Be careful that you don’t fall for survivorship bias.
A few years ago, it was popular for business publications to run headlines like “This billionaire’s secret to success: only sleep 5 hours a night” or “Richest people only eat this diet” and other nonsense.
The idea is that you, too, can become a billionaire if you just sleep 5 hours a night and eat blueberries every morning.
It’s an example of survivorship bias: only looking at the people who have made it past a selection process and assuming that what they did is the way to succeed.
There are plenty of wealthy people who sleep 8 hours a night and don’t do keto.
You see this in business if you just focus on the winners. For every Facebook and Google out there, there are 100s of companies that followed a similar path and failed.
The same can be said for domain investing. It’s easy to get swept up into trying to model off of successful domain investors. But it’s important to think about why that path was successful and if it can be successful for you. It’s just as important (if not more important) to talk to people who haven’t been successful and understand why.
An example is when people ask if you should own a large portfolio of mediocre domains or a small portfolio of great domains. I can point to domain investors in each of these camps who are successful. There are also lots of people who fail at each of these approaches. So if Jim invests in only five great domains and is now a millionaire, this isn’t necessarily the path you should take. Jim might have gotten lucky early with one of his domains.
Another example is negotiation. Should you turn down every offer until someone offers you a million dollars? There are some investors who hit it big this way and many more who lost a sizeable sale because of it. You rarely heard about the latter.
I’m not saying you shouldn’t try to learn from other domain investors. On the contrary, this is very important. But you should try to understand why that investor is successful and what tactics/practices of theirs you should model. Ask yourself if those tactics worked for everyone or just some people, and dig into why.
J.R. says
Great post.
I never understood sheepish behavior of many would be domain speculators, in thinking what works for the outliers will work for them.
Sure, the 1% can act as models and general guides.
But different entry times, budgets, professional backgrounds and other circumstances are under-stated x-factors in domain speculation success.
John Rashad says
A perfect example of the message shared by Andrew in this blog is the case of NBA player Dennis Schroder.
https://nba.nbcsports.com/2021/03/30/report-dennis-schroder-rejected-four-year-84m-contract-extension-from-lakers/
In March 2021, Schroder turned down an $84M 4 year GUARANTEED offer with the Lakers to seek $100M deal in NBA free agency this summer.
Well, things didn’t go as planned and few teams want to sign him and those that do are now offering the league MINIMUM $5.9M!!
https://nba.nbcsports.com/2021/03/30/report-dennis-schroder-rejected-four-year-84m-contract-extension-from-lakers/
Lesson: Sometimes you have to take the money that is on the table, or lose BIGLY!
What works for the next person may not work for you…
Matt says
Andrew – thanks for this post. I think it’s spot on.
A few other thoughts are how differently we each define success and purpose (as they relate to life and domaining separately).
Also nothing is static. Even on a personal level my definitions change over time.
Currently, I’m flipping $10 buys to $500-ish sales and that’s scratching the itch, covering renewals and paying for every trip I’m going on at the moment.
Last week I was away for 3 days with the fam and during breakfast one day I got an Afternic email saying I’d sold a .nyc for $500, then an hour later, I was at a water park when a second Afternic sale came in for a .co.uk for $500. Not huge figures but these regular sales are paying for all my trips.
The week before, I sold three names for $135, $500 and $900. There are interesting stories/people behind many of these sales too – so that’s value there (even when selling a name for $135!)
For me at this point in time, this is success: selling names that I have no attachment to, with little effort, to both pay for renewals and fund my extra activities while the domains that I value higher, appreciate.
Who knows for how long I’ll be content with this, but currently I have other things in my life that are more interesting and exciting than domains 🙂
snoopy1267 says
“It’s just as important (if not more important) to talk to people who haven’t been successful and understand why.”
They tend to be hard to come by because usually people won’t admit this until they are out of the industry.
Matt says
And that is why we really appreciate and value your insight.
Steve says
My chuckle for the day Matt — thanks.
Matt says
🙂