Here’s a question that has an answer that changes over time – what % of your profit do you put back into your portfolio?

Of course, I can’t ask a question without answering it myself, because honestly, who does that?

So here’s my answer.

Years ago I put ~80% of my profit back into new acquisitions. Over the last few years that has gone to a bit south of 50%.

Why?

Damn, why did you put me on the spot?

That’s fine. Here’s why – I continue to spend five figures a year on domains names, but not six figures. So for me, I’m not looking for a six or seven figure payday any more. Instead, I’m looking for a specific ROI on the domains that I buy, which for me means 10x or more.

So…that means turning town my fair share of inbound offers, waiting for the right buyer. Since I don’t depend on domain sales for my primary income, I can wait, and wait, and wait.

I’ve learned that .COM is the only thing I can depend on for repeat sales, so I tend to keep my focus there. Enough about me, let’s get back to the title of this post – what % of your profit should go back into your portfolio.

First – I don’t think there’s one right answer to this questions, so when you comment – go a step deeper and tell us why you gave the answer that you did.

Second – how did I end u[ at 50%? Well, after sticking at 80% for quite a while I realized that I should diversify more between other investments opportunities which for me means one of three things – stocks, startups, crypto. Lately I’ve been biasing towards stocks, but I’m pretty happy with what turned into a meaningful crypto portfolio.

So now it’s time for me to pass the mic, you’ve heard enough from me. So I want to hear from you – what % of the profits you get from domain sales do you put back into your portfolio?

Now it’s your turn, I want to hear from you. Comment and let your voice be heard!

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facepalm

Everyone once and a while I come across an article about domains that just really misses the mark. As many of you know, I’m a positive guy so don’t like to put down other people or articles but in some cases (like this one) I do feel like I need to raise my hand and say – “sorry, this just isn’t true”

The article, published on the Media Temple blog is titled “Advice about buying domains” and starts with this line:

Here’s my advice on buying domains for your business or project:Just buy whatever.

Source – Media Temple Blog

First, uh – your domain name matters a lot in 2019. Sure, in 1995 I agree, you could just buy whatever, your domain didn’t matter too much but in 2019 your domain name is more important than it has ever been. If you “just buy whatever” you’ll likely regret it later down the road and spend a small fortune fixing your mistake.

Next the article goes on to say:

Let’s say you wanted to sell Circus Tickets in Gainsville, but you found that “gainsvillecircustickets.com” was taken, and there was some placeholder website there, trying to sell it to you for $250. Should you buy it? Heck no, I say. Buy “gainsville-circus-tickets.com” instead and pay far less money.

Source – Media Temple Blog

Huh? So $250 is too much to spend on a domain name? Not sure I even have to add any comments here, this is just plain wrong. Plenty of companies spend $25,000 or $250,000 on a domain name and I’m yet to hear about a company that regretted making that move.

You’re welcome to go on and continue reading the article for yourself, honestly there’s no advice in here that I think any domain name or branding expert would agree with. Instead, it just makes it sounds like nobody cares about domains and your budget should be $10 – $20.

It goes without saying that you shouldn’t believe everything you read, and in this case, you really shouldn’t!

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Last week I got an email from a new domain investor. He had started out the same way most of us do – hand-registering a bunch of domain names and assuming they’re all worth thousands or tens of thousands of dollars.

A year has passed and not a single one has sold. What happened here?

In following-up with this new investor I let them know, “you’re not alone, this is how most people start.” Then I moved onto the painful part – “that being said, you’re probably going to want to drop all of these and start fresh.”

Of course there are plenty of ways to try to move a list of random, hand-registered domains, but in practice I’ve found this is rarely worth the time. It’s healthier for you, your bank account, and your domain “investments” if you’re realistic about the fact that you just bought a bunch of junk.

At this stage there are two moves you can make:

  1. Ignore the facts and just “assume” that you’re a genius and all the domains you thought of, that nobody else ever registered after all these years, are incredibly valuable. In which case you move is to hang onto these domains, keep renewing them, and insist that some day they’ll sell and it’s worth the holding cost.
  2. Drop your portfolio and start fresh.

I recommend option #2. There’s always a pretty easy formula you can follow to re-start the right way. Add up the total cost of all your renewals, in the case of this person, that number was around $700.

Take that money and put it into a handful of expired domain names. While you won’t be building your portfolio at a cost of $10/domain, you now have a much better chance of building a portfolio with some domains that actually turn out to be pretty good investments.

In the case of someone like this with $700, I recommended they buy two or three domains, all two-word .COMs. A two-word .COM that you buy for $200 very well could be worth $2,000, or even $3,000 or more. Don’t get too excited, you’re probably not going to sell it for $10,000 – sure it could happen, but it’s very unlikely.

