The way I have always looked at the domain game was not in a contemporary manner. I don't compare it to today. I compare it to history. Hence I look at the domain game as gold miners in Alaska in 1898. I looked at how hard they had it. How many died. How many were just lost. The only think I suffered through was several bath robes.
It gave me chills up and down my spine when in 1998 I went to Alaska to find the Gold Rush Centennial. I just happened to pick the 100 year anniversary of what I was copying. Land and mineral rights. Land was the domain and traffic was the mineral. That made it extra special. Together they had great value.
I was on a cruise ship and learned a lot about a time I was trying to parallel and only had limited knowledge of. That August day in 1998 was exceptional as while all this was happening, I learned that Bill Gates and Warren Buffet were also on an Alaskan Cruise and had been in the same towns we were in less than 24 hours before us. Pretty cool. A mystical confirmation that I was on the right path.
But that has little to do with this story and this post. What it as to do with is 'Booty.' I looked at mining domains as booty. You don't count what you have in the mines. You DIG in the mine. There will always be time to figure out how much gold you mined later. And so I did. But until then my mission was to lay claim to as many mines as possible and then I would have the luxury of TIME to come back to explore and exploit.
I have an admission to make. Until just a few weeks ago in December, I had NEVER compiled a list of domains I had bought in the aftermarket. The 'Aftermarket' that was created 7 years after I started buying domains from 3rd parties. I NEVER added up those purchases. Never even had a list. I always knew there would be time to do that since I believed we were in a 'Unique moment in History.' I was just investing in them as fast as I could. Every available dollar would go back in to get more and more as I knew this was the most time sensitive thing I had ever seen.
So in December 2011 I compiled my first list ever and this is what I found.
I was able to reconstruct almost every domain purchase since my early ones in 1997. I even found out that while I paid $42,000 for Porno.com, only $37,000 went to the seller. The other $5000 was a finders fee for the guy that sold Porno.com the week before for putting me in contact with the new owner. So I doubled his take just for that info. I have the original faxes that are barely legible 15 years later.
I found the original Ass.com contract and the Men.com contract and all the early 1990’s contracts. Not that there were that many. Most were in the form of an email.
1. I purchased about 750 domains from 3rd parties that I contacted 1 by 1. Never sent out a bulk spam. Always targeted at a specific domain name.
2. I purchased another few hundred in small portfolios. Usually targeting just 1 domain mixed in with many others. I did not want to tip my hand by isolating the one worth what all others together added up to. So I would make a bulk offer. Even if I did not buy the entire lot, I would still buy 5 or 6 not to isolate the winner in the group.
3. I spent a total of $6.5MM in the aftermarket. That is really not a very big number. However, when you look at bang for the buck, I think it represents a true value 10x-20x or more what I actually paid plus the daily dividends those domains provided for over 15 years now. Enough to bank roll that many times over and still continues.
4. This does not make me a big player. Quite the contrary. Some single domains have sold for more than my entire portfolio cost. So I am under no illusions. But I play in my comfort zone. I risk what I am comfortable risking. Diversification has always been my back up plan. Turning 'Virtual' Real Estate into 'REAL' Real Estate. And I think I got great bang for the buck at the time I was most active by recognizing the opportunity early on and following through with what I saw.
5. I never took a penny out of my pocket to get into the domain game. I charged $1800 on a credit card and by the time I was billed by Network Solutions and got the credit card bill I was able to pay it from the Internet earnings back in 1996 before Google was born, before PPC and when only 10% of the U.S. population was online and very few others around the world. I took the earnings from 1996 and the first half of 1997 and parlayed them into buys from third parties.
6. I overpaid for some and got some incredible money makers and bargains on others. Plus I hand registered more than 7500 others during this time. Of those hand registered domains I have sold 11 for $100,000 or more each without ever trying to actively sell them.
7. Total Value today of all those purchases? I guess we will see. But I think Property.com and Candy.com tote the note and the other 748 are just gravy before we even discuss the hand registered domains.
8. Of the 750 domains I bought from 3rd parties, less than 20 actually had a contract. I beleive that the time element involved and the risk of losing the domain to a higher bidder was a greater risk than anything else. So I would just send the money as fast as I could. To me, that was the best way to seal the deal. I would use the emails as a contract if need-be. Only one deal went south in all that time for a domain I paid $1500 for and maybe someday I will lay claim.
9. My motive was figuring out how to hold on and afford these domain names for 20 years without selling and at $100 a pop ($50/year with a 2 year minimum) that was a consideration at least 7X-8X more important than it is today. Maybe exponentially more important. How would $100 per domain name and $50/year do to your equation or business model? So when it went to $70 and then to below even $7, that took the pressure off me because my equation was $50/a year and now it was on $6 or $7 a year. Plus $100 back in 1996 had a lot more buying power than $100 in 2012 making it an ever riskier investment.
