discuss Riding the tsunami wave with your domains (upcoming economy crisis)

[twiki]

I'm saying "upcoming" because we ain't seen much of it yet. Anyway.

A month ago in a post I was saying I expect a good year in domain sales. Then April came and .... poof! I was wrong - the downtrend came suddenly and much sooner than I expected.

Although some sellers here still have had a great April, some had their best month ever. And my own April sales? They were normal, because in the first week I sold enough names for the whole month. But then, for 4 weeks (last 3 weeks of April and first week of May), I've had almost silence. Occasional lower value sales I don't count much.

( Edit: I still have some sales here and there in May so it ain't all that bleak for me personally. Plus I have other opportunities as well so I can't complain, overall I am on to a normal month as well )

But I wasn't entirely wrong. And this is what this post is about. Plus, what to do next.

Was just watching Bloomberg and I saw Larry Summers saying that "the tech companies are still going to be the biggest ones during this crisis" - not an exact quote, but anyway. I don't like the guy (at all) but on this, he's right.

I mean, what do we expect to come in here and replace the tech zone as the biggest purchaser of domains (what interests us)? Mom and pop shops? Big pharma? etc - No, the tech is still going to be here. And tech / finance related domains will still continue to sell, albeit at a lower level.

The problem is, though, that fewer names will likely sell. That is already here. Since NASDAQ is already -25% YTD, we can expect that to reflect in most of our sales. Now the question is, what to do about it. Here's what i thought:

- The problem we have is, math will not work out anymore for many domainers. Solution for this is? Get better names, even if pricier. Improve the overall quality of your domains.

Especially those of you guys with lower margins (Edit: and lower value names - I've been there, and got out of that). The higher your % overall profit margin is, the lesser the chance you will go underwater. I know, it might sound counter-intuitive in this market to buy higher priced names; but the less renewal cost pressure you have, the better off you will be.

- Don't renew your questionables. Those of which you aren't 100% sure they will be sold someday for a lump sum. If they don't sell before renewal, let them drop. Chances are you will still find them appearing out on the drops market.

- Don't steep reduce prices. And don't panic. If you decrease your prices right now, you will likely lose overall. The market is used with these price levels and the problem is not one of affordability, but one of demand. Demand will be less (Edit: because tech founders are panicking and will postpone their investment, everyone says hold to your cash right now which is both a safe and dumb advice as we all drive the crisis further with that holding) - but good names still sell for high $$$.

If you reduce your prices a lot, chances are right now you will still sell the same names but for less over the next months etc. So don't do that.

I've reduced some of my prices from say $2988 to $2488 - where they were high anyway - but otherwise nope. Also I've tested sheer discounts and yeah, doesn't work - as expected. So I would still hold to that pricing if I were you.

Besides, if we all start panicking and selling for cheap we will achieve nothing else but drag the whole domain market down.

You can try clearing your expiring ones here on NP though - nothing bad in trying that.

- Stay tuned to what happens and watch the NASDAQ index (and other factors). Including crypto - even if you don't have crypto names, chances are the better bitcoin will be, the better our names will sell as well. Because it's all in the tech bubble that started to burst. And yeah, we have bubble after bubble about to burst next - unfortunately. But it was all expected and predicted in the last years. They say right now, the biggest financial in human history might be happening next. Can't comment on that, but guys like Robert Kiyosaki etc have said it.

- Reduce your buying. This is the worst time to hoard domains. Cut from the list all those that are questionable and stick only to the top ones. Same applies to what you renew - only renew your top ones. The less junk you have, the better off you will be.

And some things that might happen, but we will have to see it first:

- Great names might be dropping and become available for catching or at auctions. Chances are auctions might end with much lower numbers on good names that are worth holding on long term.

- Domain name registration and renewal prices might fall down. I know this hasn't happened (ever?) but at least to me, it is expected to happen. (Edit: the opposite would be a dumb move for the registries)

If ICANN keeps these prices they will soon realize that a lot of their business will go down - and domain investors play a big role in that, we roll like half of their revenue through our portfolios. Decreasing prices will allow us to get more names and still continue to drive revenue not only to the registry but also to the registrars, including through their cut of domain sales etc.

