It was a model, not based on his or anyone's experience. I presume he had some basis for the 1%.
In broad measures the model would go like this (round numbers for simplicity). These are NOT his exact numbers but to show the idea of the model.
Year 1 You buy 1000 domains at $50 each.
You sell 10 domains at $3000 each.
You lose $24,500 (depends on your selling costs - I assume about 15%)
Year 2 you buy another 1000 domains at $50 each
You have 1990 domains (990 from first year, another 1000 new)
You sell 20 domains (1%) in year 2 at $3000 average each.
You pay about $10,000 in renewals.
In this year you lose just under $1000.
I didn't include anything for other costs in my simplified model.
In his model, with I think a bit higher prices for buying, you break even after year 3, and make something like $90,000 'salary' by year 6. You also end up with a very large portfolio, and would need to work full time just to manage it, which was the idea off his model.
Of curse GD (or whoever you pay your renewal costs, selling costs, auction/dropcatch costs, etc. to) make money from your investment every year!
Bob