2019 Recession

I was talking with someone earlier this week and they asked me a question that I haven’t thought about much – “What impact would a recession have on the domain name industry?”

I couldn’t answer the question so I told the person I would think about it and maybe write a post with my thoughts and pose the question to my readers as well…and yup, this is that post. So here’s what I’ve been thinking over the last few days.

A recession will impact the domain industry but in a somewhat counter-balanced way, i.e. in some ways it will help the industry, in other ways it will hurt it. Confused yet? Let me explain what I’m thinking a bit more.

One of the major things that happens during a recession is that people spend less money. So at first you might think, okay so budgets will drop for domain names then…yes and no. Domain names offer huge marketing benefits for B2C companies often saving them a small fortune in marketing costs. Here’s an example.

Suppose I run a company that sells gift baskets, and I currently spend $100,000/month on marketing running ads on places like Google, Facebook, and Instagram. I need to drive traffic to my website in order to make money so online marketing is a must. Now the recession hits and I need to cut my ad budget in half. Buying a domain name like GiftBaskets.com for say $400,000 or so could still provide me with a steady stream of traffic that would cost me 10x the price. I’ll still spend money on online advertising but only $200,000 a year.

In the scenario I outlined above my marketing budget drops from $1.2M a year to $600,000 a year, but because I bought a premium domain, I might actually get the same or more business than I would have spending twice as much. The next year, well I already paid for the domain so all the benefit of the domain I now get essentially for free, less the $10 renewal fee.

Of course, like most things in life there’s a big caveat here. Not all companies realize the impact a good domain name can have on their business – this is the counter-balance. While some companies will realize that domains can give them a huge edge, others won’t, and for them, a reduction in budget could mean holding off on buying that shiny new domain name.

One way I can see domain investors preparing for a recession is shifting focus away from higher-priced names and instead looking at domains that they could sell in the sub-$5,000 range and still take a nice healthy profit. For me, I’m personally going to focus almost exclusively on two-word .COMs in the $150 – $350 range for a while. Domains like these I could sell for $1,500 – $3,500 and lock in a 10x profit vs. buying in the $1,000+ range where I need to sell for $10,000 or more to maintain the same profit margin.

I’m also building up a larger cash position, so when I sell a domain, I’m putting less into new investments and keeping more money in my business bank account. I don’t have a mortgage or a car payment, no credit card debt or student loans, I live below my means so if and when a recession hits I’m not planning on making any major life changes. I think building up a larger cash position could be handy if/when a recession hits because if less domain investors are bidding on names, it could be a great time to buy, so if you have some extra cash you could actually get some great deals while everyone else is panicking…or at least it’s a thought.

There’s no right answer here, but there certainly are things all of us can do to prepare for what’s ahead. So now I’ll pass the mic to you, what do you think? What impact would a recession have on the domain industry and are you doing anything to prepare?

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Domain Investor Josh Reason recently ran a poll asking people – what is the most you’ve ever paid for a domain name? Here’s the results:

Domain Investor Poll

Since I voted I guess my vote won’t be anonymous but that’s okay. While I typically buy domains for under $1,000 I have paid more than $5,000 for domain names and probably will here or there in the future…but it’s not a regular thing for me.

Okay, back to the poll – 63% of people have paid less than $5,000 for a domain name, and as Josh pointed out, most people are looking to get five, six, and seven figures for their domains.

Domain Investor Expectations

As I mentioned yesterday, people are trying to sell .ETH domains for $1.8M that they paid way less than $5,000 for as we speak. While some domain investors are grounded in reality and sell domains for realistic prices (like Mark Levine) there are plenty of people out there complaining that none of their names ever sell, and while they might have decent names, they’re looking for way too much for them.

If you buy a domain for $500, sure, selling it for $1,500 or $3,500 could be very possible…but expecting to sell that $500 domain for $50,000 or $150,000 isn’t very realistic.

I’m glad Josh ran this poll, it was interesting to see the results. It also brings up an interesting question – what multiple your purchase price should you expect to get for a domain? I aim for 10x or more, so if I buy a domain for $250, I’m more than happy to sell it for $2,500.

Everyone has a different multiple in mind, what’s yours?

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The Ethereum name service has a pretty logical idea. Rather than sending and receiving money at long meaningless addresses like this:

they are promoting the .ETH domain extension. It’s a lot like the move from IP addresses to domain names. Just like domain names helped with adoption of the world wide web, they could now help with the adoption of more consumer use of the Ethereum blockchain.