My plans are: I wont' renew half of my portfolio (the questionables), but won't reduce price nor clear for dirt cheap on NP (not worth the hassle for me). Whoever really wants the domain will buy it in the last 2 days or desperately email me after they expired, to make sure they can still get it and not have the name ending in DC public auction - seen that lots of times.

That's it for now, if there is more I remember right now I'll post that. Thanks!

Edit: If you have any such due diligence tips for hard times ahead, don't be shy, please share them as well below. We all NP members here would be glad to learn from you.

 

[zomainhacks]

Here's an interesting read.


https://techcrunch.com/2022/05/19/yc-advises-founders-to-plan-for-the-worst/?guccounter=2

1. No one can predict how bad the economy will get, but things don’t look good.
2. The safe move is to plan for the worst. If the current situation is as bad as the last two economic downturns, the best way to prepare is to cut costs and extend your runway within the next 30 days. Your goal should be to get to Default Alive.
3. If you don’t have the runway to reach default alive and your existing investors or new investors are willing to give you more money right now (even on the same terms as your last round) you should strongly consider taking it.
4. Regardless of your ability to fundraise, it’s your responsibility to ensure your company will survive if you cannot raise money for the next 24 months.
5. Understand that the poor public market performance of tech companies significantly impacts VC investing. VCs will have a much harder time raising money and their LPs will expect more investment discipline.
   As a result, during economic downturns even the top tier VC funds with a lot of money slow down their deployment of capital (lesser funds often stop investing or die). This causes less competition between funds for deals which results in lower valuations, lower round sizes, and many fewer deals completed. In these situations, investors also reserve more capital to backstop their best performing companies, which further reduces the number of new financings. This slow down will have a disproportionate impact on international companies, asset heavy companies, low margin companies, hardtech, and other companies with high burn and long time to revenue.
   Note that the numbers of meetings investors take don’t decrease in proportion to the reduction in total investment. It’s easy to be fooled into thinking a fund is actively investing when it is not.
6. For those of you who have started your company within the last 5 years, question what you believe to be the normal fundraising environment. Your fundraising experience was most likely not normal and future fundraises will be much more difficult.
7. If you are post Series A and pre-product market fit, don’t expect another round to happen at all until you have obviously hit product market fit. If you are pre-series A, the Series A Milestones we publish here might even turn out to be a bit too low.
8. If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn. Remember that your chances of success are extremely low even if your company is doing well. We recommend you change your plan.
9. Remember that many of your competitors will not plan well, maintain high burn, and only figure out they are screwed when they try to raise their next round. You can often pick up significant market share in an economic downturn by just staying alive.
10. For more thoughts watch this video we’ve created: Save Your Startup during an Economic Downturn

 

[twiki]

Even if a tsunami happens, the water doesn't disappear. It just changes location. My point of view.

You got it all wrong.

Nobody says water disappears. But you should look into what the Great Depression brought, short example, Hitler? There's always so much to learn from history. Oh, and during such times, no asset is truly a safe haven. Time is. That, if your setup gives you time.

Good decisions now will have a significant impact on our revenue and lives in the near future.

That's the point of this thread. Not that the world ends - or water disappears.

 

[kite26]

I personally have break up with humanity my friend. I don't follow mainstream philosophy, because people are away from Christ's street. So, I don't have faith on humans now, sorry. However, I believe that God will not allow humans be converted to cyborgs, in the name of illness cure. I don't believe fake pandemics, laboratory meat, and planned food crisis. The devil's plan is the full control of humanity, God will stop it. There is the God's red line.

Do you think I am drunk?

Autumn will be very hot. Not off topic, all things are connected. How? Because anything built by humans can't be perfect, like crypto or the whole economic system. We are obligated to fight for a better world to win real freedom. In the name of Jesus Christ.

 

[karmaco]

Domain renewals and registrations will continue to rise just as they started to in December 2021 another hike will take place in Dec 22 and another in December 23. The increase is staggered over years and set in stone.

I haven’t had any less amount of sales and inquiries. In fact it might be a little up compared to same time last year.

I think the ones who may suffer this year are low level XX to XXX flippers as domainers who usually buy those may begin buying less. Sky is not falling quite yet.