When you’re starting out, shoot for a 3x – 5x ROI to get a few sales under your belt. The lower the price, the bigger the market of available buyers is. So it will be a lot easier to sell that domain you just bought for $200 for $600 that it will be for $2,000. Make sense?

As for how to continue to build and grow your business, there are a lot of resources to help you out with that. Two that I highly recommend are DNAcademy and DomainSherpa, if you start to plug-into both of those, moving forward I think you’ll find yourself going in a much better direction.

There are so many other people out there like this blog reader of mine. You’re all in the same boat, and it’s a boat most of us have been in as well. The question is, can you be honest with yourself and have the cut your losses and start fresh?

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It has been a busy year for Google as a number of new updates have been made to their search algorithm. The most recent is an interesting one and something that I wasn’t aware was an issue until now.

Apparently Google has received complaints of search results containing too many listings from the same domain name. In response, the search giant is now limiting the number of listings from one domain in a given search to two.

Now this isn’t a rule that will apply across-the-board, but it will be enforced in most cases. Here’s the fully scoop:

“In short – Google said for most queries, they will begin only showing up to two listings per domain in the top search results. This does not mean Google will only show two listings from the domain for all search results pages but rather for queries they think it makes sense to show more diversity from different domains for a query. Branded queries may show more than two, and you get the point”

(Source – SEORoundtable.com)

I was trying to think about whether I think this is a good move or a bad move and I’m not sure I really have a stance at the moment. At the end of the day I can understand why they’re doing it, and for the most part, it likely won’t impact me or any of you.

This weekend I’m going to try to search around to see if I can find instances of search queries that are impacted by this, off the top of my head I can’t think of any time where the full page of search results is dominated by one domain…of course with the exception of branded search which it sounds like will be untouched.

What do you think? Is Google’s most recent search engine update a big deal and I’m missing the boat here or is this a relatively minor updated that we probably won’t notice?

As usual, I want to hear from you – comment and let your voice be heard!

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I feel like a broken record every time I say it, but just in case you’re new here, I’ll say it again – I’m a big fan of two-word .COMs. Of course, I know I’m not alone here and that point is being made loud and clear over at Go Daddy Auctions right now with the bidding activity on BlueDot.com.

This is definitely the kind of two-word .COM that I would invest in…except it’s out of the range that I usually buy names like this in. While I do think this name is definitely worth over $10,000 – at this price the ROI an investor is likely to see does shrink quite a bit.

Personally, this is a domain I’d try to get for somewhere in the $1,000 – $2,000 range and then sell for $15k – $20k. Of course there are plenty of other people out there who would pay double or triple what I would and try to sell for a lot more, and that’s the beauty of domains, there are so many different strategies.

My guess is, at this price point there’s a good chance an end-user is in this auction, someone who wants to buy the domain and start using it for their own business vs. reselling it. Just a hunch and we won’t know for sure until the auction ends and we see what happens.

As for what the domain is worth, I actually think Go Daddy’s estimated value is pretty spot on here. Like I said, I’d shoot for selling it in the $15k – $20k range myself so $18,201 feels pretty darn realistic to me.

What do you think? I want to hear from you, comment and let your voice be heard!

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Hello, happy Wednesday, and welcome to your weekly domain investing news highlights. I’ve been testing different days to run this series and have had a few suggestions that Wednesday might be a good day to do it. If you’d rather see it at the beginning, or end of the week, just let me know.

If you haven’t read one of my news highlights posts before, here’s a quick primer. Every week I go through the domain investing blogosphere and pick articles that I think are relevant and important. While I encourage you to read Domaining.com every day if you really want to stay in the loop, my weekly post can help you get caught up.

With that, let’s get to the good stuff. Here are the stories from around the domain investing world that caught my eye. Enjoy!

  • Free.Games Changes Hands for Big Bucks in the Year’s Biggest Non .Com Sale to Date (read more on DNJournal.com)
  • .icu gets China nod as it tops 900,000 regs (read more on DomainIncite.com)
  • $2.5M bid on Culture.com turned out to be accidental (read more on MorganLinton.com)
  • A few details on the $335,000 Free.Games sale (read more on OnlineDomain.com)
  • Sedo weekly sales led by RPO.com (read more on TheDomains.com)
  • My Experience with Uniregistry’s Domain Liquidity (read more on DomainInvesting.com)

As always, if there are any stories you think I missed that should have been included in this week’s list – feel free to post them in the comment section below. Of course, if you want to comment on any of the stories above, be my guest as well!

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News has rippled through the domain name world about a change of ownership for .IO. I wrote about this last week when I covered a critical vote that went massively in favor of the UK losing control of .IO.

