The Rick Schwartz Equation

Morning Folks!!

Go brew a pot of coffee, this is going to take a few minutes. What started as a simple equation blossomed into all types of adventures and mis-steps and examples in real-time that absolutely support my equation. An equation that may be all but lost in the clutter of events that just had great timing and so here we are. I think the word "Clusterf*ck" is just going to be more spot on with every passing day. I thought it would happen in very slow motion, but it is accelerating even faster than I would have imagined and I suggest there will be popcorn to replace the coffee by the end of this post.

We all see what we see and we all know what we know.  I come to conclusions early based on certain elements that fit in my personal equation. This equation filters out CRAP, HYPE and NOISE. It filters out the losers FIRST and spotlights the winners NEXT. That makes my job easier and pisses off the ones that don't win and/or don't count as much. Those folks have a tougher job to convince me and other people whether domainers or end users to buy into their vision.

Each new gTLD has or SHOULD HAVE a separate vision.  Is that not a reasonable assumption? I have learned many do not as stunning as it sounds. So is it my fault for asking about the "Vision" thing?

I have been writing this blog post for over 2 weeks now and I have been deciding whether to post it or not. Meanwhile I just keep working on it and whether it sees the light of day will just depend on who knows what. But events just keep unfolding that dovetail with what I have been saying.

I have written extensively about the new gTLD's EARLY to be on record and to be REAL and that showed a vivid difference in how and WHEN  I view the world compared to many others. And in my view of the world, nothing happens until a sale is made and I did my best to explain that. And while people throw around invisible sales numbers without actually ever making a sale, well, that is a MAJOR red flag to me. I know how hard sales is. I know how hard sustaining sales is. I know how hard growing sales is. I also know the difference between a solid sale and a weak sale. A sale that will survive and a sale that will collapse or end up being a loss.

I see things early for a reason and it is based on an equation.

I have gotten several emails about and their problems this week and folks want me to write about it. Well I did, 3 YEARS ago when I transferred all my domains out. It was not my first post on the subject as you will see. The Moniker mess happened 3 YEARS ago but the train wreck happened last week. Folks had AMPLE opportunity to heed the warnings. I still have about 14 domains there. Mostly .tel. But thousands were moved away. 

There will be a lot of elbows flying in gTLD land as we have seen with the firestorm of last week with Negari and Network Solutions, that just continues and now the plot thickens as Berryhill, Corwin, Negari and the ICA join others in the industry for a circular firing squad.

The skirmishes will intensify and broaden as there are a lot of competing interests. There are a lot of ponies in this horse race and the rails on either side are not enough to contain them. So you are going to see a vivid example of some raw nerves between other gTLD operators develop. You can't see this coming? Really?? REALLY????

Why is this a sure bet???

SALES BABY! SALES! They NEED sales. They are drowning without sales. They are choking for cash as it is in many cases. That is THEIR reality.

Not only that, but If you play in a game you set up with no rules, then don't complain when somebody breaks the rules or extends the boundary lines. Where does HYPE turn the corner and become DECEPTION? There are the nuances that are in play here. The debate is wide and the fallout is still in progress. The answers are murky. Deal with it. It's just part of the clusterf*ck that will play out in time.

I also understand that many bloggers are under a lot of pressure from different camps to write positive stories about them or gTLD's in general. Some have just about lost their entire credibility. Even Howard is pressuring me not to post things I am about to say. But I could give a rats ass about getting another sponsor or not. I won't sell my soul for that. If they can't figure it out, so be it. I will say what I BELIEVE and not what my FRIENDS want me to say.

Hats off to those like Konstantinos Zournas, MIke Berkens, Ron Jackson,  Kevin Murphy and others that report whatever facts they can find and I know for a fact that the pressure these bloggers are under is IMMENSE. And they are getting it from both sides. 

Sales have to be created and WE and everyone else has a RIGHT and a DUTY as well as an obligation to be skeptical if you are a serious investor.  You should EXPECT to have you feet held to the fire. Especially since we already had prior evidence that only a fool would ignore of how previous tld's have fared in our short history.

How do you create a sale?

You start with NEED, WANT and DESIRE. And in our case you can add SUPPLY and DEMAND. Other variables as well as you are about to see. And there are even more obstacles than I am going to discuss that is why I wrote so many posts coming at things from various ways and all of them had huge pitfalls. These are compounded obstacles and I am not sure any can survive them all. Especially when they are blind to them.

That said......

How do you create sales when you don't start with NEED, WANT and DESIRE from the right party and the supply is unlimited and the demand is almost non-existent and self-made??? And keep in mind, over 80% of all registrations are by domainers and the Registry's themselves or closely held companies. aka, Bag of smoke. Some say 90%. They say 33% and that is just laughable.

