The Start-up Savior?

Morning Folks!!

Let me state right now that the most over used term of the last couple of years is "Start-up". If I were a comedian, I could make a living off of the routine. Everyone uses the word "Startup" like that is their wonder drug to cure-all business woes. Startups? Really? Even tho 80% will fail before we even start the discussion. Let's hang our hats on that baby.

Let's say we all have some "Start ups" lingering around. What's the definition of a true startup and what is the definition of I have no job so let me hide behind the keyword startup? Yeah, that's it. I can become part of the startup franchise. Part of the club. I no longer have to call myself a consultant because that is a code word for some as in between jobs. My apologies to real consultants and startups.

But wouldn't we have to admit some of that is a pure bag of smoke?

So I believe that the single most over used word today is "Startup".

Then I think of all the gTLD's that have their hopes pinned on these startups. Startups with an 80% failure rate. Hardly a book of success. So can that 20% (and i think it is actually much higher given the nature of what I described above) support these new gTLD's?

But first you would logically have to ask the question of how many startups will use a new gTLD? What percentage? we have 900 different extensions all using this same answer as their way to success. But we know it is not 100%. The hurdles would include their local country codes as well as .com and all other existing extensions assuming they need one and don't just decide to use a Facebook page or other free alternative since I hear 3rd world countries are the other savior. But free is very powerful when you have nothing.

And speaking of nothing, many if not most of these shiny new premium gTLD's come with an outrageously high premium price for those poor startups they are so worried about and trying to help. So the double talk can only get louder and louder and will be multiplied by more and more voices. But don't confuse that for anything other than what it is.

So our job is to stick to numbers, facts, history and news. Their job is to present solid and meaningful arguments that support their position. (They have done a remarkable job so far) Not good. remarkable and I have many remarks to go.

We all want to make more money. But just like fish in the sea, I think it is important to distinguish between food and a lure. And if you don't know what that means little fishies, then swallow whatever shit you like. I won't get in your way. I will just alert you to not trip over the existing dead or meaningless carcases spread over the road.

So my prediction is in the next years, "Start-up" will be labeled the #1 most overused word.  I am sure many make a living off of startups. Some love startups. I guess except the ones that lost their shirts with startups. lol. Many of us have been there too.

So is a startup a non business? Usually you open a business that after your initial startup COSTS are paid you are making a profit. Today the startup may never even intend to make a business. Easier to sell investors on the blue sky concept than it is to actually sell customers on their products.

Rick Schwartz



15 thoughts on “The Start-up Savior?

  1. vahmadViqi

    I think with this definition of startups, all these gtld companies are also “startups”… I guess dog eats dog or startup eats startup… lol.
    Another thing I noticed is that a company is not a “startup” unless it gets some kind of funding from third parties. So one needs someone else’s money to start a business? What happened to the old fashion slow and steady wins the race way of building businesses. I believe if you grow your business un-naturally… via funding and stuff, then there is something fundamentally wrong. The analogy of organic food and GMF apples here. Have we forgotten the example of the new healthcare website? They had all the money (not there own by the way) to build something “fast” and with all “bells and whistles”…. of course when you have the money and want to build your business fast.. scope creep happens… meaning shit happens and hits the fan.

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  2. Matt W

    Yes – most new ventures are bootstrapped & go for whatever ‘cool’ name/extension is available & cheap, not a real money spinner & the timing is never going to match a gTLD release.

    I have some guys using a .co from me. They’re $6k in on a $45k lease-to-buy, have good tech but attracted no backing so have decided to ‘pivot’, name comes back in 3 months. For .co as a new extension though it’s still a case of a 200% return on total investment in 3 years with a dozen names remaining.

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  3. UFO

    The gTLD space will be a catastrophic collapse. But too be honest I don’t even really ‘get’ the valuations that are ascribed to .com’s often. A good .com really has not as much relevance to traffic or searches as is given, sure it definitely helps if you’re selling something generic as a type of wholesaler, and yes traffic definitely leverages but not to the degree I see given.

    Take 2 com’s in auction at the moment.

    Hikers.com with a price range of 10-25k, and Poster.com with a price range of 750k-1m

    Hikers.com has value written all over it. Great name for an outdoor retail seller.

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  4. UFO

    Nb: Had to laugh at thedomains.com post re your poll.

    I think a post must have hit a raw nerve around vested interests. Wasn’t me, wasn’t even sure who it was aimed at. But, anyone with vested interests should really put a disclaimer on the relevant post.

    As we all know, the domain industry is full of shill bidding, so there’s always going to be quite a bit of mistrust, we have poachers turned gamekeepers pretending to be poachers.

    Anyway, I thought the whole poll was about Ricks readers to determine their views and future orientation of Ricks offerings.

