Last Part, Part 3: I Asked 7, now 9 Top Domain Investors What They See for 2016: Giuseppe Graziano and Myself

This is Part 3  in our series of asking a few questions to some of my domain investing friends.  Today we have Giuseppe Graziano answering and because a few people asked me to answer my own questions I threw those on as well.  My friends just happen to be some of the best domain investors in our industry.  Many of the biggest and most successful domain investors are behind the scenes.  Those who actively participate know who they are. They don’t blog, don’t comment on the blogs, and generally conduct their business in private.  But they have an understanding of the current market  as anyone you could talk to. I am fortunate to get to talk to these guys almost every day so I thought I would have them share some things with our readers. I asked them all the same questions.  Some chose to skip some questions as to not give away their secrets but I think you’ll find each person’s answer interesting and a good peek into what they see.  And before you get to the questions, a little background on the fun question at the end.  We had a soccer tournament at NamesCon this year and I brought Josh E aka Ike who writes for this blog.  He played goalie despite the fact he had never played in his life and yet he played incredibly well.  Nobody knew who he was when we started but they all knew who he was when we finished.  Also, I didn’t include photos of the guys.  You can Google them, and I was going to steal the pictures from Google or DnJournal anyway.  Now on to the questions.

 

Giuseppe Graziano

 is the founder and CEO of GGRG.com, a domain brokerage and consulting company focused exclusively on short, liquid .com domains. Giuseppe has lived in 5 countries across 3 continents, speaks 5 languages and holds a Master Degree in International Management from the Fudan University in Shanghai.

 

1. Where do you see the domain market at the end of 2016?  Do you see the domain market moving higher, staying the same, or just stabilizing.  Why? How about the Chinese market specifically.  Shorts, numerics, etc

I think there is a high chance of a correction in the market at the end of 2016, specifically between October and November. There has been a spike of 1M+ new .com registrations last November (above the 3 year averages) which was caused by the 6N and 5L buyout. Some investors registered thousands of domains and I wonder what is going to happen around October when owners will be forced to make a decision between paying 5 digits in renewal fees or trying to sell before the renewals. If supply outweighs demand, price drops – and the increase in supply can affect the demand for other lower end domains (5N, 4L, .net). I think Sahar Sarid said it well in this post reported by DNW: http://domainnamewire.com/2015/11/10/when-the-bubble-bursts/

Most importantly, each one of the non-industry friends whose opinion I respect, foresees a new global recession due soon, which will be probably caused by the Chinese economy slowing down. All my friends who live in China tell me how much business is lagging and how noticeable that is if you work there. If the global economy corrects as expected, just like in 2000 and 2008, the domain market is also likely to correct. The advice I am giving to friends & clients is that 2016 is a good year to stay liquid and take advantage of buying opportunities that will become available in 2017.

1. How big of an impact do you think the Chinese New Year and do you plan any of your activities (buying or selling) around it.

Many of us have seen quite a large drop in the bids from Chinese investors for the top end of domains like LL, NN and NNN starting mid December. Despite this, we brokered already over $1M in transactions in 2016 so the market is definitely still active. Chinese investors says that the drop was due to the Chinese traditions around Chinese New Year. I wrote an extensive article about how you can take advantage of this: http://ggrg.com/how-is-chinese-new-year-affecting-you/  

1. If a new investor comes in right now and has $5K.  Were would you tell them to put that money to get the best Return on Investment 12 months from now.

It depends a lot on whether those $5k are play money that he/she can afford to lose. If yes, I’d go for something highly speculative like registering 5L.com. Otherwise, LLLL .com with vowels are a solid investment and way under priced if we consider the ratio between their current floor price (around $300) and the floor price of “chips” ($2,100).

1. What about you or your company gives you an edge in domain investing vs others in the industry?

That is not for me to say, but one thing I am proud of is that we focus exclusively on liquid domains and we neglect everything else. And we are based in Lisbon 🙂

1.   Have you feelings changed about gTLDs in the last year?  If so, in what ways?

Not really. I think you resumed the topic perfectly in this article here: https://dsad.com/youre-on-the-wrong-side-of-the-profitability-business-model/

1. If I told you that you HAD to invest in 2 new TLDs that aren’t XYZ or .Top, which two would you choose.

Based on the trading values, I would go for .wang and .club. Based on my personal preference (I love Japan), I would go for .tokyo and .ninja. Just for kicks.

1. What would be your guess for the next big portfolio to be purchased by a large company

I think the pattern we have seen so far is acquisitions of portfolios of domains that were individually priced much above market value. If you were to inquire on a domain from Marchex or Mike, the ask was often between 5 to 6 digits. Smart companies like GoDaddy understood that it is difficult to generate trust about domains in the general public when people find it so hard to buy a domain name. I think one of the goals behind the GoDaddy’s acquisitions (besides the profitability) is to work towards making the secondary market more accessible and efficient. “End users” are not stupid and everyone can just google what is the value of a specific domain. The information available on the blogs and with tools like chaomi.cc is quickly expanding and covering most “trade secrets”. While it’s true that an inefficient market allowed large margins for individual investors, I think the industry as a whole would benefit both in terms of credibility, frequency and volume of sales if the difference between “end user price” and “wholesale price” is erased. To get back to your question, maybe GoDaddy will be looking to buy Sahar’s portfolios? 🙂

1. What will be your big focus in 2016 and why?

Trying to provide the most unfiltered perspective for the market of liquid .com domains through my weekly newsletter and articles. I would like to help people to cut through the noise and understand what is a good investment and what is just marketing fluff.   *editors note, I highly recommend 

1. What kind is your every day driving car?

I actually don’t own a car. I walk every day to the office.  