How do folks KNOW they need something they don't even know exists to begin with? This is the tip of the iceberg when it comes to exponential. Many icebergs because everyone at least gets hungry. Of course business may suck if you are a hamburger stand setting up shop at a vegetarian convention and you have no veggie burgers.

Hold on to your horses, it will all make sense soon to anyone that can have a warped thinking process like me.

This is NOT bashing gTLD's. It may as well be zoombibie stands. The RESULT would be almost the same.  What's a "Zoombibie stand"? A Zoombibie stand is as foreign and unknown to you as gTLD's are to the end-user.  Got that? Do you need one??? How long have you lived without a zoombibie?? Really?? Whose job is it to sell you that Zoombibie that you don't know about and probably could care less about? What color is yours? What happens when a competitor comes in and they have to SPLIT the zoombibie market?? Are only distributors buying zoombibies and they can't resell to the end-user?

The commodity you have does not matter. Coffee shops, hamburger stands. Lemonade stands, pizza joints. You name it. The thing with gTLD's, they are exponentially harder and few want to take the time to truly examine why.

The keyword is CREATE.

Zoombibie has to CREATE sales!

But to create sales, there has to be a DEMAND to begin with.

And you do that with REASONS.

(Reasons have to be valid. In sales, when you get caught in a lie, game over)

But first you have to CIRCULATE.

And you have to know how big your AUDIENCE is.

So that you can TARGET them properly.

Assuming there is DEMAND

We know there is DEMAND by several groups. The Registry, the Registrar and the speculative domainer. The speculative domainer is not the customer of the Registry as they have made pretty clear. But the same Registry is depending on the market makers who are the speculative domainers to make things happen. Sounds like a HUGE disconnect to me and many are starting to pay the price for that wrong-minded thinking process.

How big is the zoombibie audience? You still don't know what a zoombibie is? This isn't your grandfathers zoombibie. This is a much better and bigger zoombibie that will allow you to do more things. Just don't ask about what specific things they are. Way too deep.

Sorry for the caps in this post but this is more of an equation and a theory than paragraphs. And you also have to know that THEY (the consumer in any form they come in) are in control of all of their destiny's. If they don't eat the smelly fish or the rotten meat, the restaurant closes and goes out of business. PERIOD! No matter the hype.

Nobody on this planet woke up this morning looking for a zoombibie. But you NEED it because I said so. Isn't that a good reason?? 

Today alone we say .Berlin start giving their extension away for FREE! When you can't sell something, you give it away. They more than doubled their 48,000 registrations in less than 24 hours. EXPECT others to follow suit. That is definitely going to screw up the marketing plans of other registries that are already choking for cash. It gets UGLY from here on out folks. Can't see that one either?? REALLY??


So if you subscribe to this quasi-equation, and I do, then many will be able to see what I see and why I don't take MOST of the gTLDs seriously at this point in time.  That does not mean I am right and that does not mean I can't be PERSUADED.  But my job is not to persuade myself. That's THEIR job and they need many reasons that are VALID to get there. Tough questions are survived by straight answers and that is how you tell a solid and good product or service. Then I might buy a zoombibie. Right now, I can live without it. 

This just means that I have a method behind my handicapping that has served me well for decades and I am just sharing my mental process of one of the ways I might reach a conclusion or form an opinion. But that does not mean I can not be persuaded. But that only comes with solid information and benefits. A VISION that holds up against reality and scrutiny. Imagine a car salesman being afraid to answer questions about the vehicle he is selling. He wants to make a quick buck and you are looking for long-term reliable transportation. Not exactly a win-win. Once he lies about one thing, you can only do one thing. LEAVE! And that is exactly what most folks would do.

Someone wins, someone loses. If you invest unwisely LIKE SO MANY DO, you are going to be at the wrong end of that equation. As long as you are prepared and EXPECT to lose 100%, then you are okay. No worries.  But expect to lose 100% TIMES however many years you keep each domain name.

Folks want to hear what they want and they want to ignore what they want. Folks are afraid to state the obvious or even truly examine both sides to get to a proper balance without forcing the wanted outcome. To me .ceo,.rich and .horse are extensions that are in real danger of dying on the vine. They will be joined by many others. How can I be so certain??? Please just study the equation. It is a roadmap. Look at the STALLED daily registrations. .Rich has had THREE registrations in the last FIVE WEEKS! STUDY the numbers, they are pathetic at best. This is their debut. Demand does not look very high and a new broom sweeps clean.

Just days before the original launch in January I posted this on my blog about .Club and how they were the ones doing it right and now you can look back and see how it DOVETAILED with REALITY! It appears they have the most human placed registrations.