Since then, I’ve read a lot of different stories, many painting a picture of doom and gloom for .IO and hypothesizing that the domain extension could just go away.

Sorry but while this might make for a catchy headline…it’s just not realistic. It’s actually incredibly simple IMO so it won’t take me too long to break this down. Here’s the scoop.

.IO has become very popular in the startup world, there are companies that have received tens of millions of dollars in funding that use .IO as their primary domain. People are continuing to buy and brand on .IO domains, and whether you love them or hate them, it doesn’t change the fact that there are a lot of .IO names registered and in-use.

With both a higher registration cost and renewal price than .COM, .IO also brings in a pretty penny. So why do you think if the UK were to lose control of the extension, that the new owner wouldn’t want all the money that is pouring in? Honestly, that would be ridiculous.

Of course, this doesn’t mean that .IO is in the clear completely. Things like registration and renewal costs could change, and yes – there could be some other bumps along the road that we can’t see yet. All that being said, the sky is not falling and I don’t think you need to worry about .IO going away.

What do you think? Could you see a scenario where the new owner of .IO decides to just say no to all that revenue…because I sure don’t! I want to hear from you, comment and let your voice be heard.

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Million dollar domains

No matter what industry you’re in, it can be easy to forget that people who aren’t in the same industry as you, don’t know some of the foundational things that you know. This is especially true in the domain name world where most people don’t even know there’s an industry with conferences around the world that continues to grow and thrive long after the so-called “.COM bust in the early 2000’s.”

One of the things that I always find interesting is the disconnect many people have with the value of premium one-word .COMs. Just to be clear about what I’m talking about, I mean domains like California.com which sold for $3M earlier this year or Ice.com which sold for $3.5M lasts year.

At the same time, six-figure sales happen weekly, and in some weeks they happen multiple times or even daily. Heck, a few days ago Free.games, a non .COM in a domain extension that most people have ever heard of (.GAMES) sold for $335,000.

While you and I see six and seven figure sales happen all the time, most people don’t, and they don’t even believe it’s happening. If you’ve ever had the chance to field inbounds on a seven figure domain, you’ll really know what I’m talking about. Monster domains, that you find yourself turning down $500,000 offers on also get $500 and $1,000 offers from buyers that honestly think that $1,000 will seal the deal.

Trying to explain to someone with an $1,000 budget that the domain they are interested in buying is worth seven figures, and that you turned down a half a million dollar offer yesterday is hard for them to understand. Which is why, in most cases – domain owners just ignore these offers.

The challenge is, when a domain sell for six and seven figures, it rarely gets covered in the mainstream media. Yes – all the blogs you and I know and love cover it…but let’s be honest, your average person on the street has neve read a domain blog, doesn’t realize there is such thing as a “domain industry” and therefore has no idea.

This is what makes domain investing so different from anything else that it gets compared to. People compare domain investing to real estate investing or stock investing…but it’s easy to forget that there are a ton of articles about real estate and stock investing, in just about every broad-based publication in the world, every single day.

No real estate investor would put an $1,000 offer on a three bedroom home in San Francisco, but a domain that’s worth just as much, sure they’ll do it, because they have no idea what domains actually sell for.

So what can we do as an industry? At the end of the day, I’m personally less concerned with the awareness problem and more interested in how we, as investors, respond to offers. There are really two paths you can take when someone offers you $1,000 on a $1M domain.

You can choose to ignore the offer or send a friendly email back saying, sorry but I’m looking for $1M+ for this name so I don’t think it’s a fit. Or, you can send a nasty email back to the person telling them how insulting their offer is and chastising them for not knowing how much domains cost.

I encourage every domain investor to take the high road and just realize the simple fact that most people have absolutely no idea that domain names sell for six and seven figures all the time…or even ever. So be nice, you never know what happens when you leave a door open.

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BrandBucket, one of the go-to domain name marketplaces for startups published their April sales report last week and, as usual, there were some pretty interesting insights in it. Since insights sounds boring, I decided to bring back a word, that I don’t think is a real word, but should be, so I’m using it – factoid.

TLDInvestors.com did a nice rundown of all the data in sales report so if you want to do a deeper dive I recommend giving that post a read.

This time around BrandBucket added a new piece of data to their report – how long it takes a domain name to sell on average through the marketplace, and that’s where I’ll kick off my three interesting factoids.

