The Domain Name Business, Part 2

I must admit, every day I kick myself for missing out on this. I knew domain names were important, but I was just a youngling when this was the rage, what did I really know?

Despite my frustration, my curiosity has been peeked. Where did the figures John provided come from (see my previous post)? If you had the forsight, just how good could you really be doing? Is there anything left? What can be learned from the examples of this business?

My investigation led me to an article authored by Paul Sloan. Featured on CNN, it's entitled Masters of their Domains, published in late 2005. It has many of the same statements John provided. I'm inclined to believe this is where he obtained most of his facts (though I didn't see any citation - tisk tisk).

Before I go further, I provide one quote to shock you:

"I don't like to work," Schwartz says, almost yelling as if to convince everyone within earshot that they're fools if they do. "I figure any moron in the world can generate work for themselves and tie up their time. I have one laptop, no employees, and no product whatsoever--none! This is magic." Magic, he claims, that's earning him $2 million a year.

Schwartz is a domainer, and as you can see, he's made a fortune in the business. Initially I had trouble believing these sorts of figures mentioned in John Chow's blog post, but this CNN piece seems to confirm it. Another confirmed figure comes from a Yahoo rep. "One Yahoo official estimates that type-ins could make up 15 percent of its search business." Well there you have it. John wasn't bullshitting.

John also brought up the case of Yun Ye, on which the CNN article provides much more information. Here it is in the CNN piece:

Domainers have their heroes, and one of the most mysterious is a man named Yun Ye, a Chinese citizen living in Vancouver, British Columbia. He is credited with boosting the entire market when he sold his portfolio of more than 100,000 domains to Marchex. His names were bringing in more than $20 million a year in revenues--and $19 million in profits--when Marchex paid the equivalent of 8.6 times annual earnings, based on figures provided in SEC documents.

Marchex did in fact shell out $164 million for his portfolio. Yikes.

Paul also covers the future of this business in his piece. From what I can gather, the future is consolidation. Large entities are taking notice. It's likened to the "billboard industry a decade ago, before Clear Channel and Viacom bought up the small operators."

For instance, take three men, Rabin, Bob Martin, and Marc Ostrofsky, who run the company Internet REIT. They are spending $250 million buying out domain owners. Rabin states, "We've only just begun the roll-up phase. This market will likely be in the billions."

Is there still room for small fish? I know I don't have $250 million. Perhaps. Right now .com addresses are prevailing, but who knows, maybe given enough time it saturates and things like .biz become more viable. The older generations grew up with nothing but .com, it's all they know, that's where the money is. But think of the younger generations, a little more aware of the dearth of top level domains. Perhaps one day a type-in of cellphone.biz will be just as likely as that of cellphone.com. Then again maybe not.

It almost feels like buying property just past the major suburbs of a metropolitan area. Chances are the city will grow and cause growth to spill over into those unsettle areas. However, disasters do happen, so how can you really be sure?

Another option is to snag expiring domains. These domains have a history on the web. Some have been heavily indexed by search engines. As a result, they are more likely to draw hits.

The only conclusion I can draw at this point is that you have three options.

1. Assemble capital and throw down thousands or millions of dollars of cash to buy proven names and reap the rewards.
2. Speculate on something much more long term, like new top level domains such as .biz or .mobi.
3. Snatch expiring domains using a clever method.
   

The Domain Name Business

I found this blog post by John Chow on something referred to as "domainers," people who make money from domain name speculation and ad parking.

It is an interesting read for anyone with entrepreneurial curiosity of the online sort, though I have trouble believing some of his figures. Regardless, you don't have to accept his numbers in order to believe that domain name speculation is, or should I say was, a lucrative business. If you had spent the early '90s grabbing any and every short and sweet domain name and you actually had the foresight to hold on, there is no doubt you would be rolling in money, but that bang is over.

