In 2015, short domain names came to the attention of the domain community as a whole, thanks to the influx of funds from Chinese investors into two-, three- and four-character domains. Many domainers took advantage of the rising prices, and made a small fortune in a very short amount of time. Our guest today is someone who has sold over 1,300 four-letter .COMs to China within the last year.
Russell Panella (@rpanella), is an expert in short domain names, and owner of the ShortNames.com market aggregator. Over the past eight years, Russell has amassed a large portfolio of four-letter .COM domain names, and has sold a large majority of them to Chinese investors recently.
In this interview, Russell gives his opinion about the short domain category, advice for short domain investors, as well as information on his current project, ShortNames.com.
NP: Can you tell us about yourself and your history within the domain industry.
Russell:I started creating websites as a hobby while in high school back in the late 1990s. A couple years later I began having some success building content sites and driving organic search traffic to them. I didn’t really start following the domain industry until sometime around 2005, but was quickly very interested.
I had always understood the importance of a good domain from a business perspective, and the idea of investing in them as virtual real estate had always made sense to me. At that point I’d built up a decent savings from running my content sites, and was looking to invest in domains. I spent a lot of time learning and exploring different investment approaches, looking for some type of angle or advantage versus other domain investors.
At the time it seemed that almost all good keywords were taken and overpriced at the wholesale level…I felt like I had missed the boat. Shortly after the LLLL.com buyout in late 2007, I started learning more about short domains and realized it was the opportunity I had been looking for. I soon jumped in head first.
NP: In the past, you created LLLLSales.com, which is now ShortNames.com. Why did you decide to develop this resource?
Russell: Back when I first began investing in LLLL.com domains in early 2008, I was collecting sales data from around the web in order to analyze it and learn more about different letter combinations. I used this information to help determine the best investment opportunities. At the time there was a website, TDVR.com, which published many four-letter sales prices from various sources. That site inexplicably went offline in early 2009. Since I had collected a pretty large database of sales data myself, I wanted to keep this resource available to those who followed the LLLL market, so I built some search functionality into my database and launched LLLLSales.com in February 2009.
At first, the sales were all submitted manually, but over the years I automated more and more of the collection process. This made it easier to track all domain sales, so I began collecting more than just LLLL.com sales. For years, I also toyed with the idea of a site that aggregated aftermarket domain auctions, but never ended up launching anything. Instead I adapted the system I had created into a tool to find deals and help acquire my own portfolio.
As the short domain market really started to explode in 2015, there became a strong demand for a resource that tracked sales data for other categories and extensions of short names. Late last year I came up with the plan and started putting it all together into the project that became ShortNames, and it eventually launched this May. The goal of the site is to bring transparency to the market and to provide tools for investors to search available inventory in more advanced ways than are currently possible on most domain aftermarket platforms.
I still have more ideas planned for the site and am always open to suggestions or features that users would like to see.
NP: How long have you been investing in short domain names?
Russell: I bought my very first short domain name, WPXJ.com, for $15 on 11/28/2007 through a thread on DigitalPoint Forums. At the time I didn’t know much about LLLL.com’s or the buyout which had occurred earlier that month, but I quickly started learning.
I had soon developed some metrics to score any four letter acronym based on potential end-user appeal. Since most liquid sales prices between domain investors were based solely on which letters the domain contained (and usually not their positioning), I felt there was a good opportunity to arbitrage this difference. My goal was to build a long term portfolio of names that were undervalued by wholesale pricing, but had good probability of an end-user sale.
Using these methods, I ended up buying almost 60% of my portfolio in 2008. A large majority of that came a single bulk deal in May, after prices had dropped from the peak of that bubble, but well before they hit the bottom. Using the experience and data from the large portfolio I now had, I continued to buy up the other 40% of my portfolio from 2009-2014 from various auctions/forums while prices were very low.
NP: How many domains do you currently own, and how many have you sold this year?
Russell: As of October of last year, my LLLL.com portfolio had a little over 4,000 domains. Since then, I’ve sold around 1,300 in several bulk deals to Chinese buyers. Also, from 2008 to date, I’ve sold a bit over 100 LLLL.com domains to end-users for prices between $1,000-$5,000, all via inbound leads.
NP: Did you predict the rise in four letter .com prices that we saw last year?
Russell: Definitely not, otherwise I would have been buying up Chinese Premiums (instead of often avoiding domains with poor Western end-user letters like Z, Q, etc). I actually didn't even know what a Chinese Premium was until the price on them hit $300.
However, I have always had an optimistic view of the long term short domain market and its potential upside. I had gotten my portfolio to a point where annual end-user sales revenue was about equal to annual renewal costs, which allowed me to maintain the portfolio while the market was down for as long as necessary. I had expected slow long term price appreciation but was pleasantly surprised when things spiked like they did.