Figuring it out and getting it RIGHT EARLY counts and it is the equation above that makes picking winners and losers EASIER! Cutting to the chase has value. Knowing the answer before the question is asked has value. Great value in some cases. And I am not conceding that the most registrations = the most valuable gTLD or the one to invest in if any. But this is the yard stick many seem to be using for the sake of discussion. So it is our only measuring stick at the moment since there is little else to point to. Just keep this yardstick in mind as well. .mobi as a Registry is a total success. .Mobi as an Investment is a total failure. Can't folks LEARN and understand that equation?? I could give a rats ass about the success of a Registry. We are talking about investing. Until you separate the two, good luck going broke!

With 1400 new extensions those that think they will all survive and then also be meaningful are either not dealing with reality or have not been in business long enough to understand how business works. How sheer numbers work. So if they were to LOGICALLY look at the 1400, and right now we have about 125 LIVE, they can already see which ones are in DANGER of either dying on the vine, never getting any recognition or traction or just not being meaningful or relevant at all. PigeonShit gTLD's for a lack of a better phrase. This is the first heat of TEN segments to get to that 1400 number. I think I clearly picked the winner of this phase. Until I see the CONSUMER actually EMBRACE these new extensions, it's all inside baseball. The consumer hold all the wildcards.  There are several layers of consumers. But I am talking about end users and the actual person on the street.

So the first thing to do logically is remove the DEAD HORSES OFF THE TRACK!

Did you watch the race on Saturday? Imagine that race with 1400 horses in the SAME gate and the LOGICAL first question would be how many would be TRAMPLED in the STAMPEDE getting out of the gate!?? How many other horses will trip on the dead horses and also go down? Just logical questions. The ultimate question is who will win the race? I guess if you were LOGICAL you would say to yourself that I may not be able to pick the winner right away but if I pick the top 10 horses and isolate them I have a much better chance. Most bet on one horse and MOST lost. Even the gtld tracker tracks the top 10 and all the "Others" are lumped into one category. "other". Why?? Who came in 10th in the race n Saturday? Nobody knows and nobody cares.

And that means that 1390 gTLD's will be NAGS  Or maybe it will be 1300. Not a huge difference. Most will be meaningless is the only point I am trying to make. MOST. The majority. So that means they did not die on the vine, they are just as irrelevant as .aero and .travel are today along with many more that nobody wants to really invest in. How many times do you have to see the same SAD movie and still hope for a HAPPY ENDING?

How many want to bet on California Chrome to win the Belmont and the Triple Crown today? Place your bets! He LOST! Sorry. We all rooted for him to win. But he LOST. REALITY! See that is not being against gTLD's folks, that's called not being stupid and dealing with reality. We can do the what ifs all day long. But he lost. Yes, he lost because of a GASH inflicted by another horse and we will see that with gTLD's as well.  So if a gash did the damage to change history imagine what 1000 dead horses will do to change it.

Sorry folks. There is no happy ending to this movie. Get your Kleenex out!

And then all this wraps right back around to:

How do you create NEED, WANT and DESIRE?

The keyword is CREATE.

And you do that with REASONS and BENEFITS.


BENEFITS are what is important to your customer not what is important to the seller.

And you make the sale with a LOGICAL argument to support your vision.

What grade would you like to give the marketing so far folks? Invisible marketing seems to be on top of that heap don't ya think? If you don't buy into my zoombibie, you are a moron and you are old school and you are an idiot. lol. GREAT marketing!

Efficacythe ability to produce a desired or intended result. I don't see that as a widespread ability when it comes to gTLD's.  Do you??

Besides all these GIVEN headwinds, it is my belief that many of these guys already missed their window of opportunity to market their extensions. As even Michael Berkens has said many times, these are the weaker extensions for the most part. So that means when they DID have their day in the sun they were incapable of taking advantage of THEIR "Unique Opportunity in time". The train is gone for many of them already. I hear they did not have the money to promote and all the rest. Whose fault is that? Whose lack of vision was that? Whose going to be holding the bag when it is all said and done?

Sure there were ICANN delays. Well in business you have to expect things like that and be prepared for it.

So that TRAIN leads DIRECTLY to consolidation. They can't see that one either?? Really? REALLY????

See in my silly view of the world I think it is unreasonable to see why .ceo would be a good investment because no coherent argument can be made for the viability and a REASON to PARK money there. And when the registry comes out with "Their" reasons, they don't dovetail with reality. Everyone laughs and dismisses.