So where do new comers stand? I liken it to the phase after a big name, highly successful IPO (like Google). Getting in on the ground floor is over, now all that is left is buying and selling just like you would with any entrenched equity. This is hard work, and usually requires a large amount of capital and research. Most likely you only stand to make several percent on your investment, and what good does 3% on $5 do you? Even if you did have the sort of capital necessary, you could probably do better elsewhere. If someone can prove me wrong on this, please share.

Find the Right Job Straight Out of College

I sometimes find myself dispensing advice about job hunting. Lately, one question - how to find the right job - has come up often enough for me to notice. So I've decided that I'm just going to lay this question to rest right here.

You're a college student. It's your last year. Have you started looking for a job? Do you even know what you are even looking for? How do you find the right job?

I've seen a lot of people flail around looking for jobs, enough to know the pitfalls people fall into. These pitfalls are numerous, but I've picked one I believe to be so common that it has to be dealt with. Why should you take my advice? Well, because this is how I proceeded with my job search, and it worked out very well. Some of you may just think I just "got lucky," but I know better than that, and you should, too. There was a lot more to it than just getting lucky.

So let's just jump right into it. Consider the following two statements:

1. A company you've actually heard of and find interesting will most likely have a position relating to your field of study.
2. A company that has a position relating to your field of study is one that you've heard of and find interesting.

These two statements are logical inverses of each other. Which of those two statements seem more likely? Is it if A then B, if B then A, or both?

On inspection, the first statement seems to have merit. If I've heard of a company, and I have had enough interaction with them to establish they are interesting, then chances are they are diverse or large enough to need every kind of person under the sun, from marketing to sales to tech to whatever. Do the experiment. Rattle off the top companies you like. If that's hard, name some products you know a lot about or just couldn't live without. Enjoy listening to your Apple iPod, you say? Then they probably have a position for you.

"But I'm not technical, I don't know how to make software or design hardware, and that's what Apple does, right?" That's extremely near-sighted. You didn't take to heart what I just said, did you? Someone has to sell the thing, someone has to market the thing, someone has to manage their public relations, someone has to balance their books... Are you really that ignorant to the workings of companies? Come on now.

The second statement is obviously complete garbage. S.S.S. Inc. needs marketing people, but you've never heard of them, don't know a lick about them, and you obviously don't have a clue as to whether or not it would be the most horrible experience of your life. What if I told you S.S.S. stood for Shit Shoveling Services. Do you really want to market Shit Shoveling?

You may say, "Well that's a drastic example," but if you have no history with the company (from using/enjoying their products) and have never heard of them, how do you know they don't shovel shit? You see my point.

Now if this is so obvious, why is it that when most college students search for a job, they sit down at their computer and type "[insert field of study] job in [insert city]" into their favorite search engine or job site. An example would be "marketing job in Boston." Naturally, they get back an enormous list of jobs, with not a clue where to start or which ones they'd enjoy. At this point, they are completely lost.

But we know better. Instead we go back to our example from before. We know we like iPods, so we do a search for "Apple job openings." Well look at that, first result is apple.com/jobs. Oh and look, they have a page about information and/or interview sessions happening at colleges around the country. "But I go to Boston University and I don't see an event." Look harder, there's one at MIT, just a skip away. "But that's not my school, I can't go to that." You think Apple cares? 99% of the time these things are open events. At least look into it. If you let a simple thing like that hold you back, then you probably don't deserve the job anyway.

By now you should see my point. Knowing who you want to work for is infinitely more useful than searching on your field of study alone. Not only does it help you narrow down your search, but you are also likely to do better in an interview with a company whose products you enjoy. Take this advice, tailor it to your field (i.e. focus on companies you know relating to your field), and you'll be headed in the right direction. All you have to worry about now is passing the interviews.

Pligg

Pligg is a free, open source content management system bearing similarities to Digg. Now you can have your own hip Web 2.0 site fairly quickly. It's advertised as being in beta, so I'm not sure how stable it is, then again, everything these days is listed as a beta product.