The Terrible Business Model of Most Domain Investors: The Hope and Pray Interview

Sep 06 2011

If you were to talk to a business person in any other industry and tell them your business model what would they say?   This isn’t verbatim, but essentially a question and answer session I had with a new investor.  He didn’t know to what extent I was involved in the industry and I pretended like I wanted to know more.  Looking back on the conversation I realized that unfortunately the hope and pray method is the business model of choice for many domainers. Would your discussion go like this?

Q:  How do you make money with a domain?

A: Well, I buy a domain and then I wait for someone to come along and make me an offer on it.

Q:  How do buyers know you have it for sale?

A: I put “this name is for sale” or I’ll put it on a site that will list it for sale for me

Q: What if nobody contacts you?

A: Then I wait.  Sometimes I’ll send out some emails and let people know that I have something they need

Q: If they need it won’t they contact you on their own?

A: Sometimes they don’t know they need it

Q: So instead of waiting, do you have any other places to sell the domain?

A: I can sell it on the forums to other domain investors or have a friend put up a fake bid and sell it on Sedo.  I could use a public auction platform like Bido or Boxcar

Q. Any luck with Bido or Boxcar?

A. Not really

Q: So the only way you can get it up to an auction is to have a friend put up a fake bid?  Why don’t you just have some of your names put into some larger auctions?

A: None of the auctions will take any of my names

Q: Then doesn’t that mean you don’t have quality names?

A: No, they are just not the type of names they like.  They are still very valuable

Q:  If nobody wants them and the auction houses won’t put them in an auction what gives them value?

A:  They are unique.  There are no other names like them in the world.  They also have good value according to the estimators like estibot and valuate

Q: Do people buy based on those estimates?

A: No, i guess they are only guides.

Q: Is there anything you can do to make money on these domains that just sit there?

A: I can park them and put ads on them when people visit or I can develop them out

Q:  How much do you make parking?

A:  Not as much as I used to. Actually it’s pretty much down to nothing.

Q: Well then, how about developing? How many have you developed and how are they doing?

A:   I actually haven’t developed any but I plan to

Q:  What’s your time frame for developing them?

A:  I’ve been pretty busy and really haven’t had much time.  It takes me an hour or two to look for new names so not much time left for developing

Q: What percentage of the names do you sell?

A:  Oh usually 1 to 2 percent a month if I’m lucky

Q: Does that cover costs?

A: Sometimes, but did I tell you I sold a domain for $6K that I only paid $500 for?

Q: That’s great, but did it pay for the cost and renewals of all the names you didn’t sell?

A: I made $5500 on that sale alone, I’m pretty sure it did

Q: Pretty sure it did or KNOW it did?

A: Actually I’m not quite sure, I haven’t checked the numbers yet?

Q: What did your taxes say?

A: Taxes?  I didn’t make enough to file taxes last year

Q:  If you sold any domains you had to file some taxes right?

A:  I’d have to talk to my accountant

Q: You have an domain accountant?

A: No.  I guess I better check into that huh?

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Outsmarting the Dumb, Outworking the Smart

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  1. WeBuyThe.Com

    This is pretty bad. The title should be The Terrible Business Model of ONE Domain Investor and not MOST. I would hope that Most of us have a better handle on the business and certainly on taxes and proper filings. Where did you find this guy? Who doesn’t know how much they spend on renewals? It’s pretty simple math isn’t it every 1,000 names cost $9,000 per year give or take a few dollars.

  2. Michael

    Well, he isn’t investor or businessman. He have heard some things or read some things and is buying some domain names hopping that he will get lucky and someone will offer will offer million for crappy name

    Probably he is teenager or in low twenties, but if not then…

  3. Samit Madan

    Not a domain ‘investor’, probably a domain ‘speculator’ at best.

    No difference between this guy and someone who buys lottery tickets.

    And the % of ‘domainers’ who think like this would shock your socks off.

  4. picas

    uncountable number of domainers are praying and hope God hears his/their words …

    not sure God can hear something clearly if all say same time ….

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