My question to Godaddy's CEO at NamesCon: Domain Liquidity for the industry

[Rob Monster]

Earlier this morning, I wake up to seeing a lovely comment from Shane Cultra on his blog:

To my eyes, that comment from Shane is actually pretty crazy. Ironically, many people told me unsolicited, that my question was the highlight of the Q&A. This is not the first time that Shane has spoken out of school against me with trash-talk and it probably won't be the last since it shamelessly drives up his page views for his affiliate site. I don't know if anyone has a video of the Q&A section of Aman's keynote but if so, would be great if someone would upload the actual video clip. I believe anyone who objectively reviews my question will find it to be rather selfless. It was a question about domain liquidity. There were 2 parts, and I believe they were reasonable and sincere.

Part 1: Domain Liquidity via Loans

As some folks know, Epik provides interest-free loans secured by domains. This is popular but we cannot lend to everyone in the amounts that everyone might like. Compared to Godaddy, we are a relatively small company without access to the vast pool of capital that Godaddy has access to. I asked if Godaddy would consider extending domain loans to its customers. The lending model is proven. Godaddy has the ability to scale it to a much greater degree. Rather than forcing Godaddy customers to abandon domains to their expiry stream, why not allow Godaddy customers with liquid names to borrow against their portfolio? It seems reasonable to me.


Part 2: Working with US Congress to make domain names a bankable asset.

I have also been a long-time believer in the potential for domain names to be a respected asset class. The challenge there is that the banking industry does not recognize domains as a bankable asset class. People can donate domains to non-profits and can get a write-down for their investment basis, but if you go to a bank and ask to borrow against a 3N.com, they have no idea what you are talking about. The House subcommittee on banking could engage here but we would need some lobbying power to make that happen.

For anyone who has ever studied the history of the housing market, the correlation between the availability of borrowing capacity and the prices of the associated asset is indisputable. When credit is available, asset prices go up. If domain owners could more methodically borrow against their domains at conventional banking rates rather than only from hard money pawnshops that dominate the landscape today, it would be a game-changer for making the pie bigger for everyone.

I will be interested to hear what folks have to say on this very reasonable topic about domain liquidity that can greatly impact the future of the industry.

 

[Rob Monster]

This raises 2 questions - 1) Shouldn't a successful entrepreneur be 100% debt-free, or, at least, have such a plan from the very beginning? It is possible with internet-based businesses, domaining in particular. 2) How good or bad debt is in general? One may or may not be religious, but at least consulting what the religions say makes sense. Two largest main world religions - Christianity and Islam - are of opinion that at least interest, calculated as a percentage of a loan, is a big NO. Non-Draconian debt is still a debt, this is the problem...

If you want to go there:

A good man sheweth favour, and lendeth: he will guide his affairs with discretion. - Psalm 112:5

Give to him that asketh thee, and from him that would borrow of thee turn not thou away. - Matthew 5:42

Our approach:

- Lend only what people can justify -- don't over-extend
- Lend consultatively with an eye towards restructuring and turn-around
- Lend without interest

That's our approach. Others can and will do it differently.

Debt is not bad. Toxic debt that destroys people is what people should avoid..... like KABBAGE.

 

[Ategy]

- are of opinion that at least interest, calculated as a percentage of a loan, is a big NO. Non-Draconian debt is still a debt, this is the problem...

@Rob Monster mentioned that there is no interest. But there doesn't necessarily need to be any interest for it all to be win-win. The person getting the loan wins by receiving urgent capital. Epik wins by the domain continuing to life and renew at Epik .. plus they could bake the "interest" into a slightly reduced payout/loan. There are lots of ways to play with the financials to make it all work. Again though .. in the end the big question is how much can you actually get for your emergencies/projects/renewals/etc?

 

[tonyk2000]

Rob, at some point of time you mentioned that Epik as a company is debt-free. Which is great. This alone should be enough for any domainer to open an account, regardless of any banners "Lend without interest" is a great concept. Can you share how exactly are you doing domain valuations? Sorry if I missed the answer if it was posted already in some other thread. What I see inside my Epik account is estibot - something that is so misleading that it should be better removed from the interface completely.

