Rick Unleashed on Auctions….Part 3

Part 3

End users will NEVER come to the domain auction in mass. Never. They will
come one project, one need, one domain at a time. So you can't come to an
industry auction and expect end user prices. Each auction house is doing what
they can and each domainer must do what they can if they want to bring the end
user to the table. It takes legwork and it is not easy to do.

At the end of the day we are speculators and collectors and developers.
Nothing makes me happier than to buy a really prime domain name. But we have to
be real. If I want to sell candy.com to a wholesale audience I can't ask a
retail end user price. I can try and get millions for Candy.com from an end
user, but if I am going to wholesale the domain to domainers, I have to get very
realistic on the price. It's a different arena.

The domain owner that wants to sell should not assume low stats will scare
somebody off. When I bought Property.com I got the stats. Not exact. But I saw
there was life. While everyone else is worried about 2x, 3x, 10x, I bought the
domain with x in the HUNDREDS of years. Literally. No joke. Because stats are
just one element in my valuation. In time I got it down to under 100 years. Then
down to 80 years. 50 years, 25 years. 10 years. 7 years. In the future it could
be annually and perhaps less than that.

So if I see a domain making $3 a month I can still calculate a return.
Don't tell me what to factor in or how much weight to give it. That is why so
few really have a handle on valuations. I see domains selling for $100k that
should sell for $1k and I see domains for $1k that are worth $100k.

As I indicated, this is still just a number of thoughts. There are holes in
those thoughts. They are purposely there. This is the beginning of a discussion
and a massive change not the end. I reserve my right to append to this post and
amend. All I know is we can do much better and as an industry it is time to
demand it. Just like reality hit the real estate market, reality will hit the
domain market. You can own all the crap and really walk away with nothing. You
can own one great domain and build an empire.

It is not in anyone's best interest to see any auction fail or have poor
results. I don't have all the answers. I can just throw on the table as many
elements as possible and start domainers and auction houses thinking. So the
spirit of this is to share how I see it to anyone who is willing to listen.
Willing to try a different way because there is strong evidence that we are
getting off the trail. Too may elements are either missing or are just over the
top. It isn't about having a 200 domain auction. It is about having 200 domains
that are qualified to be auctioned. Better to have 125 quality domains then to
force 200 and know 75 are junkers like that 53 Chevy.

Sorry for the long series of posts. Many of you won't make it this far. But
I wanted to get this off my chest for a long time and this was the right time to
do it. The most meaningful time.
Have a GREAT Day!
Rick Schwartz

Rick Unleashed on Auctions….Part 2

Part #2

I am sick of falling asleep in the auctions. I am sick of the hype without
the substance. Domainers bare some responsibility. Stop submitting domains with
no stats. NO STATS = NO RESERVE! If folks don't want to provide stats then folks
should understand that auctions are not the proper route. Plus no reserve does
not mean 'No value.' It just means that it is going to sell right then and there
for what the market deems is a fair price.

1. Forget what the auctioneer tells you is the proper way to handle bidding
at an auction. He is wrong and I will reveal why in a moment. Not every
commodity being auctioned off works the same. But for starters, starting at a
low but reasonable number engages more people as opposed to trying to get the
'Price' right out of the gate. Even if I were to target that domain to buy, why
would I?? Why would anyone? If not a single peer will pay the opening bid THAT
says a lot. It says you are overpaying the market value in almost all cases. Why
make an overpriced bid? May as well wait until after the auction and make a deal
at a lower price. So you don't need an auctioneer if he won't run the auction
for DOMAINS. Not houses, not art, not jewelry, not collectibles.....Domains!

2. If you have a domain and it is priced over $10k it MUST include stats of
some sort. If not, then there should be no reserve. Simple as that. Alexa
numbers are not stats. Tell me how many unique visitors it got last month and
how much it made. That isn't asking anything other than 'Is there an engine in
that car?' If you want to sell the domain stop being scared to release stats. A
domain with 100 monthly visitors may have great value to someone because you can
grow that 100. It is infinitely harder to grow from zero.

3. Start low. On a $50k domain maybe $10k. If nobody is willing to bid
$10k, move on and do it quickly. If someone does bid $10k don't waste everyone's
time looking for $10,500 or even $11k. You should go to $15k. Point is the
increments are important. It builds a foundation of bidders and THAT creates
excitement and a better chance of a sale.

When 4 people bid $10,000 on a domain it create a 'Floor.' A Value. So then
the $50k becomes less of a risk. If 4 are bidding $40k you have an idea that
others see value as well. That gives people confidence to bid it up higher
because the true value comes to the surface. Even if the domain does not sell
and the top bid is $22k, the seller can come back next auction and instead of
$50k, he may be at $25k and that may be a different outcome. If many people bid
at $40k I realize I can buy that domain at $50k and likely have customers at
$40k. Then the sale is not a $50k RISK. It becomes a $10K risk and that is a
HUGE incentive to buy. It's a huge difference. It's a confidence builder in a
world that has yet to put much confidence in domains.

4. Reserves should not be announced before the auction. Loose price
categories are fine. 'Under $10,000' '$10k-$25k', '$25k-$50k', $50k-$100k'
$100k-$250k' $250k-$500k, $500k-$1M, $1M-$2M, $2M-$5M. Does not have to look
exactly that way, but it is a better guideline.