 

[twiki]

Valuable information ! Yes sometimes you need to spend some cash for testing and experimenting and you could lose some , but the advantage in return is you reach to the information or some key secrets or you discover something that very limited people know it and surprising results ! And all can lead you to success !

well done bro !


.

Thanks. It all worked well I must say.

Only one experiment has turned in a loss (with ngTLD's) but was like $3K loss or something so no biggie. Most tests turned out a profit, although at a smaller margin % in comparison with retail quality domains. But today I am done with these.

 

[twiki]

A portfolio consisting of well researched names should be robust enough to ride the current crisis. If your renewal bills were 15% to 50% of your total revenue after the commissions, then even with 50% loss in sales, you should be able to ride it out (worst case is breaking even or very small loss) without culling your portfolio or doing drastic shifts. If you are the type of domain investor that has a lot of churn out in his portfolio (buys and drops big %), then you might not be well prepared for it. And if your renewals were 50% to 100%+, you are not well prepared either. The same goes for those whose portfolios have too much exposure to the hurt industries like crypto etc. They might decide to either liquidate or hold them for the future absorbing the losses.

I personally am keeping my portfolio and growing it, but instead of doubling might do 50% growth over next 12 months. And, mainly, not due to the crisis, but needing more time elsewhere.

I definitely agree with this. High margin portfolios will get through these times pretty well.

My portfolio is still a mixed bag but with 2 vert different tiers. In like 6 months max all the "churn" domains will be liquidated. The other part is generally solid. Besides I had a good April and May is still going well, sold 3 names in the last 24 hours alone, bottom line is good.

I plan to hold and grow the better part of it as it has been selling nicely lately, since I've started improving the overall quality.

 

[twiki]

just make more money .. and consume less news .. my pill against just another economy crisis

best!! H

That's one way to deal with it, and I partially use that (consuming the minimum amount of news needed... because obvious.)

However, the ostrich method (sticking the head in the sand, if that's unclear to anybody) might not be the wisest approach in such times. Because this isn't your average global turmoil. This also ain't 2008. It's something of a much larger magnitude.

It's good to be optimistic, but it depends - on the place and time. You know, what is an optimistic guy in the Wild West? = a pessimistic guy with a bullet in his belly.

 

[zomainhacks]

May is already my best month ever but only thanks to a single outlier, for the rest silence for the entire April.

Domain name registration and renewal prices might fall down. I know this hasn't happened (ever?) but at least to me, it is expected to happen. (Edit: the opposite would be a dumb move for the registries)

I agree with almost all you said except on this, I think that at some point domain retail prices will go up as the rest of the goods in the market.
Frankly I'm expecting renewals going up and not down, also consider that lowering the renewals might be interpreted as a very bad signal in the market.

 

[twiki]

May is already my best month ever but only thanks to a single outlier, for the rest silence for the entire April.


I agree with almost all you said except on this, I think that at some point domain retail prices will go up as the rest of the goods in the market.
Frankly I'm expecting renewals going up and not down, also consider that lowering the renewals might be interpreted as a very bad signal in the market.

I'm talking about depression here. The serious and last part of the economical crisis.

For now we're in stagflation, and during this time prices go up - a lot.

If domain prices will go down, it will happen at a moment when they will not be any bad signal anymore, cause nobody would need any more bad signals in order to clearly see what already happened. Rather, it would be an alignment with everything else. I thin it is rather logical for them to do so in those times.

But again, we will have to see, nothing is guaranteed.

 

[zomainhacks]

If domain prices will go down, it will happen at a moment when they will not be any bad signal anymore, cause nobody would need any more bad signals in order to clearly see what already happened. Rather, it would be an alignment with everything else. I thin it is rather logical for them to do so in those times.

You might be right, but in general I think there are two opposite economic forces driving in opposite directions, what will prevail is only to bee seen.
Maybe we will see lower renewals for expensive gTLDs and only the already scheduled price increases for legacy TLDs (?) Everithing really depends on the magnitude and duration of this recession.

Personally I think the slowdown in sales will not last for more than 1 year, so I don't really see renewals going down.

