The other day I wrote a post about the characteristics of successful domain investors. I received a little more feedback than I expected. Most positive, some responding with domain investing is a bunch of snake oil. One such person was named Emma. Emma wrote the following
This is all crap. My advice to domainers is: if you have a business concept/idea buy a domain name and develop it. If your concept is good you will make money. We have seen facebook, instagram, pinterest, godaddy, linkedin, bebo, techcrunch and thousands of other websites making millions/billions yearly, and these websites sit on web addresses that are not even premiums, not even salable. These domains would not sell in their life time if they were to sell them undeveloped, no, even for $1. If you don’t have a business concept/idea and you don’t have a premium name that you are willing to sell 15 to 20 times less than the estimated/appraised price then please quit this business because you will waste your life. You will die without selling a single domain name in your life time. I know many domainers plan on leaving their domain names to their children, but I tell you this: your children also may not sell any domain name in their life time. Developing a domain name and make money is easier than selling domain names. Remember: Frank Shilling and Rick Scwartz started domaining since day 1 of this business but they don’t make billions a year, not even 1 million a year, and see facebook, godaddy, linkedin, bebo, alibaba,paypal, youtube, google, instagram, pinterest, tecgcrunch, diapers.com, how much are they making? millions and billions. Develop, develop, develop, develop, develop and don’t let Frank Shilling and Rick Scwartz luck/lottery of 90s confuse you. I or you may not have been around when thing started. Don’t read their posts because you are not as them. They count on their premium domains names to make money, by selling them, and you have none, so do what people in your situation would do: develop.
Emma needs to have a little lesson on fruit because she is comparing apples and oranges. I am going to use the old real estate analogy for the millionth time because domains are the real estate of the Internet. Emma is basically saying that land owners have no value until a builder or developer comes along and puts a building on the site. My undeveloped 2 acre property on the coast of Laguna Beach is worthless because it has no home or business built. She is saying that the builders create the worth. I would agree with the statement that the real money is made building a business but she is dead wrong in saying that owning domains will yield nothing.
Yes domains are sold to those that need them for a business or to others that speculate. The speculator probably will sell it to another speculator. An action that most likely will be repeated until a final end user buys it. But isn’t land bought and sold every day using the same principle? Land doesn’t have much more usability than a domain. You could grow crops on it but the return of crops to cost is minimal. It’s probably closer to parking yields than most realize. I can buy farmland for $10K an acre and the cash rent is $300 a year. A 3% yield. I get 3% out of most of my domains parking even in today’s bad market.
Yes, Pinterest, Twitter and all the other billion dollar companies are built on hand registered domains. I have always agreed that a company does not need a category killer domain. That is what branding is all about. But that does not mean that ALL domains have no value. Just because you can succeed without a killer domain doesn’t mean that one is not useful or advantageous to a company that chooses to use a name that is a common term. That’s throwing the baby out with the bath water. Building a company and selling domains are completely different business models. They only intersect when that company needs a piece of land to park their business. In many cases what domain they put that company on is not important. The product or service is so superior that people will find it regardless of name or url. There is no need to invest in a name that won’t leak traffic or make it easier for people to find. They are not worried about Google ranking. But many are. And they need quality domains.
So Emma, I’m sorry, but you don’t understand this business. You don’t understand the value of a domain. You don’t realize that like land, it is a first come, first serve system. Those that got in early got things at a cheaper price. Land is the same system. I do not get pissed at the guy that bought land cheap in 1950 and lets it sit with no buildings. I do not call him and ask him if he wants to sell it for the 1950 price because he has not developed it. I understand. And last but not least, you know nothing about Frank Schilling and Rick Schwartz. They both make over a million a year. Frank probably makes that from his share of Internet Traffic parking alone. That is NEW money, that is not from selling any domains or assets. That is generated from the value of a domain.
There are a lot of Emmas in this world. People that have termed the name squatters which is also a term for people that live on land they don’t own yet we own our domains. We paid for them. What we paid is of no concern. There is nothing secret about the registration and transfer of domains and how it works. Ted Turner owns millions of acres of which most he lets sit with no improvement. That term would never to be used to describe Turner yet he has done what we do. Buy an asset that he now can do whatever he wants. I guess Emma thinks he should put a house or business on every acre he owns. Because that’s where the money is.