 

[Samer]

Rob, at some point of time you mentioned that Epik as a company is debt-free. Which is great. This alone should be enough for any domainer to open an account, regardless of any banners "Lend without interest" is a great concept. Can you share how exactly are you doing domain valuations? Sorry if I missed the answer if it was posted already in some other thread. What I see inside my Epik account is estibot - something that is so misleading that it should be better removed from the interface completely.

Disagree Tony, first time
i appreciate it dont like paying monthly estibot,

estibot good start. I burn 1 free appraise a day appreciate integration, esti is industry standard

GD is the embarrassment does other valuators disservice, thankful estibot great place to start

Compromise, give option to idk maybe remove
but would most definitely keep estibot appraise

Samer

 

[Ategy]

Actually .. as I think about it, again, depending on the actual numbers, I suppose short term loans could get "steady" new investors bridge their gap from shortly after they start, down to their peak investment inflection back up through until their break even point. (Again .. it depends on the numbers).

Just a few days ago I went head first into ripping apart the fundamentals of theoretical domain portfolio math. An early bridge-loan could help some people get into domaining who otherwise couldn't. Again, unless you're a domainer who wholesales, I don't really see this as helping the industry grow, but it certainly could help people:


That's a theoretical example of someone buying 2 domains a day at $25 each (including initial renewal) and expecting a 1% annual sell-through at an average sale of $2500 (after commissions).

At that rate of growth he/she would hit $5000 in investment in a little over 3 months, but theoretically still be a few months away from their first sale. However, by then they would have about 200 domains. The lack of sales isn't unexpected as over that time (0.25 years) they had an average of 100 domains, so realistically they'd only have had a 1/4 probability of making a sale.

Beyond that, the portfolio continues to grow and the investment continues from $5k all the way to $12.7k when they have over 900 domains (and in theory 6 sales), after which the sales velocity continues to grow and sales multiples also grow as more an more domains start to cost $10/yr instead of the initial $25.

So I suppose the question is, how much would 200 domains (of 1% sell-through at $2500 quality domains) be able to ask for?


WARNING: This is just theoretical .. because obviously any new domainer would still need to be informed/knowledgeable enough to actually get 1%+ sell-through domains, which isn't as easy as it seems (unless doing outbound and good at sales).

 

[tonyk2000]

esti is industry standard

old but still good:
https://www.thedomains.com/2012/11/02/marchexs-sales-prove-it-estibot-appraisals-are-worthless/

 

[Kai W.]

Part 2: Working with US Congress to make domain names a bankable asset.

I have also been a long-time believer in the potential for domain names to be a respected asset class. The challenge there is that the banking industry does not recognize domains as a bankable asset class. People can donate domains to non-profits and can get a write-down for their investment basis, but if you go to a bank and ask to borrow against a 3N.com, they have no idea what you are talking about. The

For anyone who has ever studied the history of the housing market, the correlation between the availability of borrowing capacity and the prices of the associated asset is indisputable. When credit is available, asset prices go up. If domain owners could more methodically borrow against their domains at conventional banking rates rather than only from hard money pawnshops that dominate the landscape today, it would be a game-changer for making the pie bigger for everyone.

I will be interested to hear what folks have to say on this very reasonable topic about domain liquidity that can greatly impact the future of the industry.

Making domain names a loanable asset is difficult.
The first is the composition of the domain name, which itself belongs to computer code. It does not actively generate any value or profit. Secondly, if the domain name is borrowed as an asset, the bank or lender must be able to evaluate the domain name, but the fact is that the uniqueness of the domain name makes it difficult to apply standard terms for evaluation.
I think the value of domain is divided into collection value and brand value. Collectible value is universal words. They are well-known, suitable for any scene, and can be used for business activities. Brand value is some non-famous letters, such as flippa, instagram, they all increase their brand value by investing a lot of advertising. Regardless of the type, the value of a domain belongs to the category of intellectual property. And so,I think that if the domain can make commercial loans, then whether to invest a lot of money in advertising fees or intellectual property rights will be a very important reference factor.

 

[Lox]

If the domain name valuation tool is a cybermediary who adds value to and mediates between buyers and sellers, ... any current valuation tool model requires more than just info on buy-side and sell-side of domain name.