NP: What do you make of the current state of the market? Do you think that prices of four letter .COMs will increase from their current price of just under $1,000?
Russell: Having been involved in each stage of the LLLL.com bubble that occurred post buyout in 2007-08, it’s been very interesting to compare what happened then and what is happening now with prices. My experiences from that bubble have given me a broader context to understand what is happening with the current market through the ups and downs.
While it’s of course impossible to predict, I think prices on short names will continue to fall a bit before things turn around, especially as a huge amount of long tail short name renewals come due this fall.
However, there are always good, undervalued domains out there, and a down market can sometimes be the best time to buy.
NP: After selling so many domains, are you reinvesting? If so, what types of domains are you buying?
Russell: I haven’t reinvested much yet. I plan to invest some of the profits in non-domain related assets in order to diversify, and some of it back in domains. I haven’t bought many LLLL.com's since 2014, but if prices continue to fall I’ll likely start buying up any good deals I find. I’m also always looking into other domain niches and trying to find a good opportunity to invest in something undervalued on a larger scale.
NP: What advice would you have to anyone looking to specialise in short domain names?
Russell: I think the best advice I can give to someone looking to invest in short domain names (or any domain names really) is to find an angle and focus on it. That can mean anything from focusing on a certain niche that you know a lot about, or doing research and analysis using data from sources that others have not. Other domain investors are essentially competitors, so by simply following the crowd you are always one step behind.
My other suggestion is to focus on domains that appeal to end-users. This gives your domains true value that is independent of the current state of the wholesale domain market. Buying a domain with the sole hope to flip it to another investor for a higher price before renewal is extremely risky. It’s very easy to make money this way when the market is spiking upward in the short term, but once it goes down or flattens out it’s very difficult to maintain a portfolio long term without end-user sales.
NP: What is your opinion on the future of the short domain name market in general?
Russell: I believe that the short domain market has a bright and solid long term future. While I do still think prices are inflated in some categories and will continue to fall in the near term, the factors that make short domains such appealing investments have not changed.
There will always be both undervalued and overvalued domains no matter the state of the market. It’s my hope that ShortNames can help investors gauge and follow the short domain market more easily, and to make smarter investments.
--
Thanks to Russell for taking the time to talk to us. As he mentioned in the interview, if you have any ideas or feature requests for ShortNames.com, Russell (@rpanella) is interested in hearing from you!
Russell Panella (@rpanella), is an expert in short domain names, and owner of the ShortNames.com market aggregator. Over the past eight years, Russell has amassed a large portfolio of four-letter .COM domain names, and has sold a large majority of them to Chinese investors recently.
In this interview, Russell gives his opinion about the short domain category, advice for short domain investors, as well as information on his current project, ShortNames.com.
NP: Can you tell us about yourself and your history within the domain industry.
Russell:I started creating websites as a hobby while in high school back in the late 1990s. A couple years later I began having some success building content sites and driving organic search traffic to them. I didn’t really start following the domain industry until sometime around 2005, but was quickly very interested.
I had always understood the importance of a good domain from a business perspective, and the idea of investing in them as virtual real estate had always made sense to me. At that point I’d built up a decent savings from running my content sites, and was looking to invest in domains. I spent a lot of time learning and exploring different investment approaches, looking for some type of angle or advantage versus other domain investors.
At the time it seemed that almost all good keywords were taken and overpriced at the wholesale level…I felt like I had missed the boat. Shortly after the LLLL.com buyout in late 2007, I started learning more about short domains and realized it was the opportunity I had been looking for. I soon jumped in head first.
NP: In the past, you created LLLLSales.com, which is now ShortNames.com. Why did you decide to develop this resource?
Russell: Back when I first began investing in LLLL.com domains in early 2008, I was collecting sales data from around the web in order to analyze it and learn more about different letter combinations. I used this information to help determine the best investment opportunities. At the time there was a website, TDVR.com, which published many four-letter sales prices from various sources. That site inexplicably went offline in early 2009. Since I had collected a pretty large database of sales data myself, I wanted to keep this resource available to those who followed the LLLL market, so I built some search functionality into my database and launched LLLLSales.com in February 2009.
At first, the sales were all submitted manually, but over the years I automated more and more of the collection process. This made it easier to track all domain sales, so I began collecting more than just LLLL.com sales. For years, I also toyed with the idea of a site that aggregated aftermarket domain auctions, but never ended up launching anything. Instead I adapted the system I had created into a tool to find deals and help acquire my own portfolio.