 

[phaethon]

Firstly, I think your posts are very useful to old and new domainers, however when someone owns 20K domains bought mostly over the last years, I'm really wondering about the quality of those domains. Then, I saw some domains that you offered here for 11 bucks I think and I would not take them even for free. You are way more experienced and successful than me, but I just wanted to make that point..

Quantity play a role to achieve some success in domaining , Not only the quality .

.
[/QUOTE]

As far as I remember all Twiki's sales that were posted here were decent domains. Thats why I was surprised when I saw his 11 bucks offer that were simply bad domains..

 

[phaethon]

Off topic, but how's your Squadhelp experiment going, Twiki?

 

[bmugford]

Twiki: Many of us have something saved.
Inflation: Hold my beer

The problem is there is no safe haven asset.

If you have dollars inflation hurts, but inflation could still hurt less than assets dropping in value.

Stocks, crypto, gold, domains, NFT, collectibles, whatever. In theory inflation should drive the value of assets up, but in reality the economic uncertainty is putting negative pressure on assets as well.

The only asset that has really been trending up steadily is real estate, and rising interest rates are going to put the brakes on that.

We saw during the COVID collapse in 2020, every asset dropped all at once. Even safe havens like precious metals tanked.

So you have inflation hurting the value of saved money, but also hurting the value of assets as well.

Brad

 

[JoeStolars]

Thank you for the post. Small potato here.

 

[twiki]

Edited: Couldn't figure how to delete this. Having a senior moment (:

You don't need to worry about any of this, really.

Note: Glad to be of help with the post

 

[twiki]

It tells us something about domain demand in the near future. That's why it is related

I see. Indirectly but yes you are right, I missed the point initially. Thanks

 

[Real AJ Martin]

I'm saying "upcoming" because we ain't seen much of it yet. Anyway.

A month ago in a post I was saying I expect a good year in domain sales. Then April came and .... poof! I was wrong - the downtrend came suddenly and much sooner than I expected.

Although some sellers here still have had a great April, some had their best month ever. And my own April sales? They were normal, because in the first week I sold enough names for the whole month. But then, for 4 weeks (last 3 weeks of April and first week of May), I've had almost silence. Occasional lower value sales I don't count much.

( Edit: I still have some sales here and there in May so it ain't all that bleak for me personally. Plus I have other opportunities as well so I can't complain, overall I am on to a normal month as well )

But I wasn't entirely wrong. And this is what this post is about. Plus, what to do next.

Was just watching Bloomberg and I saw Larry Summers saying that "the tech companies are still going to be the biggest ones during this crisis" - not an exact quote, but anyway. I don't like the guy (at all) but on this, he's right.

I mean, what do we expect to come in here and replace the tech zone as the biggest purchaser of domains (what interests us)? Mom and pop shops? Big pharma? etc - No, the tech is still going to be here. And tech / finance related domains will still continue to sell, albeit at a lower level.

The problem is, though, that fewer names will likely sell. That is already here. Since NASDAQ is already -25% YTD, we can expect that to reflect in most of our sales. Now the question is, what to do about it. Here's what i thought:

- The problem we have is, math will not work out anymore for many domainers. Solution for this is? Get better names, even if pricier. Improve the overall quality of your domains.

Especially those of you guys with lower margins (Edit: and lower value names - I've been there, and got out of that). The higher your % overall profit margin is, the lesser the chance you will go underwater. I know, it might sound counter-intuitive in this market to buy higher priced names; but the less renewal cost pressure you have, the better off you will be.

- Don't renew your questionables. Those of which you aren't 100% sure they will be sold someday for a lump sum. If they don't sell before renewal, let them drop. Chances are you will still find them appearing out on the drops market.

- Don't steep reduce prices. And don't panic. If you decrease your prices right now, you will likely lose overall. The market is used with these price levels and the problem is not one of affordability, but one of demand. Demand will be less (Edit: because tech founders are panicking and will postpone their investment, everyone says hold to your cash right now which is both a safe and dumb advice as we all drive the crisis further with that holding) - but good names still sell for high $$$.

If you reduce your prices a lot, chances are right now you will still sell the same names but for less over the next months etc. So don't do that.

I've reduced some of my prices from say $2988 to $2488 - where they were high anyway - but otherwise nope. Also I've tested sheer discounts and yeah, doesn't work - as expected. So I would still hold to that pricing if I were you.