Here’s the details:

Over the weekend, the Ethereum Name Service launched an auction for short .eth domain names on the OpenSea decentralized marketplace. All three to six-character-long domain names that were not among the 194 approved during the reservation period that closed in mid-August are now up for grabs, and can be bid upon using ETH cryptocurrency. 

The idea, if it catches on, is to help facilitate greater consumer adoption by enabling the use of easily recognizable names—such as “satoshi.eth” (currently going for 1,500 ETH at auction)—to receive tokens and perform transactions on the Ethereum blockchain.

(Source – Decrypt.co)

Of course, there’s really nothing stopping anyone from using any domain name in any extension from doing the same thing but .ETH certainly seems like the most logical choice. At the same time, the prices for these domains seem pretty steep – okay in some cases they’re absolutely ridiculous, like usfederalgovernment.eth which is priced at over $1.8M, or antifascistaction.eth…also priced over $1.8M.

While I’m guessing some of these names will sell, I think a lot of them are wildly overpriced. All that being said, I can see .ETH taking off, it does make sense – if I’m going to send money to someone having a word or even a string of easy to remember numbers is a heck of a lot easier than a crazy long string of letters and numbers.

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

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Cryptoexchange.org

I was bidding on some domains at Go Daddy auctions over the weekend and watching a number of different auctions at the same time. Since I focus on .COM I’m not bidding on .ORG much, but I decided to start watching the CryptoExchange.org auction out of curiosity a few days ago.

As I’ve mentioned in the past, people seem to be going gaga for crypto names and I was interested to see what this one would go for. My guess was it would sell for something in the $500 – $1,000 range…and boy was I wrong.

Earlier in the day the price was in the $400’s and then as the auction got closer to closing it shot up like a rocket ship, the last time I looked it was at $4,849 with three minutes to go which means it very likely sold for over $5,000.

While I get it “cryptoexchange” is a hot two-word combo right now, it makes less sense in .ORG and at $5k+ I have to imagine this is an end-user sale. I’ll be interested to see what happens with this name and if anyone knows what the final sale price was I’d be very interested to know that as well.

To me, it feels like this is a steep price to pay for this name in the .ORG flavor…now if it was a .COM this would be a great deal, even in .NET I might understand it a bit more, but as a .ORG this is just confusing to me. But that could just be me.

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

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Dangerous domain names

A couple of weeks ago I wrote an article about a study that Unit 42 did on newly registered domains. Yesterday I stumbled on another article about two more studies, also talking about newly registered domains, and like the title of the post says – with similar findings.

According to 2 reports separately from Farsight Security and Georgia Tech University, Newly Registered Domains pose danger to users, as these have far greater possibilities of being utilized for malware distribution and phishing operations.

(Source – SpamFigher.com)

The article goes on to do a deeper dive of the specific TLDs that seem to be used maliciously, and, well it really comes down to one domain extension…drumroll please – .TO:

But, in the case of malevolent NRDs, analysts observed that the percentage increased with many ccTLDs (country-code Top Level Domains). Malevolent NRDs, which were highest in number among various TLDs, had .to domain, accounting for 80 to 100 percent of the TLD behaving as malicious. The finding suggests that there is free/inexpensive registration for .to TLD, just as it has one not so stringent registration policy, while hides WHOIS registrant details so the general users can’t view it.

(Source – SpamFigher.com)

Given how many .TO domains are used for SPAM my guess is anyone trying to build a legitimate website on a .TO domain is going to have more SEO problems than most since Google probably knows the data presented in these reports as well. This likely also means that any email you send from a .TO domain will end up being marked as SPAM making .TO a pretty bad choice for branding no matter how you slice it.

I don’t think any startups have .TO high on their list and I know most domain investors wouldn’t touch it with a ten foot pole so I don’t think anyone reading this is going to be freaking out right now. Still, it’s good to know because now if you ever get an email from a .TO domain or get re-directed to a .TO website, you’re probably going to think twice.

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Domain Investing News

Hello, happy Friday, and welcome to my weekly Domain Investing news roundup. I know you’re all probably are itching to start the three day weekend so I’ll hold off from writing some long drawn out stream of conscious here. Let’s just get to the news so you can get to your well-deserved R&R. Enjoy!

