discuss Increase In New Domain Investors... Good or Bad?

[Silentptnr]

I feel like over the past few years there has been a dramatic increase in the number of domain name investors. Not sure if it is good or bad for the market.

Maybe the increase has hurt retail prices? Let's hear your opinion whether you are a new Investors or even investing for a while.

 

[Silentptnr]

"I bet he uses two factor authentication. "

That was hilarious!

Ya caught that did ya!

 

[Silentptnr]

Owning super premium domains like George has would keep me up at night. I wouldn't sleep. It would be like having 10 winning lottery tickets. It's like the royal flush of domains in that list.

What it took to grab and now have those names is amazing.

I think some of us envision having that kind of foresight, but really, it would be pretty much impossible to get a group of names like those.

 

[Want2learn]

The only people that will ever own those ultra premium domains are those with MAJOR CAPITAL, or businesses with major capital. If you believe people can hand reg domains for $10 or less and sell them for $100 within a year, they would have to flip 1000 names to ever acquire a 6 figure domain. Doesn't seem very likely!

 

[NameYourself]

When would more demand for a limited supply of something be bad for the current owners of that supply?

 

[Michael Ehrhardt]

good job
i am back

 

[cosmicel]

Definitely bad... More competition, higher prices, too many sellers vs. buyers, and for all the reasons Hawkeye gave as well.

 

[offthehandle]

I am new to this industry, however I am not new to buying, selling, marketing, owning several businesses, economic cycles up and down, retired, etc....I was in micro niches with much harsher competition than this, pre internet, etc. I have felt welcomed and able to share knowledge perhaps of value to others here, and have learned quite abit reading. I appreciate the openness. The previous dinky niche market I was in was destroyed by too much competition, you guys have no idea how bad things can get. This industry has a much wider horizonal base with a multitude of vertical niches and I think plenty of room, if you have sufficient funds and energy. The knowledge shared here on Namepros is appreciated by myself, and try to comment on things I feel should be called out as garbage or those things that can be improved that benefits all.
Domaining is much easier to obtain good info than the complexities and self education I went through in the past. Many industries have much higher barriers to entry as far as learning, capital, time investment, etc. to entry than domaining, which can be a good thing. The margins are much lower too after all is said and done. The hard work and long hours to really do this correctly isnt for everyone. Is it bad to have more people? It all depends on the people right? If a bunch of get rich quick people arrive, or those who expect to be spoon fed, etc well they will self eliminate from the market. Same with those who have insufficient funds, passion and time. The markets correct themselves eventually. There are some really sharp guys who willingly share their knowledge on the Sherpa shows, and all the nice free blogs that is unheard of in my past endeavors, where people guard everything like it is the recipe to Coca cola. Lol. I try to contribute as well as absorb, I also do not believe in being a myopic business person. I have no problem sharing in info or commissions, the world is filled with takers and one dimensional business people that look out only for their own self interest, it is nothing new. Those who don't like new people exist in all markets. I don't give a rip though, I made a choice, paid my subscription here and here I am. The delete button works if you dont want to read anything I post. Lo que sea. Pura vida.

 

[1Darko]

As we all know it isn't easy to be successful in domaining. A huge factor that many people at beginning don't realize is - TIME! I for myself consider the time I invest the same as I consider invested money. That said probably many people which start domaining will quit after a few months because it is very time consuming. And time is money! We can call it a natural selection process which we know in any other industries or life circumstances. There is no need for established domainers to panic because I see them as the big fish in the tank, the newbies like me are the small fish . We should and can not fight against nature. Just work harder, smile and let it happen!

 

[deez007]

Hmm not sure, I think it could be both a good thing and a bad thing...

Good:
If you sell alot of your domains to fellow domainers then more investors = more potential clients.

Bad:
More domainers mean more competition, more people trying to grab the domains you have your eyes on...more bids, higher purchase prices.