Besides, if we all start panicking and selling for cheap we will achieve nothing else but drag the whole domain market down.

You can try clearing your expiring ones here on NP though - nothing bad in trying that.

- Stay tuned to what happens and watch the NASDAQ index (and other factors). Including crypto - even if you don't have crypto names, chances are the better bitcoin will be, the better our names will sell as well. Because it's all in the tech bubble that started to burst. And yeah, we have bubble after bubble about to burst next - unfortunately. But it was all expected and predicted in the last years. They say right now, the biggest financial in human history might be happening next. Can't comment on that, but guys like Robert Kiyosaki etc have said it.

- Reduce your buying. This is the worst time to hoard domains. Cut from the list all those that are questionable and stick only to the top ones. Same applies to what you renew - only renew your top ones. The less junk you have, the better off you will be.

And some things that might happen, but we will have to see it first:

- Great names might be dropping and become available for catching or at auctions. Chances are auctions might end with much lower numbers on good names that are worth holding on long term.

- Domain name registration and renewal prices might fall down. I know this hasn't happened (ever?) but at least to me, it is expected to happen. (Edit: the opposite would be a dumb move for the registries)

If ICANN keeps these prices they will soon realize that a lot of their business will go down - and domain investors play a big role in that, we roll like half of their revenue through our portfolios. Decreasing prices will allow us to get more names and still continue to drive revenue not only to the registry but also to the registrars, including through their cut of domain sales etc.

My plans are: I wont' renew half of my portfolio (the questionables), but won't reduce price nor clear for dirt cheap on NP (not worth the hassle for me). Whoever really wants the domain will buy it in the last 2 days or desperately email me after they expired, to make sure they can still get it and not have the name ending in DC public auction - seen that lots of times.

That's it for now, if there is more I remember right now I'll post that. Thanks!

Edit: If you have any such due diligence tips for hard times ahead, don't be shy, please share them as well below. We all NP members here would be glad to learn from you.

slightly contrarian opinion here - i own a lot of lead gen names for service businesses and during the pandemic they all had TOO MUCH business - people had extra cash from not traveling and from Govt handouts so the last thing my clients needed were more leads and damn sure didn't want to invest in raw domain name.

So as business slows down their phones and inboxes aren't flooded and they will need leads and ideas on how to generate more business.

Just another angle to consider.

 

[lovely4ever]

[QUOTE="twiki, post: 8597358, member:

My plans are: I wont' renew half of my portfolio (the questionables)

Firstly, I think your posts are very useful to old and new domainers, however when someone owns 20K domains bought mostly over the last years, I'm really wondering about the quality of those domains. Then, I saw some domains that you offered here for 11 bucks I think and I would not take them even for free. You are way more experienced and successful than me, but I just wanted to make that point..
[/QUOTE]



Quantity play a role to achieve some success in domaining , Not only the quality .

.

 

[phaethon]

Great, thanks, Twiki. I made that comment based on the sales you post here. I think it would be great if you sometimes post 'total outsider' domain sales, because the ones you post here are decent names I would say.

 

[lovely4ever]

Was the pandemic a financial crisis? Some people went from rich to poor and some from poor to rich because of it. The same is true with every financial crisis.

What to watch for?

Disclaimer: When I use the word "tech" I am not talking about Microsoft, Apple etc. If you do not understand what I mean, please do not read my posts, you will just end up more confused with anything I say. I cannot spend too much time explaining every detail. This post is not financial advice. You can lose your money, mind, soul, home, bird and family if you follow any part of this advice. I am not responsible for anything you do.

A small introduction before I get to the relevant part about domaining.

If tech stocks continue to show weakness, startups will have a hard time raising money. Existing companies will have more pressure to show results and cut costs. Expects millions of people in the tech sector to get fired if things continue showing weakness.

Some tech companies are already laying off employees and some warned employees to start cutting costs.

If you didn't live through the dotcom bust you probably think that I should shut my computer down and go see a doctor immediately.

It takes a long time to build something, but a fraction of that time to destroy it.

Tech is in a serious bubble. The bubble is supported by people chasing the big IPO returns that at the moment are just a fantasy. Smart money will stop pumping billions into tech and because most tech companies burn a lot of cash, tech companies will desperately start firing people. Many will go out of business.

