It is too easy to acquire domain names. There are so many enticing names sitting in auctions, closeouts, or available to hand register. In fact a whole section of NamePros regularly offers names of every type and price range. There are far more attractive names than any one person can reasonably acquire. So how are we to know what names to take, and which ones to leave? I want to suggest a simple guide to help. But I don’t have it. You do. The Answer Is Within Us The phrase, We have met the enemy, and he is us, was made popular through a Porky Pine and Pogo cartoon used in a 1970 Earth Day poster. The roots of the phrase actually date to the War of 1812. The idea expressed in the phrase applies to many aspects of domain investing and life. Our own emotions, impatience, fear of missing out, overconfidence, lack of confidence, or various cognitive biases, can lead us to make poor choices on what to acquire and what to let go. Sometimes it can send us into domain investment train wrecks. I know far too well the pull of promotions or recommended names from auctions or closeouts. It is easy to be attracted by low acquisition cost, aged domains, high automated appraisal or a recent sale of a somewhat similar name. This may cause us to overlook negative factors, perhaps even to ignore the fundamental question of who would benefit from this domain name. If knowledge about what we should acquire, and what we should pass up, is within us, why is it not obvious? Maybe it’s because we never write it down. Do you have a domain name prospectus? The Domain Name Prospectus The idea of a prospectus is common in the world of conventional investing. For example, each mutual fund will have a prospectus that indicates basic facts about the fund, who the managers are, the track record, and most importantly clear statements regarding what the fund invests in. The prospectus will show the split between equities in different regions of the world, durations and ratings for the bond component, whether the fund invests in other asset classes, how much cash the fund typically holds, etc. A prospectus for a domain name portfolio might answer the following, and other, questions. Approximately how many names are in the goal portfolio? What is the target sell-through rate and average net sales price? What percentage of the portfolio will be .com? What other extensions will be held, and in what approximate percentages? What types of domain names, single word, multiple word, brandable, acronym, numeric, alphanumeric, phrases, etc., will be in the portfolio, and in what percentages? What is the split between investment worthy, that is long term hold, and more speculative domain investments? What fraction of the portfolio is to be held in liquid assets, easily sold for at least your acquisition costs to other domain investors? Example Acquisition Statements By going a step further than the overall portfolio questions posed in the previous section, it is possible to define precisely the domain investing targets for the year ahead. Below are sample statements to illustrate what I have in mind. Note that these are just examples, and are not intended as a listing of what any particular person should invest in. Hand registrations of made-up brandable names, no longer than 9 letters, in the .com extension. The goal is to acquire names broadly applicable at least one of the following sectors: online education, health, delivery, or technology. Closeout-priced .com names that are no more than two-words in length, with the structure adjective+noun, and that include at least one of the following, or closely similar, keywords: cash, online, shop, loan, buy, rent, solutions, services, pro. New extension domain names where the match across the dot is very strong, making an expression that when searched in quotation marks yields at least 40,000 Google results. The name must have an acquisition cost of less than $20 and a renewal price of less than $30 per year. Single word, and very rarely two word, .net names where the word(s) make sense with the .net extension. For example fishing.net or startup.net. Acquisition price should be up to 1/10 of projected selling price. Single word .co domain names, only in common nouns and verbs, where the .com is either developed or priced more than $50,000 and at least one other extension leads to a developed site. Common single word .org domain names applicable to an area where that extension finds adoption, and when the domain name can be acquired for $150 or less. Single word, standard renewal, domain names in the .delivery and .express extensions, in words applicable to at least hundreds of possible users around the globe. Numeric names in the .cc extension that are up to 5N, but only when there is a sequence (e.g. 56789 or 12121) or some other pattern that is easily memorable. Acquisition costs should be less than $50. Single nouns in the .io extension where the noun is both common (more than 10 million Google results) and applicable to branding use. Acquisition costs should be $200 and less. These statements are similar in structure to what people post in the requests section at NamePros. If you have a soundly written prospectus, then you already have request statements ready. In most cases the specification should include extension type (e.g. two word or alphanumeric) sector(s) length acquisition cost renewal cost You may also want to include exclusions, such as no hyphens, or additional considerations, such as domain age or automated appraisal. Giving examples can promote understanding if your prospectus is intended for someone other than yourself, such as obtaining feedback from a trusted friend. Simply writing down a prospectus, that should not take more than a page or two, is a good exercise to clarify your domain investment targets. How This Might Help Every time I browse a domain list, whether auctions, closeouts or available hand registrations, I see domain names that appeal to me. It is really hard to resist them. I think having a clear list of what I want to invest in could help convince me to pass up names that I should pass up. As has been said, success in domain investing is as much knowing what not to acquire, as it is what you do to actively sell. To illustrate, referencing my examples in the preceding section, perhaps I find a nice numeric .cc but the auction price goes past $50, so I stop bidding. I come up with what seems like a great brandable .com, but it is 14 characters long, so would not match my specification. I really like a match across the dot in some new extension, but it is a premium acquisition at $200 per year, so, according to my example specification, I would pass it up. The prospectus helps talk me out of acquisitions. Some may find it helpful to have a list of domain types that you have decided never to invest in again as part of your prospectus. Exceptions But what if there is a really great opportunity that does not match the specifications? Any guideline is exactly that, a guide, not an absolute prescription. As long as one has carefully researched and considered the pros and cons of the name, it makes sense to sometimes ignore the rules. Prospectus And Monitoring Just as a mutual fund prospectus includes more than a specification of what the fund invests in, looking at, for example, past performance, you may want to periodically compare the prospectus goals and your actual performance. If the goal was 2% sell-through rate, was that achieved? Did your average sales price match your goal? This blog post on domain investing by the numbers provides an introduction to parameters you might use in a periodic portfolio assessment. The advantage of having a prospectus, is that it provides both a road map for domain investing, and a way to see how closely your planned investments matched your goals. It makes sense to at least annually revise the list of what you invest in, looking at both your own performance and that industry-wide, as well as new trends. Coherent Portfolio If you sell only on third party marketplaces, or the associated registration streams, it may not matter much if the names you invest in seem to be all over the map with no unity in your portfolio. However, if you maintain your own website, or reference your overall holdings on a marketplace, it will come across as more professional to have coherence within the portfolio. For example, a mix of adult names with brands intended for banks will shake confidence in your holdings. The prospectus can promote discipline to move toward a more unified portfolio. What To Keep As well as acquisition choices, each month we face renew or liquidate decisions. The domain name prospectus can help guide which domain names you currently hold are consistent with your goals as set out in the prospectus. A Tip While recognizing that NameBio includes a minority of the entire set of actual retail domain sales, it might be useful to compare your prospectus statement with NameBio-listed sales of $1000 and up. This will give you an idea of what fraction of sales are in areas not represented in your current prospectus specifications. Final Thoughts I welcome reader comments. Do you use a written summary of what you invest in for guidance in acquisitions, and if so have you found doing so helpful? Please also share tips on writing good prospectus statements. While it is helpful to get ideas and views from other people, ultimately our success will come from within ourselves. The prospectus is a tool that may help clarify goals and approaches. Note that none of the specific name examples are my own, nor is mention here intended as endorsement or promotion of any domain name. They are simply used for illustrative purposes..