Stop Flipping and Start Investing. I’ll Illustrate the Difference.

Morning Folks!!

One ot the most often questions I am asked is how I got started with domains. Here is the answer. I did not approach domains as an item to flip. Besides there was no flipping in those days and only a handful of buyers on the planet. What I was doing was taking excess funds and investing in something I knew would take many years to pay off and take off. But I was willing to invest a portion of my cash and credit in domain names. So That's how it started.

When I started to actually earn money from those domain names I reinvested 100% of the proceeds because as an investment I did not need the $$ to live on. I could parlay what I already had and then parlay it again. My investments were always financed via my earnings.

Think of it as self powered. Self propelled. A solar business that recycled and reclaimed the earnings into more and more buys. Selling was not on the radar because collecting those names was so time sensitive. It was a race against progress. Each day others were figuring out as well. So there was no time to rest until about 2002-2003. The prior crash gave birth to a new channel that few knew of and even fewer respected. But nothing came without taking exceptional risk at the time and circumstance and the size of my wallet. Many were very tough decisions.

The beauty with flipping is there is almost a $0 entry bar. Few other things on this planet are so cheap and have such a huge upside. But flippers should also be transforming themselves into investors because that is a long term plan that will always pay you even when you don't work.

Flipping is a way to get started. It's a way to make a living. A good living. But as a flipper you should know when you have something in your hands that should NEVER be flipped. That's the point of this post. Flipping the ones that should be investments in your futures.

A guy that starts out today has to match his wallet with the patience to see it through. Clarity comes in time. There is so much more clarity today and that gives new folks opportunities as they come with fresh sets of eyes and new tools to work with. But they need to buy investment grade domain names not just random pigeon shit. That's the #1 reason domainers fail. They pick pigeon shit.

One thing I can tell you. Many domainers don't really understand what the numbers mean and they use Google numbers as a compass. Those numbers reflect so much broader terms and subjects than you think so many over estimate the value and usefulness. That leads them into the wrong direction and usually a black hole. I hear about exact matches and such but then the domain gets zero type in traffic. See the disconnect? It is about type in traffic. It does not have to be a lot. 10-20 potential customers a day have value. 0 has very limited or no value unless the domain can stand up on it's own. What does that mean? It means something that the public would accept and embrace and can be used commercially. What does that mean? It means something that sounds good, feels good, reads good, catchy, easy, passes all the tests and may have multiple functions. A generic, generic. Not a category domain.

All I can say and have been saying is there is a multitude of opportunity in domains. But 90% of that starts with current or future type in traffic. Yes a domain that gets zero today can get 100/day next year. That's called chasing the future and getting there before anyone else. But validation does not occur until they type it in. The domain is not 'Ripe' until there are type ins. So those that flip and have the time to watch some ripen will find great rewards with less work while building a stronger and stronger foundation.

Domaining is all about type in traffic. PERIOD! 90% of the game. Sure there are always exceptions. NNN have value, LLL may have value. But don't confuse that with domains with meaning. Domains that have a multitude of advantages. It's about guessing what others might think. The reason so few talk about type ins is because so many would go broke. PPC companies exist because of type ins. That's the model. Those are the domains that have value. Guaranteed value. Value that can be demonstrated. Then it is just a debate about the degree.

When I started 99% of the industries traffic had no value. There was no way to convert people looking for things to companies that could provide the good or service they were looking for and get paid. Except for adult that is. They KNEW what to do with the traffic. They knew how to convert into sales. To upsell. To trade traffic with their own competitors for their mutual benefits.

The problem with discussing an issue like this is one thing leads to another. When you come in at the beginning of a movie you might look differently on it as opposed to coming in during the intermission. The view is different. That is why history is so important so you can follow the bouncing ball and why it is bouncing and why it is bouncing a certain way and in a certain direction. It is why I try to give you a feel for things. No Google. No PPC. No aftermarket. 5% of the people online in the US and virtually none in so many other places. A mainstream doing everything it could to discredit doing anything online. Especially business. It was their greatest threat. So the movie is different when you see the entire show.