As the short domain market really started to explode in 2015, there became a strong demand for a resource that tracked sales data for other categories and extensions of short names. Late last year I came up with the plan and started putting it all together into the project that became ShortNames, and it eventually launched this May. The goal of the site is to bring transparency to the market and to provide tools for investors to search available inventory in more advanced ways than are currently possible on most domain aftermarket platforms.
I still have more ideas planned for the site and am always open to suggestions or features that users would like to see.
NP: How long have you been investing in short domain names?
Russell: I bought my very first short domain name, WPXJ.com, for $15 on 11/28/2007 through a thread on DigitalPoint Forums. At the time I didn’t know much about LLLL.com’s or the buyout which had occurred earlier that month, but I quickly started learning.
I had soon developed some metrics to score any four letter acronym based on potential end-user appeal. Since most liquid sales prices between domain investors were based solely on which letters the domain contained (and usually not their positioning), I felt there was a good opportunity to arbitrage this difference. My goal was to build a long term portfolio of names that were undervalued by wholesale pricing, but had good probability of an end-user sale.
Using these methods, I ended up buying almost 60% of my portfolio in 2008. A large majority of that came a single bulk deal in May, after prices had dropped from the peak of that bubble, but well before they hit the bottom. Using the experience and data from the large portfolio I now had, I continued to buy up the other 40% of my portfolio from 2009-2014 from various auctions/forums while prices were very low.
NP: How many domains do you currently own, and how many have you sold this year?
Russell: As of October of last year, my LLLL.com portfolio had a little over 4,000 domains. Since then, I’ve sold around 1,300 in several bulk deals to Chinese buyers. Also, from 2008 to date, I’ve sold a bit over 100 LLLL.com domains to end-users for prices between $1,000-$5,000, all via inbound leads.
NP: Did you predict the rise in four letter .com prices that we saw last year?
Russell: Definitely not, otherwise I would have been buying up Chinese Premiums (instead of often avoiding domains with poor Western end-user letters like Z, Q, etc). I actually didn't even know what a Chinese Premium was until the price on them hit $300.
However, I have always had an optimistic view of the long term short domain market and its potential upside. I had gotten my portfolio to a point where annual end-user sales revenue was about equal to annual renewal costs, which allowed me to maintain the portfolio while the market was down for as long as necessary. I had expected slow long term price appreciation but was pleasantly surprised when things spiked like they did.
NP: What do you make of the current state of the market? Do you think that prices of four letter .COMs will increase from their current price of just under $1,000?
Russell: Having been involved in each stage of the LLLL.com bubble that occurred post buyout in 2007-08, it’s been very interesting to compare what happened then and what is happening now with prices. My experiences from that bubble have given me a broader context to understand what is happening with the current market through the ups and downs.
While it’s of course impossible to predict, I think prices on short names will continue to fall a bit before things turn around, especially as a huge amount of long tail short name renewals come due this fall.
However, there are always good, undervalued domains out there, and a down market can sometimes be the best time to buy.
NP: After selling so many domains, are you reinvesting? If so, what types of domains are you buying?
Russell: I haven’t reinvested much yet. I plan to invest some of the profits in non-domain related assets in order to diversify, and some of it back in domains. I haven’t bought many LLLL.com's since 2014, but if prices continue to fall I’ll likely start buying up any good deals I find. I’m also always looking into other domain niches and trying to find a good opportunity to invest in something undervalued on a larger scale.
NP: What advice would you have to anyone looking to specialise in short domain names?
Russell: I think the best advice I can give to someone looking to invest in short domain names (or any domain names really) is to find an angle and focus on it. That can mean anything from focusing on a certain niche that you know a lot about, or doing research and analysis using data from sources that others have not. Other domain investors are essentially competitors, so by simply following the crowd you are always one step behind.
My other suggestion is to focus on domains that appeal to end-users. This gives your domains true value that is independent of the current state of the wholesale domain market. Buying a domain with the sole hope to flip it to another investor for a higher price before renewal is extremely risky. It’s very easy to make money this way when the market is spiking upward in the short term, but once it goes down or flattens out it’s very difficult to maintain a portfolio long term without end-user sales.
NP: What is your opinion on the future of the short domain name market in general?
Russell: I believe that the short domain market has a bright and solid long term future. While I do still think prices are inflated in some categories and will continue to fall in the near term, the factors that make short domains such appealing investments have not changed.
There will always be both undervalued and overvalued domains no matter the state of the market. It’s my hope that ShortNames can help investors gauge and follow the short domain market more easily, and to make smarter investments.
--
Thanks to Russell for taking the time to talk to us. As he mentioned in the interview, if you have any ideas or feature requests for ShortNames.com, Russell (@rpanella) is interested in hearing from you!