'No reserve' domains can even open up with a minimum starting bid. That is
the way you do it if you want to start the auction at the reserve price. But
those have to be less than $5000. It does not work on the higher end domains as
was the original motivation for this post.

5. Bidders create value. They are the true valuations of the worth of a
domain assuming you have a qualified audience. Walking away with not so much as
a REAL valuation is really shortsighted. I even believe records should be
memorialized to show the high bid of each domain.

Not showing reserves will help eliminate 'Show bidding.' What is 'Show
bidding?' It is when you bid high on a domain that you know what the reserve is
but don't go to the reserve with the only motive to look like a big shot in
front of everyone. In other words, let's say you have a domain on the block with
a $10 million reserve. The bidder bids $9M knowing there is no way they would
buy it at that level and knowing there is no way the seller will sell at that
level. I know some that do this over and over again and without advertising the
reserve in advance eliminates this problem and these showoffs can take it
somewhere else.

6. Stop telling me how great a domain is. Show me the damn stats and stop
the BS! Tell me how many visitors last month. If it is zero, then what justifies
the price to wholesalers if they can't buy and get a 2x, 5x, 10x return? Alexa
is NOT stats. Google is NOT stats. If you are not prepared to share stats, you
are not prepared to sell the domain name. We are wholesalers not end users.

7. Great domains at reasonable prices will always sell. Computer.com and
Camera.com would still sell today even in this market. Great domains are great
domains in any market.

There are so many more points to make. I probably have not done an adequate
job of articulating everything I am thinking. It is difficult to explain. It is
a big subject with many subcategories. But I hope this opens up the
conversation. I don't have all the answers but I sure as hell know when
something is not working properly. We don't have the luxury of getting it wrong
in the future. Way too much time has already been wasted on crap that won't sell
and prices that make you chuckle with disbelief. I will post Part #3 soon

Have a GREAT Day!

Rick Schwartz

Rick Unleashed on Auctions….Part 1

Rick unleashed on the auctions.

Part 1 of 3 so far

Ok, fasten your seat belts, I have seen enough and now it is time to speak
out. I gave you a preview yesterday. Today I will include the rest of the first part. I will be covering quite a bit in this series. So what I have not mentioned here will be mentioned on the other parts. I did this as one post and realized it was just too long for people to sit and read. Each of these posts are a bit lengthy. So bare with me as I try and tackle this.

'When you have a $20,000 reserve and the opening bid is $20,000 that is no
auction, That is a PRICE
TAG!! It's nonsense! It's a waste of time and likely did not
return the seller the best return if any at all nor did it create any bids other
than perhaps one. But you don't need an auction or an auctioneer for that one
bid, you need a cash register! Auctions are about momentum, defining value and
sales. Now it is time to do the auctions the right way and I feel pretty
qualified to speak out on this.'
Times are way too dire to worry about
ruffling feathers of some auctioneer who knows nothing about domains and tells a
qualified audience just how great each one is regardless of the quality. EVERY
auctioneer is guilty of this so I am not singling out anyone. So get ready for a
post that will change the game and shine a light on the deficiencies.

So since it was Howard's idea to have the domain auctions and my idea on
how to make them meaningful and Monte's execution, I think it is time to speak
out. We don't have the luxury of screwing up this year.

Let me start with saying this will be hard for me to define in words even
tho the vision I have is crystal clear. It may also take me several posts to
clarify things. I look at the live auctions first as a bidder and attendee
sitting in the audience and then as someone involved behind the scenes. But
sitting in the audience has the trump card because I, like you, are the
customer. I don't like falling asleep at auctions. I don't even like being in
the room for the entire auction. So that is where I am at as a bidder. They are
long and boring. So I believe that the auctions need to understand this and keep
it exciting. I mean imagine a car auction with beautiful show cars one after
another. It is exciting. Now throw in a rusted 53 chevy that is all ripped apart
followed by 6 other junkers like that and that is what a domain auction REALLY
looks like. Ya think the excitement level is going to remain high? Ya think
people will bid. Ya think people will pay attention? Ya think people will
believe how pretty that chevy is? WAKE UP!!

This series of posts will run all over the place because the mistakes that are being
made are numerous and they are compounding and the results speak for themselves.
Sell the sizzle not the steak. The first lesson of business. Create excitement.
You do that by having quality domains. You do that with having domains that are
sought after by a number of people. You do that by NOT INSULTING YOUR AUDIENCE
with crap and telling them how it is the best thing since ice cream followed by
199 more that are even better. Give it a rest.

I want a great auction and that can only happen with great domain names and
MAJOR modifications. There have never been so many quality domains out there for
such bargains and that list is growing every day. People want income domains and
people that own income domains want to cash some of them out. So timing is about
to be perfect. That is what happens in an economic downturn. Auctions heat up.
But you can't have an auction the way they continue to be run and expect them to
be successful. Times have changed, the audience has matured and it is time to adapt to those changes or we will continue down the current path of decline. I will post Part 2 soon.

Have a GREAT Day!

Rick Schwartz