So even if you flip for a living you should have at least 1 out of 10 that are keepers. That are investments. That will eventually transform you from a flipper of domains to an investor in profit whether domains or any other opportunity. You can be flipping burgers or the restaurant owner with a chain of stores and all you have to do is THINK about it and what this all means to you.

Have a GREAT Day!

Rick Schwartz

26 thoughts on “Stop Flipping and Start Investing. I’ll Illustrate the Difference.

  1. Scott Alliy

    “The prior crash gave birth to a new channel”. Will GTLD activities be the NEW new channel? Tomorrows lottery drawing will help bring light to the program. Hopefully all goes without a hitch.
    BTW Just tweeted… Still waiting to see a marketing paln from any dot applicants? Do any of them plan to let the consumers know about GTLD? at this point it does not appear so???

  2. BullS

    “It means something that sounds good, feels good, reads good, catchy, easy, passes all the tests and may have multiple functions.”
    There you go, domain is like your first name like mine”BullS”
    dot com is and will always be KING

  3. Jay

    Traffic is a key factor for most of domain names, but this is not the only condition that should be considered. How often you need to spell your name to someone? Some of you do that all your life, calling somewhere and spelling your first and last name and being nuts of misspelling. What I want to say is that short names, easy to spell, with no misspelling are great candidates for online brands and such domain names have a significant value. Short, easy to spell, easy to remember, even with no or very low traffic.

  4. Anunt

    So who wants a solid investment opportunity right now??? – only asking $8k – gets 100 unique visitors per day.
    I am getting completely OUT of domaining by year end…so here is your opportunity.
    Lets see who is smart enough to see this opportunity.

  5. Anthony

    So what happens when Microsoft goes the way of Google and sends that type in traffic directly to bing ?

  6. DomainShane

    Type in traffic is certainly a great place to start but the real work is building a business. A domain name is not a business. You can start a business with any domain but as we all know a stronger domain saves you thousands if not millions in customer attraction. In order to lease you have to have a business lease it from you. Domaining is about type in traffic but you can buy traffic. You can buy recognition. A domain saves you that money. A domain is a marketing expenditure. It can even improve reputation if it’s a category killer domain. A domain is a sign that raises into the sky for the world to see. The better the domain, the higher the sign and more people can see it. Anyone with enough money can buy a domain, any domain. Most of them can’t build a business to monetize it. In today’s market, if I want easier but less money I get in the domainers car. If I want real riches I get in the businessman’s car. As for flipping. I like to get my portfolio to zero cost. Flipping domains to pay for all my keepers.

  7. Mike

    “But they need to buy investment grade domain names not just random pigeon shit. That’s the #1 reason domainers fail. They pick pigeon shit.”
    This is the most important advice Rick! I get people that send me lists of domains every day, and most of these domains are pure crap!

  8. UFO

    Admittedly, one of my domains which I’ve held for quite a while now is cranking traffic, as a 5 letter technology .com all the sites using similar keywords are ranking 10k and lower in Alexa.
    That must make it a potential 40k uniques a day type of URL with the right (Some) content.
    S/b worth 250k if I get motivated enough to spend another 10k on content.
    Thats why you hold and not flip.

  9. Steve O'Brien

    Well said Rick! We like to say -“keep the best and sell the rest”.
    I would venture to guess that most all companies that own 25,000 or more domain names, sell less than 1% of their holdings a year in retail value or end user closed sales. If you read most all the published domain sales reports, it appears that the larger domain holders actually sell far less than 1% of their inventory a year.

  10. Jay

    @UFO, please do NOT use Alexa as an argument. I have domain with 2000 visitors per day and another with 250 visitors per day and Alexa ranking for the second one is better than first one, which has 8x higher type-in traffic.

  11. Ron

    Anunt, stop buying pigeon shit, and selling it for 50% off, it is unbecoming to being a domainer.
    You paid what close to $30k for cloudapp, now you trying to sell it for $15k
    Same with stfu, indianjewelry etc… you pay double, and sell for half, if you did your homework, sure you could have sourced a nice domain for $50k from a cash strapped person, and you have income for life from that one premium domain.