There’s lack of sophisticated script s.a. AI + ML etc , they must integrate and automate more data from the market share / forecasting processes and f.e. stock. Domain names can increase revenues (24/7/365) and decrease costs and supply and demand of domains is not anymore relevant to the buyers.

What’s important is: the volume of empty cyberspace, how many people are going to remember that specific domain name (come back) and see what they are saying / offering ... (space + name + offering; f.e. 40% of empty cyberspace for l.s. DN Greenliving.ext + housing sector or food sector = for local operation $100k , for global operation $1m+).

Once you drop the idea that the domain name is worth more or less based on retro sales and focus more on studying the current market size / share / value ... you’ll figure out something that is going to change the domaining.

Regards

 

[oldtimer]

What makes the domain loan at Epik doable is the unique position of @Rob Monster as the primary decision maker and also as a Christian entrepreneur that genuinely wants to help others.

As such the exact value of the domain(s) used for collateral really doesn't matter because no matter how many domains you have put as collateral Rob is going to give you ample time even beyond the original terms of the loan to pay it back and if you still have difficulties in paying the loan back as he has already mentioned in this thread he is not going to take away all the domains that you have put as collateral because he is going to try to sell some of those domains and if he can get the loan paid by selling couple of them then he will let you keep the rest because as he has already indicated here this is more about helping others and relationship building than being a loan shark and as such the exact appraisal of the values of the domains used for collateral might not be needed what is important is the fact that the driving force behind this loan program is the idea of empowerment.

Considering all these factors it might not be possible to duplicate this loan program across the whole Industry because the charitable and empowerment factor is going to be missing in other places as everywhere else is just going to be the harsh and cruel reality of putting money and profits above all else.

Aside from his promotional strategies and tactics that is making some people mad I believe that Rob perhaps has been greatly misunderstood and that he really does want to help domainers to be able to stand on their own feet financially. Sure he wants to make money, but his Christian values prevent him from putting money above all else.

By the way when it comes to promotions I am sure that if Rob was waiting at the gates of heaven trying to get in he would still list all the services and projects that he has going at Epik so maybe for all the good that he is doing we can cut him a little slack if he occasionally mentions some of the Epik's projects specially if he is just using them as an example to convey his message of empowerment.

IMO

 

[FlipperC]

To my eyes, that comment from Shane is actually pretty crazy. Ironically, many people told me unsolicited, that my question was the highlight of the Q&A.

Really? Unsolicited? Highlight of the Q&A? puh-lease.

You really need to find new friends. If Shane lives in a bubble where he biased, so do you. Even more.

You CONSTANTLY promote yourself here on namepros, and like to go on and on and on about things few care about.

The fact is that no single person in the world wants you to get up in a keynote speech and promote your own business. Have spme respect for the keynote speaker. It wasn't the time or the place to challenge the status quo or whatever you think you were doing.

I suspect you're not going to take this well. So be it. I can't make you see reality.

Try standing next to Shane next time at the conference. Branch out your inner circle.


-----

the discussion about lending against portfolios is an interesting one. I just don't want to participate because I'm so disgusted from the original intent of this thread.

 

[FlipperC]

So I suppose the question is, how much would 200 domains (of 1% sell-through at $2500 quality domains) be able to ask for?

Isn't the industry standard wholesale rate of 1% of the reetail value?

Beyond that, the portfolio continues to grow and the investment continues from $5k all the way to $12.7k when they have over 900 domains (and in theory 6 sales), after which the sales velocity continues to grow and sales multiples also grow as more an more domains start to cost $10/yr instead of the initial $25.

So 1% 900 domains priced at avg of $2,500 is: (900 x 2500 x 0.1) = $22,500. LIquid value.

What makes the domain loan at Epik doable is the unique position of @Rob Monster as the primary decision maker and also as a Christian entrepreneur that genuinely wants to help others.

can we all agree to keep proselytizing to a minimum here? Muslim entrepreneurs need not apply? stop.

 

[oldtimer]

can we all agree to keep proselytizing to a minimum here? Muslim entrepreneurs need not apply? stop.

