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Domain Valuation – DNW Podcast #307

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Great tools and a real-world example of domain name valuation.

Picture of Michael Cyger with the words Domain valuation with Michael Cyger

Proper domain name valuation is crucial to being a successful domain name investor. On today’s show, Michael Cyger of DNAcademy walks through a valuation of a domain name I just bought. Along the way, you’ll hear about some great data tools to home in on the value of your domains. It could be helpful to follow along visually in this screenshare.

Michael also helps me answer the first two podcast listener questions.

Also: Reverse domain name hijacking, NamesCon plans, and Efty marketplace launch

Sponsor: DAN.com

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Subscribe via Apple Podcasts to listen to the Domain Name Wire podcast on your iPhone or iPad, or click play above or download to begin listening. (Listen to previous podcasts here.)

What these name choices should tell domain name investors

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China is a market for your domain names. Even if they are English names.

Screenshot of Fiture's website. Fiture offers fitness products.

Fiture, a fitness products company in China, doesn’t have a Chinese brand name.

Common knowledge is that Chinese companies own Chinese brand names. Even foreign companies follow this rule when operating in China. For example, Amazon is Ya Ma Xun (亚马逊); Apple is Pin Guo (苹果); and Tesla is Te Si La (特斯拉).

So, it may surprise you to see a Chinese company operating without a Chinese brand name. This actually happens often, and one example is the fitness startup Fiture, which I read about in the news a few days ago.

Fiture was founded in March 2019 to provide at-home physical exercises through intelligent hardware and AI-based programs. There is also an element of social networking to create a virtual group training atmosphere.

The startup received $6 million in angel investment in late 2019, followed by a $65 million Series A funding round last month.

“Fiture” is both its English and Chinese brand. It is a made-up name derived from “fit”, which is appropriate for a fitness company.

Fiture’s corporate domain is the brand-matching Fiture.com. According to Wayback Machine, the domain was owned by a Japanese investor from 2004 to 2019 until it was transferred to the fitness company. At one time, Fiture.com was part of a group of 6 domains of the same name in various extensions for sale at $25,000. The investor probably never thought Fiture.com would be sold to China!

Fiture is not the only case. Just in recent months, I have come across the following Chinese startups without Chinese brand names. The lack of a Chinese brand name does not seem to hinder their growth, as evidenced by their ability to raise rounds of funding.

Chinese Brand Business Funding Domain
Hachibot Robotics $10m Hachibot.com
Hey Maet Plant-base meats $1.5m Heymaet.com
Moka Recruitment $44m Mokahr.com

Did you spot any domain opportunity here? Moka has the need to upgrade to Moka.com. If you were the owner of Moka.com (not likely as it is a developed site already), you could sell the domain to this Chinese company.

There are Chinese companies using only English brand names. There are even more Chinese companies using both Chinese and English brand names. Together, they mean there’s a great need for English-based names.

What is the implication? There is demand for English-based domains in China, and the demand will only intensify when more and more Chinese companies move into the digital economy driven by the 900 million internet consumers. Therefore, make sure you list your domains at a marketplace with retail outlets also in China.

How I’m investing in domains these days

by — Domain Sales 19 Comments

I’m planting lots of small seeds and making marginally bigger bets.

Graphic that shows a dollar bill image and arrow going up and down and the words "domain investing"

There are lots of great domain investors out there. People who make bold investments and great sales.

I am not one of those people. I’m good at it, but not great. (Note that some of the people you think are great at domain investing actually suck, and there are lots of quiet people on the sidelines who are making a mint.)

Here’s how I look at it: Domain Name Wire has been my primary business for a long time. Now, from a revenue perspective, PodcastGuests.com has caught up with it. So I have these two very high margin businesses and then domain investing, which is more capital intensive. Domain investing is something I do as icing on the top; it helps me stay on top of what’s going on in the business, to understand more when I write, and to have fun.

I don’t count on domains for cashflow. In fact, I try to reinvest everything I make selling domains into buying more domains and improving my portfolio.

Over the past few years, I’ve grown my portfolio from about 1300 domains to around 1600. I’ve pruned quite a few over that time, so my total additions is higher.

Most of my adds are low-cost auctions sub $300, and the majority of these are sub $60 including “closeouts” and uncontested expired domain auctions.

These domain acquisitions form the portfolio model of my business. This means I’m buying domains for cheap and selling them for 10x-200x the purchase price — but at median prices below $5,000.

While some of these new additions sell quickly, I look at it more like planting seeds. Most of the sales occur at least a year after I buy the domains.

Those seeds have come to fruition nicely this year. When I look at my BuyNow sales at Afternic, I have 11 sales in the past 3.5 months going back to June. The domains sold for between $495 and $5,800 with a median of $2,300. I’ve made additional sales outside of Afternic.

Lately, I’ve tried to acquire some more marquee names that could make great brands and businesses. I picked up Warmfront.com in an expired domain auction. I just bought Shortbread.com yesterday at GoDaddy Auctions. The Shortbread.com purchase alone cost the same as about 700 closeout domains. But it’s also a domain that has a decent liquid value should I ever need to cash out. The same can’t be said for 700 domains you buy in closeouts.

So that’s my model. It’s been a good year so far, and I hope it continues.

The lottery ticket analogy

by — Domain Sales 5 Comments

Domains aren’t exactly like lottery tickets, but be sure not to get sucked in by false hopes.

Picture of lottery ticket scan forms with the words "Domains as lottery tickets"

John buys a lot of lottery tickets. He’s a prolific lottery ticket buyer, snapping up thousands of lottery tickets every week.

He then brags about his winnings.

“Just won $50,000 on a $1 lottery ticket. I am the master!” he tweets.

“Another score! $10,000 on a lottery ticket I just bought yesterday!”

John doesn’t talk about the majority of the time when he loses. In fact, most of his lottery tickets are losers. Most of the time when he wins, it’s only a few dollars.

Other people see John’s social media and think, “I should buy lottery tickets, too!” They don’t realize that John is actually cashflow negative on his lottery purchases.

OK, so investing in domains is not precisely like buying lottery tickets. With skill and data, you can buy domains that are more likely to sell than others. You can also increase the odds that a domain will sell with optimization and marketing.

But…many people are attracted to domain investing because they hear about quick flips and huge returns on investment. The reality is that most domains aren’t flipped quickly, and many people who do have big successes to brag about still only sell a small fraction of their domain portfolio. Some are cashflow negative despite their big wins.

So I share this analogy as a caution. Don’t get sucked into the idea that domain investing is easy. Or that you’ll make insane profits. Or that the people who are bragging about making insane profits are swimming in cash.

Sell more domains with a crowd – DNW Podcast #294

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Squadhelp is becoming a formidable player in the domain aftermarket.

It’s one thing to list your brandable domains for sale. It’s another thing to list them for sale and have people suggest them to end users at the exact moment they’re searching for a name. That’s one of the many benefits of Squadhelp, a crowd-sourced naming service. On today’s show, Squadhelp CEO Darpan Munjal explains how the platform works and talks about the company’s new white label domain marketplace system. You can see the white label marketplace I created here.

Also: Walmart’s odd domain registrations, Verisign takes action against Covid-19 domains, new Sedo brokerage tool and more.

Sponsor: DAN.com

Podcast: Play in new window | Download (Duration: 36:10 — 29.0MB) | Embed

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Subscribe via Apple Podcasts to listen to the Domain Name Wire podcast on your iPhone or iPad, or click play above or download to begin listening. (Listen to previous podcasts here.)

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