons Why You Should Ditch '.com' for Good
One of the first steps entrepreneurs take when jumping into startup life is setting up a company website. But then reality strikes: Most find that their dream ".com" names have been taken, or else are being held by brokers looking to make tens or hundreds of thousands of dollars to release even the most mediocre domain.

Entrepreneurs in this position would be wise to take advantage of some of the new extensions being rolled out and ditch .com for good. Instead, they should consider some of the following opportunities when jump-starting their digital presence or a new campaign:


ButtonMakers.com Registered in 2007 Lost in UDRP To Co. That Registered TM in 2014
MARCH 11, 2016 BY MICHAEL BERKENS 23 COMMENTS
The domain name ButtonMakers.com which was registered by the domain holder in 2007 was just lost in a UDRP to Rockstar Industries, LLP which registered a trademark in 2014.

The one member panel of Dr. Katalin Szamosi found the Complainant had established common law trademark rights to the term “Button Makers” as early as September 2004, despite that it’s pretty generic as far as I’m concerned.

The panel also put a lot of weight on the fact that the domain owned never used buttonmakers.com other than to forward it to buybuttonparts.com, which is a competitor to the Complainant finding that was not a legitimate use.

The panel did not discuss whether buttonmakers.com is a generic term rather than a well known brand nor did it discuss exactly how the Complaintant established it was a famous, well known brand back in 2004 to give it common law trademark protection.

A horrible decision in my opinion. Here are the highlights:

good luck with your .com ( complicated )
 
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I like Aron. He's an good guy and he gives good advice. Thanks.
 
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Great insightful interview. Hard to argue against any of what you said.
 
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well thank you :D
Aron, thanks for visiting. Since you are close with Chinese buyers, I was wondering if you can mention this 99999.gold. I heard some Chinese buyers like numerics domains. I think this domain is rare. Thank you in advance.
 
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Aron, thanks for visiting. Since you are close with Chinese buyers, I was wondering if you can mention this 99999.gold. I heard some Chinese buyers like numerics domains. I think this domain is rare. Thank you in advance.

thank you for the message. The Chinese do love numbers, but we are trying to sell mainly .com names and we aren't selling any new gTLDs at this time. Aron
 
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thank you for the message. The Chinese do love numbers, but we are trying to sell mainly .com names and we aren't selling any new gTLDs at this time. Aron
Thanks.
 
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James-here's why I like Aron-he ALWAYS answers emails even if to tell you that they are not a great fit. The exact opposite of what NameJet does. Aron is exceptionally professional. Thank you for this interview.
 
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James-here's why I like Aron-he ALWAYS answers emails even if to tell you that they are not a great fit. The exact opposite of what NameJet does. Aron is exceptionally professional. Thank you for this interview.

thank you. I appreciate the kind words :D
 
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We're actually in the hedge fund business ( domains more of a hobby) but I'd respectfully mention to Aron as to his statement " I probably sold too cheap/early" etc that J.Paul Getty once said "I got rich selling too early" .
 
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[QUOTE="With that said, I own zero gTLD names and likely won’t buy any. One thing I don’t like is that the word “dot” is now part of your brand name. “Dallas Dot Lawyer” is now your brand name, when before, attaching the “dot com” was more of an afterthought." .[/QUOTE]

Waoh..
 
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thanks for making out all the valuable points which are required for novice...
 
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great and inspiring interview.........thanks
 
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Great Interviews and thank you both Aron and James for your valuable time, many great advise for new comers in industry.
 
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Great is the interview, there are many nice issues discursed on it. Thanks to Aron and James.
I can visibly see the hand of God in your business with connections for less than $1000 startup cappital to rose to as huge as more than seven figure within such a time you have practiced domain business.
Congrats for your success.
 
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