 

[Michael]

It is good if your goal is to flip to the greater fool, the bigger pool of buyers for your names the better. But this is, in my view, more speculating than investing. At this point people are buying high hoping to sell higher, with no clue or care as to end user potential.

If your goal is to buy low and sell high to an end user, the domain industry expanding is undoubtedly bad. Competition is driving up prices almost to the point of retail and squeezing margins to the point where it is barely worth being in this business. Even old-school value investors are overpaying just to keep replacing inventory and accepting ROI's that don't really make much sense.

Andrew Rosener said something really interesting, and to me scary, towards the end of the latest Sherpa show (I'll paraphrase). He advised people to buy aggressively at auction because you know there are 4-5 other people who saw value in the name within 10-20% of what you paid.

So if you win at $4k you know there are at least a few other buyers at $3,200 to $3,900 if you need to liquidate. The idea being that your upside potential trying to outbound is high, maybe 5x, but your downside risk is theoretically low. This isn't even necessarily true though as they might not get into a frenzy next time, I've seen plenty of auctions driven up to $5k that didn't complete and went for sub $1k in the re-auction.

But the real problem with this thinking is that if those 4-5 other people are speculating and not value investing, then your "social proof" is other crazy people who aren't acting responsibly. If all of them have relatively deep pockets, you could drive a $1k name up to $10k with each one of those 5 bidders convincing himself to keep going because the others are there validating a near price.

Now those four other crazy people who didn't blow their bankroll on that auction live to be ridiculous another day, and they drive the next auction to silly levels. By the time it circles around, the first buyer who won got his next paycheck and is ready to get crazy again. With a big enough pool of people who think this way, or with deep enough pockets, this can get completely out of control. I think we're at or close to that point.

But where does it stop? Surely some of these people paying near-retail prices for low-mid tier expired auctions are going to go out of business eventually. But if enough people replace them, or replace them at an even faster clip than they are failing, it will likely continue until the next global financial crisis and then there will be a crash in this industry like we've never seen before. There will be people losing 75%+ of what they paid trying to liquidate.

Just my $0.02. I predicted two of the last zero crashes so don't listen to me

 

[Asfas1000]

Andrew Rosener said something really interesting, and to me scary, towards the end of the latest Sherpa show (I'll paraphrase). He advised people to buy aggressively at auction because you know there are 4-5 other people who saw value in the name within 10-20% of what you paid.

So if you win at $4k you know there are at least a few other buyers at $3,200 to $3,900 if you need to liquidate. The idea being that your upside potential trying to outbound is high, maybe 5x, but your downside risk is theoretically low. This isn't even necessarily true though as they might not get into a frenzy next time, I've seen plenty of auctions driven up to $5k that didn't complete and went for sub $1k in the re-auction.

Exactly my thoughts on this bad advice, and I remember Doron Vermat also mentioned something along those lines a few weeks ago.

This strategy is by definition bad, because, if it was right, everybody should employ it !!!
And if everybody employed this strategy , the auction prices would climb indefinitely !

For insatnce, one particular bidder may have a client in mind and can afford to bid $1,000 . I, who don't have immediate access to this buyer, can I really justify a bid of $1,050 ??

 

[boker]

The only people that will ever own those ultra premium domains are those with MAJOR CAPITAL, or businesses with major capital. If you believe people can hand reg domains for $10 or less and sell them for $100 within a year, they would have to flip 1000 names to ever acquire a 6 figure domain. Doesn't seem very likely!

A few weeks ago one of the big guys was saying that to sell a 100k name you need to buy it when it's at 2.5k and wait a few years, let's say on average 5 years. Now, buying handregs for 2.5k means that using coupons you could buy close to 1000 names, and to make 100k, that means to sell 300 of them for the average price of 300$ and I think you could do this in a reasonable time frame, like 1-2 years. I will feel more confident of selling 300 names for 300 in 2 years( and you have 700 other names that you could sell for reg fee to cover some renewals for the other 300 for one more year) than one name bought for 2.5k and sell it in 5 years for 100k.