10. Luckily the earnings for the type ins more than paid for the renewals and a fairly nice war chest for additional buys. I had to focus on adult because there was no mainstream and we were years from a mainstream model. However I took those dollars and bought non adult domains knowing that someday this sector would not only develop but dwarf the adult market. Even tho there was virtually no traffic to those domains but I did correctly believe that traffic would develop in time.
I had to balance looking for domain names with retirement in 1998. Retirement was more important and domains would be what I did when I was doing nothing. So my retirement schedule has always trumped my working schedule. It is to this day. I don't like having to do something by a certain time or having to be someplace at a specific time. I want to work when I want to. Many times that is 18 hours in a day. But that is SOLELY up to me. When and where I want. My own drum and drummer. My own beat. My own time and rhythm. That has great value to me. Life is short and I believe we have been trained to work in excess.
I am not motivated to earn billions. I just look at my hopeful lifespan and ask what will I need to sustain it in exceptional comfort and do what I want when I want. How do I create oil wells? The less maintenance the better. The less time the better. I am also very sensitive not to CREATE WORK! Any moron can create work. The most important part of exploring a business opportunity is time involved vs the reward. Getting tied down on one project could derail everything else I am doing. On the other hand, if there is a calling, I will follow the path.
The mining I did in 1996 and 1997 was enough to sustain me a lifetime. I still invest 6 figures year after year after year and have hopes of increasing that for the right domain name or associated business. The one thing I have learned is 1 great domain trumps 1000 fair to mediocre ones. Quality is the key.
Now the kicker. Now the biggie. Look around you. Outside your window that is. See much building going on? Look inside your screen. See the difference? The Internet is building and growing faster than I can write this post. How many new businesses came online as I wrote this?
Question: What makes land valuable in the real world?
Answer: Assuming there are no minerals like Gold or Oil........Bringing people together by building something that they want and will go to. Then it starts.
Once these people are there, they will need other things. That's what I try and focus on. I don't have to be a casino in Las Vegas to make money. I can sell sunglasses. Provide a service. Open a gas station. The same holds true on the Internet. Patience is the key as I allow folks to build what they build and then see what I have that matches up well with what they are doing. It's just one way to look at things. One way out of hundreds if not thousands of ways.
Parallels with domains are in every direction you look. But you need historical perspective sometimes to easily take advantage of what is coming. I am the hamburger stand next to the steak house. The gas station on the corner of where the largest mall in the region is located. We together own bridges from one place to another and those bridges require a toll.
It's not what is happening today or what happened yesterday. It's about the next minute, the next hour, the next day, the next week, the next month, the next year, the next 2 years, the next 3 years, the next 5 years, the next 10 years, the next 20 years. And every idea goes thru that time warp in a split second.
I look at the Internet as a series of mountain ranges. Each bigger and more spectacular than the previous one and hard to believe that once you find the peak of one mountain range you only discover the higher peak of the next one. That has happened and repeated itself more times than I can remember. The only thing that kept me sane was knowing these mountain ranges existed and the only test to navigate through them comes in the form of TIME. Then there becomes a point in that time that you can barely keep track of things as you hop to each new mountain range in a shorter and shorter amount of time until it turns into a blur. That is where we are entering now and I believe patience today will pay dividends far faster than in the past. Warp speed. Things are changing too fast to even keep up with but we are in the path of everything coming. It's really that simple.
What's the value of O.com to Overstock TODAY as opposed to 1 year ago? 2 years ago? They just discovered early what many will find out later. WHAT WE ALREADY KNOW! That cost MONEY! That lesson cost MONEY! The value of O.com if it is ever auctioned off went up exponentially. Maybe 2 years ago $500,000-$1MM. Today, could easily be 10X that or more. That's what happens when the SECRETS we discovered YEARS ago are discovered by companies throughout the world. That is why I look at domains as 'Passive income' and compare to savings bonds. The game there is to hold them until they mature.
What I saw back then needed these 20 years to fully materialize and now we are where I expected we would be just 3 years from that target. How cool is that? I saw it so clearly back then but never anticipated the truly colossal business this would become in registrations and a sizzling aftermarket doing HUNDREDS of millions if not billions of dollars in very active transactions and we are just at the starting line.
Domains are the Real Estate of this century. The oil wells and gold mines of this century. The hub of every new business created as far as the eye can see. Facebook is training 800 million people to be online savvy. Many will open websites. All will need domain names and as they grow more successful they will have the desire to move to bigger and better locations. Just like they do in the real world. Expansion and understanding are the two driving forces and that vehicle is moving at full speed on the Internet.
Have a GREAT Day!