Now I don't mean to pick on .ceo all the time but it is the most glaring example next to .Rich which is just too funny to even spend any time on. And I think .Horse has no better chance of being important and worthy to INVEST in as betting TODAY than California Chrome will win the Triple Crown last Saturday. In any test you usually look and set aside the top and bottom scores. .Web for me is the top score on the chart and .Rich is the bottom score on the chart for me.Actually the bottom is CRAMMED with losers yet to be declared DEAD ON THE VINE.

And let me also state for the record that number if registrations is not the yard stick for measuring success of ANY gTLD.

CONTENT is the key to the survival of any extension. And in this cases, BETTER content is going to be EXPECTED.  So when you look at this onion you can peel it so many different ways and into different conversations. Just be prepared to hold on to those as long as I have to hold on to .mobi. I have great keywords. Big deal!

And there are so many obstacles now after that. Consumer acceptance is always the key to any success. Beta was better. Did not matter. Ask Sony. So these obstacles and facts can even contradict each other. And my main point is the path forward is not straight it is splintered and the pitfalls immense. And as we have seen and as I have said for over a year now, one bad deed with one spills over to all. Anyone doubt that one now?? We have just seen the beginning of this show and the abuses. I am sure a site will pop up that will chronicle all the abuses that are taking place. I have already lost count. It WILL get MUCH worse.

I always started with my parents. They were my test cases throughout most of my life. They represented Mid-America and how the majority would react to any given new thing. Their input was more valuable than anyone else. So I do miss that part of my equation.

You can see once you talk about gTLD's one thing leads to another and the whole thing just has not been well thought out and with 1200 MORE to go, the ABUSE and the HYPE has not even started. I have written over a dozen posts just in regards to the horse race and how important and how hard it will be to pick the winners at THIS stage. And what happens to these "Weak" extensions when the strong ones like .web come to life?

We are an intelligent group and we get to ask tough questions and if folks don't like it because they have no answers, that is their choice. I say the numbers are pathetic. Let me define it with this. The day .Web comes to market (and I am not touting .web, but it is just the Odds on Favorite) is the day you will see pathetic defined.  That is an extension we will be counting by the millions and they will LIKELY have more registrations in the first few HOURS than all the gTLD's in the first few MONTHS. Just a FACT waiting to be BORN. Can't see it from here?? Really?? But you can see the value of gTLD's in 10-20 years?? Sorry, that dog won't hunt with me. Don't talk about 10-20 years when some folks doing the talking can't see 10-20 hours, days, weeks or months in front of them.

Is there money to be made in the new gTLD's by domain investors? YES.  But Registry's making money on YOU have nothing to do with your gamble/investment. Chances are more money will be lost 100 times over than made. We can only predict and see how things unfold. But ignoring and not examining all sides of an issue because of peer pressure...........really? Investors NEED to be skeptical regardless of the WANTS and DESIRES of others.

As I said yesterday and will repeat often: "NO DOMAIN INVESTOR has ANY OBLIGATION to support ANY new gTLD whatsoever, so don't buy into that nonsense. On the other hand the gTLD's have an obligation to treat domain investors a lot better than they have.  They need us not the other way around.

We had a superhighway come to be in the early 1990's. It was well thought out and had already been around for a very long time for military use. It had to work right. They built a super-duper worldwide interstate roadway system that changed the world. Now we have over a thousand interstates coming out and many have no real destination, direction or even a plan. If you go down one of those, you are GUARANTEED to run out of gas and you will have no money left to buy anymore. So as long as you are prepared and can afford to lose 100% or more of your investment, you are fine and good to go. But picking the winners is still the single biggest hurdle and only 10% of the extensions are now out. Multiply all the nonsense we have seen by 10 fold and you will see this will not be an easy road. A road that can only get harder to navigate and there are consequences most would just like to ignore and not talk about. Sorry, as investors we DO get to talk about it and your job is to address those concerns if you can.  And if you can't, just get out-of-the-way.

All that said, I will be looking and searching for successes and when I find one, I may place a bet or two. Time tells all and the shakeout we will see is absolutely, 1000% forseeable.  Maybe waiting until the dust settles is not the worst strategy as you will avoid being sucked in by the noise and hype. That way you get to sit back and enjoy the show. I DO NOT see gtld's as a threat. I have seen them as an opportunity from the get go. Brings a lot of eye balls our way. But on the way to opportunity, there is going to be a lots of events. Hype, noise, crashes, clusterf*cks and a lot of dead horses and it will eventually be known as SURVIVOR! Popcorn anyone?

And there is a flaw in this Rick Schwartz equation in this case. There seems to be no end to the pitfalls, obstacles and the dividing lines that are coming. Lots of folks entering the crossfire. Welcome to my world fellas.......better have a thick skin.

Rick Schwartz