GoDaddy launches updated Investor iOS app
(Read more on Domain Name Wire)

$450m Company Uses a .Club Domain Name
(Read more on DomainInvesting.com)

Booth report: Domains acquired and sold by the BQDN founder recently
(Read more on DomainGang)

Uniregistry weekly sales led by Skew.com
(Read more on TLDInvestors)

Sedo weekly sales led by AceTech.com
(Read more on TheDomains)

Skew.com Sends Uniregistry Straight to the Top of This Week’s Domain Sales Chart
(Read more on DNJournal)

Donuts will reduce prices to 1.1 million unregistered domains
(Read more on OnlineDomain)

Court rejects France’s appeal in France.com case
(Read more on Domain Name Wire)

These two ccTLDs drove two thirds of all domain growth in Q2
(Read more on DomainIncite)

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Domain Name Security

While I love a good user interface, great support, and a lot of other things that I think most reliable companies should have in general – when it comes to a domain registrar, security takes the cake as my #1 concern. Heck – what good is a beautiful UX if your domains get stolen?

When it comes to keeping your domains safe and secure at a registrar there are two key features that I think are an absolute must – Registry Lock and two-factor authentication.

A lot of people know about two-factor authentication, this means going beyond a simple password. Let’s be honest, passwords are stolen as databases full of passwords are hacked all the time, if you think a password is going to keep your account secure it’s time to wake up. Two-factor authentication adds a pretty serious layer of security to your account either by sending a text message or using a myriad of different apps like Google Authenticator, Authy, OneAuth, and the list goes on.

I won’t spend too much time talking about two-factor authentication because I’m pretty sure you all know what that is. What you might not know about is another security provision that is less common for domain registrars but equally important – Registry Lock. Here’s a high-level overview of what it is:

Domain name hijackings are happening more and more frequently. If hackers get access to your account where you manage your digital assets they can transfer or even delete the domain of your corporation, making your online identity disappear in a second. In addition, they could redirect your domain to a malicious website, tricking your customers into sharing sensitive information on what they believed to still be a legitimate website associated with your brand.

With Registry Lock in place, domain names cannot be deleted, transferred, or altered. Therefore, making such changes is impossible, as multiple parties must provide authorization in order to do so.

(Source – 101Domain)

The power of Registry Lock is that it actually protects your domains even if a hacker is able to get into your account. With both Registry Lock and two-factor authentication you have best-in-class security that makes it almost impossible for a thief to steal your domains.

While a lot of domain registrars offer two-factor authentication, finding one that supports Registry Lock can be a bit trickier. When it comes to security the three registrars I trust the most are 101Domain, Go Daddy, and NameCheap.

I use all three of these myself and find their focus on security to be second-to-none. I’ve used plenty of terrible registrars in the past but I’ll keep things positive here so won’t name any names…but you can certainly Google around and read horror stories about people who picked the wrong registrar and paid the price.

Remember, not all registrars are created equal and while you might find a registrar with a nice shiny UX and ads in your favorite magazine, that doesn’t mean they prioritize security, it just means they prioritize marketing.

Like I said, I don’t want to throw anyone under the bus so I won’t share any of my own registrar horror stories but if you have some of your own, please feel free to share in the comment section below!

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Startups have gravitated towards different domain extensions over the years. Rewind to the early 2000’s and if you couldn’t get your .COM, .NET was pretty much your only pick. Today there are over 1,500 domain extensions to choose from so it’s safe to say there are now a dizzying number of options. Out of those 1,500+ extensions, a small niche have become a go-to for startups and one them, not surprisingly, is .TECH.

Companies branding on .TECH have raised hundreds of millions of dollars, and in total, startups branding on .TECH have raised over $2B. I thought it would be interesting to do a deeper dive into a specific vertical, and given how hot the automotive space is right now I thought this would be a fun space to explore. 

Let’s start with Aurora.tech. Founded by three known leaders in the self-driving car world, they’ve raised $690M (see details on Crunchbase) and their last round was led by Hyundai. In the future, when you buy a car, and that car drives itself, there’s a very good chance Aurora.tech will be why.

In May of this year Aurora announced they would be buying Blackmore, one of the leading Lidar companies in the world. If you don’t know what Lidar is, think lasers, and if you want to do a deeper dive, read this.

In their most recent round Aurora.tech was valued at over $2B and they have the support of some of the biggest VC firms in the world.

“The company, founded in 2016, raised a $90 million Series A last February from Hoffman’s Greylock Partners  and Index Ventures . Hoffman and Index general partner Mike Volpi  joined Aurora’s board as part of the deal. Greylock and Index are Aurora’s only existing investors, per PitchBook data. The young business has a lean cap table often characteristic of startup’s led by experienced entrepreneurs able to secure financing deals briskly from top VCs.” (Source – TechCrunch)

Next up is Innoviz.tech which is actually pretty closely related to Aurora.tech as they do, drumroll please, Lidar technology. See, now you know why I told you to read more about Lidar above. As you’ve probably figured out by now, Lidar is a critical component in the self-driving car ecosystem. 