Anyone who through the values and principles that they hold dear can put helping and empowering others above money and profits is worthy of some recognition.

It just happens that Rob is a Christian, but those values and principles could have arrived at through other religions, enlightenment, or just pure logic and compassion and so ones religion should not be a factor here.

IMO

 

[tonyk2000]

Aside from his promotional strategies and tactics that is making some people mad I believe that Rob perhaps has been greatly misunderstood and that he really does want to help domainers to be able to stand on their own feet financially. Sure he wants to make money, but his Christian values prevent him from putting money above all else.

At the same time, Rob needs to run the whole Epik, pay registries in timely fashion, pay the employees etc. - not an easy mission. Customers can only hope that any and all "noncommercial" initiatives would not negatively affect daily operations...

 

[trelgor]

Really? Unsolicited? Highlight of the Q&A? puh-lease.

You really need to find new friends. If Shane lives in a bubble where he biased, so do you. Even more.

You CONSTANTLY promote yourself here on namepros, and like to go on and on and on about things few care about.

The fact is that no single person in the world wants you to get up in a keynote speech and promote your own business. Have spme respect for the keynote speaker. It wasn't the time or the place to challenge the status quo or whatever you think you were doing.

I suspect you're not going to take this well. So be it. I can't make you see reality.

Try standing next to Shane next time at the conference. Branch out your inner circle.


-----

the discussion about lending against portfolios is an interesting one. I just don't want to participate because I'm so disgusted from the original intent of this thread.

I really think all of the criticism about ”self promotion” is actually as content damaging as the purported promotion in itself. Most are here for business, promoting their interest in line with their views and their beliefs. And you know what? People can evaluate bias themselves. They don’t need private policing. If someone crosses the line, have NP:s decide what to do. Don’t go on and on about it. Or flip to something entirely ”unpromotional” if you can find it.

I like to think there is a place for discussions and information - and an element of self promotion - that ”few” care about.

 

[Mister Funsky]

MG .. Steamie thinks you're the best domainer ever (after me .. lol)!

LOL...maybe K9 and Steamie will get a chance to meet one day!

 

[Playfull]

the modus operandi of Godaddy was exposed, which is to get people to register and renew vast amounts of unsellable crap year after year.

It's like you are looking over my shoulder!

 

[Rob Monster]

Try standing next to Shane next time at the conference. Branch out your inner circle.

Actually, Shane avoids me lately. He says so himself. I have reached out to him, including in the last year. Believe it or not, I only have love for the guy even if that sympathy is probably not reciprocated.

DSAD is far from being a bully pulpit. Shane is a provocateur who fully knows that drama drives page views. In other words, I am less convinced by the virtue signaling. That said, I don't judge him.

However, in the end, Shane did me a favor, and he keeps doing my favors. Why? Because authenticity has its fans and I will consistently engage with authenticity. Along the way, I sometimes learn something new.

can we all agree to keep proselytizing to a minimum here? Muslim entrepreneurs need not apply? stop.

As for the reference to Biblical verses, it was actually not me who raised that topic in this thread. I was simply saying that lending to others is certainly not a sin -- to the contrary.

As for our lending practices, a Muslim is absolutely welcome, and in fact the interest-free approach should even resonate with many of them for practical and perhaps spiritual reasons.

ICYMI, we have hired several Muslims over the years and look forward to making all of Epik available in places where Islam is the majority, notably Arabic.

 

[Rob Monster]

Rob, at some point of time you mentioned that Epik as a company is debt-free. Which is great. This alone should be enough for any domainer to open an account, regardless of any banners "Lend without interest" is a great concept. Can you share how exactly are you doing domain valuations? Sorry if I missed the answer if it was posted already in some other thread. What I see inside my Epik account is estibot - something that is so misleading that it should be better removed from the interface completely.

The valuations are part art and part science. It is part business and part philanthropy.

These days, we do have some debt but it is a small percentage of the capital structure and used strategically, to fund three things:

- Registry Balances and Auto-renews: At any given time, we are funding many hundreds of thousands of dollars of auto-renews at registries. If you are wondering who carries the water for your .COM auto-renews during grace period, that would be the registrar. Verisign is also pre-paid.