    Don’t know, seem’s too complicated to me, there must be a lot of money at stake if you ask me, the gTLDs are evidently feeling the heat, many business cases will be shown to be bunk and full of false expectations.

    There’s plenty I could pick on in thedomains.com post, but to say ‘domainers’ would buy into domains if they were offerred for free is obvious, but google et al isn’t going to give away unecessary value, and we currently perceive that value to be 1% of the corresponding .com, registries obviously don’t share that perspective so good luck to them selling them for extortionate amounts.

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  5. UFO

    To me hikers.com is more social and more group orientated. hiker.com is singular and less inclusive. I’d far rather trade under hikers.com for 25k than hiker.com for 500k.

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  6. Patrick Hipskind

    Ouch..this post will really sting. The gTLDs are positioning themselves as a cheaper alternative for startups, and yet they are clearly the opposite. First, they are unproven so your investment can be a total loss. Second, even with the ones that succeed we still don’t know how long it will take for them to be indexed in the search engines and adopted by consumers so that they are feasible to use as a platform to build a business upon.

    I was going to pre-register nature.photography but at a fee of $399.99 a year I think I will pass. Priority pre-registration is $549.99 (really). The renewal fee for the domain name will be $399.99 a year. How is this cheaper for a startup with all the unknowns and risks involved?

    I was also going to pre-register casual.luxury but at a pre-registration fee of $799.99 a year I think I will pass. Priority pre-registration is $1,199.99 and this includes a $400 non-refundable application fee that you lose if you don’t get the domain name. Renewal for the domain name is $799.99 a year.

    The gTLDs are a cheaper alternative for startups? Really? So when the gTLD fails, it is really going to be cheaper when you have to go back to square one and put your company website on a different extension and attempt to rebuild traffic all over again. And that is operating under the false assumption that you got traffic from the unproven gTLD in the first place.

    At this point the gTLDs are over priced. They are not a cheaper alternative. There are many unknowns and many risks. I would not invest my savings, hopes, and dreams starting a business using a new gTLD as the platform. Good luck to you if you do.

    An existing business that has consistent and sufficient cash flow could use a gTLD to complement their current marketing efforts. They can afford to take the risk. At this time, however, the gTLD should be used to augment existing marketing efforts and not to replace them. To use the gTLD at this time as a stand alone for marketing would be suicide.

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  7. UFO

    @Patrick

    Good stuff. ‘Some’ start ups that primarily rely on their technology solution don’t need a kick ass domain, thats why they’ll just go for cheap and nasty, hell, why not a .tk that is free. A real business on the other hand that is pitching to ‘joe blogs’ on the street will want a credible domain that will want to make that ordinary consumer have confidence to deal with them, hence a .com (If you’re a start up you don’t want to also be fighting on recognition as well). Even with the technology solution start ups going for .tk then if they are successful they may well migrate to a .com

    To me, new gTLDs for start ups will just be sandpit / proof of concept type plays before they grow up and look for consumer credibility.

    As it stands the only credible force in gTLDs will be the .brands, and there is no proof that they will migrate from the .com’s they already own. They will just as likely buy the gTLD and simply park and poke back to the .com

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  8. Aaron Strong

    The word “twerking” is becoming just as overly abused as the word “start-up”. In fact some “start-ups” would be better off “twerking” rather than starting.

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  9. Kassey

    I’m very happy to see the way new gTLDs are being introduced. Their high prices and unknown future will make many existing gTLDs veeeeeeeeeeeeery attractive.

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  10. NEIL

    Rick,
    The new gTLDs is a good example of a perfect start-up failure.
    ICANN should pay you $ 1MM to sell them a better idea to expand ebusiness.
    I can give them some ideas for less than that.
    I am sure every reader of your blog can offer something better…to the blind and deaf paranoid ICANN.
    Kind regards,
    Neil

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  11. UFO

    One thing that should be remembered, is that because the total number of valuable names in some gTLDs is so low, they have to charge high renewal prices for those names in order to make their business model viable.

    One of the best indicators of whether these gTLDs have any legs is whether the registries behind all the other previous gTLDs (.aero .travel .pro etc) have all heavily invested in the new gTLDs. If they have, then from a registry perspective there must be value. For us ‘domainers’ we just have to look at the benefits of buying .pro .aero .travel and whether they made anyone any cash.

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  12. UFO

    One last remark.

    If we take total domainers yearly renewal budget as relatively fixed, then if these new gTLDs are running at $199 and the .com at $10, then if domainers registered say 1m new gTLDs (lol) then they’d have to drop 20m other TLDs.

    The average domainer is NOT going to drop their current porfolio to buy into the new gTLDs. E.g. Drop 400 current .com’s to buy 20 new gTLDs. Not likely. Seriously, if there was all this excess liquidity around then there would be far higher prices being paid in the secondary market.

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