The salary some of these tech companies paid cannot be replaced by most other industries unless your job at the company was a Full Stack Developer or you were an exceptional designer. These people will be the last to be fired anyway.

Inflation was unfortunately not transitory (if you knew it wasn't from the start here is a gift ) and the increase in people using their credit cards more is probably not a sign of confidence but rather a sign of danger ahead.

During the pandemic a lot of people got fired or felt insecure about their job. We know for a fact what millions did. They decided to start their own business. This was the reason stocks like Wix, Shopify, Fiverr and many others had incredible revenue boosts (their stocks, like most are down significantly for the year). This was also the reason domain sales increased together with the prices.

Another thing happened during the pandemic. A lot of people got into buying stocks. Depending when they got in and what they purchased, there is a chance millions are looking at a portfolio that is showing that the money they invested is now worth half that (not to mention inflation).

When people look at a portfolio for months that shows them earning over 30% on their money in a short time and then suddenly in a few weeks they lost half their money, do you know what most people do? They get desperate to find a way to recover that loss. Usually this is the period that they wipe out all their money.

Now let's tie this all into domaining. If a financial collapse happens, million of people will lose their jobs within months. People are already maxed out, they will buy less junk on Amazon and order less food and cook at home more. They will also take mass transit and rely less on the apps like Uber. Why is this important to grasp? Because these companies hire a lot of people and for once, they might lay people off, regardless if you can imagine it or not. You couldn't imagine a lot of things that happened in the past few years, so please be open minded to the possibility.

We will see a lot of people take real steps to start their own business. Most will want a domain name. What businesses will they start? Software / Web dev, Social media marketing, adwords managers, web design, copywriting, seo marketing, general artists, video editing, voice overs and a lot of other things they might've done full time for a company and they will try to do it on their own. They might also get into one of the more fantasy home businesses that only a few ever make a lot money, think Amazon FBA and selling courses.

You should think about what these people might do and buy names in those categories and if they are really good names you can even try it in other popular extensions.

Buy them, list them on Afternic (make sure fast transfer enabled) and Dan with a buy now that is priced to move.

But can they afford names in the X,XXX or XX,XXXX range? Remember what I told you about people looking at their stock portfolio that is at a loss and they will look for ways to make a better investment to make money? Many will opt to take that cash and invest it in something they have more control over like their own business. Price your names fairly but do not be scared to price them high if they are worth it AND the name is in a popular category.

If food inflation continues on the current path, we could start seeing serious global social unrest that will be historic because a lot of people are already on edge, angry, hateful, miserable and nothing destroys the fabric of society, even in the most authoritarian countries, like food insecurity.

Sometimes I invest a lot in large tests over various directions. Some pay off well, others don't but the advantage is always the information. What sells is often VERY surprising, and I want to have that information.

Valuable information ! Yes sometimes you need to spend some cash for testing and experimenting and you could lose some , but the advantage in return is you reach to the information or some key secrets or you discover something that very limited people know it and surprising results ! And all can lead you to success !

well done bro !


.

 

[zomainhacks]

Yes but this applies only to VC, investor-funded startups.

Most domainers here probably don't apply (including myself although I'm having 2 startups right now but not looking for investors).

99+% of businesses, either incorporated or self-employed as most domainers aren't probably interested in the above, because it doesnt' apply to them.

Edit: I think this is out of context in the current thread, which refers to us domainers here on NP.

It tells us something about domain demand in the near future. That's why it is related

 

[twiki]

Just a quick note:

NASDAQ down almost 30% over the first 5 months of 2022. This is a HUGE drop.

 

[topdom]

Stockmarket is in bubble already. This might be a correction, but we can expect a small and artificial collapse during "Biden presidency", to wake people up.

 

[twiki]

Stockmarket is in bubble already. This might be a correction, but we can expect a small and artificial collapse during "Biden presidency", to wake people up.

This is not what we generally call a correction. It's much deeper, and long overdue.

Key indicators we have today have been met before only once in our history - right before the Great Depression.

 

[twiki]

They are so many I can't even count. Haven't saved them. Various things aligned with pre-1929.

edit: deleted, was a bad example