  12. Dave

    @Anunt ,that is not type-in traffic. That is site traffic on a spammy-looking blog. Hardly worth owning at any price, IMO.
    @Shane, if you think being a domainer is not a real business then you are not a domainer, or still don’t understand this market.
    Who told you you can’t make a fortune with domain traffic? Losers in the domain business who never made money on ppc?
    Who says some of us don’t make more than your definition of real businesses? Who also says selling traffic to paying advertisers is not a real business? I’m under the impression you have little type in traffic and still don’t get how some of make money. You are not the only one. Many experienced flippers are incredulous when you tell them about domain traffic as if they don’t believe you. Many also think it is idiocy to buy domains because of their traffic.

  13. Jack

    You talk a lot about type in traffic. Type in traffic is nice and all, but your lack of experience developing domains shows you simply don’t understand how simple it is to build a website that gets 100-200 people per day via search traffic.
    It is not a difficult task, so to say things like (i’m paraphrasing from past posts)”you already have 100-200 BUYERS coming through the door every day” shows you don’t understand the way websites, traffic, and internet buyers operate.
    A great domain is a great domain, but it’s not about the traffic.

  14. Uzoma

    I was gonna get into the new gTLD business. After reading what Rick has to say, I change my mind. This is an opportunity for any believer in the new gtld. Go to my site and present an offer, this one will go fast. I’m selling:

  15. UFO

    Sorry Jay, but while it’s not accurate and can be rigged (And I know how to do it all), I do know that the websites are fully functional and owned by serious private equity etc. These are not two bit flipper sites, these are all 10k and under. A couple I have tracked for years and years.
    So yes, as a relative benchmark it is more than justified.
    A high content well indexed low ranking Alexa site (Sub 10k) does crank a lot of traffic. Hell, I’ve even listed to the earnings call on one of them where they have run through their traffic. I was absolutely staggered by the traffic they receive and the product they sell.

  16. UFO

    Ricks talking about type in traffic as a proxy benchmark for the value of the domain. If its a hot domain, people will be typing it in, period.
    If you do more SEO on top of that fine. But its the old addage, its better to build on prime land than swamp.
    Rick is talking about domain potential rather than Website potential which you are.
    Good domains either have type in traffic or they have a good brandable attribute.

  17. UFO

    Look Jay, when you appraise metrics you take a whole bunch of reference points and by a process of what I’d call linear programming you estimate what is a likely scenario.
    I make plenty of mental notes when I hear website owners talking about monthly uniques when they run large sites.
    Doing about 40k uniques a day I’d expect to be doing around 8k on Alexa. I can’t even remember how many uniques a certain site was doing that was down at 1.5k, but it really was shed loads. Actually just relistening to the earnings call its 19.6 million uniques a day, up 21% YOY. Conversion rate of 1.45% with av sales value at $62.
    The true value of quality .com’s is WAY WAY more than valuations currently being banded about if they
    1) Do good traffic
    2) Sell something that applies well to the Net.
    3) Have good brandability
    4) Have a huge market

  18. Leonard Britt

    Yes, there is a huge difference between search traffic and type-in. I recall pre-Penguin/Panda I had a site on a non-.COM domain getting about 10 thousand visitors a month. Traffic took a nose dive in April and then again in May and is now down to about a thousand visitors a month. Google can’t play with type-in.

  19. Anunt

    Both domains have been SOLD.
    Both domains are in
    You guys missed an incredible opportunity.
    Only domains I have left now are: + – Total Price $1,000 USD
    Yes, I paid $2k…hahahaaaa…50% Off

  20. Michael

    The Google numbers mean something lol! But you’re right most people don’t know how to use them.
    And Anunt has figured out the best way to sell domains is on Ricks Blog :)

  21. Amanda

    Well said: You can be flipping burgers or the restaurant owner with a chain of stores and all you have to do is THINK about it and what this all means to you.


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