Why I Am Pulling Out of an Investment in Alternate Tlds

I’m not sure it was really going to ever happen but I was part of a group that was putting together investors for a new alternative tld.  I won’t say exactly which ending we had our eye on but I can tell you this, I now have no interest in putting my hard earned money into anything of the sorts. While I am sure there are people in this industry that are much more informed than I am regarding the application process, this was my thought process as it evolved during the idea phase of investing in a new tld.

Like all investments I make I asked a simple question.  “Could I get a better investment with my money elsewhere?”.  After a few months of meetings and gather details, I think I can name 100 other investments that had a better risk/return.  In my opinion putting the $300,000 into a top tier dot com would even be a better investment.  Notice how I say $300,000.

As the information for the process was introduced it became clear it was going to cost a lot more than $185K to get things rolling.  ICANN wants to make sure there are deep pockets involved and requires evidence of capital on top of the fee and that could run as high as $300K depending on the name.  Evidently they feel bad about taking money from those of average wealth because only the financially stable need apply (yes I know they have the poverty application scholarship or something along those lines) .  We also noticed another angle that could be played. The old “apply for a tld that a wealthy investor is going after and make them buy you out” angle.

In the guidelines they essentially tell two people going after the same tld to “work it out among yourselves” ie somebody is going to either out muscle the other with backing of a “community”  or out money them and buy them out.  It’s a hell of a gamble at $45K but if I had $45K to blow I see a few names where you could strong arm a few people or possibly do all the leg work and sell out early in the process.  The other angle is just putting in your $5000 application fee. It seems like they are going to take a limited amount of applications and then close her down for a few years.  It’s like getting an armband to come back and get early tickets.   The right to get in may have a lot of value here soon depending on how many people get the “armband”

Finally the real money seems to be managing and helping the application process.  One, its guaranteed.  Two, there is big money being invested here and it makes sense to spend a little more to make sure everything is done correctly.  ICANN doesn’t care about anyone but themselves and no doubt in my mind that they will turn someone down for some petty error in paperwork and keep their money.  It says they can so if the can, they will.  So people are wisely bucking up and legaling up to make sure that doesn’t happen.

My final realization was even after we’ve gone through all the paperwork and the long process we are now at square one.  We have a name and now we have to go out and spend to get customers.  How many of these specific names are we really going to sell?  They are all such niche names that I just don’t see tremendous wealth coming out of very many. Again, maybe I don’t have the foresight to see obvious opportunity in front of me.  It DID take me a while to see the value of generics.  I may have missed a golden opportunity but now I can guarantee I won’t lose a dime.

I am certainly not discouraging others to apply for names.  Without risk there is no reward.  For many it will be lucrative.  It’s just not a secure enough investment for me at this financial level.