 

[MapleDots]

I will feel more confident of selling 300 names for 300 in 2 years( and you have 700 other names that you could sell for reg fee to cover some renewals for the other 300 for one more year) than one name bought for 2.5k and sell it in 5 years for 100k.

Wow, that is very optimistic, I would love to see how many domainers can move 150 domains per year regardless of price, much less at $300 each.

I'm happy with a few sales a year and I prefer not to deal under 1k, too much trouble and hassle for me.

 

[boker]

Wow, that is very optimistic, I would love to see how many domainers can move 150 domains per year regardless of price, much less at $300 each.

I'm happy with a few sales a year and I prefer not to deal under 1k, too much trouble and hassle for me.

I have had this year 11 end user sales and between 200 and 300 bulk sales( average of 24$ each), and this is for half of year, so it's not imposible

 

[MapleDots]

I have had this year 11 end user sales and between 200 and 300 bulk sales( average of 24$ each), and this is for half of year, so it's not imposible

Congratulations, I love success stories

 

[boker]

Congratulations, I love success stories

Thanks, depends from which side do you look. I'm one of the lucky domainers who was on profit from the first month when I have started, so this is good. For some success is if you're on profit every month, for others is success just if you make much more than average a year profit( high xxxxx or xxxxxx and up). So for the future I want to keep my number of sales but raise step by step the average sale(both, to endusers and to domainers)

 

[Bros]

Couple thoughts that I've lately had that relate to this topic:

- There is a reason why many experienced domainers with lot of knowledge choose to SELL on Namejet (mainly domainer platform)
- There is a reason why many experienced domainers are expanding / moving into brokering

The above is not to say that good finds couldn't be made on Namejet (and other places), but it is something to consider.

 

[Silentptnr]

Thanks for the write up TLDInvestors...
http://tldinvestors.com/2017/06/are-more-domainers-a-good-or-bad-thing.html

 

[karmaco]

I don't think it's bad to have new people. And I think its great this place is here to steer us newbs back into the reality of it sooner. New people will come and go. The hard part is being a pragmatic dreamer who thinks big but spends wisely. It's a fine line to walk. Most people aren't patient or dogged enough to do both of those things well. Also, most of the winning tickets were sold out before we entered the building so no worries for you guys who have been at it for years.

 

[Shianna-EBN]

I feel it's a good thing:

• More competition but more people to flip quickly to.
• More companies wanting to provide more services specifically to domain investors.
• More people to bounce ideas around.
• More people to find out what works and what doesn't.
• More conversations at NamePros.

I agree, the more the better but the only problem we come across like others have mentioned is a bunch of useless domains getting bumped up in price at auction.

 

[ValleyRock]

Let's take it to the extreme : Suppose tomorrow 100,000 new domain investors enter the market, out of nowhere.

Many are called few are chosen
http://www.statisticbrain.com/startup-failure-by-industry/

 

[MapleDots]

Many are called few are chosen
http://www.statisticbrain.com/startup-failure-by-industry/

Great article - thank you

 

[mr-x]

... Also, as they hear that they should buy aftermarket domains at auctions, they see a name with bids on it and jump on to bid too (just because), thus raising mediocre names to stupid prices..

Fortunately, 90% of them will ignore any and all advice.

 

[Silentptnr]

I like new people getting involved in domain investing but I don't think it's the right move for a person that maybe bought and sold 1 or 2 domains.

It is truly complex in many different ways once you really get going. The learning really never ends.

I've had new people tell me about tools I never knew about. And even though I have bought and sold domains since 2000, I sometimes feel like I myself am just beginning.

I love this business but I do keep my day job so to speak.

Still so much to learn.

 

[Kel Com]

competition is typically 'good' for buyers, but for new resellers its important to have a plan b with names that are not appealing to the current pool of investors/buyers/marketers; like running white labels pointing to unsold/unused domains for easier/quicker roi. otherwise creating a portfolio of low quality names/phrases is counter productive, especially if the sole intention is to profit 'quickly' in a long term game/niche