- Promotions and Incentives: During the last year, we have done many aggressive promotions, notably to fund transfers, e.g. $6.99 .COM transfers, etc. These are straight loss but then we recoup that loss when the domain owner sells or leases. The math works.

- Opportunistic acquisitions: We did 4 acquisitions in 2019, mostly work in process technology and acquihires. Sometimes it makes sense to finance a purchase or to accelerate re-investment without using operating cash flow.

The domain loans we do are at zero interest. This is part humanitarian and part customer acquisition method. The people we have bailed out of dire straits are among the most loyal. I will say that much. We had their back and they have ours. That pattern is pretty consistent.

Coming back to the point, I think Godaddy could help a lot of folks if they introduced some working capital strategies for their customers. On a personal note, I like many of the staff at Godaddy a lot. I believe they can be a significant force for good in the domain industry and beyond.

As I see it, I handed Aman a billion dollar idea that happens to play particularly well in emerging markets. If he applies it to his business plan, it probably accelerates their growth and increases the chances that he will be remembered in history as a great executive.

 

[Mister Funsky]

Debt is not bad

True. As I recall, things changed when interest (on the debt/loan) began to be charged and then became usury.

As far as automated sites giving values, nameworth should be included as a contender. Of course, nothing can beat the valuation of an experienced human...but like the other top valuators (godaddy and estibot) numbers can be generated that are unacceptably low or high. For the majority of my comparisons, nameworth is providing me more realistic retail numbers. I actually check all three and then do my own calculation using visitors, clicks and cpc. If there is a consensus on a number that lies within a +/-15% deviation, that is my price. (I also check namebio for recent reported sales)

It would be awesome if epik could reach an arrangement with nameworth to display pricing alongside the estibot numbers...or at least offer a one off or two off check like the integrated estibot checker.

 

[biggie]

imagine you are a typical domainer: domain rich but cash poor, i..e you have a tremendous amount of your wealth in domains.

Now imagine you have some bills due and you get a good offer on one of those domains. You now have to decide whether to accept the offer or shoot the moon.

If you have no plan B, then you may be forced to take the weak offer. However, if there is an option for stand-by liquidity, the decision to shoot the moon does not have to be ruinous to the portfolio.

lot of imagination to conjure up a contradictory scenario like that above

first,
is the typical domainer really "domain rich"?
and how can they be "cash poor" at same time?
and yet, their domains have tremendous wealth?

does the typical domainer really spend all their money on domains and have nothing left to survive on but a sale?
and if their domains had tremendous wealth, then wouldn't they or shouldn't have been able to sell some before this scenario came to be?

also, how does a "good offer" on one of those domains, turn into a "weak offer" that you may be forced to take...between the decision making process of taking the offer or shooting for the moon?

just asking....

Let's say you have a typical "pig in the python" portfolio where you have a bunch of domains that were registered on one day. Renewal day comes up and you have to make a decision to play lifeboat with your portfolio. The registrars that monetize their expiry stream will happily have you drop names. However, you might have reason to believe that many of those names are worth more than zero. So, you have a couple of options now: (1) you can liquidate the non-renew names and (2) you can borrow against the portfolio.

how do you borrow against a portfolio of names that you couldn't or didn't sell before they expire?
and who assumes the risk for the loan?

and are those the actions of a typical domainer?

and why, or who, would loan somebody more money to go register another bunch of the same type of domains?

and if there is no learning from past mistakes or risk to a registrant, what registrar or lender could sustain something like that?

just asking....


imo...

 

[Rob Monster]

True. As I recall, things changed when interest (on the debt/loan) began to be charged and then became usury.

As far as automated sites giving values, nameworth should be included as a contender. Of course, nothing can beat the valuation of an experienced human...but like the other top valuators (godaddy and estibot) numbers can be generated that are unacceptably low or high. For the majority of my comparisons, nameworth is providing me more realistic retail numbers. I actually check all three and then do my own calculation using visitors, clicks and cpc. If there is a consensus on a number that lies within a +/-15% deviation, that is my price. (I also check namebio for recent reported sales)

It would be awesome if epik could reach an arrangement with nameworth to display pricing alongside the estibot numbers...or at least offer a one off or two off check like the integrated estibot checker.

