Washington Post article provides more data on about domain name portfolios.
The Washington Post wrote about domain name investor Mike Mann yesterday, and the article sheds more light on the economics or large domain name portfolios. Really, it applies to all domain portfolios, even if you have a small one.
I wrote about this topic before after BuyDomains sold for $44.9 million, or just $47 per domain name.
According to the Washington Post article, Mann’s company DomainMarket.com owns 350,000 domain names. He grosses $4 million a year from selling domains from the portfolio.
Right there, you can see a problem. The renewal fees alone on the portfolio are close to $3 million.
Then you consider the costs of building the portfolio. Mann told WaPo he spends $3 million a year buying new domain names. Suddenly, it makes sense that he is $2 million in debt.
Mike Mann frequently posts tweets like these:
Some domain investors grasp at resale stories like these for inspiration. But in many ways, they’re like lottery tickets. As you can see from the numbers above, for every domain Mike resells for a 2000x return, he has many domains that don’t sell. For a long time, if ever.
but your remiss not to point out that the other side of the extreme is pretty cool also. And i still think pretty unique, special and profitable.
for every domain doesnt sellfor a long time, or ever, .he has many domains that sell for 2000x .
So Major League hitter get paid $15 million for hitting a 300 average, we have to hit .000001
Also, they said domainmarket.com owns 350,000 names not him personally so he would not have to renew all those names, this actually is a place where people go to buy domain names for their own personal use and he makes a profit each time a name is registered
Claiming that he buys names is a way to create a red herring to prevent competition. While he might buy some names and he might list some that he bought and sold no way he got 350k names or anywhere close to that by paying for them any significant dollars.
I wouldn’t even take the 4 million as being correct either. You can say anything you want to a reporter and they will repeat it.
(Possible that he bought imike.com for $350 that I believe).
Andrew Allemann says
He hand registered tons of them. He’ll admit that.
From the article: “splits his time between an $8 million oceanfront home in Delaware (it’s in a trust for his daughter)”
Part of the divorce settlement and/or protection of assets no doubt. My bet is “divorce settlement”.
Andrew Allemann says
Don’t get Mike started on that…please.
The inventory at buydomains (Mike’s first company and my “go to” source when buying for clients) is much different than at domainmarket. A number of times when I have a particular name I need I pull a whois and poof buydomains owns it. I’ve never had that happen I’ve never found a name that I need that domainmarket owns. Reason might be that buydomains got the bulk of it’s name way back when the better names weren’t already taken. So Mike’s algorithms worked well back then. The twist is a little different now. Still it’s a good model.
If the reg fee is $10 a year (for simplicity sake) that means 1 name at $5000 you roughly break even and can hold 500 names per year. Anything in addition to that you make money.
The classic dilemma of every domain investor:
How to register quality domains that sell well and for good prices and sell them and be able to replace the inventory without letting the success to get to your head and start believing you are a genious and start registering mediocre domains convinced of your own genious and expanding your portfolio much faster than you are selling the domains.
If many of the domains you decide to not to register do not get registered during the next 12 months then that means you are not selective enough in buying domains which will lead to squandering your cash on average.
Larger portfolio means more chances of selling domains but it is a fine balance in not registering too much which will lead to higher carrying costs and eat into the profits.
3 point list:
Manage your cash
Do not get bidding fever
Never believe you are a genious
I try to follow my own advice but fail regularly even though I’m small time.
Still I have to say Mann is probably the biggest genious when it comes to building huge portfolios profitably which he has done with Buydomains.com and now with domainmarket.com
Reberry of Hugedomains.com is another in the genious category who has built an even larger portfolio than Mann and must be selling domains at the highest rate of all the big players who use the sales lander model.
“Mr All-Star” Schilling is also another Genious but he uses parking and sales lander model whereas Mann and Reberry use just the sales lander model.
Schilling also has Schwartzesque asking prices whereas hugedomains.com sells, sells and sells and Mann is in the middle.
For smaller domain investors the sales lander model is impossible because without a big portfolio you need the parking revenue to pay the renewals at least partially.
Honestly, who do you know that carries their domain portfolio by parking revenue?
Mike has other businesses plus he has sold a number and is just fine.
Most likely $4M revenue has been over-inflated
ALL of these big portfolio holders are looking for an idiot whale with deep pockets to buy their portfolios, warts n all.
99% are fillers, pure crap, that will never sell
Mann will have learnt his lesson (from his divorce) – like a lot of other shmucks – in how to preserve wealth:
NEVER GET MARRIED
Gary Yeardley says
Mike Mann has an interesting Domain Model
Lets Take Sept 2015 for domain changes for DomainMarket.com
$0 Out on New Domains
$418,000 In on Domain Sales (avg $2000 per domain)
$291,666.67 Domain Renewals per month (based on 350,000 domains)
$5,000 Out on Domain Auctions (based on 10 domains brought at auctino for $500 a go)
$121,333.33 Profit for September 2015
– Are all domains owned by DomainMarket Mike Manns or others domain owners too?
– Avg sale price may be higher than $2000. I’m being conservative here. I suspect nearer $4000
– Many domains will not get renewed (saving on monthly renewals)
– Domain Renewals most likely cheaper than $10 a go. I suspect getting discount on bulk orders and using Godaddy regular coupons
– I only took September, so may not represent an average month
Mike Mann says
this is the only correct analysis
Thanks Mike, you’re definitely one to watch!