  1. On average it takes two years and two months for a domain to sell through BrandBucket – I think this is an incredibly interesting data point and hopefully it also gives you an indication of how long, realistically, you can expect to hold a domain before selling it. That being said, BrandBucket is out there actively marketing their marketplaces and getting regular eyeballs on the domains they have listed for sale…so for an individual domain investors just fielding inbounds I’d say the average time to sell a domain is probably quite a bit longer. This also shows why when anyone talks to me about “quick flips” I make sure to tell them that is not the norm.
  2. Two-word .COMs steal the show once again – as has been the case all year, two-word .COMs are the most popular amongst startups. No surprises there, it’s the reason why this is the main kind of domain I buy, and also why I run a startup on a two-word .COM, they are awesome in so many ways.
  3. Buyers are opting for keywords vs. invented – almost three quarters of the domains sold were keyword names vs. invented names. This also isn’t a huge surprise, when it comes to branding I think startups definitely see the advantage in using words people already know. Learning and remembering an invented word is more work for the customer which means it can be harder to remember and then find your brand, if they remember it!

Like I said above, there’s a lot more data in the report and TLDInvestors.com has some great coverage of it so read this post of theirs if you really want to do a deep dive into the numbers.

Thanks to BrandBucket for sharing this data – you rock!

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I was talking with a new domain investor this week who asked me the question of all questions, “how many domains should I expect to sell this year?” which of course was followed by, “how much money am I really going to make doing this?”

Whenever I hear this question my typical answer is, “well – it’s impossible to give any kind of realistic answer. The domain name world works in mysterious ways and you could have a great year where names sell all the time and for more than you expected, followed by a down year where nothing sells.”

I tried that answer but he pushed me to give him something. He said, “can you give me a way to just get a rough estimate? There has to be some general assumptions out there right?”

So I thought I’d take a stab at it, and since I don’t have a crystal ball, the best I could do is buy an image of a crystal ball and put a cartoon of my face in it. My point is, this is not an exact science, or even a science at all, but it is a way to get a rough estimate, which I guess is better than having no idea…or worse, setting unrealistically high expectations which I think way too many investors end up setting.

My estimation magic here is based on two assumptions that we’ll need to just roll with in order to move forward.

Assumption #1: the average domain investor sells 1% of their domains a year (or less, but let’s try to be optimistic here)

Assumption #2: you’re only going to be able to sell your .COMs

sorry but there’s just not enough proven repeatability with any other extension so you’ll have to consider all those non .COMs as gravy (and as MUCH riskier investments)

So here’s what you can do to get a rough estimate of how many domains you’re going to sell this year. Take the number of .COM domains you have in your portfolio and multiply it by 0.01.

If you own 100 .COM domains, selling 1 domain per year should be your expectation. Own 500, expect to sell five. Pretty simple right?

Well of course it’s not that simple. The reality is you could sell less because what you’re not accounting for is the number of domains in your portfolio that are junk. Since it’s hard for you to consider any of your precious babies as ugly, you might think none of your domains are junk, but trust me, some are.

Here’s what I’m going to use to filter, some of you are going to like this, others are going to hate it, but let’s give it a go. Take all of your .COM domains and plug them into Estibot, we’re not going to use this to get estimated values, instead we’re going to use it as a binary junk detection machine.

Consider any domains in your portfolio that Estibot values less than $20 as junk and subtract them from the number of .COM domains in your portfolio. Now take this new number and multiply it by 0.01, and that’s probably a more realistic estimate of how many domains you’re going to sell.

Well kinda…but of course there’s one more wrinkle.

I think this 1% assumption really applies to people who are passively waiting for people to make offers on their domains. If you actively try to sell your domains, I do think you’ll see more sales velocity. DNAcademy has a pretty cool new program in beta specifically focused on outbound sales that can give you a bit of motivation if you don’t know where to start with outbound.

I’m not sure exactly how much to increase the sales velocity if you’re doing outbound but to make the math easy, let’s just say it doubles the amount of sales you make. So if you’re doing outbound, take the total number of .COM domains you have, minus the junk names you filtered out using Estibot, and multiple by 0.02.

There’s your rough estimate…and yes – it’s probably a lower number than you thought, but there’s nothing like a good reality check every now and then. I was joking when I called this “The Linton Equation” in my post title but if you want to call it that, go for it.

As for the second part of my friend’s question – how do you know how much your domains will sell for. The best things I’ve seen in this space is what Andrew Rosner put together and has coined “The Rosner Equation” you can learn more about that here. Just note, this equation is for valuing premium generic domains…and there’s no chance you have a portfolio full of premium generic domains, so be honest with yourself when it comes to applying this to your own names.

Now I’m 99.9% sure that there will be people who disagree with my approach here in one way or another…and that’s okay because in all honesty this isn’t something that I feel is a hard and fast rule or a scientifically accurate formula. Instead, it’s my best attempt at helping someone estimate how many domains they’re going to sell, which like I said in the beginning, really is an impossible answer to provide.

That being said, I’m very interested to hear what you think. Is this estimation technique useful at all? Does it estimate too high? Too low? Is it just ridiculous?

I want to hear from you, comment and let your voice be heard!

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