So far Innoviz.tech has raised $252M and is funded by one of the largest VC firms in the world, Softbank Ventures. 

Like many companies in the self-driving car space, Innoviz doesn’t just deliver hardware, they also deliver the software behind the hardware. Along with sensors, they have some of the most advanced perception software that can work at scale. 

This month Innoviz’s top competitor, Oryx shut down, here’s the details:

“Israel-based low-cost LiDAR startup Oryx Vision Ltd. has shut down as of Thursday, Oryx’s CEO Ran Wellingstein said in a Friday interview with Calcalist. Oryx was a direct competitor of Israel-based LiDAR startup Innoviz Technologies Ltd., which announced the completion of a $170 million series C funding round in June.” (Source – CalCalistech)

While it’s never fun to hear about a startup shutting down, this is likely good news for Innoviz.tech and their investors as they now have one less competitor to worry about.

Last but not least is Flit.tech. This is one of those companies that has such deep tech that I didn’t understand what they did until really diving into their site. Here’s the main tagline on their site that made me scratch my head and say, okay, what the heck does that mean?

What does it mean? I’ll tell you. Essentially Flit has a suite of technologies for enabling and streamlining transportation from booking a car, to scheduling a shipment, to making payment and aggregating and analyzing a ton of data. 

Here’s a look at all the different products that they offer:

So far Flit.tech has raised $250M and there’s likely more to come given all of the partnership they are building around the world. It’s one of those companies that you could end up using every single day without even knowing it. 

Of course there are a lot more great examples of startups branding on .TECH but these three are pretty impressive and were a lot of fun to learn more about. Congrats to the whole team at .TECH, if this is what the first four years are like, I can’t wait to see what the next four look like!

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Public vs Private WHOIS

Here’s a topic that seems to be pretty hotly contested lately – should you keep your WHOIS information private or make it public? Last week Shane tweeted this question:

I responded by saying that I’ve had the same question for years – why make it harder for someone to buy a domain from you? Now, over the few days I’ve been thinking about it more and reading other opinions on the topic and I have to be honest, I’m not sure what I think any more.

Yesterday Theo from DomainGang shared his thoughts on the topic:

I can see both sides to this. The reality is, if someone really wants to buy your domain name they will do what it takes to get a hold of you. At the same time, if you’re using a solution like Efty that generates a for sale landing page on your domain, it’s pretty darn easy to get in touch with you. Anyone that wanted to buy a domain from you would likely visit the domain itself first, see your for sale page, and make an inquiry.h

At the same time, I don’t quite understand what the risk is of having public WHOIS information. I could also see a scenario where a really interested buyer would reach out on your landing page and send you an email which could signal a higher budget, thus giving you the seller more information.

All that being said, I really am not sure where I stand on this any more and I typically like to use data to make decisions…but I don’t have any data here. So I thought I’d hear what everyone else things. It’s the age old question – should you keep your WHOIS information public or keep it private?

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

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Expired Domains

I got an email from a startup founder I’ve been friends with for years this morning. Their company has raised over $30M, they’re kicking ass and taking names, growing like crazy and making their clients and investors happy…and like most startup founders, they don’t know too much about domain names.

They are interested in buying a domain and asked me the following question.

“We want to buy a domain name, and luckily when we looked it up it turns out the owner is going to let it go and it’s going to expire this year, where is the best place to buy it to make sure we’re the first to get it?”

This isn’t the first time I’ve seen this confusion, it’s easily the 30th time. Many people have no idea that people only register domains for a year and then set them to auto-renew. They think that if a WHOIS search shows a domain is going to expire, that means the owner has decided to let it go.

Of course I explained to them how domains work and that while some people register domains for multiple years, most people register for a year and just let it auto-renew. This made me think, I wonder what the impact of registering a domain name for longer has on the number of offers it gets?

If someone sees a domain registered for multiple years are they more likely to reach out? My guess is there’s probably little-to-no impact but I do know in this case that my friend was planning to wait until the expiry date and then make a move. Whenever someone waits, things can change and a seller can lose a deal.

So I thought I’d turn it over to you, my readers and hear what you think. Does registering a domain for longer increase your changes of getting an offer? Like I said, I don’t think it does, but hey – what do I know?

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

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