Thanks, I don't know their product but I reached out to Garett Thompson to learn more. We have a long-time strategic relationship with Luc Lezon and are natural allies to people who have data. We are still trying to figure it out with NameBio but Michael and I are in contact recently and I rather like him more and more.

 

[equity78]

lot of imagination to conjure up a contradictory scenario like that above

first,
is the typical domainer really "domain rich"?
and how can they be "cash poor" at same time?
and yet, their domains have tremendous wealth?

does the typical domainer really spend all their money on domains and have nothing left to survive on but a sale?
and if their domains had tremendous wealth, then wouldn't they or shouldn't have been able to sell some before this scenario came to be?

also, how does a "good offer" on one of those domains, turn into a "weak offer" that you may be forced to take...between the decision making process of taking the offer or shooting for the moon?

just asking....



how do you borrow against a portfolio of names that you couldn't or didn't sell before they expire?
and who assumes the risk for the loan?

and are those the actions of a typical domainer?

and why, or who, would loan somebody more money to go register another bunch of the same type of domains?

and if there is no learning from past mistakes or risk to a registrant, what registrar or lender could sustain something like that?

just asking....


imo...

Exactly right Don, there are many domain portfolios that have little or no wholesale value. There are plenty that should not be getting into debt. Or on the flipside they might be happy that someone will give them money and just never pay back the debt and use the loan as a portfolio sale.

Anyone will lend money on someone owning Blue.com or TM.com.

I think for @Rob Monster I would love to know are people selling names here at namepros right now, no hypothetical but right now in the marketplace eligible for a loan and how much?

Could this thread starter get a loan? https://www.namepros.com/threads/ne...louisiana-com-advertisingoptions-com.1142532/

How about this one https://www.namepros.com/threads/tu...m-49-gourmetmenus-com-eaterymenu-com.1175768/

I just picked them because they have a portfolio of names for sale.

 

[Rob Monster]

lot of imagination to conjure up a contradictory scenario like that above

first,
is the typical domainer really "domain rich"?
and how can they be "cash poor" at same time?
and yet, their domains have tremendous wealth?

does the typical domainer really spend all their money on domains and have nothing left to survive on but a sale?
and if their domains had tremendous wealth, then wouldn't they or shouldn't have been able to sell some before this scenario came to be?

also, how does a "good offer" on one of those domains, turn into a "weak offer" that you may be forced to take...between the decision making process of taking the offer or shooting for the moon?

just asking....



how do you borrow against a portfolio of names that you couldn't or didn't sell before they expire?
and who assumes the risk for the loan?

and are those the actions of a typical domainer?

and why, or who, would loan somebody more money to go register another bunch of the same type of domains?

and if there is no learning from past mistakes or risk to a registrant, what registrar or lender could sustain something like that?

just asking....


imo...

Short thoughts:

- Believe it or not, many domainers are domain rich and cash poor. It is a common thing, and fits the pattern of domain consolidation as more and more better names land in stronger and stronger hands.

- Not every domainer is prepared to objectively look at their portfolio. We try to look at distress situations like a turn-around project. Our success rate is decent there.

- We also help close deals, which is perhaps the biggest bonus, i.e. we typically deploy our SSL landers and then work to engage inquiries.

Coming back to the point of this thread, what Epik is doing does not scale everywhere or overnight. Godaddy has the people, the data, and the balance sheet to do what we have done in a much bigger way.

 

[trelgor]

If you have a proven business track record, and are still in dire straits, the business being domain name sales should not be an issue.

 

[Mister Funsky]

Thanks, I don't know their product but I reached out to Garett Thompson to learn more. We have a long-time strategic relationship with Luc Lezon and are natural allies to people who have data. We are still trying to figure it out with NameBio but Michael and I are in contact recently and I rather like him more and more.

Thank you for sharing the info. I've used and relied on estibot for years and I'm grateful it exists. I've interacted with Garett a couple times and find him to be very determined to provide a useful and accurate valuator to/for the industry. I hope you and he can find some common ground!

add: back to the subject...having a good valuation service (or aggregation) is essential to determine reasonable values for domain liquidity issues.