1. If I had you shoot 10 free throws (after a little warm up) how many would you make?  For you football/soccer guys, how many penalty shots would you make on Josh out of 10?

8

 

 

And finally, little ‘ole me.  Most of you know my opinions since I share them every day so I’ll try and add a little here.

1. Where do you see the domain market at the end of 2016?  Do you see the domain market moving higher, staying the same, or just stabilizing.  Why? How about the Chinese market specifically.  Shorts, numerics, etc

I see it much higher in the “main” categories.  LLL.com, 5N, 6N, LLLL.coms. Renewal in the fall is going to hurt the outlying tlds that are going for $100 and under.  There will be a lot of people trying to sell just enough to pay renewals.  If the market can’t take in all those sales then we continue the move.  If not, there will be a time when the Bulls will be screaming at the top of their lungs that the sky is falling.  And it will present a great opportunity for those that know what is good and what is junk to go through the pile and get some great values. But like many instances in the past, some categories will slow down for months and regain,  and others will fall off the radar and everyone will eat their reg fee investments. Millions of domains have been purchased at $1.88 or discounted and most will drop.  It’s a numbers game that will continue on for years.  For many it has worked extremely well so they have doubled down.  There will be a fringe that doesn’t work, but we haven’t gotten there.  We will.  The point of people losing money is coming.  Right now you haven’t been able to lose because everything is going up.  There will be losers this fall.  But 5N and 6N and LLLL.coms won’t be the losers. 

There is only so much money and all the speculation in shorts and numerics has taken away from the liquidity of two word and even some one word dot coms.  I don’t think they go down in value but when investors see better ROI in shorts they don’t buy as many of the other names.  I see big value in those.  BUT I see people overpaying for one word dot coms because they’re flush with LLL.com and other fast rising domain category sales.  They’re taking all that money back into names that got them there. And the cycle continues.  I see that continuing.

 

1. How big of an impact do you think the Chinese New Year and do you plan any of your activities (buying or selling) around it.

I waited 6 weeks for this week.  I sold all fall just to put money back in this week. We’ll see if it pays off. 

1. If a new investor comes in right now and has $5K.  Were would you tell them to put that money to get the best Return on Investment 12 months from now.

When I wrote this I put best ROI.  I actually wouldn’t steer a new investor into a high risk category. If risk wasn’t a factor, I would tell them to buy a 6N.com with no 4 but a zero for the best return.  For the safest return with possible growth I would tell them to buy good western letter 4L.com with an A in it.  They are a good deal right now but they have become much less of a deal over the last few weeks.  People were ignoring all vowels and that was a mistake.  

1. What about you or your company gives you an edge in domain investing vs others in the industry?

My edge is a follow the market as close as anyone in the industry on the daily sales and auctions.  I “watch the money” .  I am also fortunate to be able to watch the behind the curtain money.  I am fortunate to be able to bounce ideas and strategies off of people that spend hundreds of thousands and millions at a time.  Information is king and I get a lot of it. 

1.   Have you feelings changed about gTLDs in the last year?  If so, in what ways?

It hasn’t.  I have always thought in due time they will be used and many will be very valuable. But until that time comes I plan on making a lot of money in the straight dot com.  Then I can afford to buy in a little late.  But I am looking at buying a few of the best, “makes sense” new Gs.  Right now the only one I own that aren’t numbers is Garden.Ninja 

1. If I told you that you HAD to invest in 2 new TLDs that aren’t XYZ or .Top, which two would you choose.

You know I am going to say .WS although its not new.  I would also pick .web only because so many people have talked about being excited about it.  And I like what others are excited about. I want to buy and sell where there is a market and it sounds like there will be a market there.  That being said, I think dot WS is shorter, means exactly the same thing as .web, and better for the Chinese.   But I am biased to keep reading. 

1. What would be your guess for the next big portfolio to be purchased by a large company

I had Sahar on my mind when I wrote the question.  And if it sells he WILL fly me for a free week of paddle boarding all at his expense.  I can’t wait. 

1. What will be your big focus in 2016 and why?

Making money, building a good one word, two word dot com portfolio.  Continue building entities that will bring in regular income.  Doing more of these types of interviews. 

1. What kind is your every day driving car?

Ford Explorer Sport. I live a mile from work so I don’t drive a ton except to get stuff for the nursery or food.  

1. If I had you shoot 10 free throws (after a little warm up) how many would you make?  For you football/soccer guys, how many penalty shots would you make on Josh out of 10?

I’m good for 6 free throws easy after a few warmups.   I’ve always been good at penalty shots so I’ll say 7.  But Josh is smart. After 7 he will figure out to take a step up and cut off my angle which is cheating but since we have no referee its OK